Thread: The Greenback

Here's one article of many:


The Dollar's Decline Does Matter

CBS' Tom Fenton Says Shrinking Value Is Warning Sign For U.S.




LONDON, Dec. 6, 2004

Most Americans pay no attention to the exchange rate of the dollar, unless they take a trip to Europe and gasp at forking over the equivalent of five dollars for a cup of coffee.

Only then do they realize that their paper currency which they once thought was as good as gold, is only worth what foreigners think it's worth. And right now, foreigners have a very low opinion of the dollar.

Since the end of the Clinton administration - or to put it another way, since the beginning of the Bush administration - the dollar has been heading south at an alarming rate.

Against the Euro, a relatively new currency backed by a European economy that is bigger than America's, the dollar has lost more than a third of its value. The same thing has happened to its value against the British pound.

What's going on here?

Economists can give you a lot of arguments and counter arguments, most of them complex and some a little dodgy, but the simple answer is that America is living beyond its means.

Our government has been doing what the average American has been doing. While American families pile up credit card debt and re-mortgage their homes, the government is piling up national debt and mortgaging our future.

Who is our government borrowing from? Mostly other governments, it seems. Foreign central banks now hold 2.3 trillion dollars (that's $2,300,000,000,000) in American IOUs such as U.S. Treasury bills and bonds. China and Japan are among the biggest creditors. If they decided to sell off a substantial part of this mountain of dollar assets, the dollar would collapse.

Should we care? You bet, as Defense Secretary Donald Rumsfeld would say. The collapse of the dollar would drive American interest rates sky high. Your mortgage would suddenly become unaffordable, your credit card debt all but unpayable. And forget about those foreign trips. Who could afford a ten dollar cup of coffee?

How did our government get to the edge of this cliff? Again, the answer is simple. The Bush administration cut taxes, launched two wars in what it calls the Greater Middle East, and is now bleeding lives and money in an Iraqi insurgency that shows no signs of abating.

Link and entire: The Dollar's Decline Does Matter, CBS' Tom Fenton Says Shrinking Value Is Warning Sign For U.S. - CBS News

Switched on the BBC this morning and some Banker was saying tha the decline in the dollar was linked to the gross inequalities of income in the American economy. I guess he meant that with the continuing shrinkage of the middle class, the super rich will never get hurt as they can move out of the dollar and the rest of the country is so in debt that a decline in value wouldn't make much difference.

its a simple enuff equation innit?

Dont spend more than you make.

ppl and countries sometimes forget this.

Originally Posted by kingwillyhggtb

its a simple enuff equation innit?

Dont spend more than you make.

ppl and countries sometimes forget this.

Didn't take long for the present owner to screw things up. Americans must be nostalgic for the good old days of Bill Clinton when the economy was run by professionals.

Originally Posted by Begbie

Originally Posted by kingwillyhggtb

its a simple enuff equation innit?

Dont spend more than you make.

ppl and countries sometimes forget this.

Didn't take long for the present owner to screw things up. Americans must be nostalgic for the good old days of Bill Clinton when the economy was run by professionals.

dont quite agree with that statement.... clinton was lucky to ride a wave of prosperous economic times....

quite a few analysts would tell u he caused quite a bit of the mess....

he might have been a world diplomat and a womanizer.... but economist he werent!

The problem with the USD is everyone is in it and if everyone starts dumping it we all get fucked.

It it wasn't for the expensive oil, the USD would be even lower and it would be a complete disaster.

The Chinese and Japanese are stuck but at the same time it's a power thing for them as they hold the USA by the balls with their debt. The real question is how long will it last ?

Originally Posted by Butterfly

The problem with the USD is everyone is in it and if everyone starts dumping it we all get fucked.

It it wasn't for the expensive oil, the USD would be even lower and it would be a complete disaster.

The Chinese and Japanese are stuck but at the same time it's a power thing for them as they hold the USA by the balls with their debt. The real question is how long will it last ?

agreed, bladdy house of cards it is, gotta all fall down sooner or later...

Originally Posted by kingwillyhggtb

dont quite agree with that statement.... clinton was lucky to ride a wave of prosperous economic times....

quite a few analysts would tell u he caused quite a bit of the mess....

I don't agree entirely. I think he sent the correct signals to the business community (at least for the Silicon Valley companies) and was reassuring by creating an environment of peace and stability. Jr instead is throwing shit at everybody and he is rocking the boat like a spoiled kid just because he can. He is not creating an environment for businesses to operate freely and effectively. He is the most anti-business person you can think of, just like his daddy. Unless we are talking government related businesses (corporate welfare) and oil (strategic politically)

Clinton rode the wave of the internet while it was growing. The bubble burst when Bush took office and it's been downhill ever since. Probably the only economic 'expansion' where the expansion was the result of debt piling up. People taking out second mortgages to buy new SUVs and other useless crap. Now that the housing market is dying and their rates are adjusting upwards they're all screwed if the dollar falls further.

This announcement was made over a year ago. It's mostly symbolic, but Iran is not the only country in the world facing this decision.

Iran to replace dollar with euro in foreign deals
Dec 18 4:51 AM US/Eastern


The Iranian government said it has ordered the central bank to transform the state's dollar-denominated assets held abroad into euros and use the European currency for foreign transactions. "The government has ordered the central bank to replace the dollar with the euro to limit the problems of the executive organs in commercial transactions," government spokesman Gholam Hossein Elham told reporters Monday.

"We will also employ this change for Iranian assets (in dollars) held abroad."
The move comes amid mounting pressure from the United States for the UN Security Council to agree sanctions against Iran over its controversial nuclear programme.
Elham added that Iran's budget would in future be calculated according to euros.
"Until now the budget has been calculated according to revenues in dollars but this calculation will now change."

Link: BREITBART.COM - Iran to replace dollar with euro in foreign deals

Time to invade Iran

Yeah, keeping Iraq on the dollar standard is working so well. What an investment! $1 trillion down the drain.

Now all we need is for China to call back their debt. Talk about the ability to destroy the U.S. without firing a single shot.

Originally Posted by Begbie

Americans must be nostalgic for the good old days of Bill Clinton when the economy was run by professionals.

Don't think so, Jimmy.
My paypacket is doing much better under the present administration's watch since taxes were slashed...

The current regime runs up the worst record in history when it comes to fiscal conservatism:

Despite improvement in both the fiscal year 2006 reported net operating cost and the cash-based budget deficit, the U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000.

As this long-term fiscal imbalance continues to grow, the retirement of the “baby boom” generation is closer to becoming a reality with the first wave of boomers eligible for early retirement under Social Security in 2008.

Given these and other factors, it seems clear that the nation’s current fiscal path is unsustainable and that tough choices by the President and the Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance.

Page 156.

http://fms.treas.gov/fr/06frusg/06frusg.pdf

The relationship with our creditors is one of mutually assured destruction. They won't not buy US treasury securities because their economies rely on our economy. It's the neo-liberal interdependent economies theory - we all need eachother. How long will it take China to establish their domestic market, their S. American markets, their African markets, etc. to the point that they don't need the US market anylonger? This I don't know.

^^^Less than 10 years I would wager.

On a side note, does anyone believe the Baht will depreciate signicantly against the $ since the SET crash?

heading to 37 now

Originally Posted by Butterfly

heading to 37 now

Very good news! I'd like to see 42 again soon.

I would like to see 44

Lost already 6k USD this year in exchange rate alone, last year was another 10k

44 would be dreaming but I'm hoping for 40 again. More screw ups by gov't. and it go that way but I think they'll be more careful in their interventions from now on.

To help cover up their fiscal incompetence, the Bush regime has stopped publishing M3 money supply statistics. The dollar appears to be a doomed currency. Gold, silver and currencies from fiscally responsible, less corrupt places like Scandinavia and Switzerland may be the way to go. From 54 AD - 268 AD, the silver content in Rome's currency shrank from 94% to .02%. Stupid, faraway wars and corruption ruined their currency. Some things never change.

I need to bring in about US$45K. So, all you FX experts:

Do it now, or

Wait a bit....