A funny thing happened on the way to the crash of our dollar.  That is, other world currencies face similar fate’’s due to their own monetary policies.  The EU and England, resistant to adopt our bailout/rescue policies of near zero interest rates, as well as printing money by the trillion as a backstop to the crisis, have relented.  this past week both the EU and England have sharply reduced interest rates.  England has pumped massive amounts of cash into their economy, as have Germany this past week.  The conclusion seems to be that the US dollar, although battered, will hold up against competing world currencies.  It appears that everyone has their own, similar problems.  Confirming this long term trend is the market’’s reaction to gold prices, a traditional hedge against the falling dollar.  As evident in the accompanying chart of gold prices, the 13 year trend line of gold prices appears to have boken to the downside.  The devaluation of the dollar is a euphamism for inflation, which, by way of gold prices, appears to have been thwarted, or muted, by the deflationary effects of the now universal economic downturn.  A tentative balance of price stability has manifested itself by the powerful forces (like opposite ends of magnets) polarizing price movements.  On one hand, you have a looming Depression marked by dropping prices (deflation).  On the other hand, you have the various monetary official’’s of various governments printing money to save their own economies from economic doomsday.  

The price of gold tells us that the actions by monetary policy makers is creating a first of it’’s kind polarization to what previously has been viewed as an inevitable hyperinflation style Great Depression.  Think of it as the economic equivalent of nuclear war.  Nobody wins if the dollar crashes, and Gold prices, per the accompanying chart, will not be the safe harbor we all believed it to be.  Hiding from the whipsaw of today’’s markets just got alot tougher.

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