The dollar at 82 instead of 88 has caused the recent jump in oil prices. US gasoline prices are at a 10-week high, which just happens to coincide with when the dollar started dropping. The last thing the US economy needs right now are high fuel costs, and yet the Fed has done nothing to stop the dollar dropping (and oil going up) because they cannot. The USA cannot pay for its spending except by printing dollars, and this uncontrolled printing of currency cannot lead any place except to major inflation.
When the dollar reaches 80 on the dollar index, this will signal the beginning of a major spike in US inflation. At 70, this inflation will be obvious to the global markets and not be considered just an oil-spike event. At 60, the US economy will be spiraling out of control.
Although US interest rates will climb, foreign money will stay out as the interest-rate income will be more than offset by dollar devaluation. Money will flood into stock markets like the Philippines as a “safe haven.” The Philippine peso will move to a range of 40 to 42 within 12 months. Foreign investors will make profits from both stock prices going up and peso appreciation. Nominal oil prices will move much higher, but increases here will be offset by the peso’s strength. Gold will easily break $1,100.
The Philippine peso at 40. Inflation at 4 percent. The stock market at 2,500. These are just some of the kinds of economic numbers we have not experienced all at the same time before. We will in 2009, and this will be a positive game-changer for the Philippines and for all of us.
Fortune na ba kaha ni para sa Pilipinas?
Special Philippine Fortune
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