Are Dollar Bears Dollar FOOLS???????
January 25, 2009
– Comments (22)
Alstrynomics will have to break trend again.....what else is new......it is not easy being a shepard amongst a flock of sheep in a woolen sweater factory.
First what is a dollar....it is a zero interest rate note backed by the Full Faith and Credit of the United States GOVERNMENT.........NOT THE US PEOPLE.
The US Government has currently about $11-$12 trillion dollar of debt if you back out entitlements. OH MY GOODNESS...did I just say $11-$12 Trillion????? Yessireeeeeeeeee!!!!!!!!
As a holder of dollars, versus yen, juan, francs or whatever.....my concern is the ability of the holder to pay me back......
In order to assess that, I have to look at the solvency of the debtor and the collateral it has supporting its debt.....
So let's look at what the US GOVERNMENT owns........it owns mineral rights in Alaska and the Gulf of Mexico amongst a bunch of other places, it owns valuble water rights, it owns timber rights, it owns incredible Federal Park lands, it owns a ton of fantastic buildings and museums, it controls a fanstastic productive infastructure generating trillions of dollars of tax revenues per year.....all this PROTECTED by a military second to none.
If you think about it.....few currencies in the world are backed by soooooo much natural resources as the dollar.......so commodity inflation should actually make the dollar RISE in value unless the US Government prints an incredible amount of dollars to balance out the offsetting rise in collateral. Not too much different than a bond increasing in value when the makers ability to pay improves.
Who woulda thunk???.....commodity inflation actually strengthens the US Dollar....see this is the difference between Alstrynomics and Economics......Alstrynomics looks at the world practically......Economics forgets to apply the facts to reality and lives in a theoretical world.
Have you ever seen an economist value the assets of USA Inc against its debt??? The practicioners of Alstrynomics do it all the time, because as Americans, we view ourselves as shareholders and the Consitution is the bylaws which set the framework for our business.
The above analysis works just applying the natural resource interests of the US Government and NOTHING else. Then add in the fact that US Government receives 1/3 of the profits of EVERY decent income earning business and individual in America not to mention the hundreds of billions it obtains from other taxes each and every year and other revenues sources.
Right now...rumors are flying around that one little drug company that starts with the letter W....well not sooo little, is about to be purchased for $65 Billion dollars......$65 BILLION dollars!!!!!!! Then compare that to USA Inc and ask yourself what is USA Inc really worth?????
My guess is that you will find that the current debt load of the US Government, relative to the value of its assets and income stream, is far better than just about any major currency in the world. And if commodity prices rise in value, the US Government owns a ton of commodities and the dollar should rise as well.
My favorite Foolians, and you know who you are,...... isn't that why you buy Gold Stocks?????? To indirectly benefit from the rise in Gold prices. Think of the US Government owning a 1/3 interest in the profits of EVERY Gold company in America.....not a bad thing to own if I say so myself......and you Fools called Alstry a gold doubter????? Shame on you. Everytime I write a check to pay taxes, I think of it as my diversification investment into the income stream of some of the largest Oil and Gold companies in the world. Everytime I collect dollars, I think of it as owning an interest in a bunch of commodity companies.
Alstrynomics doesn't want to burst your bubble about Gold.....just pay your taxes and and collect dollars and you will own a well diversified portfolio of commodity investments just by being a citizen of the United States of America and/or holding a bunch of dollars. You think many Europeans or Japanese can say that???? However, Canucks can:) How do you think the yen is gong to fare with EXPORTS DOWN 35%???????
The problems facing America are far more complex than the economic value of its currency or Government. Those are pretty much in check. The issues we face now are more political in nature as we have been mismanaged for the past few decades. How this next CEO will turn out is anyone's guess....but Alstry always likes to maintain a VERY OPTIMISTIC BIAS until proven otherwise.....so what do I say for now???????
OBAMA!!!!!! OBAMA!!!!!!! OBAMA!!!!!!!!! OBAMA!!!!!!!!
CAUTION: An economic analsyis of America's States, private businesses, and individuals leads to very different conclusions in many many cases. So please don't confuse the the nature of the Alstrynomic analysis.
RSS Headlines
Fool UK