Why are people "worried" about the dollar? It seems pretty strong

[old mark]

against the world's currencies; Link to CNN-
http://money.cnn.com/data/currencies/

Is this just BS drummed up to:
1. sell overpriced gold
2. try to defeat any recovery so Obama will "fail"


I think if the dollar were really in danger of collapse, the big corps would dump all they had and put it in something better, whatever thay may be...

Any thoughts?

mark

[Greyhound]

1. It is doing 'fine' as long as you confine your observations to performance against

other currencies, and that's what they want you looking at.

Look at real purchasing power over the last 30 years (go back 100 years if you want to be really depressed) and then consider that the USD has done better than the rest. Then ask yourself where did the purchasing power go and who benefits from the consistent devaluation.

Deficits don't matter only as long as the value of the currency constantly declines. If the dollar were stable and represented something other than "we say so", we would(?) realize that things are even worse than we think.

[earth mom]

2. Food and water are the next things those bastard banksters are planning to game.

There was a very interesting article in the May 27th issue of Rolling Stone magazine called "The Global Land Grab" which focuses on one guy but also talks about how individuals, corporations and countries are buying up farm land in Africa, Russia and the Ukraine because of future food shortages due to overpopulation and global warming. They will probably try and buy up as much land as they can in Canada too. I would post the article but it is not on the Rolling Stones website, hopefully it will be posted soon.

And don't forget, the BFEE bought all those acres in Paraguay that has a huge aquafir on it.

Everyone better learn how to garden and grow their own food-quick. :yoiks:

[BzaDem]

3. The dollar is perfectly fine.

Not only is it fine against other currencies, it is also fine when measured against goods (inflation). People whining about inflation do not understand economics when we are at a zero-lower bound with high unemployment and a huge output gap.

[Art_from_Ark]

4. Apparently you have never experienced real inflation

I have (1970s). The dollar has lost a LOT of buying power since then.

I remember a commercial for US Savings Bonds back in the early '70s. It featured a postal worker chirping, "Last year, I was able to save 300 bucks" by enrolling in the USSB plan. That was a nice chunk of change back then.
In the late '60s, telephone calls were a dime (a nickel in Louisiana), gasoline was a quarter a gallon, houses in regular neighborhoods could be bought for less than $10,000. The value of the dollar has been eroded considerably since then.

[BzaDem]

9. The inflation of the 70s was primarily due to increases in costs of imports (such as oil).

It was not demand-induced inflation of the type that can be caused by an easy monetary policy in a good economy.

Right now, all the inflation indicators are hovering around 0-1. This is very low, and indicates the problem right now is risk of deflation, not inflation. This makes sense, since demand-induced inflation is very unlikely in an economy with such high unemployment and such a large output gap.

[Art_from_Ark]

11. I disagree

Inflation started getting into high gear around 1971, before the 1973 oil shock. I remember that time well, as I was just starting to earn some pocket money and was surprised at how fast prices seemed to be rising. Imports had little to do with inflation, since they would have tended to make prices cheaper.

I don't believe the inflation figures for one minute, given that prices for big-ticket items (including health care, insurance, taxes, higher education, utilities. and rent, among others) are rising. And there are two types of deflation-- interest rate deflation, and consumer price deflation. There is deflation with interest rates, but prices for the stuff that I buy in the US are not going down. The world market realizes that a lot of these figures are smoke-and-mirrors-- that's one reason why there is so much interest in gold.

[rucky]

16. Interest rates played into the equation somehow.

that much I remember.

[BzaDem]

19. Many economists disagree with you. n/t

[Art_from_Ark]

23. As Will Rogers once said

"If you had economists predicting the weather, and weathermen predicting the economy, nobody would ever know the difference".

Nixon's abandonment of the gold standard internationally in 1971 (it had already been abandoned domestically in 1934), as well as the complete removal from all precious metals from US coinage the same year, that is, the switch to a completely unbacked fiat currency, is what got the 1970s inflation ball rolling. The 1973-74 oil shock only compounded the problem.

[ixion]

13. LOL

It's ironic that you criticize people for not understanding economics, when your grasp of it is apparently limited to the talking points on CNBC.

[Ikonoklast]

17. One hundred years ago, an ounce of gold bought a fine man's suit.

About the same price as today, in dollars vs. gold.


I know it's an old saw, but it seems to hold its truth over time.

[Art_from_Ark]

18. A fine man's suit is $1200???

I can get a pretty decent suit for a lot less than that.

[Ikonoklast]

22. Tailored suit, not off the rack.

I paid close to that for a silk suit w/ two pair of pants, custom tailored.


It will be the last suit I wear.

[Electric Monk]

5. You nailed it in 1. sell overpriced gold

[Art_from_Ark]

6. Overpriced by whose standards?

Perhaps it is overpriced, perhaps it isn't. Trillions in new dollars, euros, yen, pounds, and other currencies are being printed, or just bleeped into existence. One could say that maybe those fiat currencies are overpriced.

[Electric Monk]

7. Triple what it was a decade ago now. Do you think it's still going up?

Time to find a new bubble :crazycynical:

[Art_from_Ark]

8. It still could go up

This is a global market, not just a market hyped by Glenn Back and friends.

I have had an interest in the gold market since I was a grade schooler back in the '60s. I have seen the gold market go up on hype, and go up on on fundamentals, and I have seen it go down. Tripling its price over a decade does not, in itself, indicate a bubble. Ten years ago, one of the main factors causing the gold market to be depressed was manipulation by European central banks, but that was essentially halted when the euro was officially adopted in 2002. Also 10 years ago, interest rates were much better for savers, there was still a modicum of confidence that the stock market was being policed by the SEC, and the supply of fiat money was much lower than it is today. Also, government debt was much lower then (Remember Clinton's budget surplus? That was squandered almost immediately by Dubya, and now we're hopelessly in debt). Furthermore, the government's figures on inflation do not jibe with what a lot of people are experiencing. Sure, prices for some imported goods are going down, but a lot of the other stuff -- health care, nursing homes, insurance, taxes, higher education, utilities-- all seem to be going up and up. So the value of paper money is eroding, especially for people on fixed incomes, investments in stocks are extremely risky, banks don't pay any interest to speak of, and people want something tangible that has had value as money for ages.

[dipsydoodle]

10. Search US debt 2018

2018 is the year that is which is most frequently mention for the shit to really hit the fan.

[tavalon]

12. As long as the Chinese stay with it, it will survive

If China dumps us, we're done. Stick a fork in us. But then, we are too big to fail, so we'll take the rest of the world with us. That has kept the Chinese from dumping us yet. But do not be deceived - they own our ass.

[dmallind]

20. Strange - they own us with about 6.5% of our debt? How so? NT

[Statistical]

21. They buy about 10% of the newly issued debt we auction each year.

What do you think happens to the price of goods is 10% of supply is disrupted? Goes up and goes up a lot right?
10% supply disruption could cause a rise in price of 50% or more depends on how elastic pricing is.

What is the price of money? Interest rates.
What do you think happens to our budget if interest rates on national debt rise 50%?

China holds about 25% of foreign held US debt. They are the fastest growing debt buyer and the only nation who can absorb more debt supply (as we rack up larger and larger deficits).

Until we get a balanced budget or at least cut deficits down to say 5% of GDP we NEED China.

That is economic power my friend and a reason we will never get tough with China or Japan.

[Chulanowa]

14. I've begun wondering if monetary agencies are trying to cause a panic

We see austerity (read; looting) plans burning across Europe all one after another, then the yen is apparently shaky, and we're hearing people trying to tell us the dollar is spiraling out of control... And with no actual tangible proof, just economists assuring us that it is so, and that we need to start hacking off limbs of the public sector and feed them to the private piranhas to float by.

Maybe there really is a problem; but the cry of wolf has gone out far too often and far too predictably for me to clutch my pearls just yet.

[rucky]

15. Look at how much debt the dollar is backing.

the fed's turning somersaults to keep the dollar afloat. The other day Geithner was basically begging China (in that semi-threating way the US begs for things) to control their Yuan. If our dollar sinks against the Yuan, we're fucked even worse in the debt department.