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US Dollar Collapse?: USD Index Trend Forecast 2015

December 17, 2014

For as many years as I can remember and 2014 has been no exception, the most vocal mantra that can often be heard is one of warnings of an always imminent U.S. Dollar collapse as a consequence of a myriad of highly convincing arguments such as a soaring debt mountain, deficit, rampant money printing, demographics, rise of China, death of the petro-dollar etc.. However the dollar trend of recent years shows that the dollar in actual fact is little changed, where even the recent breakout only put the USD barely 4% outside of its multi-year trading range of between 85 to 79 and still within its longer-term trading range of 89 to 75.

The current USD breakout above the 85-79 trading range should not be viewed as due to fundamental hidden strengths i.e. that the value of the dollar is increasing but rather that all currencies are in perpetual state of free-fall against one another that manifests itself in inflation that asset prices are leveraged to and oscillate around. Therefore in reality all we are witnessing is a slackening in the rate of free fall of the U.S. Dollar.

Whilst the mainstream press continues to obsesses over the 'currency wars' by blaming China amongst others for manipulating their currency exchange rates against the U.S. Dollar that is often painted as the innocent victim by self-righteous U.S. politicians calling for action to be taken against the currency manipulators. When in in reality the likes of the China are more akin to rabbits frozen by fear in the face of the Fed's headlights trying hard not to become road kill in response to Fed actions and the U.S. Congress's near endless deficit spending debt accumulation binge that is debasing the worlds reserve currency on an industrial scale.

Global Money Printing Central Banks Crime Syndicate

Contrary to the way the financial world may be presented in the mainstream media, the Fed is at the head of the global central banking crime syndicate cartel that runs the show Don Vito Corleone style, where should any foreign central banks get out of line will soon be in for a currency markets massacre as they see their currencies soar or collapse against the dollar and thus destroying their ability to export to the world’s largest consumer market which many economies are addicted to drug addicts style or manage inflation, as the official policy of the U.S. since the midst of the cold war has been to control the world’s financial system by means of operating a continuous large trade deficit, as I have covered at length several times over the years such as in my article of October 2010 (12 Oct 2010 - USD Index Trend Forecast Into Mid 2011, U.S. Dollar Collapse (Again)?).

Thus against the Fed INFLATE or DIE policy, all foreign central banks are fighting hard to maintain their pegs to the downwards spiraling U.S. Dollar, which effectively means that all currencies are spiraling lower hence the whole world is inflating at the Feds whim. For instance emerging markets such as Brazil repeatedly cry out that they are being flooded with too much foreign capital that is driving up their currencies, therefore they are forced to print and debase their own currencies i.e. INFLATE! (are you listening delusional deflationists ?) THE FED IS INFLATING THE WHOLE WORLD!

How can the US Fed get away with printing money and inflating the whole world?

You may wonder that the dollar's strength (lack of collapse) in the face of money printing and ever expanding debt accumulation is as a consequence of underlying US economic strength or huge amounts of (Invisible) gold reserves at Fort Knox. The real reason why the US is able to get sway with printing unlimited amounts of money is the US Military, as the US remains the world’s sole hyper military power following the collapse of the soviet union and increasingly relies on global military power to back up the dollar as the world’s primary means of exchange, as any country that chooses not to comply will likely be on the receiving end of a 1000 tomahawk cruise missiles as Libya is experiencing today or even worse as Iraq has experienced during the past 8 years.

We are in a new world (for the west anyway) and that is a world of Quantitative Easing, the more the governments of the world print money and monetize debt the easier it is for governments to keep printing and monetizing ever escalating amounts of government debt to cover the government budget deficit gaps. Upon which the accelerant of the Quantum of Quantitative Easing has been poured i.e. Governments paying themselves interest on monetized debt (20 Jul 2012 - The Quantum of Quantitative Easing Inflation is Coming! )

U.S. Dollar Supremacy

In terms of implications for the U.S. dollar, this clearly reinforces the fact that the U.S. state will through all means at its disposal including economic, military, propaganda, and covert agencies always do what needs to be done to ensure supremacy of the US Dollar as the worlds reserve currency. What this means is that the reality of the United States is not what the brain washed masses have been programmed to perceive it to be namely to understand that democracy and freedom are an illusion as I have covered in great depth a number of times before -

14 Oct 2013 - The Illusion of Freedom - Democracy, Religion, Science and Propaganda

The truth as I have often warned of many times during the years is that the intelligence agencies are arms of the elite towards the objective of total control of the general population through fear of what the state through its various institutions such as the NHS and Inland Revenue will do to Individuals and thus the Intelligence agencies seek to condition the population towards the elitist agenda of control and where those who are flagged as threats to their interests to be systematically neutralised.

Virtually everyone is psychologically susceptible towards being conditioned, so to speak having ones buttons pressed towards a particular outcome, something which the intelligence agencies have a wide arsenal of tools at their disposal and long experience of.

The bottom line is that 1984 happened, people in the UK, US and most of the west are living in a VIRTUAL PRISM (Prison). As individuals the only thing we can do is to try and ride on the coat tails of the elites agenda i.e. to profit from money printing inflation consequences of control that cycles through asset classes such as stocks and for which today's primary opportunities are in the UK and US housing markets.

The bottom line is that politicians and democracies are merely fronts for the elite to control as most of the population are taught in state schools to become docile debt slaves in the service of their elite masters. Which my articles have been focused on illuminating the consequences of and strategies for neutralising such as not partaking in the system of debt slavery and being aware of the inflation mega-trend consequences of policies aimed at funneling wealth to the elite, in that individuals can engineer their asset portfolios to be leveraged to inflation as money printing bubbles are repeatedly blown by central banks which is how the elite accumulate their wealth and through which they disenfranchise the mass of the population into owning nothing i.e. people with mortgages own nothing! All mortgage holders are just glorified renters, where if you stop paying the mortgage (rent) then you will be ejected from your home.

The point it is this that most people are genetically prone to be slaves to the elite, this is how our parents and society conditions us from birth to ensure that we follow what is programmed in our genes. However, the slave gene can be turned off during our life through environmental influences.

In my opinion the key to achieving freedom of sorts from genetic and social programming is to realise that what is most important is the PRESENT, rather than the past or future which is a distraction that the societal conditioning seeks as a means to control us i.e. we are conditioned to always be focused on the future by referring to the past. This is what religion does, this is what science does, because both achieve the same goal of making you forget about the PRESENT! As it is in the PRESENT where ALL actions take place, but most people give up most of their important decision making processes to the past for a reward in the future.

Thus all those waiting for the US Dollar to collapse need to understand that virtually every other currency will collapse BEFORE the U.S. Dollar collapses as whilst US economic supremacy is slowly diminishing as a consequence of the rise of China, however this is being countered by the expansion of military and covert agency actions across the world that can only INTENSIFY as an expanding military industrial complex REQUIRES various types of threats and enemies to justify its expansion across all areas as the United States continues its trend of morphing into a global military empire.

Therefore most of the world’s central banks work towards maintenance of their currencies relative value against the worlds reserve currency which results in collective currency devaluation where what appears as relatively little change in currency rates masks a real terms flood of fiat money the consequences of which is exponential inflation as illustrated by the below US CPI inflation graph. Whilst those few central banks who don't play ball are subject to currency wars - a collapse in the value of their currency relative to the worlds reserve currency and thus ALL other currencies resulting in a destabilising surge in inflation as countries such as Iran and Russia have recently experienced.

TREND ANALYSIS - The USD has been in a bull market since 2012, therefore probability favours a continuation of this bull market. The current strong uptrend hit long-term resistance (previous highs at between 88 and 89) and has started to correct. The correction should continue to between 85 and 87 before the USD attempts another break higher to target a break above 89/90. So in terms of trend the USD is currently over-extended (overbought) on the long-side and due a significant trend correction.

The long-term level around which the USD oscillates is 100, this is not just because it is a nice round number but that is the level that the USD index started off at over 40 years ago, it is now over 14 years since the USD last traded at 100. Given the current long-term bull trend pattern, it appears probable that the USD will at some point trade on the other side of 100 again, and given that the USD has been in a bull market since 2012 the probability of the USD trading at above 100 during 2015 is far more likely than not, in fact I would put it at a 65% probability before the end of 2015.

USD analysis

Formulating a USD Forecast

This trend analysis implies immediate term weakness towards USD 85 into end December / early Jan 2015 before the USD sets itself up for the next leg higher as it slices through a series of overhead resistance levels all the way towards 98 that it may briefly breach during summer 2015 before entering into a significant correction into the end of 2015. Whilst the trend into the middle of 2015 suggests the USD will gravitate towards breaking USD 100, how far the USD subsequently falls I am less certain about i.e. it could fall to anywhere between 98 and 90 by end 2015. Whilst favouring the seasonal pattern would suggest that the USD could be trading at around 92 by late December 2015. Further out rather than a USD collapsing in 2015, we may see the USD preparing the ground for a sustained break above USD 100 during 2016, but more on that this time NEXT year.

USD Trend Forecast 2015 Conclusion

My USD Trend forecast conclusion for 2015 is that after the current correction is over by around USD85, that the USD then trends higher towards a target of 98 by mid summer 2014, probably terminating in a spike to just about 100 before correcting back towards 92 by the end of the year as illustrated by the following trend forecast graph.

us dollar index trend forecast

The bottom line is the US Dollar debt monetization Ponzi scheme can ONLY continue under threat of MILITARY FORCE, which is WHY the US today is far more willing to engage in conflicts across the globe in the interests of maintaining US Dollar supremacy that allows the US to get away with printing debt without the consequences that other nations would soon experience unless they follow the US central banks programme for global monetary inflation as do the UK, Japan etc. However, also note that there is a price for central banks printing infinite money and that is REAL inflation which is why 99% of people no matter how hard they work will experience FALLING real terms earnings as there is never a free lunch, no matter Fed deflation propaganda, the inflation trend is exponential!

This reminds me of times in history when things were obvious i.e. that it was obvious that the Soviet Union would eventually collapse, and so today it is obvious to me that the world will experience an hyperinflation panic event even if the Fed ensures that all fiat currencies collapse together! So not a US Dollar collapse but a GLOBAL HYPERINFLATION EVENT that could even see the value of the Dollar RISE against other paper currencies - But don't worry the panic event is some years away, in the meantime continue to protect your wealth by leveraging yourself to exponential inflation through exposure to assets that cannot be so easily printed such as housing.


Excerpts Courtesy of:  

Nadeem Walayat has over 20 years’ experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 experienced analysts on a range of views of the probable direction of the financial markets.

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