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Well Todd, I see you have been busy while I was away (getting rid of Chairman Ebensteiner here in our Minnesota state GOP) and then celebrating up at the lake cabin over the weekend. T'sk, t'sk. Now all you Phony free traders, take a seat and learn something.

You have collectively misrepresented what I said about the chart...which I cited merely because it proves what has happened the last four years. And devastatingly so.

The question always was (for about the 12th time Todd, shall we say Mr. Know-it-all), has the U.S., with respect to foreign "investments" pumping up our dollar, reached a tipping point? Where such actions actually fail to counterbalance the dollar's slide due to an overwhelmingly bad trade picture...

That was the primary point.

Let me repeat this point another way to try to get past your obfuscations and refusal to legitimately debate: Knowing "investments" are the countervailing force holding up the U.S. dollar (which in fact I presupposed)...you must confront the fact that it appears it has failed to do so the last four years

This demands an explanation from your side. And Kane doesn't give anything close to credible. And "Bush did it" as some on your side purport...doesn't cut it. Laissez faire is his approach. You do believe in the "unseen hand" don't you????? Guess not.

I asked the pertinent question, still unacknowledged by you. Instead you launched into an argument on the chart's "relationships" which I never argued for time-series correlation beyond the last four years. Kane can't deny the last four years. Hence he tries to confuse the issue. You grasp on to his framing of an issue I am not arguing.

We are dealing with multivariant analysis, and those two listed factors have no controls for the foreign entities investment flows. I just pointed to the last four years hard history...and it conclusively destroys Kane's and your side. All your thoughts. All your reasonings. All your excuses. Laid waste. So much for you hunt for Moby Dick, Ahab.

Your failure to respond to my particular points are proof of your sides' disengenousness... Such continued omission of what I said is outright intellectual dishonesty...and indeed it is evidence that your little F-Troop of Disinformation is just a little herd-psychology spin group.

I could rag about how you constantly try to bamboozle folks with your inanity. Probably because you have some nefarious self-interest in Chinese importing. But I won't. :-)

Kane's graphs really do undermine his, and Griswold's thesis pretty decisively.

Let's deconstruct the fairly glaring mistakes replete in Kane's article. It is so richly ironic, that his own charts "does in" his....and your whole spin operation. He argues that we should look at the longer term, not wishing to confront the last four years. Trying to argue things go up and down more or less randomly or so. One can just as cavalierly suggest nations rise and fall, and its okay if the U.S. does too.

I, for one, don't think so. Methinks Mr. Kane is just a tad too unconcerned to be credible in advocating for "our" side.

Meanwhile, while you grasp at the last 3 months of the EU's French-driven decline, Kane grabs for the 15 year long period chart as follows on the Dollar against the "Euro" (which did not even exist back then)

What does it prove? That 12 long years of increased wealth in the U.S. as measured by the dollar's pain-staking gains against at least some European main currencies, has vanished completely in the last four.

Most of the Free Traders who apologized for the "creative destruction" of the U.S. industrial base routinely genuflected in the direction of the appreciating U.S. currency. Now that its evaporating under trade stress...the phony free traders have developed a sudden amnesia... omitting their history of praising U.S. dollar appreciation. Kane's dollar-praising amnesia is now starkly contrasted with his apologia and rationalizations for the collapsing dollar, and pretending it is without any cost to the economy...and national well-being. The disproofs of that is seen in a variety of commodity areas, with oil, LNG, steel, copper, tin, lead, beef, etc.

Then there is the U.S. Dept. of Commerce Chart from '92 to 2004:

This tries to apologize for the huge increase in U.S. imports primarily by two main misrepresentations:

(1) Kane argues by captioning in his chart and in the body of his text that U.S. "exports" also "surged". But note, this was at only half the rate of growth of the imports. Which now eclipse U.S. exports by over $620 billion a year and are running on a track nearing $70 billion in the red each month to set a new annual record.

There is a companion rationale inisipidly advanced to apologize for this discrepancy which I am sure everyone has heard ad nauseum. You would think Kane et al. would be tired of proffering the same tired shibboleth:

Argument (2) is that when the imports accelerate faster than our exports...it is a sign of a "strong" economy. Fifteen years of progressively increasing trade imbalance makes this more than a little suspect. The free traders used to say that a falling dollar would make us more competitive. Now we have Kane saying it doesn't matter that it doesn't. Anyways, a trade imbalance is demonstrably also a sign of a weak economy. And let me remind you Todd, you are the one who said as follows: "Countries that have problems with trade deficits are those countries that have weak currencies. " So which is it Todd?

And stop the presses. Undercutting Kane's thesis is this factual conundrum: a large and growing portion of the U.S. "exports" are in fact components shipped abroad...for combination with foreign materials and fabrications, and re-import to the U.S. The Mexican Maquilidoras are a perfect illustration of this phenomenon. These "exports" merely facilitate increased imports!

Thus, the argument that the chart is showing export strength...may in fact be showing precisely the opposite...that the U.S. is becoming more and more prone to depending on imports out of competitive weakness ...ever-more dependent on lower-cost foreign labor, and hence economically imbalanced in its payments.

Then there is the chart I have been showing now for sometime, which you have finally looked at, but as usual, misunderstood, misrepresented, and just plain missed the boat on.

Notice the last four years of decline, where the dollar, floating on the free market, has fallen in value.
(a) Controverting the notion that there are some mysterious uncounted exports to hold it up.
(b) Or that the Chinese and Japanese will be able to effectively thwart force of gravity on the dollar of our trade imbalance by buying up our Treasury paper infinitely. That helps them manage their individual currency trade-levels and pegs, and can hold up the general dollar for a while.

But can...and will...it stop the dollar from sliding as it is currently doing? Are the fundamental weaknesses of the U.S. export sector simply too much and sinking the dollar's trade value [the brief dip of the EU notwithstanding, thanks to French voters]? [ Sound of crickets on Todd's end.]

And then there are the last four years of our society becoming demonstrably, and irrefutably, poorer. In precise contradiction of the assertions of the self-appointed "optimists" who have no idea what is really going on. [With any more optimists lke that, who needs enemies?]

Another rich irony Todd, is that it is in precise agreement with your own proclaimed economic understanding (I previously alluded to your statements supporting these very analytic points before, but you blew it off). I surmise you are simply either too intent on "getting" me, or even more egregiously...simply blowing smoke and trashing the thread so no one learns an important set of facts. Here is what you said in this very thread (reiterating at further length to really grind your nose in it):

"Countries that have problems with trade deficits are those countries that have weak currencies." "Argentina had a problem because they couldn't buy goods with their own currency. So they had to borrow dollars. Then they couldn't pay them back."

"Foreigners who want to invest in America have to use dollars to do so. So when they sell us their goods they use the dollars received for investment. Foreigners pouring investment into America is not a sign of American weakness."

"No one wanted to invest in Argentina, because the economy was weak and their government was untrustworthy."

You presuppose...without proof...that "Foreigners pouring investment into America is not a sign of American weakness."

Prove they are in fact "pouring" in financial investments. Your numbers will have to show effectiveness. Prove the dollar is in fact stronger than ever, and has recovered all its losses of the last four years.

But you can't can you? And neither can Kane. In fact, you guys hoist yourself by your own petards, Todd. That is why those charts are so devastatingly bad for your side. And it makes clear that the case you made against Argentina applies with potentially equal force against the U.S. currency which is in fact now demonstrably weaker than it was not just the last four years ago...but almost fifteen.

Good going phony free traders. Got any more bright ideas? Let's sell some retired MX missiles to the Chinese...and recoup some of the money, eh?

The question always was (for about the 12th time Todd, shall we say Mr. Know-it-all), has the U.S., with respect to foreign "investments" pumping up our dollar, reached a tipping point?

Well Paul, do you know the answer? Do you even know what directly determines the exchange rate between currencies? I'll help you here: the market's demand (that includes all buyers, public or private) for a given currency is what ultimately determines its exchange rate with other currencies. Any "tipping point", where foreigners (collectively) stop using their capital to purchase dollar dominated assets; thereby shifting the demand curve, will only result in getting more of what you wish for - a shrinking trade deficit.

Where such actions actually fail to counterbalance the dollar's slide due to an overwhelmingly bad trade picture...

You're really going to have to make up your mind here, Paul. Is this really a bad trade picture? Next, why is a falling dollar a bad thing in your opinion? If you write that a weaker dollar makes commodities much costlier for purchase but you simultaneously do not what any of the foreigners raw materials, then why should you care? Oh, I know, you're afraid that American companies that extract raw material commodities will decide to sell to foreigners instead, since they'll be able to better afford the stuff. I know the solution to this dilemma, Paul, and it's in keeping with your autarky beliefs...we should make law that "allows" American owners of commodities to sell them at an American discount as long as they submit a waving American flag with their purchase orders.

Let me repeat this point another way to try to get past your obfuscations and refusal to legitimately debate: Knowing "investments" are the countervailing force holding up the U.S. dollar (which in fact I presupposed)...you must confront the fact that it appears it has failed to do so the last four years.

Again, it's really the demand that's the determinate. Demand for dollar denominated assets is only one such portion of overall demand.

Now all you Phony free traders, take a seat and learn something.

I have no idea how the most "phoniest" of the free traders have learned something from your post. Other than you seem to use your language skills to get across a lot of nothing. It's reminiscent of John Kerry speak and do you even really know what in the hell you are saying? For instance, when you write "We are dealing with multivariant analysis, and those two listed factors have no controls for the foreign entities investment flows.", do you even know what the word "multivariant" means? Why not talk of "models" and "explanatory variables"? I think I know why, because you don't really understand the stuff you're trying to get acRoss.

You have collectively misrepresented what I said about the chart...which I cited merely because it proves what has happened the last four years. And devastatingly so.

Your own words :My, my, my, you are flummoxed. The chart proves the relation of the issues. Trade Deficit charted over time against US Dollar Value Against Major Currencies. They have been going in adverse directions in precise tandem....and I remember how 4-5 years ago the "phony trade" apologists for the deficit pooh-poohed this... where are they now?

That's the funny thing about a relation, it should work both ways. It should work over more than just the last 4 years. If there was truly a relation.

The question always was (for about the 12th time Todd, shall we say Mr. Know-it-all), has the U.S., with respect to foreign "investments" pumping up our dollar, reached a tipping point?

No, the dollar has not reached a tipping point. This is what a tipping point looks like.

U.S. Dollar vs. Argentine Peso

Let me repeat this point another way to try to get past your obfuscations and refusal to legitimately debate: Knowing "investments" are the countervailing force holding up the U.S. dollar (which in fact I presupposed)...you must confront the fact that it appears it has failed to do so the last four years

No one said that investments must hold up the dollar. Only that investments are more important than trade deficits in determining the value of the dollar. Kane also said "However, the market for dollars includes— and in some ways is dominated by—speculators, who are not focused on real goods and services. Currency traders try to stay just ahead of the expectations of the market but can create self-fulfilling prophecies of exchange rate movements. They have routinely abandoned a currency when there was a widespread loss of confidence in the underlying economy. In short, market sentiment matters, even if sentiment is impossible to know— much less quantify—beforehand."

Kane can't deny the last four years. Hence he tries to confuse the issue. You grasp on to his framing of an issue I am not arguing.

If Kane can't deny the last 4 years then you can't deny the 4 years before that. Keep dancing though. Love the Moby Dick reference. F-Troop too.

Everyone knows the Euro did not exist 15 years ago. That's why the chart says "Euro per Dollar Synthetic Exchange Rate" For someone who uses such big words, you continue to have a hard time reading the titles on charts.

So, please educate all us free traders. Tell us when the Euro was created and what its value was on the first day it traded.

Most of the Free Traders who apologized for the "creative destruction" of the U.S. industrial base routinely genuflected in the direction of the appreciating U.S. currency.

I don't know anyone who genuflected in the direction of the appreciating U.S. currency.

Argument (2) is that when the imports accelerate faster than our exports...it is a sign of a "strong" economy.

When do US imports accelerate fastest? Isn't it when we experience fast growth coming out of a recession? When do US imports decline? Isn't it when our economy slows down during a recession? Now who's obfuscating?

And then there are the last four years of our society becoming demonstrably, and irrefutably, poorer.

Demonstrably poorer? Where is your proof?

Prove they are in fact "pouring" in financial investments.

Your words: I see you miss that the rate of Chinese U.S. capital accumulations is accelerating on an exponential curve...more evidence of absolute advantage. In 2003 they had $400 billion in their U.S. slush fund. Now it is over $610 billion...

See, the Chinese have poured $610 billion in investments into the US. You know the Japanese have even more.

Your numbers will have to show effectiveness. Prove the dollar is in fact stronger than ever, and has recovered all its losses of the last four years.

You show your economic ignorance, again. Just because they invest in the dollars, in the US, doesn't mean they are "effective", doesn't mean they guarantee the dollar rises or doesn't fall. It just means that they feel comfortable investing hundreds of billions in the US, or at least uncomfortable with the alternatives.

And it makes clear that the case you made against Argentina applies with potentially equal force against the U.S. currency which is in fact now demonstrably weaker than it was not just the last four years ago...but almost fifteen.

Huh? Show me how weak it is compared to 15 years ago. And please, stop using the big words that you don't understand. Try using English for a change.