Cash Is King

While we are experiencing massive deflation in the price of commodities and the stock market the dollar has been showing strength. The US Dollar Index values the dollar against a basket of other currencies. What the chart below is telling us is that the value of other counties currencies have declined when compared to the dollar. What it also tells us is that there is a flight to safety out of other currencies. Iceland recently went bankrupt. Other countries may go bankrupt as well. The IMF in an effort to combat a spreading global financial crisis will be supporting the Ukraine and Hungary with emergency loans. The strength in the dollar has led to a drop in the price of oil. Since Russia receives about half of its tax revenue from taxes on oil decreased revenues are impacting the Russian economy. Markets go up and down. The key to wealth building is to know which are going where and why. Click on chart to enlarge.