Value of the dollar?

[ess105]

Originally Posted by delmarrey

And here's another theory:

True Conspiracies, the Illuminati and One World Government



http://en.wikipedia.org/wiki/New_World_Order_(conspiracy)

If you get sucked into the debt / gold standard conspiracy, sooner or later you'll come across the New World Order as an explanation while discovering, along the way, that man never really landed on the moon.

[Tropic Cat]

I think it's interesting that everytime the economy slows down, the Bushies trot out another tax cut which always seems to benefit the top 1% income producers in the USA. These people who benefit take the extra money and invest it where they get the greatest return on their investments ..... China

How this helps me and mine, or the local economy is beyond me.

[Lancerbye]

Well it helps you buy that cheap ripped off crap they sell in Wal Mart made by your lost tax dollars by some international company based out of the US using slave labor in China. Isn't it nice to see your tax dollars at work. LOL

[blove8]

The Federal Reserve is a PRIVATE bank. The FED does not hold any allegiance to 'the people', it holds allegiance to it's shareholders and will be manipulated to benefit them, NOT the people of the USA.

The Money Masters - How International Bankers Gained Control of America

G Edward Griffin - Creature From Jekyll Island: A Second Look at the Federal Reserve

[TaoJones]

Originally Posted by blove8

The Federal Reserve is a PRIVATE bank. The FED does not hold any allegiance to 'the people', it holds allegiance to it's shareholders and will be manipulated to benefit them, NOT the people of the USA.

First, blove8, welcome to Cruisers Forum - glad you're here.

Second, your "handle" arouses my curiosity. Is it a shorthand version of "bloviate," meaning "to discourse at length in a pompous or boastful manner." Since that doesn't describe you, IMHO, can you enlighten us on your handle's hidden meaning?

Third, you are absolutely correct about the Fed. It is a privately-held corporation. It was ostensibly set up to protect the American dollar, but its mission has been so distorted over the last 94 years that it has become the dollar's worst enemy.

It should be re-named the Federal Reserve Board of Inflation, as the dollar has lost more than 95% of its purchasing power since the Fed began "protecting" it. Of course, as you state, its real primary mission is to protect the interests of its member banks.

Although it is supposed to be independent of politics, such a claim doesn't pass the laugh test. Since the president nominates the Fed chairman, and the Senate confirms him/her, it is impossible to remove politics from the equation.

The Bush family blamed Alan Greenspan, then Fed chairman, for the loss of the presidency to Clinton in '92, and weren't shy about letting Greenspan know it. When the second Bush assumed the presidency, Greenspan was most accommodative of the new Bush administration's wishes.

The losers in that accommodation, as you have observed, were the American people, through the devaluation of their currency.

TaoJones

[blove8]

Originally Posted by TaoJones

First, blove8, welcome to Cruisers Forum - glad you're here.

Second, your "handle" arouses my curiosity. Is it a shorthand version of "bloviate," meaning "to discourse at length in a pompous or boastful manner." Since that doesn't describe you, IMHO, can you enlighten us on your handle's hidden meaning?

Thanks TaoJones. I'm glad to expand on my handle in a PM, but you're right, blove8 does not refer to bloviate. It's more like a 'be love forever' type of handle.

[TaoJones]

Originally Posted by blove8

Thanks TaoJones. I'm glad to expand on my handle in a PM, but you're right, blove8 does not refer to bloviate. It's more like a 'be love forever' type of handle.

I think I get it now - the "8" is actually infinity. That's a clever usage.

Thanks for setting me straight.

TaoJones

[blove8]

Originally Posted by TaoJones

I think I get it now - the "8" is actually infinity. That's a clever usage.

Thanks for setting me straight.

TaoJones

Yuppers.. you got it. There is also another side to it which I just PM'd you.

[Fishspearit]

Maybe someone can educate me because I'm certainly not an economist, but my understanding of the falling dollar is that it's caused more by the trade and federal deficits than anything else. The dollar was dropping when the feds were lowering rates and also when they were raising them. When I looked at a graph of the dollars value over the last 50 years the last big decline was during the Reagan years as the deficits were being run up. The dollar came back through the 90's as they were cut down. Same pattern now. Spend, spend, spend, and then make the next guy (or gal) raise taxes to pay the bills. Isn't it the Treasury who is responsible for the "printing" of the money and it's actual supply, the fed is just controlling the access to credit, not really the value of the dollar. Am I wrong here? And as for a private Fed, isn't that a good idea? If it were solely in the hands of the government wouldn't the party in power always keep rates as low as possible and make the next guy have to raise interest rates and fight inflation rather than being forward looking? Politicians never look further into the future than the next election. I thought that the Fed was established to keep control out of the hands of our greedy politicians.

[Fishspearit]

The biggest single factor in the dollar’s fall has been the soaring deficit in US trade.

from Fall of the Dollar - Social and Economic Policy - Global Policy Forum

[TaoJones]

Originally Posted by Fishspearit

Maybe someone can educate me because I'm certainly not an economist, but my understanding of the falling dollar is that it's caused more by the trade and federal deficits than anything else. The dollar was dropping when the feds were lowering rates and also when they were raising them. When I looked at a graph of the dollars value over the last 50 years the last big decline was during the Reagan years as the deficits were being run up. The dollar came back through the 90's as they were cut down. Same pattern now. Spend, spend, spend, and then make the next guy (or gal) raise taxes to pay the bills. Isn't it the Treasury who is responsible for the "printing" of the money and it's actual supply, the fed is just controlling the access to credit, not really the value of the dollar. Am I wrong here? And as for a private Fed, isn't that a good idea? If it were solely in the hands of the government wouldn't the party in power always keep rates as low as possible and make the next guy have to raise interest rates and fight inflation rather than being forward looking? Politicians never look further into the future than the next election. I thought that the Fed was established to keep control out of the hands of our greedy politicians.

You make several interesting points, Fishspearit, and while I'm no economist myself, I do want to respond to your post.

It is true that the Fed does not "print" our money - that is the job of the US Mint. But the relatively small amount of physical coin and paper "money" in circulation at any given time isn't the problem.

When our government needs "money" for whatever reason, the Treasury Department doesn't just hit the switch on the printing presses and run off a batch. Rather, the Treasury informs the Fed that it needs "x" amount, the Fed's member banks issue credit in that amount, the Treasury issues Treasury Bonds (long term) or Notes (medium term) or Bills (short term) in a matching amount that the banks hold as collateral, and the "money" is literally borrowed into existence.

The banks holding the Treasuries collect interest on them right up to the day they mature, at which point they are redeemed for the full face amount. Obviously, since the government isn't a for-profit enterprise, the Treasury Department doesn't literally have the cash to redeem the mature Treasuries, so the Treasury Department prints more T-bonds/-notes/-bills, borrows from the Fed's member banks using the Treasury paper to secure the loan, pays the holders of the mature Treasury paper with the newly created "money," and the cycle begins again.

Any third grader can easily see that this is a system doomed to eventual failure.

Others, much more knowledgeable than I, put it this way: Imagine that the United States is a business that issues stock. The "stock" of the US is the dollar - one dollar equals one share. A finite quantity of dollar stock covers all of the assets of "US Corporation," and therefore has a finite purchasing power.

If the corporation increases the quantity of "stock" it issues, in this case dollars, each "share" is worth less if the corporation's assets don't increase at the same rate. Therefore, each dollar's purchasing power is devalued. If the corporation increased the production of assets at the same rate as it increased the "float" (the quantity of issued stock), the stock would retain its market value.

In regular stocks, this phenomenon is called "dilution." The corporation issues more stock, which it sells to the public, but the corporation's assets haven't increased - therefore, each share of stock is worth less because there are more of them covering the original quantity of corporate assets. Shareholders hate this.

Inflation is not an increase in the price of anything. This is a smokescreen, behind which the people who actually create inflation hide.

Inflation is an increase in the currency supply without a commensurate increase in the supply of assets, goods and services in the economy for which that currency supply pertains. With one exception.

That one exception is the world's reserve currency - in the current era, the American Dollar. But when a reserve currency debases beyond the gullibility of the people who rely on it, it begins to lose its reserve status.

In the history of the world, no reserve currency has managed to resist the temptation to exploit its status and "print" far more than the world needs. Thus, the continuous turnover in world reserve currencies. To think the American dollar will be the exception to this well-established pattern is naive.

It will happen to the US dollar, and to whatever currency replaces it as the world's reserve currency. The only unknown is when.

TaoJones

[GordMay]

Groupe Bénéteau "calm" in face of weak US dollar and lower forecasts for new boats in the US
By IBI Magazine: International Boat Industry home - the trade magazine for global marine business

"Groupe Bénéteau chairman Bruno Cathelinais said that he remains "calm" about twin threats posed by the weak US dollar and a weak new boat market in the US, one of the company's most important markets. In an interview with Investir, Cathelinais said that he still expects the company to meet a 10 per cent net margin for fiscal year 2009-2010. Groupe Bénéteau is expected to publish its full-year sales for its last fiscal year sometime this week.

Cathelinais said that the pivotal US market is "stable" in sailboat sales, adding that smaller motorboats are more "sensitive" to the downturn than the sailboats Bénéteau imports and manufactures in the US. "So far, none of our clients has mentioned the crisis in the money markets," Cathelinais told Investir.

Cathelinais also minimised the impact of the weak US dollar, saying that about half the company's dollar sales come from its US facilities in Marion, South Carolina..."

More: Groupe Bénéteau "calm" in face of weak US dollar and lower forecasts for new boats in the US

[schoonerdog]

It will be interesting to see the group beneteau sales numbers for multihulls, which are all made in Europe. At the boat show">Annapolis Boat show the vendors seemed to be in full panic with traffic down by half.

Originally Posted by GordMay

Groupe Bénéteau "calm" in face of weak US dollar and lower forecasts for new boats in the US
By IBI Magazine: International Boat Industry home - the trade magazine for global marine business

"Groupe Bénéteau chairman Bruno Cathelinais said that he remains "calm" about twin threats posed by the weak US dollar and a weak new boat market in the US, one of the company's most important markets. In an interview with Investir, Cathelinais said that he still expects the company to meet a 10 per cent net margin for fiscal year 2009-2010. Groupe Bénéteau is expected to publish its full-year sales for its last fiscal year sometime this week.

Cathelinais said that the pivotal US market is "stable" in sailboat sales, adding that smaller motorboats are more "sensitive" to the downturn than the sailboats Bénéteau imports and manufactures in the US. "So far, none of our clients has mentioned the crisis in the money markets," Cathelinais told Investir.

Cathelinais also minimised the impact of the weak US dollar, saying that about half the company's dollar sales come from its US facilities in Marion, South Carolina..."

More: Groupe Bénéteau "calm" in face of weak US dollar and lower forecasts for new boats in the US

[Tropic Cat]

Looks like it's 'official', the value of the US dollar will continue to fall. Apparently this is a huge surprise to currency traders.

Is this some kind of a doublecross?

Link below:
Markets see U.S. policy of "ignore the dollar"

[TaoJones]

Originally Posted by rickm505

Looks like it's 'official', the value of the US dollar will continue to fall. Apparently this is a huge surprise to currency traders.

I suspect you had your tongue firmly planted in your cheek when you wrote that, Rick. If anyone is not surprised by the devaluation of the dollar, it would have to be currency traders, who follow each tick on the charts as if their lives depended on it. Financially, it often does.

Here's a link to a nine-year, monthly chart of the USDX (United States Dollar Index), an index of the dollar against a weighted basket of currencies (Euro .576, Japanese Yen .136, British Pound .119, Canadian Dollar .091, Swedish Krona .042, Swiss Franc .036).

U.S. Dollar Index (DX, NYBOT): Monthly Price Chart

The USDX is a virtual mirror of the Trade-weighted Index used by the Federal Reserve Board to measure the dollar's strength, except that the Fed breaks out each of the countries which use the Euro individually, plus the other five countries comprising the USDX. The assigned weightings are identical.

Others, far more knowledgable than I, have pithily remarked that the USDX, the dollar's chart, is like that of a patient close to death. Some have even observed that it bears a striking resemblance to that of Enron as it spiraled downward into bankruptcy. Still others have opined that the American dollar is "circling the bowl."

TaoJones