The Dollar Meltdown

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ottokbre
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The Dollar Meltdown

Post by ottokbre » Wed Dec 08, 2004 3:19 pm

about two years ago I was reading one of my favorite 'wako' news sources; Pravda.ru. It had this article about the US economy headed back to the Gold Standard, and that in order to do so it would take a massive devaluation of the USD. I showed the article to a coworker who had a masters in economics. She laughed at the idea.

Well, here we are. The Euro is on fire, and the USD can be had for 1.17 Canada.

A week ago I had someone show me a random article (which now I can't find) that was based off of a closed door seminar in which the head of a conservative investment banking firm stated the perils the USD is in, and the boom of T-Bills. He gave a 10% chance of the US actually avoiding a currency meltdown.
In any other country in the world, such a situation would have triggered a currency run and a default, Argentine-style, with the IMF and other such institutions coming to the rescue... The only reason this has not happened (other than the main foreign investors almost everywhere are Americans, and they are obviously not going to treat their own country the same as some godless foreign land) is that the Dollar retains its role as a trading currency, and the US has accumulated such a capital of trust in its currency that it can spend a lot of it before it has spent too much.

The difference now is that, for the first time, there is a credible alternative currency for both international trade and reserve: the Euro. It is backed by an economy and trading partner just as big as the US, and by institutions, despite all the criticism and nitpicking from the business press, that are fundamentally sound (rule of law, sound banking regulation, hawkish central bank, balanced trade, reasonable debt position).

At the same time, the US has gone on an amazing spending binge, fuelled by the dot-com bubble, then the real estate bubble and the Bush deficits. The binge has been made possible by Greespan's astonishingly loose monetary policy (and everybody's joyful embrace of debt) and a lot of it has been wasted in military spending which does not profit many and is certainly not recycled into the economy (the economic equivalent of armies and weapons building is to have the people involved dig holes in the sand and refill them - it does not create any value and it ties up a lot of people that could do better things. Up to a point, you can argue of its value as an insurance policy against trouble from the outside, but it is fair to say that the US are far beyond that point).
- the moon of Alabama .org
Speaking in France this weekend, Snow called the recent currency decline "fairly modest" and said the greenback's value should be determined by market fundamentals and public confidence. The statement was interpreted to mean that the Bush administration is indifferent to the weakening dollar.

The dollar stabilized somewhat after the initial shock wore off but the stock market was unable to recover its losses, despite statements from the Bush administration that a strong dollar policy remains in place.

A weak dollar tends to make U.S. exports more competitive in other countries, and some economists say Bush's economic team is content to allow the dollar to drop in a bid to help the sluggish economy.

"Snow's comments about the dollar are giving investors a good excuse to take some money off the table after the recent run up," said Peter Cardillo, director of research at Global Partners Securities. "But basically, this is just a lot of profit-taking." - CNN Money
At present course, America consumes double what it produces. Therefore, without trade volumes in the USD, guess who is going to have to work twice as hard and spend half as much? Lemme give you a clue, not Bush's people. :-p
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phait
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Re: The Dollar Meltdown

Post by phait » Wed Dec 08, 2004 3:20 pm

I never understood WTF this was about. Isn't $1 just $1 in the US? I'm lost.

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ottokbre
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Re: The Dollar Meltdown

Post by ottokbre » Wed Dec 08, 2004 3:23 pm

phait wrote:I never understood WTF this was about. Isn't $1 just $1 in the US? I'm lost.
unless your in Arkansas, then its half a hogs head.
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Re: The Dollar Meltdown

Post by segaface » Wed Dec 08, 2004 4:02 pm

phait wrote:I never understood WTF this was about. Isn't $1 just $1 in the US? I'm lost.
You may find this:

http://www.iht.com/bin/print_ipub.php?f ... pesek.html

article relevant.
fossiltooth wrote: That's like saying you hate Fenders because of Yngwie Malmsteen.
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Re: The Dollar Meltdown

Post by Greenlander » Thu Dec 09, 2004 3:38 am

Personally from my Euro-base in Dublin, Ireland, it's a godsend. I'm coming over to your guys in March to buy all your recording gear with my valuable, valuable Euros.

I'll just wave a couple of Euros in your faces and you'll hand over those 1176s At least, that's the plan.
My setup: brain into muscles into hands into fingers into guitar into cable into pedal into cable into amp into air into mic into cable into box no 1 into cable into box no2

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A.L.
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Re: The Dollar Meltdown

Post by A.L. » Thu Dec 09, 2004 5:00 am

It's too bad I'm philosophically committed to staying here.

My music buying habits are already feeling the pinch.

Phait, here's the deal: since the majority of the goods we consume come from outside the country the decrease in the value of the dollar worldwide means that the prices of those goods will increase, meaning our cost of living will rise.

Our wages of course won't comparatively increase, meaning more poverty and unemployment as well as work hours to make ends meet.

Since we'll be buying less stuff as a whole the national economy will be taking a kick in the pants.

Factor in that we're exporting most of our blue collar and now tech jobs overseas, as directly encouraged by the Bush admin., and we're fuckled.

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A.L.
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Re: The Dollar Meltdown

Post by A.L. » Thu Dec 09, 2004 5:07 am

Tangent: American corporations are too cheap to hire American workers yet the suits make out like bandits, fuck those guys.

Blargh.

I can't believe working class America went Republican. Racism trumped logic and man are we feeling it now. Argh.

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Re: The Dollar Meltdown

Post by mjau » Thu Dec 09, 2004 7:33 am

Yeah, the dollar tanking is going to be a much bigger story than it is currently, I think. The Euro is so strong on the dollar right now, and I can't believe how the dollar's fallen against the Canadian Dollar. Crazy. Gotta love trickle down economics.

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Re: The Dollar Meltdown

Post by kcrusher » Thu Dec 09, 2004 9:54 am

A.L. wrote:Tangent: American corporations are too cheap to hire American workers yet the suits make out like bandits, fuck those guys.

Blargh.

I can't believe working class America went Republican. Racism trumped logic and man are we feeling it now. Argh.
Without some major turnaround, it's gonna get worse before it gets better.

This dollar value fall wouldn't be so bad, but we're rackin' up debt like there's no tomorrow and that is what is making investors so jittery. The only reason the economy hasn't tanked hard already is that most investors (Japan, China, Europe and Mid-East) have a vested stake in a strong dollar. They are hedging their bets that things will eventually turn around. There is also some advantage to certain investors in having a weak dollar, so they're propping things up as well.

Bush's campaign promise of halving the debt by 2009 is a wet dream with things going as they are. If he keeps pressing this military style agenda and doesn't start to reign in some of this debt (look for a tax hike!), then we're gonna be in for some pretty wild economic times.
America... just a nation of two hundred million used car salesmen with all the money we need to buy guns and no qualms about killing anybody else in the world who tries to make us uncomfortable.
- Hunter S. Thompson

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ottokbre
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Re: The Dollar Meltdown

Post by ottokbre » Thu Dec 09, 2004 10:03 am

There is just so many others trading in the Euro now. The days of the USD being the common hard currency might be over.
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Re: The Dollar Meltdown

Post by sonikbliss » Thu Dec 09, 2004 6:55 pm

I think i'm going to convert all my money to gold bars. I can see it now

me "Here's $13.40 can I get a gold bar?"

teller (blank stare) ........... . . . . . . . . .

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ottokbre
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Re: The Dollar Meltdown

Post by ottokbre » Fri Dec 10, 2004 8:50 am

too bad goldbars are illegal to own
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