Ok, I'm going to get a little political in this post. Fair warning.

I want to talk a little bit about the mechanics of currency value and FOREX trading. A dollar has a definite value and a relative value. For example, if you can buy a gallon of milk for a dollar, then a definite value of 1 gallon of milk can be applied to that dollar. The dollar also has a value related to other currencies. Since there are many other currencies in the world, the relative value of the dollar can be very complex. If you want a general idea of the relative value of the US Dollar, you can look at the performance of the Powershares US Dollar ETF UUP.

You could also look at the exchange rate between the dollar and other currencies that are used as common grounds for comparison. The Euro and the Yen are two that I check regularly (as in almost daily). Below are two ETFs that track those exchange rates.

The Euro: FXE
The Yen: FXY

Today fears about the economic crisis in Greece, mainly those of investors that any attempts to dig them out of their hole will fail at least in the short term, drove the value of the Euro way down. The way this happens is FOREX holders start selling their Euros because they want a currency that they think will be more stable or valuable. Typically that currency is the dollar. So today, the value of the Euro dropped dramatically and the dollar shot up. I'm just going to get to the goods regarding links about today's events.

Greek Bailout Flop
US STOCKS-Wall St tumbles on fear Greek crisis could spread
Tumbling stocks, stronger dollar drive down oil
Terrible Tuesday: Dow Plunges 225 on Global Jitters

Before I give the short rundown on the message of the articles above and most of the other articles out today, I want to warn you again that I will shortly be pulling out my soapbox. That being said, the general consensus in the media is one of fear. Primarily investor fear at this point, but when investor fear is conveyed through popular media outlets, non-investors read this. The reason for the fear is the rise in the value of the dollar. Sounds like a good thing doesn't it? So why is there a reported air of fear? Why have stock prices drop? And wait a second. Did they say oil prices dropped? Isn't that a good thing?

Here's what happens when the us dollar moves. As the value of the dollar goes up, it takes fewer dollars to buy a particular stock. That is, a $50 share of Company-X yesterday may only cost $45 today because those 45 today-dollars are worth as much as 50 yesterday-dollars. So the only person that takes a real loss in this scenario is the people buying the dollar. I live in America. Most of you reading this probably do as well. You already have dollars and your next paycheck will be cashed into dollars. Therefore, your money just gave you more buying power. Think of that stock like the gallon of milk I used earlier as an example. If yesterday you could buy that milk for $1, today you'd only have to spend 90 cents. You'd have just earned 10 cents by being a non-investor living in the United States.

This is an important point. Because a lot of people hear about this Dow thingy and when it goes up, people have money and jobs. When it goes down, we don't have money. This is partly true, but the parts that are not true about that assumption are always left out of these scare articles. First of all, the Dow is only 1 of countless measures of the strength of an economy and the living standards of a people.

In the case of the US Dollar strength moving, rising dollar equals lower stock prices equals lower market indexes. Yes, lower stock prices lose some investors money. But higher dollar values MAKE non-investors money! Simply put today's results were as follows: Wall Street = Sad; Blue Collar = Happy.

Unfortunately for you, business owners are Wall Street. Specifically big business owners. Some of those business owners also own fancy studios with really big transmitters and employ people that sit in front of a camera and spread fear -- I mean, the news. If their bottom line is hurt because they have money tied up in other currencies or stocks and now they have to pay more in assets to get the pricier dollars back, they talk about their horrible losses and how they have to raise prices to make it through these "tough economic times".

So let's go back to the gallon of milk. Imagine that $1 gallon of milk was now only were 90 of your today-cents as I recently described. Well, the dairy conglomerate selling the milk claims very openly (especially through it's sister network news company) that it's profit margins are hurting and they need to cut corners and raise prices ever so modestly. The math is going to get a little messy here, but I'll try and make it a simple rundown by the end. You got paid a dollar last week. Milk cost a dollar then. Today your dollar is worth more so the gallon of milk should only cost you 90 cents. However, to try and offset costs and losses that they took from the rising dollar - falling stocks relationship, they figure their customer base can handle a "modest" 10 cent raise in the price of a gallon of milk. So now they charge $1.10. "It's ok, it's only 10 cents," you say, but remember, your dollar is now worth more because you were NOT investing in stocks. As a non-investor, you were unknowingly investing in the dollar. So it's not just a 10 cent price raise. They raised the price 20 cents. (You should have only had to pay 90 cents for the milk.)

Milk Yesterday: $1.00
Milk This Morning: $0.90
Milk After Price Hike: $1.10

Yesterday's milk price is a red herring. It doesn't apply anymore. Big business just knows they can use it as a distraction to keep you from noticing they just increased their prices 22%, not 10% like they would have you believe. So you, the non-investor who should have profited 10% now lose money. All because you listen to the news and believe that in these tough times everyone just needs to tighten their belts and makes sacrifices. Are the CEO's making sacrifices? Ask yourself that.