Thread: US dollar decline, or collapse?

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Thanks Panda Cant green you at the moment

they can't be a stampede out of the USD, as you say we are all in it, and the USD is still a major currency, no matter how silly the US government is

you are also forgetting that the US is an economic powerhouse and can swallow all kind of problems, very uncommon for a rich and large country, probably possible because of the 2 levels of economic societies that exists in this country, a bit like China. Something missing in most European countries.

Basically, they hold a gun to our head, so if you kill the horse while you are in the middle of the desert, it's game over.

Never say never, or "cant" for that matter.
Sure the US is an economic powerhouse. Its far from done. But a rapid decline in the value of the tradable value of the $US is certainly not out of the question as investors are jumpy and will move their cash where they think its safest.

The US government is quite obviously trying to engineer a devaluation in the $US at a slow regulated pace. That could get out of hand with some major bad news.
Panic does not respond to logic. And as we have seen, neither do the people managing the financial markets through out the world.

A brief 3 minute summary on Quantitative Easing and the ratings.

Following this topic with baited breath... The problem is where to put capital to prevent devaluation...

I think it is now the time to have no capital

all currencies will devalue, so the exchange rates will even up to what they already are but commodities will increase

buy lead and tin immediately

Originally Posted by DrAndy

I think it is now the time to have no capital

all currencies will devalue, so the exchange rates will even up to what they already are but commodities will increase

buy lead and tin immediately

If massive inflation (dollar-denominated) is on the way, wouldn't it be a good time to be getting into debt? In dollars, I mean.

Originally Posted by robuzo

Originally Posted by DrAndy

I think it is now the time to have no capital

all currencies will devalue, so the exchange rates will even up to what they already are but commodities will increase

buy lead and tin immediately

If massive inflation (dollar-denominated) is on the way, wouldn't it be a good time to be getting into debt? In dollars, I mean.

Exactly what the US government is doing right now.

Originally Posted by Panda

investors are jumpy and will move their cash where they think its safest.

they are not investors, they are speculators, 2 different breeds of players

Originally Posted by Panda

The US government is quite obviously trying to engineer a devaluation in the $US at a slow regulated pace.

any evidence of that ? If Obama is trying to stimulate AD, that will boost import, and logically will put pressure on the USD, but it's hardly a government thing.

Originally Posted by Panda

Panic does not respond to logic.

We already had the panic, it was in 2008. There is so much panic you can take in 1 year. This is over. Give it 2 or 3 years, and then maybe we could have another one, but we are done for now for at least another 18 months, probably more.

Originally Posted by Panda

neither do the people managing the financial markets through out the world.

People don't manage financial markets, it's just a cahotic world where players with different ideas interact

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

Originally Posted by Panda

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

now you are being silly, since when a recession is a panic ? or are you just showing off your ignorance in economics matters ?

Originally Posted by robuzo

I suspect that decoupling from US markets and US$ "hegemony" is going to turn out a lot more complicated and painful than anticipated. There just isn't any alternative at the moment, and China has not taken any meaningful steps to making it possible by developing a large-scale domestic market.

truer words couldn't be spoken,

Originally Posted by robuzo

Not that the US isn't in deep shit, too, but it will be a long time (if ever) before China will be a position to tell the Americans to go take a great leap downward.

exactly,

I think this is the proper thread for this post. . .Paul Krugman in today's NYT says not to worry about inflation:
The Big Inflation Scare
http://www.nytimes.com/2009/05/29/op...29krugman.html
(Excerpt follows)
. . .if prices aren’t rising, why the inflation worries? Some claim that the Federal Reserve is printing lots of money, which must be inflationary, while others claim that budget deficits will eventually force the U.S. government to inflate away its debt.

The first story is just wrong. The second could be right, but isn’t.

Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves. And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.

But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.

Still, don’t such actions have to be inflationary sooner or later? No. The Bank of Japan, faced with economic difficulties not too different from those we face today, purchased debt on a huge scale between 1997 and 2003. What happened to consumer prices? They fell.

All in all, much of the current inflation discussion calls to mind what happened during the early years of the Great Depression when many influential people were warning about inflation even as prices plunged. As the British economist Ralph Hawtrey wrote, “Fantastic fears of inflation were expressed. That was to cry, Fire, Fire in Noah’s Flood.” And he went on, “It is after depression and unemployment have subsided that inflation becomes dangerous.”

Originally Posted by Butterfly

Originally Posted by Panda

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

now you are being silly, since when a recession is a panic ? or are you just showing off your ignorance in economics matters ?

Do you recognize this quote?

"We already had the panic, it was in 2008. There is so much panic you can take in 1 year. This is over. Give it 2 or 3 years, and then maybe we could have another one, but we are done for now for at least another 18 months, probably more."

^Come on Panda, you know that Butterfly-world is stuck in mid-2007 right now. You will have to wait a couple of years for him to reach this point in time.

Originally Posted by Panda

Originally Posted by Butterfly

Originally Posted by Panda

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

now you are being silly, since when a recession is a panic ? or are you just showing off your ignorance in economics matters ?

Do you recognize this quote?

"We already had the panic, it was in 2008. There is so much panic you can take in 1 year. This is over. Give it 2 or 3 years, and then maybe we could have another one, but we are done for now for at least another 18 months, probably more."

I don't recognize it. Was it George W Bush? Sounds daft enough to be him, but he has been lying low in 2009. Some other comedian?

Originally Posted by Panda

Originally Posted by Butterfly

Originally Posted by Panda

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

now you are being silly, since when a recession is a panic ? or are you just showing off your ignorance in economics matters ?

Do you recognize this quote?

"We already had the panic, it was in 2008. There is so much panic you can take in 1 year. This is over. Give it 2 or 3 years, and then maybe we could have another one, but we are done for now for at least another 18 months, probably more."

Now you are beyond silly, you can't even read properly

I will try it again very slow, just for you

The panic has passed, maybe another one in 2 or 3 years over something else (there is always something to worry about), but in the meantime we will suffer a recession. A recession is not a financial panic. Do you understand what the word panic means ?

Originally Posted by robuzo

I think this is the proper thread for this post. . .Paul Krugman in today's NYT says not to worry about inflation:
The Big Inflation Scare
http://www.nytimes.com/2009/05/29/op...29krugman.html
(Excerpt follows)
. . .if prices aren’t rising, why the inflation worries? Some claim that the Federal Reserve is printing lots of money, which must be inflationary, while others claim that budget deficits will eventually force the U.S. government to inflate away its debt.

The first story is just wrong. The second could be right, but isn’t.

Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves. And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.

But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.

Still, don’t such actions have to be inflationary sooner or later? No. The Bank of Japan, faced with economic difficulties not too different from those we face today, purchased debt on a huge scale between 1997 and 2003. What happened to consumer prices? They fell.

All in all, much of the current inflation discussion calls to mind what happened during the early years of the Great Depression when many influential people were warning about inflation even as prices plunged. As the British economist Ralph Hawtrey wrote, “Fantastic fears of inflation were expressed. That was to cry, Fire, Fire in Noah’s Flood.” And he went on, “It is after depression and unemployment have subsided that inflation becomes dangerous.”

Inflation can occur when economies overheat in boom times when everyone has money and competition for things increases. Governments increase the interest rates then to slow down the demand for money and thus the economy.

Inflation can also occur when commodities become scarce, which again drives up competition and thus the price of things. EG: Zimbabwe.

The common denominator there between the two is an imbalance between the supply of goods and money. Either too much money or too few goods will cause inflation. Both together is a disaster.

Right now the world (and USA) has plenty of goods but not enough money, hence the drop in prices and the lowering of interest rates to get things going.

But the clincher here for USA is that their economy has been based on debt rather than productivity and by creating all this new money to improve domestic productivity, it will increase foreign debt even more. Somewhere down the line the credit has got to run out. The tradable value of the $US will plummet and imports will go up markedly in price for Americans. Without a domestic source of cheap goods combined with a flood of paper money on the market, inflation is assured as too much money chases too few goods.

Its nothing the US economy cant pull out of eventually. But its going to mean a lot of pain for a lot of people for a long time.

Originally Posted by Butterfly

Originally Posted by Panda

Originally Posted by Butterfly

Originally Posted by Panda

^ Glad to hear its all over now.
For a while there I thought we were in the grip of the biggest world recession since the 1930s.

now you are being silly, since when a recession is a panic ? or are you just showing off your ignorance in economics matters ?

Do you recognize this quote?

"We already had the panic, it was in 2008. There is so much panic you can take in 1 year. This is over. Give it 2 or 3 years, and then maybe we could have another one, but we are done for now for at least another 18 months, probably more."

Now you are beyond silly, you can't even read properly

I will try it again very slow, just for you

The panic has passed, maybe another one in 2 or 3 years over something else (there is always something to worry about), but in the meantime we will suffer a recession. A recession is not a financial panic. Do you understand what the word panic means ?

Your logic really cracks me up sometimes.

I mentioned this article to a friend of mine, and he pointed out that economists have a fairly narrow view of what constitutes inflation. I also tend to think that Krugman is ignoring foreign exchange fluctuations and massive dollar buying by China and other countries as the foundation of the dollar's value right now. In other words, the value of the dollar is being manipulated, deliberately propped up by the holders of the massive positions, in the same way that they propped up the insane US consumer spending spree of the past 10 years (especially last five).

"But its going to mean a lot of pain for a lot of people for a long time." Oh, yeah. They say it builds character.

Originally Posted by robuzo

Banks aren’t lending out their extra reserves.

Banks have withdrawn something in the region of 2.2 trillion dollars in credit card lines. This is already, and will continue to have an effect on the US economy.
The other side of the coin is little mentioned, the fact that business and consumers just dont want to borrow, the mentality at the moment is to hunker down, pay off a little debt and stop partying like it was 1999.

Originally Posted by Spin

Originally Posted by robuzo

Banks aren’t lending out their extra reserves.

Banks have withdrawn something in the region of 2.2 trillion dollars in credit card lines. This is already, and will continue to have an effect on the US economy.
The other side of the coin is little mentioned, the fact that business and consumers just dont want to borrow, the mentality at the moment is to hunker down, pay off a little debt and stop partying like it was 1999.

And thats exactly what the US government doesn't want at the moment. Things have got to keep rolling rather than to stagnate for this situation to unfold and the recovery process to start. Obama has got at best 8 years to do it in. If things stall and go into economic limbo he and the Democrats will be out in 4.
Spend, borrow and print. Bring it to a head and get it over with is what they want.

Originally Posted by robuzo

I mentioned this article to a friend of mine, and he pointed out that economists have a fairly narrow view of what constitutes inflation.

and your friend is an expert, is he ?

Originally Posted by Panda

The common denominator there between the two is an imbalance between the supply of goods and money. Either too much money or too few goods will cause inflation. Both together is a disaster.

Right now the world (and USA) has plenty of goods but not enough money, hence the drop in prices and the lowering of interest rates to get things going.

But the clincher here for USA is that their economy has been based on debt rather than productivity and by creating all this new money to improve domestic productivity, it will increase foreign debt even more. Somewhere down the line the credit has got to run out. The tradable value of the $US will plummet and imports will go up markedly in price for Americans. Without a domestic source of cheap goods combined with a flood of paper money on the market, inflation is assured as too much money chases too few goods.

Hey Panda, do you have any idea what you are talking about ???? this above is fucking awesome, absolutely priceless. Unfucking believable, you should get a Nobel Prize for Economics stupidity

Originally Posted by Panda

Your logic really cracks me up sometimes.

Oh yeah, you do too, see above, you are a total clown, you should open a blog, or better yet, run a financial TV news program

And a very substantial contribution to the thread you have made there too Butterfly.

Please keep us posted when you have something to say about the subject at hand.