In plain and simple text, why $ so low.

[WI wide body]

Originally Posted by island911

Well done John.

Gosh, you actually congratulate quite well.

Now hows abouts you list some of your own thoughts/ideas/conclusions about what, if anything, is incorrect in any of the above posts?

Only the expectation exceeds our anticipation.

[sketchers356]

Where is Ron Paul when you need him?

[K9Torro]

Thank you for the link, I think I have a better understanding now, an to the guy who had lunch in Hamburg that is exactly what I mean when I say traveling in the EU is now PAINFULL to the extreme,

Todd

[jluetjen]

I happened across the following comment on CNN today. I guess not all of the assets which have been bought up by foreigners turned out to be such good deals. To me it sure looks like the "weak" dollar is working.

Shares of Bank of China dropped 6.4 percent in Hong Kong after the South China Morning Post newspaper reported that the bank is expected to announce a "significant writedown" in U.S. subprime mortgage securities, citing unidentified sources. In Shanghai, the bank's stock declined 4.1 percent.

Note that while the US stock market has dropped 9% so far this year (3 weeks), that the rest of world is faring worse:

Since the start of the year, Japan's Nikkei index has declined 13 percent, while Hong Kong's blue-chip index is down more than 14 percent. Even China's Shanghai index - which nearly doubled last year - has fallen 6.6 percent over the same period and nearly 20 percent from its all-time closing high on Oct. 16.

[silverc4s]

Just a thought; 100 years ago, this country was in a transition from a agricultural based economy to a manufacturing based economy. That was a pretty painful change for a lot of people, and it did not all take place overnight.

Most of us on this forum grew up in a manufacturing based economic society, and one that was at the peak of it's success as we started our careers. Lifetime employment, cushy medical benefits, long vacations, profit sharing, stock ownership, etc etc. and etcetera.

Now, I know it is hard to envision a fully formed service based economy, but that does not mean it should not evolve that way. Man was not born to manufacture goods, any more than he was born to grow crops, or herd cattle. That is simply how we contribute and add value to our society, but it IS NOT what my favorite author refers to as , "life it's own self."

[Bill Verburg]

Originally Posted by island911

Apparently you believe that national monetary policy is just like "balancing a checkbook." You likely also believe that Al Gores SS "Lock-box" would have been a viable solution as well. (again with a simplistic view of monetary policy).

Not a fan of Gore and certainly not defending his policies in general but on that one he was right. It's criminal of the Federal government to comingle SS/medicare $s w/ General revenue $s as we have been doing since the Johnson administration. It just gives the pols more money(it is only in their imaginations that it is theirs) to buy their next election(can you say Pork, Earmarks, member iems) while someone way down the road pays the bill.

[WI wide body]

Originally Posted by silverc4s

Just a thought; 100 years ago, this country was in a transition from a agricultural based economy to a manufacturing based economy. That was a pretty painful change for a lot of people, and it did not all take place overnight.

Most of us on this forum grew up in a manufacturing based economic society, and one that was at the peak of it's success as we started our careers. Lifetime employment, cushy medical benefits, long vacations, profit sharing, stock ownership, etc etc. and etcetera.

Now, I know it is hard to envision a fully formed service based economy, but that does not mean it should not evolve that way. Man was not born to manufacture goods, any more than he was born to grow crops, or herd cattle. That is simply how we contribute and add value to our society, but it IS NOT what my favorite author refers to as , "life it's own self."

Agree with you about the previous evolution of our economy. But manufacturing WAS the thing that made the USA an economic powerhouse. We could make more stuff, and do it faster, at less cost, and make it better than most of the rest of the world and that's what gave us the economy we had.

It's a tad silly to pretned that we will ever be able to replace our manufacturing base with a service based economy. Yes, we have accumulated a lot of wealth and combined with our clever government's ability to keep printing money...we will for some time be able to "outsource" and let others make the stuff we buy. But at some point, that combination of our immense debt and the $900 Billion per year that we are sending off to foreign nations per our trade imbalance WILL come home to roost.

And our economy and our standard of living will then most likely see an adjustment of the type we have never know in the past.

[jluetjen]

WI wide body; Where do you account for "assets" such as mortgage debt being purchased by foreigners within your economic model? Is this another example of how foreigners are buying up the US??? I assume that you perceive transactions such as this as extending the US debt load to foreign countries. If the debt is written down -- does that enter into you model anywhere? How about if it is paid for in "weak" dollars? So essentially it's dollar inflation for foreigners that doesn't directly impact the US economy. Currently I'm not aware of anyone screaming "Runaway inflation!!!" in the US economy.

[WI wide body]

Originally Posted by jluetjen

WI wide body; Where do you account for "assets" such as mortgage debt being purchased by foreigners within your economic model? Is this another example of how foreigners are buying up the US??? I assume that you perceive transactions such as this as extending the US debt load to foreign countries. If the debt is written down -- does that enter into you model anywhere? How about if it is paid for in "weak" dollars? So essentially it's dollar inflation for foreigners that doesn't directly impact the US economy. Currently I'm not aware of anyone screaming "Runaway inflation!!!" in the US economy.

And what exactly does that have to do with anything that I said here?

You sound like those economy "experts" who pretend that our massive national deficit, our yearly budget deficits, the loss of our manufacturing base, and the billions of our dollars flowing off to foreign nations per our trade imbalance are all of little or no consequence. That's so damn stupid that it should require confinement.

[jluetjen]

OK. I assume that this means that you're choosing not to answer my three questions.

[WI wide body]

Originally Posted by jluetjen

OK. I assume that this means that you're choosing not to answer my three questions.

Because your questions did not have didly ***** to do with my previous post. It would be like me now asking you to list the average price of potatoes in Idaho in 2007 as if it meant something.

Why is it that almost always when someone uses a term such as "economic model" that person ends up dealing mendacity supported by taciturn semiology? Probably just a coincidence.

[WI wide body]

Originally Posted by jluetjen

OK. I assume that this means that you're choosing not to answer my three questions.

Besides, since you appear to be possibly numbers challenged (you actually had four questions) whatever calculation/formula you devise will be subject to review.

[nostatic]

Originally Posted by Chocaholic

Wait a minute fellas. The popcorn isn't done popping yet. Hold on.....just a few seconds...wait....wait...wait.....DING!

Okay....carry on.

pass it over here, ok? Hey, how about some popcorn. I'll trade you a beer. Hey!

Mom, Mike's not sharing!!!

[island911]

Originally Posted by Bill Verburg

Not a fan of Gore and certainly not defending his policies in general but on that one he was right. It's criminal of the Federal government to comingle SS/medicare $s w/ General revenue $s as we have been doing since the Johnson administration. It just gives the pols more money(it is only in their imaginations that it is theirs) to buy their next election(can you say Pork, Earmarks, member iems) while someone way down the road pays the bill.

What would be the effective difference between the "Lock Box" (only to be opened in the future) and just Burning the excess SS funds and then reprint new dollars in the future?

If you have a large chunk of the population retired, then you have a large chunk of the population consuming w/o building. -Quite simply, printing money (or taking it out of a Lock Box) does not create wealth.

[Lothar]

The paper dollar is backed by no tangible asset of any kind. The fact is, that it has virtually no value at all compared to its value when the federal Reserve was created. The dollar of 1913 is now worth 4 cents.

[hardflex]

"runaway Inflation, Runaway Inflation"

[tabs]

Tis very simple really... and not at all like WI likes to imagine as he waves his arms wildly gesturing about how terrible GW Bush and crew are. He like most Americans are real smart people who think they are clever and are on a cruise ship called Lollipop. Hey what da ya think about those Pats anyway?

As your credit worthiness declines the amount of interest you have to pay for a loan increases. However interest rates have been kept low and are now being pushed lower to keep the system liquid and to keep from falling into recession. Since markets tend toward equilibrium it is the value of the $$ that is reflecting the declining credit worthiness of the USA instead of interest rates.

You might say that all those people who hold $$$ and $$$ payable assets (Bonds) are paying for the war in Iraq, as the value of what they are holding is declining. This is not the first time that this has happened, a Democrat President by the name of LBJ first conjured up this ponzi scheme to finance the Vietnam war. Only then it was Gold being pegged to $35 an OZ that was the enabling vehicle.

It was also LBJ that first started dipping into SS funds to fund the Governments deficit spending. All the SS money was put into the General Fund and an IOU was put into the SS box. That has been the way the government has hidden the true amount of deficit spending for decades.

The reason interest rates were dropped to record lows (1% Fed Funds Rate) in late 2001 was 911, the system had to be kept liquid to keep from collapsing. The mantra being keep the cash flowing..remember 0% financing by GM. Then the inevitable greed set in and and voila the sub-prime mess.

To straighten out the mess one either has to raise taxes which will put a drag on business and growth. I always liked the idea of raising taxes during a recession, a proven path to make a recession into a depression. Or one has to cut spending, and somehow I just don't think Americans are prepared to see the level of services they receive pared by as much as they would have to be.

There is some very faulty thinking in the USA that was basically started during LBJ's tenure in the WH...that you can have "guns and butter"...to have a Great Society and fight a war at the same time without it effecting America's life style. In todays parlance it is to have "no child left behind" or "universal health care" The thinking being in Liberal circles that America is too rich a country to allow poverty to exist. The reality of the situation is that we live in a rough world and there are just not enough $$$ to build enough life boats for everybody on the good ship America.

[tabs]

Originally Posted by hardflex

"runaway Inflation, Runaway Inflation"

Very well might come about....

To combat inflation the Fed would have to raise interest rates in an environment where the liquidity of Stocks and Bonds are a very serious issue.
The Fed is having difficulty keeping the system liquid by lowering interest rates as it is, because no one knows what portion of the Sub-prime loan packages that they hold will default. Thus they don't know how to put a valuation on them, and nobody wants them at any price. This then effects the Stock Market because no one knows how much exposure they have to the Sub-prime market and the ultimate effect on the economy and corporate earnings.

U all should remember the name Citi-Corp and the name Richard Ruben as the head of Citi.. remember he was Bill Clintons Secratary of the Treasury.


The perfect storm is abrewing on this good ship lollipop. You can only go to zero percent interest rate to keep the system liquid. Meanwhile the $$ is falling in value because of the decling credit worthiness of the USA. Since the value of the $$$ is falling foreign capital is not flowing into the USA which causes the system to become more illiquid and intest rates to be pushed even lower to prop the system up. At some point the music has to stop.

It is possible for the whole system to freeze up and become illiquid. That means Stocks, Bonds, Money Market Accounts, CD's, 401K's, Mutual Funds, Pension Funds all stop having value because you can't trade nor sell them. The $$ will havve by then declined to almsot nothing anyway. Then what happens to your job? Yeah ya gotta love those Pats!

The net effect is that American Financial Institutions are drawing in capital from NATIONS (as opposed to businesses) that are sitting on piles of $$$ that are doing nothing but stuffing mattresses in places like the United Arab Emirates, Dubai, Singapore, Hong Kong, Beijing, Toyko, Taipei and Seoul. They will lend our institutions the money, but the interest they earn on that capital will be going overseas and not staying in the USA. That in effect means that the wealth of the nation is leaving and we are beocming poorer... But Hey what about those Pats!

[RoninLB]

Originally Posted by K9Torro

Ok , can anyone tell me in plain and simple text form why the U.S. dollar is falling so low,

What exactly has happened for our dollar to be so worthless ? (

Inflation is major cause of devaluation. Devaluation does not cause inflation.

[Lothar]

Originally Posted by RoninLB

Inflation is major cause of devaluation. Devaluation does not cause inflation.

Over the long term, they are one in the same. Prices go up when it takes more dollars to achieve the same intrinsic value.