Cliff Spliff – Give Me a Break

As out of character as this is…..I just couldn’t stop myself this morning. A funny thing really – watching news on spanish TV. Regardless of most of the small talk generally all “melting together” – you get these funny little english outbursts of words and phrases that can’t be translated into spanish.

“Y en otras noticias.. .el Estados Unidos avanza hacia la FISCAL CLIFF……y los peligros de caída de la FISCAL CLIFF crean problemas significativos para la economía”. Its too funny.

Listen – If anyone reading here honestly thinks for a minute, that Obama and ol Uncle Ben – after pumping billions and billions and billions into markets over the past 4 years – are going to just quit/give up /get hung up on something as ridiculous as this – perhaps you’re sittin up in Colorado right now – kicking back and enjoying the new marijuana laws.

The big wheels of “easing” are now more than set in motion –  and nothing ..NOTHING can stop it now – NOTHING. This administration is in far to deep at this point…. to even “consider” slowing down – in fact… its much more likely things will even start to move faster – as the easing continues and continues.

Its bye bye dollar boys…….and the markets gonna fly.

The Dollar’s Death Spiral: Why This Time Really Is Different

Central Bank Coordination Creates Perfect Storm

Here’s what the talking heads on CNBC won’t tell you – this isn’t just about Fed policy anymore. We’re looking at unprecedented coordination between major central banks that makes the Plaza Accord look like child’s play. When Bernanke opens his mouth about QE infinity, Draghi’s already nodding along with his OMT program, and Kuroda’s sitting there with a money printer that makes our Fed look conservative. This synchronized debasement creates a race to the bottom that the dollar simply cannot win. The EUR/USD isn’t just going to drift higher – it’s going to explode through resistance levels that technicians have been marking for months. Same story with GBP/USD, AUD/USD, and every other major pair where the greenback sits on the wrong side of the trade.

The smart money already sees this coming. Look at the positioning data from the COT reports – commercial hedgers are short dollars like it’s 2008 all over again, except this time there’s no flight to safety coming to bail out dollar bulls. When institutions that actually move billions start positioning this aggressively, retail traders better pay attention or get steamrolled.

Commodity Currencies: The Real Winners in This Game

While everyone’s obsessing over EUR/USD breaking through 1.30, the real action is happening in commodity pairs. AUD/USD, NZD/USD, and CAD/USD are setting up for moves that will make forex history. Think about the mechanics here – when you debase the world’s reserve currency while simultaneously pumping liquidity into every corner of the global financial system, that money has to go somewhere. It floods into hard assets, commodities, and the currencies of countries that actually produce real things instead of just printing paper.

Australia’s sitting on more iron ore and gold than they know what to do with. New Zealand’s got agricultural exports that feed half of Asia. Canada’s got oil sands that suddenly look a lot more attractive when priced in rapidly depreciating dollars. These aren’t just currency trades – they’re plays on the complete restructuring of global monetary policy. The AUD/USD breaking through parity wasn’t the end of the move – it was just the beginning.

Technical Levels That Actually Matter

Forget the noise about support and resistance lines drawn by weekend warriors on TradingView. The levels that matter now are the ones that represent structural breaks in dollar strength. EUR/USD at 1.35 isn’t just another technical target – it’s the level where European exporters start screaming and ECB officials start making nervous comments about currency strength. But here’s the thing – they won’t be able to stop it because they’re playing the same easing game as everyone else.

GBP/USD at 1.70 represents the point where the Bank of England’s credibility on inflation targeting completely evaporates. USD/JPY dropping below 75 would trigger intervention threats from Tokyo that ring as hollow as a campaign promise. These aren’t just numbers on a chart – they’re inflection points where the political and economic consequences of this monetary madness become impossible to ignore.

The Endgame: When Markets Finally Wake Up

The beautiful irony of this whole setup is that the very policies designed to “save” the economy are going to create the biggest wealth transfer in modern history – from dollar holders to anyone smart enough to position themselves in real assets and stronger currencies. This fiscal cliff drama is just political theater to distract from the fact that both parties are completely committed to the same inflationary policies that got us here in the first place.

When the dust settles and the history books are written, they’ll point to this moment as when the dollar’s status as the world’s reserve currency began its terminal decline. The signs are everywhere for those willing to see them – China’s bilateral trade agreements that bypass dollar settlements, oil producers accepting alternative currencies, and central banks worldwide diversifying their reserves at record pace. This isn’t doom and gloom prophecy – it’s simple mathematics applied to monetary policy run completely off the rails.