Posted on 11/27/2004 10:24:13 AM PST by soccer_linux_mozilla
The United States’ trade deficit is soaring and the once high-flying dollar has sunk to record lows against Europe’s common currency.
The dollar’s record low against the euro coincided with the government’s report that the United States was running a trade deficit through September at annual rate of 592 billion dollars. That compares with last year’s record 496 dollars billion. As a result, the country is having to borrow almost 600 billion dollars from overseas this year to pay for the imported cars, televisions and other items Americans are buying.
No need to start name calling, this has been up till now a very good thread. Lot's of good exchanges in ideas. I don't agree with shouthack, but he is not unpleasant to talk to.
If cheaper was the only factor when considering a product, the world would be filled with Yugos, and no one would own a Lamborghini.
When quality goods become more affordable...for whatever reason, they sell more, and America produces quality goods.
By the way, the comment about the hamburger flippers, was it directed at my comment about Disney World?
Do you think that Disney World, and the Orlando area was designed, built and is run by hamburger flippers?
Have you ever SEEN what goes on behind-the-scenes at Disney?
Southack, I'm replacing "South Americans" with "foreign central banks" in your argument. Does it work?
>>> But, those foreign central banks love to store their wealth in the form of cash (dollars). They "see" their wealth in terms of cash on hand. To them, money should store wealth.
To me, that's precisely what money should *not* do. Money should merely facilitate retail and wholesale trades, not act as a store of wealth.
If you want to store your wealth, then you should use money to purchase traditional stores of wealth such as real estate, mineral rights, oil itself, gold, factories, licenses, etc.
Freidman wants your money to store wealth. That's the foreign central bank recipe for economic stagnation. There are better ways to store your wealth than cash... <<<
It doesn't work real well. Foreign central banks have used dollar reserves *precisely* becasue they have been a relative store of value. Since the demand for dollars is decreasing and the dollar is not as great a store of value, we should see some flight to the Euro and other currencies -- that are perceived as stores of value.
Regarding "hoarding" -- isn't that just a word to indicate strong demand for something? There's strong demand because of a perceived store of value. What really is troublesome is "dis-hoarding" when people perceive that holding a currency is a losing proposition. This leads to people unloading dollars as quickly as possible in order to stem the loss of value. When many people do this simultaneously, the herd mentatlity can lead to panic unloading of a currency. I think I prefer hoarding to dis-hoarding. Prices and currency are more stable.
Oh, and regarding Freidman...is he really wrong or do you just disagree with his conclusions based on your own research?
Loses from what exactly?
"I'm not saying it's not better. I'm just saying that having a percentage of equity in a home is not "owning" it."
So according to your statement above, none of American businesses, whatever their form, are owned as all of them have liabilities.
I would be interested in the details of such an account or how to get a similar account. I can't afford to buy gold as some unexpected expense ALWAYS seems to drain me of my moneys. But I might be able to protect a little gold checking account.
I don't see it. The Dollar has declined since 1930. Real estate has increased in value since 1930. If central banks were about storing wealth instead of manipulating Markets, you'd think that they'd be able to afford managers clever enough to invest in appreciating real estate instead of depreciating cash...
Throw me into that briar patch. The more that the Euro increases, the more expensive European exports to the U.S. become. That makes American companies more competitive, hiring more Americans.
No replies.
You're right. Sorry.
Friedman is only "wrong" in the sense that the more your currency stores wealth, the more difficult it becomes to speed up the velocity of money.
If your bank account always had $1,000 in it, but every day that $1,000 had more and more purchasing power, then you'd be hard-pressed to spend your money. This is what happens with computers getting cheaper each month. People delay buying a new PC as long as possible because they know that their money will buy more of a machine the later that they wait.
In contrast, if your $1,000 buys less and less each day, then you have an incentive to hurry up to spend your money sooner, rather than waiting for it to become worthless. In this environment it is considerably easier to speed up the velocity of money.
Well, the slow speed of money is the South American economic model. The fast speed of money is the U.S. model.
If you had to choose one economic model, the U.S. version will always win out.
So buy gold and American products, hire more U.S. workers, reduce the trade deficit, create a huge bull market. Who do they think buys their sweat shop slave labor products? Who do they think has already started looking for the "Made in" stickers on the products because they want to buy "Made in USA"? Next, following in suit the French loving NY Times will raise its daily paper price to $10.00 a copy to show their solidarity with their brethren and guess what....nobody will buy it either. Its like a crooked used car salesman threatening not to sell you a lemon. You will not hear a peep out of them over buying USA food exports.
Forgive my ignorance, but the velocity of money has it any thing to do with the money multiplier?
Thanks.
There is a certain thing called legitimacy. I do think that debate on this forum is not limited to politeness as our RAT competitors would have it. Debate is raucous and we should be also. When I see BS I think the proper way to respond is by naming it such. When I see a drunken stupor in the middle of a debate I think the right way to respond is to tell my opponent to sober up and call me in the morning. Am I wrong?
yes seems inflation always erodes the value of money but this is interesting
$2.14 in the year 1969 has the same "purchase power" as $1 in the year 1929.
$5.02 in the year 2003 has the same "purchase power" as $1 in the year 1969.
http://eh.net/hmit/ppowerusd/
Looks to me like our money started taking a real noise dive since 1969 (1971). Also note that the lastest info is for 2003 but the dollar fall is really a 2004+ thing.
Just for grins
$20.96 in the year 2003 has the same "purchase power" as $1 in the year 1776.
I used to know all that stuff but it didn't serve me so I forgot it. The velocity of money is the rate at which money moves through the system, ie, the rate at which you spend or save your money. If you spend it, then someone else will spend your money and etc. If you save it then the velocity slows down. Anyone else have a better explanation?
No sir won't catch me standing in line at 6 in the morning to get into Targets to shop for things made in China. No sir!
Correct. The Dollar declines over time, the speed of money accelerates, productivity increases, while our standard of living (think: healthcare, home ownership, stock trading) over time increases.
So money makes for a poor storage vessel for wealth, yet overall, our wealth still increases.
I disagree. Someone is buying those 5,000 dollar big screen HDTV's. There is as market for new products before they get to a level of affordability. Why do they even market them? I was in a store today and every tv in there was tagged at several thousand dollars. This store has been in business for at least twenty years. Are you telling me that they are going out of businees? I think not.
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