Headlines around the internet blaze that the Dow has passed the "psychologically important" 10,000 mark signaling good times to come in 2010 and beyond.  The trite and superficial remarks on most financial websites would have everyone believing the market moved up because of positive earnings news by a few big companies and better than expected September retail sales news.  Maybe, but the larger and far more important reason the market is climbing these days has more to do with the death spiral of the US dollar.

There is a correlation between the Obama Administration's relatively quiet policy of debasing the US currency, and the recent rise in equity and commodity markets.  People who understand what's going on are moving out of cash and into commodities and equity to try and hedge against the ever falling dollar.  The Obama Administration likely views the falling dollar as a good thing for the following reasons:

1)  As people move out of cash and into the markets, it creates an artificial artifact of driving those markets up, which is a purely psychological device to falsely claim that the economy is turning around.

2)  A weak dollar makes our goods cheap relative to the rest of the world, and Obama is likely banking on this driving up US exports.

3)  Imports become more and more expensive, encouraging purchases of domestically manufactured goods.  It is a stealth trade tariff of sorts.  So you make overseas goods more expensive, without having to impose actual tariffs that would undoubtedly touch off trade wars.  And remember - trade wars helped usher in the Great Depression. 

4)  More US exports should translate into more jobs.

Debasing the US currency is a dangerous gambit in a globalized world.  Domestic manufacturing has already taken a walloping from slave labor markets overseas.  So much so that it is very hard indeed for the average consumer to "buy American" these days.  So, will a weak dollar really help the average American?  Or will a weak dollar just further and further erode the purchasing power of ordinary Americans, putting even more pressure on us - all of us - to stop spending and starting hoarding.  Not cash, but gold, silver, and any other in-demand tangible commodity which will help offset the erosion.  Left unchecked, the Obama Administration has set about a course of action which will lead to a commodity bubble - artificially inflated valuations because EVERYBODY is trying to swap out their  near worthless greenbacks for something else regarded as having value.  Of course, if enough people scramble to park their cash in commodities, consumer spending will suffer greatly, and in a consumer oriented economy such as ours - that's really bad news, especially right about now.

The saddest and hardest part of this to swallow is that the debasement of the US Dollar is a third world tactic.  And we can't help but wonder if providence will save us from Obama, or will we become the first new third world nation of the millennium?

A stupid nation may ultimately get what it deserves, but it sure does suck that I am long for the ride, and so are you.