Replies

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

Of course you know such people, so we know that response by you is also dishonest. They're in your own F-Troop.

At least you have finally deigned to reply to the actual question posed. You reliably of course take the defensive posture. Your Argentina tipping point illustration is the only thing cognizable as an responsive proof. But it fails to effectively deny the hypothesis. The situation is distinguishable, since we, as the reserve currency of the planet, may be exhibiting a quite different, and more protracted slide. E.g., one key difference here is that the U.S. dollar is being propped up by any number of importing countries buying our treasuries, particularly China and Japan. And, also, we haven't defaulted yet, although public doubts have surfaced in the trade press. The Argentines defaulted, correct? So anyways, despite the non-default on our part, the U.S. dollar has been sliding down and down over the past four years into territory analogous to that of 15 years ago. A titannic loss of wealth for the U.S.

Your further argument went this way:"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."

This is at least in part, a lame admission of the underlying, "Adam Smith" axiomatic connections between dollar value and the trade balance. You and Kane try to embellish the countervailing force of investments as "more important". Then you try to add one more factor, which ultimately is mere hand-waving:

"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."

Such market sentiments have always been there one way or the other... So, have they ever forced a persistent decline over four years? And ascribing this much power to such market elements tends to undercut Kane's devotion to his blindered notion of one-way free markets. So are you and Kane saying that the drop of the last four years was "dominated by" and hence due primarily to the "speculators"? And that the "speculators" have wrongly trashed the U.S. dollar for the last four years? You need to come up with proof for all those propositions. Those speculators are just part of the same "market" you and Kane previously implicitly trusted with fixing real value. Fundamentals should have corrected this persistent a "market distortion" by now. Unless the other fundamentals are also adverse. Which is what I have been suggesting. The trade deficit, and an incapacity of the investments of the importers to counter the damage caused. So maybe the "market sentiment" which is supposedly playing a "dominant factor" here is weighting the trade deficit a lot more heavily than you apologists are. In other words, the "After the Fact" recognition of this factor. That which you deem inconsequential, they don't. If we posit that the speculators are driving the dollar down, your persistent pattern of stone-wall denial of factors the speculators deem significant...such as the trade deficit for one...would, if followed by the Administration, just result in economic policy that merely feeds those same speculators mistrust in the policies. You guys in F-Troop need some kind of "Ten-Step Program" to get out of your addiction.

Now onto the chart, where I was pointing at the last four years for evidence of a tipping point. Not a precisely general relationship, as we don't know what the variable of the countervailing investment activity...or the variable of the precise market response to it... looks like, (albeit Kane unconvincingly claims it is a larger factor than the trade deficit itself). Hence I said, "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." Over the last four years. My own words from their context. That is indeed an accurately descriptive history of the last four years, is it not? It's Kane's own chart, after all.

You're reply: "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."

Actually, if there was no proof of tipping, with your contrarian thesis of the "robust" U.S. economy, I seriously question whether the dollar should be sliding for so darn long. I.e., "just" four years is not so short a time. So as the dollar slides, return on foreign investments in those non-pegged currencies would be hurt. General, non-pegged imports get more expensive. Particularly commodities. These are adverse fundamentals for the economy which have to be overcome.

I reminded you that the U.S. was impacted adversely by this decline in the dollar, as it reflected that we were demonstrably poorer. You replied:

"Demonstrably poorer? Where is your proof?"

Kane's own chart. Deflate the GDP by the dollar decline.

Finally let's look at your response about the countervaling investments. I demanded that you show they be effective at keeping the dollar up.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."

Their "comfort" is not the issue. The effectiveness is. So you can't duck this, their "comfort" is not being supported by the rest of the market.

Then you finish up with your usual insults: 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.

You mean YOU don't understand. Sorry Charlie. I am not about to make it too easy for any Chinese agents who only speak English as a Second Language.

Actually, if there was no proof of tipping, with your contrarian thesis of the "robust" U.S. economy.

Why place the word "robust" in quotes like you did?

Their "comfort" is not the issue. The effectiveness is. So you can't duck this, their "comfort" is not being supported by the rest of the market.

OK, let's talk about the effectiveness of trade because..well because..who really gives a sh*t what the dollar is doing. Let's talk about the long term trend of rising disposable income, high employment, high productivity, and a superior and still improving living standard; all occurring in a post trade agreement period, too.

Oh, and you can include all of the $5 dollar words in your sentences that you wish but if you're including them to mask that fact that you don't really grasp the material on a conceptual level, it just has you come acRoss as cheesy. In other words, drop the act, participate with better clarity, and we might just be able to help liberate your common sense from the deep and sticky tar pits in your irrationally fearful, protectionist brain.

At least you have finally deigned to reply to the actual question posed. You reliably of course take the defensive posture. Your Argentina tipping point illustration is the only thing cognizable as an responsive proof. But it fails to effectively deny the hypothesis. The situation is distinguishable, since we, as the reserve currency of the planet, may be exhibiting a quite different, and more protracted slide.

Or no protracted slide at all.

E.g., one key difference here is that the U.S. dollar is being propped up by any number of importing countries buying our treasuries, particularly China and Japan. And, also, we haven't defaulted yet, although public doubts have surfaced in the trade press.

You fear the US will default? How so? Economic growth is very strong, 3%+. You're imagining things again.

The Argentines defaulted, correct?

Yes, they defaulted on their debt. The debt that was denominated in other currencies. Our debt is in dollars. I ask again, you expect the US to default on dollar debt? Put down the crack pipe.

So anyways, despite the non-default on our part, the U.S. dollar has been sliding down and down over the past four years into territory analogous to that of 15 years ago. A titannic loss of wealth for the U.S.

Finally, you touch reality. The "horrendous" slide of the dollar puts us where we were in 1990? I thought this drop was historic, unprecedented, earth-shattering? And all it did was put us back to 1990? I guess that's a bad thing because.....that's right, it's not.

"Adam Smith" axiomatic connections between dollar value and the trade balance.

Big words, but like so many of your words, they're pulled right out of your ass. The same axiomatic connections between dollar value and the trade balance exist between dollar value and the capital account. So much for your big words!!

Such market sentiments have always been there one way or the other... So, have they ever forced a persistent decline over four years?

Yes. Just as they forced a persistent rise over the prior four years.

So are you and Kane saying that the drop of the last four years was "dominated by" and hence due primarily to the "speculators"?

No.

And that the "speculators" have wrongly trashed the U.S. dollar for the last four years?

Speculators can over react. Have they? No one knows. That's the funny thing about currency markets.

You need to come up with proof for all those propositions. Those speculators are just part of the same "market" you and Kane previously implicitly trusted with fixing real value.

When did Kane or I implicitly trust anyone with fixing real value? And they aren't part of the "market" they're part of the market. No need for scare quotes. Everyone is part of the market. Even people who don't understand it, like you.

Fundamentals should have corrected this persistent a "market distortion" by now.

You mean by dropping the Euro to a nine month low?

The trade deficit, and an incapacity of the investments of the importers to counter the damage caused.

Damage? It's called a market fluctuation, not damage. Some people win, exporters and holders of foreign currency, foreign debt and foreign equities. Some people lose, importers and those who are short foreign currency, foreign debt and foreign equities.

Now onto the chart, where I was pointing at the last four years for evidence of a tipping point.

I showed you what a real tipping point looked like.

Not a precisely general relationship, as we don't know what the variable of the countervailing investment activity...or the variable of the precise market response to it... looks like, (albeit Kane unconvincingly claims it is a larger factor than the trade deficit itself). Hence I said, "the chart proves the relation of the issues.

Wrong, a four year chart would have showed what happened over the last four years. An eight year chart shows the dollar gaining strength as the deficit increased and then weakening as the deficit increased more.

And when you use these big words (you have an egg head random word generator or what) you just sound silly because you don't understand what you're talking about.

Actually, if there was no proof of tipping, with your contrarian thesis of the "robust" U.S. economy, I seriously question whether the dollar should be sliding for so darn long.

It's not my thesis that the economy is robust. It's a fact. Look at GDP, unemployment or any number of other measurements and you can see that the economy is robust.

Kane's own chart. Deflate the GDP by the dollar decline.

There you go, nice simple words. Easier for everyone to see your error and you don't sound like such an egghead. Why in the hell would anyone think that deflating GDP by the decline in the dollar would give you a number that means anything? GDP stands for Gross Domestic Product. In my world our domestic currency is still dollars.

You mean YOU don't understand. Sorry Charlie. I am not about to make it too easy for any Chinese agents who only speak English as a Second Language.

Yeah, okay. You're like Wiley Coyote. You ordered a nice bomb (chart) from Acme (Heritage Foundation) and when you opened it, it blew up in your face, again.