The Brutal Price of a Dollar

The Heritage Foundation ^ | May 31, 2005 | Tim Kane

[Paul Ross]

I'm sorry, I should have written "real disposable income"

Adjusted by internal CPI accounting fails to actually capture loss of living standards. Weighting instead against an exogenous major currency is more likely to do so.

As Tim Kane says above: "foreign exchange markets have been showing signs of what The Washington Post calls “dollar jitters,” especially in February when South Korea’s central bank hinted that it might buy fewer dollar reserves in the future. The market was quick to dump and run. It is also true that the dollar has fallen from its heights of 2000, when a single dollar traded for 1.15 euros. Today, one dollar trades for 0.8 euros, a decline that one French official has called “brutal” even as many analysts suggest that the dollar still remains overvalued. For example, Warren Buffet and Bill Gates have declared that they are “short the dollar”.

Actually, Kane is understating how high the Euro got...where it was trading at something like $1.31-32 for quite a while. And then looking at previous history, pre-Euro, we see an even more concerning trend even for phony optimists like you:

[Paul Ross]

...but you disdain his views of economics - that is if you've read your history.

Quite the contrary. You have not read your history. You are simply ignorant.

Alexander Hamilton strongly supported protective tariffs.

LOL!

[Paul Ross]

I see that you are not helping make large, healthy, and American automobile companies. Practiceth what thou preacheth.

?? How do you figure. My SUV is two years old now, I bought it new. So I do. Waste not, want not. I am getting full value out of my vehicle which is pristine and like new. How do you measure the value of a car, not just handling and performance, features and looks, but reliability and endurance, right? That is how Detroit originally foundered. They have pretty much fixed that. I can tell you the vehicles I have picked have over the last 10 years have had zero problems. The two brand new BMWs I had before that in the 80s and into the 90s needed a LOT of repairs. Maybe you need to open your eyes. I.e.,

"How many did you?" None. I refuse to subsidize the production of s**t just because it's "made in America."

U.S. automotive industry now makes a lot of the best cars on the road. So where is your attitude coming from? Meanwhile, my wife slavishly sticks to Toyota, and her cars have needed repair after repair while my American SUVs just go and go. Seems to be more like an article of religous faith for those anti-american car phobes. Just like Todd's denial complex about the trade deficit.

And that means you are part of the problem in more than a few ways...if you bother to think about it.

[Paul Ross]

You ordered a nice bomb (chart) from Acme (Heritage Foundation) and when you opened it, it blew up in your face, again.

Still your face blown off, not mine. You deflate the currency by exogenous currencies because, so long as they are stable and non-inflationary, their purchasing power gives you a "control" measure against your own purchasing power...hence your country's wealth and living standard. The statistical assertions concocted to the contrary, we can safely discount.

[Toddsterpatriot]

Adjusted by internal CPI accounting fails to actually capture loss of living standards. Weighting instead against an exogenous major currency is more likely to do so.

What do you think snows, you agree with Paul's line of "reasoning"? The dollar went up 10% vs the Euro in the last 9 months. Does that mean our standard of living just increased 10%?

[LowCountryJoe]

Quite the contrary. You have not read your history. You are simply ignorant.

Alexander Hamilton strongly supported protective tariffs.

LOL!

Hmm; yes, a bad example and terribly embarrassing. Though i do not believe that you've refuted the strong centralized government charge I levied against you...and how could you given your central planning adoration?

[Paul Ross]

How about Gold, Paul?

Not a Gold Bug, Todd. But this morning's headline should chasten your poppycock: Dollar Falls v. Euro, Gold Rises in Europe.

And to really nail down the lid on your economic statistical coffin....let's look at the internationally traded commodities...

How about Oil, LNG, Steel, Copper, Tin, Lead, lumber, beef, Todd?

[Paul Ross]

What do you think, "Todds" do you even agree with your own line of reasoning?

[Paul Ross]

What "strong central government charge" was that?

So perhaps you want to go back to the weak Articles of Confederation?

I don't.

I too wish we could undo a great deal of crap done in the name of the Interstate Commerce clause. But tariffs were always constitutional. No ifs. Not buts. No maybes.

[Toddsterpatriot]

Not a Gold Bug, Todd. But this morning's headline should chasten your poppycock: Dollar Falls v. Euro, Gold Rises in Europe.

Chasten my poppycock? I think you've got your egghead word generator tuned to dork.

Gold closed in London at $422.70 bid per troy ounce, up from $422.20 on Thursday.

So, gold at $422.70. That must be a new high, right? After all we're debauching our currency. The dollar ain't worth shit, the economy is in tatters. Oh, you mean that's not an all time high? Not even half of the record high?

So much for debauching the dollar.

How about Oil, LNG, Steel, Copper, Tin, Lead, lumber, beef, Todd?

How about them, Paul? You have a chart to show us? Try to post one where more than half the data points prove whatever silly point you think you're proving.

[BeHoldAPaleHorse]

"U.S. automotive industry now makes a lot of the best cars on the road."

Just keep drinking the Kool-Aid.

[Paul Ross]

Guess you can't debate your way out of a paper bag. No help for you here Todd.

Oh, and when you finally do post any data, why don't you follow your own advice and Try to post one where more than half the data points prove whatever silly point you think you're proving.

You lost the debate.

[LowCountryJoe]

So perhaps you want to go back to the weak Articles of Confederation?

A healthy respect for the 9th and 10th amendments are in order, are they not? Oh, I forgot who I was asking!

Tariffs were constitutional, yes, but they became an unwise method of government revenue after the "infant industry" had finally blossomed. In fact, the tariff manipulation on products - a manipulation that was not uniformly applied and unfairly levied against the South's interests was one of the causes that led to the War Between the States.

Your reasoning in support of tariffs is purely nationalistic and is deeply rooted by your own fear, xenophobia, and limited knowledge of economic principles. You'd, by your own admission, would rather have leaders in our government plan economic activities and create disincentives for consumers who would choose to purchase foreign goods using their own free will. By definition, this make you a big government extolling, disdainer of liberty. Sorry [I write sorry because the truth must hurt], but you'll have much difficulty in trying to refute this charge.

[Paul Ross]

Your reasoning in support of tariffs is purely nationalistic

That part is correct. And your own reasoning seems to be something else.

... and is deeply rooted by your own fear, xenophobia, and limited knowledge of economic principles.

B'zzzt. False. For you, unreciprocated free trade is a religion. I reject your religion. I was a straight "A" in my econ courses with Prof. Walter Heller among others, wherein I was an early advocate for the "rational expectations" school.

For sure you weren't.

And neither have you shown insightful perspicacity with respect to the national security hazards of your trade positions...

Your blase' indifference is fortunately not echoed by the U.S. Dept. of Commerce, or its Bureau of Industry and Security.

You are not a defender of liberty in this country if you get this country killed.

Libertarianism is n Hence your malarkey about tariffs fails. The utility of tariffs goes far beyond nuruturing formative "infant industry" stages, but many other stages up to and inclusive of "managing" aggressive mercantilist predatory powers intent on damaging their adversaries. Hence George Bush's finally threatening the PRC with tariffs over its bad currency behavior. Personally, I would make a bigger deal out of how the communists constrain the liberty of its citizens. Speech, religion, and oh yeah...economic freedom too. The incomes of their vast working population are subject to outright systemmatic opression, forced geospatial immobility (i.e., they are not allowed to travel, or move without permission)...and no "market" alternatives. They can't quit the jobs they are "attached" to. And no legal recourse for denial of wages if their boss stiffs them, or coerced working hours, or maintains two books to fool the foreigners trying to pay better.

And, let's not forget the continuance unabated of the Laogai slave labor camps.

Note the closeness in wages in just these two categories typically exhibited between Japan, Hong Kong and Singapore from '95...which have only gone up and closed the gap since.

The mainlanders earn what, about 27 cents an hour on the average? This despite claims suddenly of "labor shortage" for the export sector on the mainland.

[LowCountryJoe]

In all that reply, I never heard you once refute the accusation I levied against you. Do you wish to be one of the elites at the seats of power who plans the economy while you also, and at the same time, chide the despotic 'leadership' of the PRC? Don't squeeze the Charmin, my Federalist, Hamiltonian loving nemesis!

[Paul Ross]

Just keep drinking the Kool-Aid.

[steveyp]

pingareadlaterdingaling

[Toddsterpatriot]

Wow, GM made a car that doesn't suck ass?

Does that mean they made $1.1 billion in the first quarter? Nope, they still lost $1.1 billion. The convertible does look pretty.

[atlanta67]

""For example, Senators Hillary Clinton (D–NY) and Byron Dorgan (D–ND) recently proposed a law that would cap the trade deficit at 5 percent of gross domestic product (GDP).""


central planning, pure and simple..should be quite popular wuth the Luddites here.

[Paul Ross]

"I never heard you once refute the accusation I levied against you. Do you wish to be one of the elites at the seats of power who plans the economy while you also, and at the same time, chide the despotic 'leadership' of the PRC? "

Gee, it almost sounds like you are defending that despotic leadership.

I am perfectly content to be one of the majority of 300 million Americans who thinks that we should be looking out for our nation and its own people's security and well-being. Not risking all on a fool's bet. I don't need to be whispering behind the chairs at the seat of power, as I believe that power comes from the People. Right now, the voice of the People appears conflicted, and confused. And if the People resolve that a Hamiltonian approach would serve them best, then all other, conflicting approaches and their advocates better get the hell out of the way.

Meantime, my "optimistic" libertarian friend, would you leave us with a government which punishes success and hard work, and savings, and innovation? I have always advocated replacing the income tax, personal, corporate and capital gains taxes, with a national sales tax of 15% and a revenue tariff of 25% or so. Plus, I strongly urge revoking China's MFN status, and letting Smoot-Hawley automatically kick in at a 50% tariff against them.

I believe that this fiscal-sourcing switch would have some dramatic effects and would restore American competitiveness across a broad swath of industries, encourage U.S. innovation, pouring back investments here at home...rewarding savings, earnings, and punishing consumption.

My largest concern is that the demand for these healthful changes will come too late to be effectual. It is always better to keep the horse in the barn, rather than try to coax it back in later.