Posted on 04/13/2009 8:44:20 AM PDT by djf
Bump to find later
or had to run under fire........ all the gear, latest gadgetry, weaponry, and ammo in the world don’t make a bit of difference if you can’t move from point A to point B with it.
You misunderstand. With an international devaluation of the dollar, the price of carrots in Mexico remains the same, but because international markets *say* the dollar is devalued, carrots imported into the US would technically cost $30/pound, here. Ergo, they aren’t going to sell carrots here. And our farmers can’t sell our products there, because they would be repayment for debt we owe them. We have no credit.
The same with other imports. Unless they are both critical, and not something the US can grow or make itself, the US will not be able to import it, at international prices. “Buy American” will be the only option.
These are not artificial tariffs, these are natural tariffs. But the end result is actually a positive one, forcing the US to rebuild all the industries it outsourced for decades.
As far as the SPR, I am well aware that its output is very restricted. But a combination of very limited demand, because of the depression, and the active production of “new oil” in the US, we will hopefully muddle through with just limited shortages.
It won’t do any good for domestic US oil to be exported, for the same rules as for carrots. The oil would just be taken as repayment for existing debt.
This is a strange argument. Farmers most certainly could sell in Mexico at the world market, and they would. You don't need credit to sell. You need credit to buy, but only if you don't have cash.
The world doesn't just *say* that the peso is now worth US $10, it backs it up by actually trading 1 peso for 10 US dollars. That means if I can sell my pound of carrots for 3 pesos in Mexico, I can go to a Mexican bank and trade that for 30 dollars. And, I'd be a fool not to do so if I could only sell that pound of carrots for $3 in the US.
So, I bring that $30 back into the US, and some goes to taxes, and the tax revenue is turned around to pay the US debt. I'm sure the government will be much happier with the taxes from a $30 sale in Mexico than a $3 sale in California.
Our exports won't be 'taken' as repayment. That's an act of war. We get to sell them, the proceeds are taxed, and the tax revenue is used to pay off the bonds.
Expropriation like you are talking about happened when Napoleon took Europe, or Alexander took Persia. Modern examples include Japan taking China, China taking Mongolia, Russia taking Eastern Europe, etc. Are you really assuming a war that we are going to lose? Otherwise, give me an example of a devaluation followed by expropriation not backed up by gunboats or armies.
Lots of currencies have been devalued, and your scenario of expropriated exports hasn't happened. And if the debts were denominated in the failed currency, the debtor loses: see Weimar Republic for an example. Since most of our debts are denominated in dollars, the debtors are in a real hurt if the dollar is greatly devalued. My guess is that they'll get a heads up on the devalutation (and you and I won't) so they can attempt to minimize the hurt.
What countries tend to do when devaluation hits is to tighten their belts, and export like hell to get the necessary profit to pay off their debts. I can't see any logic in or historical example of your claim that exports can't happen after a devaluation.
LOL! You’re too funny, TAC.
BTW, I miss you over on the survival thread.
Roth gains aren’t taxed at withdrawal, unless the government changes the rules...
They are one of the only Brit Banks NOT to take govt. money, and they recently floated an $18 billion rights issue, as well as selling a couple pieces of prime real estate for $4 billion.
Apparently they thinking of acquisitions in Asia...?
Cheers!
HSBC is *not* really a brit bank. Hong Kong Shanghai Bank Corp...
“the more traditional idea of a formal currency devaluation by the government against the other currencies”
The US Dollar -as the world’s reserve currency & trade currency- is not an exact comparison to other currencies. The vast majority of the time that is a good thing, as it maintains high global demand for Dollars and Treasuries for the purpose of selling into the US trade deficit, for lending into the budget deficit, and for buying/selling oil. However, it’s also the achilles heel of the global system - any loss in confidence in the US Treasury or in the US Dollar or in the Federal Reserve’s independence can so massively reduce global demand for dollars for the above-3 purposes as to be catastrophic for us.
When we went off Bretton Woods, we effectively replaced the gold backing for dollars with an unsustainable backing of perpetual US budget deficits, trade deficits, energy dependence and over-consumption. The system suffers from the Triffin Paradox, where US economic health depends on the impossible combination of both net dollar inflows into the US and also net dollar outflows from the US. As Herb Stein replied to objections over that Nixon-era faustian bargain, “If if can’t go on forever, it will stop.”
There is no question that it will stop, and there is no known way to stop it that is not painful for the entire world. The only questions now are if the pain will be inflicted on this generation or some future generation; and if it will stop in a time and manner of our own choosing, or in a time and manner of someone else’s.
But they have a big presence in London, and are always mentioned in the same breath with RBS, etc., so...
Cheers!
I’ve been reading Jim Willie for the last 6 months. He offers a shocking amount of detail in his free articles, makes me wonder what kind of info is in his paid newsletter.
A recent interview: http://www.youtube.com/watch?v=dKbGc_wluPw&feature=related
Man! He’s rippin Bernanke a new one...!!!
Check 'em out:
1)Silver Wheaton
2)Kinross gold
3) NDM.TO
4) EDR.TO ( small cap Silver)
5) First Majestic Silver( small cap silver)
6) ABX.TO ( Gold)
I think you misread what FDR was doing. The American money supply had shrunk by 30% before he took office, due to the collapse of thousands of small banks during the 1930-33 period. Such a drastically reduced money supply limited the ability of banks to make loans, which would stifle economic recovery. The revaluation of gold to the dollar by 30% had the effect of increasing the money supply. It doesn’t appear to have accomplished much, but I think that is the reasoning behind why they devalued the dollar vs gold at that time.
It would. Even slow inflation devalues the dollar. You can use “the rule of 72” to find out how quickly inflation cuts the value of your money in half. Divide 72 by the inflation rate to get your answer.
You mean the bid-to-cover ratio was only 2.05? Why is that a problem?
Though there will be rumblings, any devaluation would be very swift where one goes to the bank the morning and finds them on holiday
Since the US does not fix the dollar against any currency or commodity, how does he imagine the government would suddenly change the (nonexistent) peg?
And why would there be a bank holiday?
This post is not meant to spook anybody
LOL! Or give anybody any useful information.
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