I just find this to be too funny. Despite the US printing more money without substantial increase in goods or services, our dollar keeps rising in value relative to other currencies. Specifically relative to the Euro. The share price of UUP which is an ETF that trades with the value of the US dollar as compared to various foreign currencies has been rising. In fact, as of the writing of this post, the value has risen 1.08 points or 4.8% approximately since 10/14. While other currencies devalue in relation to our own, people want to buy our currency with theirs. This creates and increase in scarcity of our own currency, driving up the value. To many this often sounds great. But what that means for the market and for economic growth is usually a slow down. The market indicators tends to slow their climbs, or completely reverse them and decline. There is less money available to people, so less money is spent. This slows down an economy. Despite the best efforts of the powers that be, we just can't seem to inflate our own currency.

The other problem with this is something that I have discussed in several past posts. If the value of the dollar climbs, stock prices tend to drop. That's why the market indicators drop as I said above.

Because of economic issues in Europe (that I have been to lazy to really follow) the Euro has been having issues. This is what has been translating to the US dollar not being able to inflate. So I jokingly say that EU is killing their own currency just to spite us.

As I was writing this, a thought occurred to me. The US Dollar market right now seems similar to the housing market where I lived. Back in about 2005 real estate values had just about completed a run up that was one of the highest in the nation. Prices were so high that I read a figure claiming that median value of single-family homes was about twice that for which a median income earner to get approval. What happened all across the nation soon after? To quote the buzz phrase at the time, "the bubble burst." I'm wondering if something similar could happen to our dollar values here. We keep printing more money. But people keep buying it up like it's going out of style (or like rats jumping of the Euro ship). Is this creating artificially high dollar values? Imagine the US dollar was a product that was produced my some business called the Federal Reserve. Normally when demand increases, businesses increase supply to meet the demand. In fact, the fed already tried this once right before more bad news started coming out of Europe. So if the US keeps printing money every time the Euro holders buy US dollars, we will continue to see more and more dollars in circulation. This devalues (or inflates) our currency. But contrary to this effect, Euro holders keep buying those new dollars. This drives the price up even though the value is less. What you end up with is a bunch of people with dollars that cost way more than they were worth. It's like a pyramid scheme or the housing situation. Back in the early 2000's people owned houses that cost more than they were worth by a LOT. This is a big reason for the housing market collapse. So if this happens with the dollar, we could look at a huge and sudden devaluation of our own national currency.

Is that going to mean ruins for the US? Many people think so. But they clearly don't understand how currency value effects economy. What would definitely happen is oil prices would drop. I can't think of many Americans that would complain about that. What would almost definitely happen (if their wasn't a huge scare) is that the stock market would suddenly blow up. But there would also be a fairly large correction as well. It isn't guaranteed to all happen this way. But it wouldn't surprise me and it's an interesting thought.