In plain and simple text, why $ so low.
 

Ok , can anyone tell me in plain and simple text form why the U.S. dollar is falling so low, I used to enjoy trips to the EU for vacations , when they adopted the Euro these trips became somewhat less enjoyable , now they are downright painful. Also I remember in the not so distant past when the our friends in Maple Leaf land were lagging behind us at around .70 cents now they are equal or higher ?

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

In simple terms WTF ???

Todd :(

Simple?? hummmm......

We import/purchase/buy more goods from other countries than we sell to them. We buy 'hard' products ...they get paper dollars.

Our (USA) National Debt/Trade Deficit climbs ... these countries look at our paper (money) and say...do we really want/need more of this ...paper???

When your annual salary is 100 K and you spend annualy 150 K...!

In Germany, Hamburg actually, for work two weeks ago and we had a beer and a burger and crisps, there were two of us and we both had the same thing. It was $72 US. And we did this for a a "cheap meal."

Our paper money output exceeds our assets.

Basically it's because our dollars are simply not worth as much as they were previously in relation to the currency of other nations.

This is caused by a variety of reasons (our huge trade imbalance is also key) but the bottom line is it's caused by our government spending more more than they take in. Then there are only two ways that they can finance their deficit spending: they can either borrow from other nations (this is mostly done by selling the debt to foreign nations) or they can print more money. The latter is also the main reason for inflation.

And that's exactly what the azzholes in Washington are doing at this very moment. They even spend ALL of the excess money taken in from current Social Security payments. They do this while pretending that they are concerned about the coming SS shortfall that is sure to occur. I would like just one time for the TV talking heads to ask these immoral jerks how they can pretend to be concerned about SS while basically stealing the curent excess funds being paid in to SS..

BTW, this is only going to get worse. MUCH worse. President Bush has not even tried to raise a single penny to pay for the Iraq war. It is possibly the only war in the history of the world to be funded by deficit spending. This is what can happen when we have a low IQ president who has probably never in his entire life paid a utility bill, a tax bill, or balanced his checkbook.

Then when all of the unfunded debt (that means the cost of future promised programs such as SS and healthcare and taking care of the Iraq vets) comes due and is factored in...coupled with when all those clever little foreign guys who are accumulating our debt decide they want to be paid...it will most likely result in a sort of chaotic economic perfect storm such as our nation has never before seen.

Goobers worry about terrorism. What they should be worrying about is the above.

But not to worry. As the scumbag politicians know very well, they will be long gone when this finally occurs and it will be our children and grandchildren who will be left to suffer and deal with it. :(

Sorry for the rant, but I think about this every time I see a politician carrying a bible or hear President Bush and his trademark "God bless America" bull*****.

WI, relax. ....you should be happy to know that you have it wrong.

Terry is close, but it is not so much the paper money as it is a problem with the virtual bank/loan money.

I'm with WI on this one. This scares the crap out of me. Sure the GDP is still higher than the debt, but the debt is closing in on it.

http://forums.pelicanparts.com/uploa...1200596349.jpg

Do tell us exactly what I have wrong?

Exactly? -that's tough, because you quite obviously are so far out in left field.

The questions is "can anyone tell me in plain and simple text form why the U.S. dollar is falling so low..?" You then use that to go on a rant about all the different ways it's Bush's fault. --such insight. :rolleyes:

Ironically, part of your rant contains "This is what can happen when we have a low IQ president who has probably never in his entire life paid a utility bill, a tax bill, or balanced his checkbook."

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).

Really, you are so far off base it's kind of funny. --so keep those nonsensical rants coming. Remember, the more you rant, the more correct you must be. ;)

So you actually don't have anything at all to refute what I wrote? No problem.

But let me try to help you out. I did a tiny bit of quick "research" and came up with the following from some guy named Barker who is obviously smarter than I (he gets paid for it:) ) and lays it out much clearer. Please advise if in your expert opinion he also is "so far off base it's kind of funny" and that like me he thinks that if "the more he rants" then the more correct he will be?

"What causes this drop in dollar value?

1. Trade deficits, the US is importing 800 billion more then its exporting and the dollars planned decline by the Bush people has not improved its deficit.

2. Mounting foreign debt, the Bush people have out spent every administration in history and we borrow from the World Bank, China and Japan to float this war in Iraq and other projects for a new American century.

3. Loss of confidence is growing across the globe. Nothing requires International investors to Continue to invest in the USA or holding US assets they now own.

4. Winds of war and strife drive down investor's confidence. As we threaten Iran and others we become the hornet's nest of angry bees and tend to upset the quiet of economic stability

5. Economic sanctions against Iran and others tend to reflect back on our own economic stability. Iran is reacting to our pressure by threatening to pull out of the Nuclear Non Proliferation Treaty causing many to question the future peace process.

6. Coalitions of defiance such as Hugo Chaves of Venezuela and Evo Morales of Bolivia and others to form an anti American alliance and drive the dollar away using oil as a weapon.

Most of these are caused by misguided or aggressive arrogant government policy. If we do not lose total control, perhaps the next administration can repair some of the damage by sound fiscal policy and improved diplomatic measures. Yet, daily we see the loss of prestige and confidence. Since almost two years of the current Bush policy remains, it may be enough to crush the once-mighty dollar.

The USA is under the auspice of people that profit from higher oil prices and war, so for them this is a boom time and the decline of the dollar is not their concern. The rest of us are not making billions off the war or increased petroleum prices. Nor are we getting rich from future options like Cheney is from Halliburton or the Bush and Bin Laden families are from the Carlyle Group. These people will simply shift the dollars to euros and take the loss because they are wealthy beyond measure.

What can we do to offset this wolf at our doorsteps?

Investing in other currencies may precipitate the decline, but might help diversify your own assets and give you some long-term protection. Changing unsound economic policies and foreign policies that drive down the value of the dollar is essential. But, most of all, Pray.

Good luck America we are going to need it."

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

Okay....carry on.

Actually, by your non-sensical inference to "Al Gores SS lockbox" I sense that what you really didn't like was my little shot at President Bush. I apologize for Bush being such a basically stupid man...but as people like to say now...it is what it is.:)

Monetary problems could fill books. There is some sense in leaving the SS fund alone and not raiding it. IOUs are not good. The deficit is partially responsible. The interest on 9 trillion has a role to play. The money paid annually on interest is not available for other programs such as SS, MEdicare, "no child left behind", the infrastructure and such. There is much, much more.

Just don't eat more than two boxes a day. Some guy from Denver is filing suit that it caused him to get "popcorn lung" and you sure don't want to make it make it a class action deal.:)

You are correct. Most fools and especially the "expert" economists must not realize that our massive deficit is probably costing us around $300-400 BILLION a year in interest alone. Coupled with that soon to be $900 BILLION that goes flowing out of our nation per our trade imbalance and there is virtually no chance for our economy to continue as it is.

Some goobers think that "the housing crisis" is the culprit and this is laughable. Yes, it's a big and sad deal for the folks who allowed themselves to get into the mess. But what do they estimate to be the cost of a total bailout (which IMHO they should not do) about $300 billion to $700 billion I think.

However, that is not even equal to the USA dollars that go flying out of our nation in a single year per the trade imblance mess. People like island911 and other fools can pretend this is not important but it is in fact deadly important in the long term. And that "long term" is getting shorter and shorter!

This reply is about as plan and simple as I can say it.

The same topic came up in another thread a few weeks ago. A much more balanced one at that. Try and find that one..

I have read everything so far on this one - and you will not learn much.

Basically supply and demand - US interest rates are low, return on investments is low, business opportunities are low right now - and with inflation going up a bit - so the dollar is low. A bit more complicated and interdependant that some would have you believe.


Yes! That link above!

Yes, "supply and demand" can be said to be the cause of the low dollar...but that's like saying that lack of air is the reason for dying. The question is what CAUSES that supply/demand thing.

And it sure as hell is not simply "interest rates are low..." or anything similar.

The reasons ARE listed above in a post and if you can point out specifically why any of those reasons are incorrect we will certainly enterrtain your input.

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.:)

Where is Ron Paul when you need him?

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 :confused:

What Happens to all of those Assets that the Chinese are buying???
 

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. :rolleyes:

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

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."

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.

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.

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.:eek:

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. ;)

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

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

Mom, Mike's not sharing!!!

While the popcorn is fresh....
 

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.

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.

"runaway Inflation, Runaway Inflation"

The Good Ship Lollipop
 

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.

What about those Pats?
 

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!

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.