This Means Your Dollars Are Worth Crap.

[JAMESBJOHNSON]

http://www.bloomberg.com/apps/news?pid=20603037&sid=a0m8QhfjdEG4
AMERICA SELLS NUTHIN BUT OUR DEBT, AND NO ONE WANTS IT. WELCOME TO THE WORLD OF HYPER-INFLATION.

 

[JamesSD]

Exports: $1.283 trillion f.o.b. (2008)
Export goods: industrial supplies, 29.8%; production machinery, 29.5%; non-auto consumer goods, 12.4%; motor vehicles and parts, 9.3%; food, feed and beverages, 8.3%; aircraft and parts, 6.6%; other, 4.1%. (2008)

The US still leads the world in development of a lot of higher end stuff like software, motion pictures and state-of-the-art machinery. China can make most of the cheap stuff cheaper, but when it comes to goods that need to be reliable, the US is king for a lot of things.

Our big issue is:
Imports $2.115 trillion c.i.f. (2008)

Americans as a whole buy too much shit and don't save enough. The other reason the dollar is falling is during the global recession there was a rush to take safe haven in dollars for fear that developing markets would collapse. Now that things are improving a bit, investors are much more willing to take a few risks and selling those dollars.

Incidently, the article you linked is probably a contrary indicator. When mainstream investors start getting into a commodity, that's when the profit potential is mostly gone. The sheeple were buying stocks in late 2000 and houses in 2007, and that's when it got a lot of mainstream media coverage.

Gold is a thinly traded market that is highly succeptable to panic and manipulation. It's like Oil x10, without being (much of) a consumer good. Goldbugs love to treat gold as a currency with intrinsic value, but it fluctuates wildly and really is not a safe haven for money at all.

 

[JAMESBJOHNSON]

Exports: $1.283 trillion f.o.b. (2008)
Export goods: industrial supplies, 29.8%; production machinery, 29.5%; non-auto consumer goods, 12.4%; motor vehicles and parts, 9.3%; food, feed and beverages, 8.3%; aircraft and parts, 6.6%; other, 4.1%. (2008)

The US still leads the world in development of a lot of higher end stuff like software, motion pictures and state-of-the-art machinery. China can make most of the cheap stuff cheaper, but when it comes to goods that need to be reliable, the US is king for a lot of things.

Our big issue is:
Imports $2.115 trillion c.i.f. (2008)

Americans as a whole buy too much shit and don't save enough. The other reason the dollar is falling is during the global recession there was a rush to take safe haven in dollars for fear that developing markets would collapse. Now that things are improving a bit, investors are much more willing to take a few risks and selling those dollars.

Incidently, the article you linked is probably a contrary indicator. When mainstream investors start getting into a commodity, that's when the profit potential is mostly gone. The sheeple were buying stocks in late 2000 and houses in 2007, and that's when it got a lot of mainstream media coverage.

Gold is a thinly traded market that is highly succeptable to panic and manipulation. It's like Oil x10, without being (much of) a consumer good. Goldbugs love to treat gold as a currency with intrinsic value, but it fluctuates wildly and really is not a safe haven for money at all.

Gold is selling for $1044.00 an ounce today. In 1932 gold sold for $20 an ounce. In 1971 gold sold for $35 an ounce. Youre arguing something that isnt debatable. When gold sells for $1500 an ounce your dollar will be worth 1/2 what it is today. Everything we import will cost twice what it is now.

 

[Goldie Munro]

I always have gold

 

[DeeZire]

I had some gold in the early 70s but I smoked it all.

 

[Zeb_Carter]

I had some gold in the early 70s but I smoked it all.

figures...probably didn't share it either you neo-con pig.

 

[Dragonlipz]

Reagan's Dream come true......it make me wanna run barefoot down the path of free trade and deregulation......

 

[ishtat]

Canadian Dollar = 0.945 $US

Swiss franc = 0.97 $US

Australian Dollar = 0.90 $US

All three have appreciated greatly against the $ in the past 18 months or so, one starting at 0.55. Which will win the race to parity?

A consolation for Americans is that the UK Pound has performed even worse. Note too that where a country stands politically makes no difference. The UK started currency debasement with a Labour Government whilst the USA kicked it off under the Republicans.

The banking regulatory requirements are not as different between USA/UK and the rest but the policing of them does seem to be, with USA/UK being much slacker.The lesson seems to be police the minimum regulations properly rather than add to the legislative weight of them.

Major inflation is the Anglo world's Christmas present in 2009 + unemployment.

 

[JAMESBJOHNSON]

Reagan's Dream come true......it make me wanna run barefoot down the path of free trade and deregulation......

The government prints the money, bucko.

 

[trysail]

I-Believe-in-Strong-Dollar Turns Relic as China Begs
By Matthew Brown and Oliver Biggadike

Oct. 8 -- More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning.

Timothy Geithner, the current Treasury secretary, has tolerated the greenback’s 12 percent slide from its peak this year in March as measured by the Federal Reserve’s trade- weighted Real Major Currencies Dollar Index. While he said as recently as Oct. 3 that “it is very important to the United States that we continue to have a strong dollar,” the last time the U.S. intervened in markets to support its currency was 1995.

The weaker dollar may boost America’s exports as the economy recovers from the deepest recession since the 1930s. The risk is that it may also drive away America’s largest creditors just as the Treasury relies more than ever on foreign investors to buy the bonds financing Barack Obama’s stimulus spending. The dollar’s share of global currency reserves fell in the second quarter to 62.8 percent, the lowest level in at least a decade, the International Monetary Fund in Washington said on Sept. 30.

“Since the dollar has been weak and weakening for years, Geithner was using a code phrase, a carry-over from the Bush administration,” said David Malpass, president of research firm Encima Global in New York. “It means that the U.S. approves of a constantly weakening dollar but doesn’t want a disruptive collapse,” said Malpass, the former chief economist at Bear Stearns Cos. and deputy assistant Treasury secretary from 1986 to 1989.

Poorer Americans
The dollar’s 15 percent decline against the euro and 11 percent depreciation versus the yen since early March are increasing concern among world leaders. At the same time, Americans are getting poorer.

Per capita net wealth tumbled to $172,749 in August from a peak of $212,599 in September 2007, government figures show. A United Nations Human Development Report released Oct. 5 showed America’s quality of life dropped to No. 13 in a 2007 global ranking from No. 5 in 2000.

European Central Bank President Jean-Claude Trichet said today in Venice that a strong dollar is “important,” repeating remarks made in Brussels on Sept. 28. Toyoo Gyohten, an adviser to Japan’s new finance minister, said the same day there is “no better alternative to the dollar.” Bank Rossii First Deputy Chairman Alexei Ulyukayev said Sept. 29 that Russia will keep buying Treasuries because there’s no realistic alternative.

The dollar fell as much as 0.7 percent against the euro today, before trading at $1.4736 as of 2.35 p.m. in London, from $1.4691 yesterday.

‘Special Burdens’
“We recognize that the dollar’s important role in the system conveys special burdens and responsibilities on us and we are going to do everything necessary to make sure we sustain confidence,” Geithner told reporters after attending a meeting of counterparts and central bankers from the Group of Seven in Istanbul on Oct. 3.

The comments came after policy makers from China to Russia called for an alternative to the world’s main currency in foreign-exchange reserves.

“Major reserve-currency issuing countries should take into account and balance the implications of their monetary policies for both their own economies and the world economy with a view to upholding stability of international financial markets,” China President Hu Jintao told the Group of 20 leaders in Pittsburgh on Sept. 25, according to an English translation of his prepared remarks.

Bentsen, Rubin, Summers
When Ronald Reagan was elected president in 1980 his platform called for a “strong NATO,” “strong leadership,” “a strong peace,” and a strong currency. “A sound monetary policy will be restored -- one designed to instill confidence in the American dollar abroad, as well as bring down the rate of inflation at home,” according to a 1980 brochure from Reagan’s campaign.

The preference for a strong dollar was brought back under Lloyd Bentsen, Bill Clinton’s Treasury secretary, in 1994 and the phrase was used regularly by his successors, Robert Rubin, a former Goldman, Sachs & Co. co-chairman, and Lawrence Summers, who is now the director of Obama’s National Economic Council.

Intercontinental Exchange Inc.’s Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, gained an average of 4.93 percent a year between 1996 and 1999 when Clinton was in office.

Rubin Mantra
“By not varying the statement, an issue never arose about whether a comment involved a subtle change or not in the policy toward the dollar,” former Fed Chairman Alan Greenspan told his colleagues on the Federal Open Market Committee in 2001, according to a transcript of the meeting. “It was boring, it was dull, it was repetitive, it was nonintellectual, and it worked like a charm.”

Rubin, a former senior counselor at New York-based Citigroup Inc., wasn’t immediately available to comment. A spokesman for Summers referred questions to the Treasury.

During the presidency of George W. Bush, the Dollar Index declined 20 percent.

The government has used the phrase for so long that “I don’t think it has much meaning left for the markets,” said Vassili Serebriakov, a currency strategist at Wells Fargo Bank in New York. “Once you have this policy in place I don’t think there’s any possible choice but for the Treasury to stick to what it’s been saying all this time.”

More Expensive
The decline means it’s becoming relatively more expensive to live in the U.S. The difference in per-capita income with Canada has shrunk 87 percent since October 2008.

A McDonald’s Corp. Big Mac sandwich cost $3.57 in the U.S. in 2009, unchanged from 2008, according to The Economist magazine’s Big Mac Index. That compares with a 13 percent decline in the euro region to $4.62 from $5.34, and a 19 percent drop in the U.K. to $3.69.

One benefit to a depreciating dollar is that it helped shrink America’s trade deficit to $32 billion in July from the record $67.6 billion in August 2006, data compiled by the Commerce Department show.

Exports rose 5.7 percent to $127.6 billion in July from the low this year of $120.6 billion in April, the most recent data show, led by sales of capital goods including cars, civilian aircraft and computers, as well as stronger demand for industrial supplies and consumer goods.

Theory ‘Problem’
“The Washington theory is that dollar weakness will benefit the U.S. by inflating our way out of debt and causing more exports,” Encima’s Malpass said in a Sept. 25 note to clients. “The problem with this theory is that it assumes capital stays put while the dollar devalues.”

While the dollar dropped in global currency reserves, holdings of euros rose to a record, the IMF report shows. The U.S. currency’s portion declined to 62.8 percent from 65 percent in the first quarter. The euro’s share rose to a record 27.5 percent from 25.9 percent while the pound and yen gained.

The share of reserves in dollars declined even after the Fed and the government lent, spent or guaranteed $11.6 trillion to shore up the economy and the financial system. The Fed has increased the size of its balance sheet to $2.144 trillion from $906 billion in September 2008.

Treasury officials rely on foreign investors to buy the record amount of debt needed to finance the more than $1 trillion budget deficit. The gap will grow to $1.6 trillion in fiscal 2010 before narrowing to $1.4 trillion the following year, according to the Congressional Budget Office.

Treasury Sales
The U.S. sold $1.517 trillion of notes and bonds this year, compared with $585 billion at the same point in 2008. London- based Barclays Plc forecast total 2009 issuance at $2.1 trillion, and $2.5 trillion in 2010.

Dollar bears say net purchases of long-term U.S. securities by foreign investors fell below the trade deficit by $46 billion in the first half of the year, one of the only three occasions since 1994 there was a shortfall, according to Treasury Department data.

China has slowed purchases, increasing its holdings 10 percent to $800.5 billion through July after a 52 percent rise in 2008 and 20 percent in 2007, according to the Treasury Department. Foreign ownership overall has risen 11.4 percent to $3.43 trillion, after gaining 31 percent in 2008.

Chinese Premier Wen Jiabao said in March that the Asian nation was “worried” about the safety of its investment in U.S. debt, as a weakening dollar eroded the value of its record $2.1 trillion of foreign-exchange reserves.

Dollar Index
The Dollar Index, which was as low as 75.896 today, is still above the lows in March 2008, when it fell to a record 70.698. The decline isn’t as steep as in the late 1980s, when it tumbled 48 percent to 85.33 in January 1988 from 164.72 in March 1985.

There’s no sign slower purchases of U.S. debt are leading to higher borrowing costs. The yield on the benchmark 10-year Treasury, which helps determine everything from mortgage rates to auto loan payments, has averaged 3.17 percent this year, compared with 5.6 percent since 1989.

“The dollar will fall against the euro into the year end as investors reallocate funds in search of higher yields,” said Hans-Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, the most accurate forecaster of 2007. “This is only capital export though, not capital flight. There is no evidence whatsoever that the weak dollar will lead to capital flight.”

No Inflation
There is no inflation in the U.S. that would deter foreign investors from Treasuries. Consumer prices fell 1.5 percent in August from a year earlier, and have dropped for six straight months, the Labor Department in Washington said Aug. 16.

“Inflation is still declining in the U.S. so it’s wrong to say that the dollar is losing its purchasing power,” Redeker said. “The U.S. is a domestically driven economy. It has huge output gaps and these are going to keep inflation subdued for at least two years.”

G-7 finance chiefs stopped short of singling out the dollar for criticism in a statement after talks on Oct. 3, saying that “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.” That’s the same language they used in April, when the Dollar Index rose to 86.871.

“It’s hardly a decisive statement by the officials but at the same time it shows that they prefer the dollar steadies in the current range and they could learn to live with it,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “I’m sure Geithner wouldn’t mind the dollar becoming a little more competitive but he doesn’t want to threaten the dollar’s status as the reserve currency, so by definition he has to play a delicate balancing act.”

 

[ishtat]

I-Believe-in-Strong-Dollar Turns Relic as China Begs
By Matthew Brown and Oliver Biggadike

Oct. 8 --
No Inflation
There is no inflation in the U.S. that would deter foreign investors from Treasuries. Consumer prices fell 1.5 percent in August from a year earlier, and have dropped for six straight months, the Labor Department in Washington said Aug. 16.

“Inflation is still declining in the U.S. so it’s wrong to say that the dollar is losing its purchasing power,” Redeker said. “The U.S. is a domestically driven economy. It has huge output gaps and these are going to keep inflation subdued for at least two years.”


”

This is the bit that interests me Trysail. I can accept that there is no inflation now but my prediction is US consumers will start to notice by the end of this year. Obviously the guys with their hands on the levers of the economy wish inflation will never happen but devaluation at this rate it has to feed inflation eventually . The only question is when and 2 years away is wildly optimistic.

I suspect King Canute is running the Fed at the moment.

 

[trysail]

This is the bit that interests me Trysail. I can accept that there is no inflation now but my prediction is US consumers will start to notice by the end of this year. Obviously the guys with their hands on the levers of the economy wish inflation will never happen but devaluation at this rate it has to feed inflation eventually . The only question is when and 2 years away is wildly optimistic.

I suspect King Canute is running the Fed at the moment.

I think you know I don't disagree. The something-for-nothing crowd a/k/a the U.S. electorate believes in free lunches, Santa Claus and the Tooth Fairy. They are perpetually suckered and bamboozled by a succession of charlatans and Pied Pipers promising perpetual motion, miracle cures and bread and circuses. Eventually, the piper will have to be paid— though I am not so bold as to pretend to know when.