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.
Rubbish. Pure, uneducated, low-brow nonsense.
Our currency, the U.S. Dollar is being manipulated by foreign governments.
My position is that we must counter that manipulation. To do otherwise is to endorse the foreign manipulation of American job losses.
This is a pro-defense, pro-U.S., pro-conservative position.
You do not like *how* I have proposed to defend our American economy. Tough.
I intend to defend it. That is conservative. If my methods offend you, then all the better.
If the U.S. Dollar falls, then Americans can't physically purchase as many Chinese goods as in the past.
What do you think that fact would do to China's economic "expansion?!"
Likewise, if the U.S. Dollar falls, then American exports become cheaper for our customers to purchase. How many more American jobs will that create?
Now, you tell me if a falling Dollar is worse for the U.S. or China.
Just wondering why they hold so much in US notes/bonds etc.
Unless dumping the lot would hurt us?
They hold all of those notes in order to prop up our currency. That enables the U.S. to purchase more of their exports.
If the Dollar declines, then we can't buy as much of their stuff.
So it is in their own interests, and against ours, to prop up the Dollar.
>>> Rubbish. Pure, uneducated, low-brow nonsense. <<<
Thank you for your refutation.
I've refrained from posting on economic threads for about 3 years now. I'll return to lurking. While many of us wear the conservative name, not many realize that many "conservatives" espouse very socialist ideas about what our government should do in managing markets and trade.
>>> If my methods offend you, then all the better.<<<
What kind of debate tactic is that? You are glad to offend me, are willing to call Milton Freidman wrong, and beat up on posters who disagree with you. Sheesh...
Over and out.
You won't be missed.
Unfortunately, to have a "strong one" one needs to not print and spend them like they're... made of paper...
Not true in many parts of the country, most people just never did the math. Property taxes (and to a lesser extent, HOA) are sufficiently punitive in many areas that you will acquire more wealth renting and investing the substantial difference. Most people buy anyway without regard for any kind of economic analysis, but that does not surprise me. The people who own rentals often have little or no mortages, and so are just offseting taxes/HOA plus profit, which makes a mortgage not even remotely competitive even at 20% down payment.
The only way buying a home makes sense in many parts of the country is if you can afford to purchase a very substantial portion of it outright, but very few people do. The idea that owning a home is always a good investment is one of the most insidious and widely believed myths. It is a shelter, not an investment, over the long run and on average. Having the value of your house double in ten years does not constitute an "investment", particularly not if you have only fractional equity. Certainly not the most constructive use of capital unless you have no other plans.
Currency should reflect value, not store it. ANY store of value will necessarily be unnatural simply by the fact that it has to reflect the product of the rest of the economy if used as currency. The value of fiat currency is that you can explicitly control the reflected value -- there are many lessons in history of the result when the supply of value stores used as currency (e.g. gold) suddenly shifted. Not pretty. Granted, idiots can still screw up fiat currency, but at least that always stems from an explicit decision. When you tie currencies to stores of value, you suddenly have the case where the value of currency is effectively beyond human control due to shifts and sourcing of supply.
For example, if gold was the currency of record today, not only would it be ridiculously expensive to reflect the total value of the economy, but South Africa and Russia would own huge fractions of the world's money supply. The ability to produce gold does not reflect the production of value any more than the ability to produce paper money does. But it makes it a hell of a lot more arbitrary and uncertain. Sure there is some minor real value in gold, but that is already reflected in the market as a miniscule fraction of the total value of human wealth. Fake value is not worth any more than paper is.
No thanks, I'll take fiat money over physical stores of value. Unlike the "store of value" case, the government can manage the effective value because they explicitly control the supply.
Gold is irrationally valued, primarily because many people think like you do. The price does not reflect fundamentals, and you will get burned if the price collapses to fundamentals. You would be much better off with either silver or platinum metals, both of which have a price tracking the cost of production (unlike gold).
1.) In 1969, the dollar value of gold was fixed by the government. It in no way reflected its actual market value. You therefore cannot use it as a legitimate reflection of real value.
2.) The profits gained by stocks are, on average, not reflected in the price. The compounded returns on dividends for the broad market are at least as large as the returns on price appreciation over the last 35 years. That is why the dividend tax cut was such a big deal to investors.
You're dreaming if you think GM will weather this (at least without a bailout). They're so far under water pension fund wise they need a pressure hull...
This would apply to many parts of California and Oregon (which is also where I am).
NOBODY saves money with the mortgage interest deduction. This is yet another insidious myth, and really short-sighted thinking. In essence, you pay the bank instead of IRS, and the bank pays the taxes on the interest to the IRS for you (all of which is passed along to you one way or another). It is an accounting trick to encourage the middle class take mortgages without reducing their tax burden one bit. The only people this "helps" is those that have too little self-discipline to actually save and invest their money.
When you pay interest it is money that is not working for you, just like renting. The "mortgage interest deduction" is really just writing off the depreciation loss on the value of the house. In other words, when you take out a $250k mortgage, you end up actually paying something like $400k for a $250k house. The mortgage interest deduction lets you write off $150k capital loss, and the bank pays taxes on $150k profit. You have not saved any money, the IRS has just decided to tax the guys who took the real profit rather than the loss i.e. the bank.
So no, the mortgage interest deduction does not really help here. They just are not taxing you on money you were throwing down a rathole anyway. No wealth has been accumulated as a result. You have still lost the interest payment down a black hole that you might have saved in other scenarios.
Or to put it another way, if a mugger takes $20 and gives you $5 back, you've still lost most of your money. There was no profit in getting the $5 back.
While it probably should be more towards an ~, it is about the $0.30 Ag value of a gallon of gas nationally. Who made money on that inflation job? Certainly not my cash saving grandparents...
You would be absolutely right except for 3 points. 1. Many of the US finished goods have inputs of production (read subparts) that are imported. Now more expensive. 2. Oil is bought in dollars, dollar becomes weaker, we get less oil, thus everything goes up in price. 3. Finally there's that little problem that our Federal government spends $2.5 BILLION more each and every day then it earns and almost half of that comes from foreigners. Weak dollar means its not worth their investment, so interest rates spike up to keep them buying into the scheme. So there goes the housing market and the credit cards, which is about $20 debt per family.
Economic growth is deflationary. The only way to offset that is for the government to introduce inefficiency into our economy (something the government does extremey well). In order to bring about inflation the government must go beyond the breakeven point, so there is no way that inflation can be said to introduce a higher standard of living. That can only come from productivity increases. There are only so many windows the government can break to stimulate our economy before it causes problems.
One form of investment: any European company that trades here as an ADR could be a hedge against a falling dollar, assuming that their business wouldn't be adversely impacted by such a fall.
My favorite European stock is CRXL, though they're a young biotech and somewhat speculative. They have been moving up on their own, but the falling dollar has been wind to their back.
Of course it's not to be assumed the dollar will just fall forever. It might settle around 1.5 Dollars to 1 Euro or something like that, it would seem there are points beyond which it is in *nobody's* interest for it to just keep falling.
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