by John Daniels

Being that the recent dollar surge is correlated with the opening ceremonies of the Olympics, my 'conspiracy radar' is on high alert. I am of the opinion that the Chinese government is solely behind this dollar rally; and wall street is all too happy to 'play along' and be bullish on the dollar. However, what should be of primary concern is that not only will this dollar rally be extremely short term, but it will set up a major dollar crash once the Chinese are "done" with w/e they are doing. The crash will occur once the Chinese decide to trade their "stronger dollars" for commodities and hard American assets, and firm up the yuan from its apparent current weakness vs the dollar. Who is the primary beneficiary of a stronger dollar? The Middle east, China, and other foreign countries. Definitely not the FED: they have been trying like mad to keep rates down as they fear deflation more than anything...I think because they have no defense against it.

If our countries economy is so easily manipulated by a foreign country, how can wall street be bullish? All the problems are still there: 10,000,000,000,000 National debt, government mismanagement, the baby boomer lobby and their entitlements, wall street bailouts, and the overall lack of effective GDP. The dollar is up significantly over just the past week. So what has changed? Only the Olympics, hosted by China. A strong dollar is now the American nightmare, ironically. Deflation means Chinas dollars are stronger, and they can acquire US assets for pennies on the dollar.

Today's stock market rally is similar to a mouse being lured into a mousetrap by its own greed for the stink of cheese. Desperation.

The dollar rally is not a planned or manipulated event by the Federal Reserve; they may have lost control and are unprepared for a surging dollar. They cannot lower rates. Inflation is not the problem, as we have seen rates held internationally. The abnormal trend over the past week of dollar overcompensation could be the uncontrollable deflationary trend in all assets, as the money supply (as defined as new debt) deteriorates ... resulting in further bank failures because the reduction in money supply is defaults, not loan repayments. Banks are going under due to "money" literally "disappearing".

Today's dollar strength must be toxic because positive current economic fundamentals are not present.

I am also surprised the press and the markets "brushed off" the Russian intervention in Georgia today. Being that Russia is one of two primary sources of Palladium and Platinum, I thought there would be some reaction in the metals markets. This somewhat raised my 'radar' a bit as to what we are being led to believe and invest in...