Thus, properly braced with a double-shot of context, we're now ready to explore the rather peculiar behavior of the U.S. dollar was actually up a bit this morning.
Remembering how the Global Economic Confidence Game is a zero-sum affair as long as it hangs together, we recall that when the "dollar extends gains vs. Euro, pound falters" that something else on the other side of the equation should go down. Enter oil and the precious metals.
Because there's a chance that Hurricane Gustav, which is headed toward Hait, then Cuba, and perhaps into the Gulf of Mexico Oil Patch, could cause some production issues, the price of oil is not falling as far or fast as otherwise could be expected int he face of a Dollar rally.
So that leaves Gold and Silver to be a whipping this morning as there's got to be this quid pro quo of the markets.
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It's about here that you could raise a hand and ask a sensible question: "So if the US is continuing to print up promised-backed debt paper, why is the dollar going up?"
To put it simply, there's a global confidence game underway.
Pretend we have all just pulled up chairs to a poker game, and the table stakes are pieces of paper which have strange symbols and incantations on them. While we think these will have some meaning in the future (symbols and incantations appear through human history, after all) we have not absolute assurance that this will always be so.
Nevertheless, we all start to play our card game, and as long as no one brings up the issue of convertibility to anything absolute (as in x ounces of gold or silver, or better, so many BTU's of energy) the game continues. Thanks to the miracle of inflation, every so often, we get to dump another basket of paper into the game so it appears the stakes get bigger over time.
Mind you, not one player at the table has any incentive to call out the paper for what it is. The reason? If at any point the foolishness of the game were revealed, then all table stakes would drop in value and thus all the players would lose.
This is precisely the position China finds itself in today: Here's a country with huge human capital which has bootstrapped its economy up by trading paper for its goods and services. Logically, for China to announce to the world that "Paper is worthless!" would endanger their stakes in the game just like anyone else.
But with recent events in Georgia, Russia may be getting a little edgy about all this paper floating about. In fact, Russian lawmakers are asking for recognition of two breakaway areas in the Georgia region. Of particular concern is that next week, BP Dick Cheney is going to the area, the analog to pulling up a chair at the table. Then there's the matter of missile "defense" systems being put into Poland, which the West has turned into a marvelous 'create your own enemy' situation; one we're getting unfortunately skilled at.
Thankfully, US voters are pretty forgetful, perhaps because we're the most highly medicated society on earth. That's how the ruling corpgov paradigm can get away with 'stacking' the pseudo-elections in November such that they offer no anti-war candidates, no plan to concentrate on the transformation of America's economic model, infrastructure, or revitalize farming along the organic meme. Instead, both parties are tacitly pro-war, anti-change, and desperately pumping up the old paradigms.
This pumping old paradigms is useful, however, because it keeps the liar's poker game with all that paper with the symbols and incantations on them going. If you think the recent headline that "Antidepressants impair driving ability of the depressed" is worrisome, you'll notice how there's corresponding headline in the MainStreamMedia that logically extends the research to the area of political choice.
Thus, police stop people for drinking and driving, but who gets pulled over for being on an antidepressant? Reason: There's a lot of lobby money on the table from the pharmaceutical industry.
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