A worrisome trend

The markets always win. The politicians can say and do what they want, but the markets always win.

Look at the tragic decline of the dollar (click on the chart to enlarge it). What you hear on the TV business channels is plain nonsense, as I wrote several times in this blog.

The trend of the dollar measures our competitiveness. It reflects productivity differentials between us and other countries. It reflects opportunities created by the way the government treats business.

If foreign buyers feel our products do not have value, they sell dollars to buy products denominated in other currencies.

If foreign investors do not see a profit opportunity in the USA, they sell dollars and buy the currencies needed to invest in other countries.

It is very difficult to have a strong currency. You have to earn it. The countries with a strong currency are the "rich" countries with a rising standard of living. The countries with a weak currency indicate a decline in the standard of living relative to other more competitive countries.

The decline of the dollar is ominous for us from an economic and standard of living viewpoints. It means our manufacturing sector is fleeing the USA to start operations in countries with less regulations, more competitive, and with greater profit opportunities.

And we seem to worry about health care, the pay of executives, and create "czars" for just about anything we do. Our leaders need to wake up and try to understand the real meaning and implications of the sickening decline of the dollar which started in 2004.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977