Posted on 02/11/2005 6:49:34 AM PST by FreeMarket1
HOW GOOD IS THE DOLLAR?
Feb 11, 2005 - FreeMarketNews.com
by staff reports
At the recent International Center for Economic Growth (ICEG) annual get together in Davos, Switzerland, speakers from various countries commented on global warming, politics, economics and foreign currency relationships. Bill Bonner of the Daily Reckoning notes Fan Gan, a mid-level government official from China had some stark opinions about his government’s lost faith in the dollar. Fan remarked. "The U.S. dollar is no longer (seen) as a stable currency.” He sees his country moving away from having so much of its holdings in dollars.
Bonner remarks, “As to why China hadn't done so already, he (Fan) explained that it was a bit like fixing a roof. When it rained heavily (such as last fall when the dollar was falling sharply) you can't do it ... and when the sun is shining, you don't have much interest in doing it: "High pressure...we don't do it. When pressure's gone, we forgot."
Then Fan stated, “This time, we won't forget.”
The trend of dollar diversification is well underway. The Eurodollar, once scorned when it traded in the low 80’s, has moved as high as 1.37. Chuck Butler, President of EverBank, notes that now “About 50 countries of the 200 that are recognized in the world use the Euro as their ‘anchor currency.’”
Investment newsletter writer Doug Casey observes that China has not only begun to diversity its dollar holdings into other currencies such as the Euro, but also is making purchasing forays into natural resources, as well as mining companies and large consumer interests. He credits the recent sale by IBM of its laptop division to a Chinese company and the attempt to acquire Canada’s Noranda mining company to this strategy.
While this is going on, the American consumer continues in his profligate ways. In Casey’s view there is a disconcerting precedent for such activity. The Chinese trade their huge surplus of dollars for tangibles, “while Americans are spending hundreds of billions on ..................Full Article www.FreeMarketNews.com
Just wait until civil war breaks out in Europe...or the car bombings began...
The dollar is great! I'll be glad to take any you feel aren't any good.
I would bet the dollar long term against the Euro anyday. Europe's aging population, high unemployment, low growth, big government is gonna takes it toll on the Euro.
Europe and China are going into the tank. There was a story about Chinese people losing their money daytrading and many are just getting it out before the yuan falls.
The Fed can't keep printing dollars and increasing the money supply by over 10% per year and not expect the dollar to fall in the long run.
Personally, I luv 'em. Any and all who are disenchanted with their own is welcome to send some my way.
And the Fed grows money on trees.
BUMP
They both are in need of "roof repair". ;)
"just getting it out before the yuan falls."
What? Yeah, bet on that one.
Forgive my simplicity, but doesn't hte falling dollar make our goods more affordable to the rest of the world?
Absolutely right on. In the last 30 years we've gone from having asset money to liability money.
My money changer is always happy to see me when I remind him I'm "Working for the Yankee Dollar"
Bonus points if you can tell me the group without googling!
The money supply does not increase 10% a year. Closer to 5%. If you like Euros so much, by all means invest in them. I happen to have much more confidence in the health of our economy then theirs. But if you perfer to bet on left-wing socialism, more power to you.
It is a crisis when the dollar falls, it is a crisis when the dollar rises. We are always in crisis until everything stops changing.
As good as it gets.
Not really. You could not turn in your money for gold. There was not a 1 for 1 backing, it was all based on margins. The biggest impact of making it appear our money was backed by gold was to make people feel better.
agreed. 4.5 times more money than 1980. Anyone think our economy is 4.5x bigger. NO! Thanks Alan.
There is a difference between fractional reserve banking and full reserve banking. The latter is historically very rare. But simply because the dollar was a fractional reserve currency doesn't imply it wasn't backed by gold. It was, until FDR uncoupled it. Now it is backed by nothing. That's a change.
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