Value of the dollar?

[Tropic Cat]

Originally Posted by David M

Well...at least a shrinking dollar encourages exports.

Yeah it does... now....if only we still made anything....

[Ex-Calif]

We make a few things...

TradeStats Expressâ„¢ - National Trade Data

[cat man do]

Originally Posted by rickm505

Yeah it does... now....if only we still made anything....

What, like Money and Helicopters !!

Dave

[Tropic Cat]

Guns... tanks and jet fighters

Originally Posted by Ex-Calif

We make a few things...

TradeStats Expressâ„¢ - National Trade Data

[TaoJones]

Originally Posted by David M

Well...at least a shrinking dollar encourages exports.

This is correct, as far as it goes, but there are other implications of the dollar devaluation that are ominous, indeed.

In the modern era, a global economy allows manufacturers of durable goods (or any other exportable product) the option of selling anywhere in the world. Thus, to the extent that domestic supply is exported, diminished supply remaining in country costs more if demand remains constant. And because of the decreased purchasing power of the dollar, external currencies that are appreciating against the dollar have greater purchasing power, and it is this that draws the goods into the export market, putting pressure on the domestic supply.

This phenomenon is nothing new, of course. In the 70s it was given the name "stagflation." A stagnant domestic economy coupled with price inflation. The worst of both worlds.

When the Fed threw the dollar under the bus at its September 18th meeting, price inflation in the US was guaranteed. Since panic hit the markets the last week of July, the Fed has been increasing the money supply at a staggering pace - about 50% annualized! At that rate, they would double the money supply in 1.44 years, or less than 18 months!

Such unprecedented inflation of the money and credit supply must show up in price inflation sooner or later - but probably much sooner than most expect, or are prepared for. To the extent that one is "in" $US without the capacity to increase one's personal money supply in step with the real rate of inflation, one's standard of living will necessarily diminish.

Real wages in the US have not kept pace with real inflation for more than 30 years, so very few are fortunate enough to be able to increase their earning capacity enough to maintain their standard of living.

If an American either wants to, or has to, sell any of his personal property over the next few years, he would be wise to market to those whose currencies have appreciated against the dollar. If you have a boat, for example, that's been languishing on the American yacht market for some time without catching a bid, consider marketing to Canadians, Europeans, Aussies, Kiwis - well, almost anyone, anywhere, who isn't an American dollar holder.

TaoJones

[cat1]

I am an FX Dealer and have read with some amusement the posts. Here's the real deal. If you have money then buy your boat and enjoy yourself (I am). But if you want some personal opinion on our dollar its this. We are picking that the USD will get stronger. The European market is not that robust. Asia is dominated by extraordinary deposit rates in New Zealand (now there's a currency and economy that will come down to earth with a thump) Our econmoy is doing OK. The Fed will not allow a recession and cuts in rates have averted this but the dollar is weaker BUT and this is the big but...its a short term thing only. We see the USD getting stronger over the next 12- 18mth peiord and certainly over the next 3 years. The euro is not that flash. There are alot of factors. To sum up. If you have money then why not buy your boat and enjoy life ? If you have debt then hold off (especially if you have rental property.....incidentally good time to buy investment property over next 6- 12mth as there will be morgatee sales looking for CASH buyers. If you are not sure and want a European boat then definately hold off. The cost of a new boat is high and so even on the used market you will be buying high and will undoubtedly have trouble in afew years because new and used Euro boats will be cheaper to the USD. Hope this helps. I am not getting into a discussion on the USD but will simply say that as an 18 yr FX dealer I know what I am talking about! Good luck.

[Ex-Calif]

As my economics professor pointed out - The markets are driven by animal spirits...

What he was getting at was the herd mentality. How often do you hear, "Hey the market is up. Let's go buy some stocks."?

I hear it all the time. The point is be a counter trader - when Joe Blow is saying buy you sell. When Joe Blow says sell, you buy...

I don't think I'd be hoarding dollars (as if I could - LOL) but I am certainly not in a panic.

[Lancerbye]

Being a Canadian being paid in Canadian dollars and paying for moorage in U.S. funds all I can say is

[cat man do]

Originally Posted by cat1

Our econmoy is doing OK. The Fed will not allow a recession and cuts in rates have averted this but the dollar is weaker BUT and this is the big but...its a short term thing only. We see the USD getting stronger over the next 12- 18mth peiord and certainly over the next 3 years. .

What's that I hear.........................The sound of printing presses warming up.

I would be interested to hear your views on what will actually be making the US dollar stronger again over the next few years.

Is this a gut feel, or do you have evidence to support your view.

Dave

[Tropic Cat]

Originally Posted by cat man do

I would be interested to hear your views on what will actually be making the US dollar stronger again over the next few years.

That's a real good question. Currencies do move up and down against other currencies over time. In this case the USD would seem to be dropping with good reason, as TaoJones pointed out. Just as important is the reason the Fed is pumping money into the economy like crazy and the fact that companies here are figuring a way to offshore any job that pays more than $15.00 an hour. Both are unprecedented.

I see why the currency is dropping in value, but I also don't see why it will rise.

[Tspringer]

Originally Posted by sneuman

Ah, for the days of the budget surplus, eight years ago seems so long ago ...

There was no budget surplus. At least not in the last 60 years.

Do not pay attention to fiscal statistics published by the CBO. These are the figures used for the "Budget" that Congress and the President love to quote and that everyone pays attention too (without asking why or questioning them). The CBO budget numbers do not include "Off Budget" expenditures. They only include "discretionary" spending. In other words, anything that is not voted on each year is not included. This means that 70% of all Govt. spending is not included in the CBO figures. Social Security.. Medicare...Medicaid... VA benefits... Federal Employee pension and interest due on the overall national debt.... NONE of those are included in the CBO budget figures.

In short, the "Clinton surpluses" are based on accounting rules that would land you or I in jail. So are the currently accepted $260 Billion deficits. Neither are real figures.

Check out the real stats from the Comptroller Generals office. They audit the Federal books to general accounting standards. They show a starkly different picture.

Even in the best Clinton surplus year, actual Govt. receipts were short of expenditures by about $2.5 Billion. Thats far better than today but its far worse than the supposed huge surplus they claimed. Likewise last year real deficits were around $850 Billion despite the CBO claim of $300 Billion.

The Govt. makes up its own accounting rules and uses them to lie to us about the state of our nation. We sit by and do nothing.

The only saying "The people get the Govt. they deserve" is right on target. Sheep get run over.




Terry

[Tropic Cat]

As we are some $50 Trillion odd dollars in debt and climbing, it would seem like there is no way out of this. The next group of politicans we elect will do the same as the last ones. Apparently they aren't concerned at all about fiscal responsibility.

So what happens next?

[sneuman]

Originally Posted by Tspringer

There was no budget surplus. At least not in the last 60 years.

Do not pay attention to fiscal statistics published by the CBO. These are the figures used for the "Budget" that Congress and the President love to quote and that everyone pays attention too (without asking why or questioning them). The CBO budget numbers do not include "Off Budget" expenditures. They only include "discretionary" spending. In other words, anything that is not voted on each year is not included. This means that 70% of all Govt. spending is not included in the CBO figures. Social Security.. Medicare...Medicaid... VA benefits... Federal Employee pension and interest due on the overall national debt.... NONE of those are included in the CBO budget figures.

In short, the "Clinton surpluses" are based on accounting rules that would land you or I in jail. So are the currently accepted $260 Billion deficits. Neither are real figures.

Check out the real stats from the Comptroller Generals office. They audit the Federal books to general accounting standards. They show a starkly different picture.

Even in the best Clinton surplus year, actual Govt. receipts were short of expenditures by about $2.5 Billion. Thats far better than today but its far worse than the supposed huge surplus they claimed. Likewise last year real deficits were around $850 Billion despite the CBO claim of $300 Billion.

The Govt. makes up its own accounting rules and uses them to lie to us about the state of our nation. We sit by and do nothing.

The only saying "The people get the Govt. they deserve" is right on target. Sheep get run over.




Terry

Hmmm. A message that will be coming to a GOP campaign near you!

::Alan Greenspan, the Federal Reserve's chairman for 18 years and the leading Republican economist for the past three decades, levels unusually harsh criticism at President Bush and the Republican Party in his new book, saying Bush abandoned the central conservative principle of fiscal restraint.

While condemning Democrats, too, for rampant federal spending, he offers former President Clinton an exemption. Clinton emerges as the political hero of "The Age of Turbulence: Adventures in a New World," Greenspan's memoir, out Monday.

----
Greenspan's book, The Age of Turbulence: Adventures in a New World is a modern center-left pundit's dream come true (the title, not so much). He wishes he'd never endorsed Bush's tax cuts, complaining his words were used to justify a reckless, politically motivated spending binge. Republicans "swapped principle for power. They ended up with neither. They deserved to lose" in 2006. The WP says he and Bill Clinton come off "almost as soul mates." Indeed, "The hard truth was that Reagan had borrowed from Clinton, and Clinton was having to pay it back."

[TaoJones]

Originally Posted by Tspringer

The Govt. makes up its own accounting rules and uses them to lie to us about the state of our nation. We sit by and do nothing.

This is a very astute observation, Terry, and I would point out that the government bean-counters also are fond of changing the way inflation is calculated as often as it takes to prevent a clear picture from emerging.

In addition to all of the expensive entitlements that do not show up in the government's version of "accounting," the cost of the Iraq/Afghanistan war is also off-budget. Before the war in Iraq was launched, and the administration was promising that the expense would be covered by Iraqi oil revenue, some "alarmists" claimed that the war could actually cost Americans as much as $100 billion. So far, the actual cost is about $800 billion and is increasing at a rate of about $12 billion/month.

Sadly, as bad as the above is, it is but a pale shadow compared to the colossal threat hanging over the global economy in the form of a meltdown in the over-the-counter derivatives market. Not one person in a thousand even knows there is something called "derivatives," much less what it means, its massive size (about $450 trillion - or about 7 years of world GDP), that the integrity of the chain depends on the solvency of the loser in the transaction, or the fact that the derivatives market is completely unregulated.

Got Gold?

TaoJones

[Tropic Cat]

You guys make it sound that delmarrey is correct!! Hang on to the boat as we will need them.