U.S. Dollar Is Surging & It’s Not Good! Temporary Buydowns Are Back!

I highly recommend re-reading the blog because it turned out to be accurate and because it is educational.    But here is a brief summary:  The dollar will collapse at some point, but not for many years or even decades.  The reason is that the entire dollar market is just far too huge to be replaced in the near term.  No other country, currency, or economy (or group of them) is even close to big enough or trusted enough to offer an alternative currency that could replace the dollar.

I was just repeating the opinions of Jeff Snider and Brent Johnson, so they of course get all the credit.  In any case, the dollar’s value has been sharply climbing in recent weeks largely in response to overseas financial troubles in countries like Germany, Japan, and China.   Brent Johnson explains this often; despite the U.S.’s many problems, we are less screwed up than other countries, so the dollar will remain in high demand.   Snider further points out that the demand for dollars/U.S. Treasuries increases during times of trouble, as everybody wants dollars/treasuries for collateral and liquidity.

A surging dollar is not good though because when dollars get too expensive/valuable, it becomes too difficult for other countries to pay off dollar-denominated debts and/or pay for imports (like oil) with dollars that sellers/exporters demand.   This can create very severe financial repercussions that can impact the entire world … similar to what we saw happen in 2008.

Anyway, Snider and Johnson are being proven right once again, so we might want to listen to them more.

As a quick reminder, a 3-2-1 buydown works like this:  The buyer’s interest rate in year #1 is 3% below today’s market rate; 2% below market in year #2; and 1% below market in year #3.

I wrote two blogs about buydowns that I recommend for much more detailed info: