Posted on 10/25/2007 8:12:27 PM PDT by Philistone
To read the MSM headlines (which I try not to) the falling dollar is the end of the world. Maybe Wall Street should get a Noble Prize for their work in "Global Dollar Cooling". But seriously, what are the effects of a weak dollar?
1) Increased exports. Last month's exports were among the highest on record. Trade deficit? What trade deficit? Boeing, Caterpiller, Microsoft, Apple, etc. all with surges in foreign export sales.
2) Outsourcing? What outsourcing? All of the sudden it becomes cheaper to employ an American technician than one from Bangalore.
3) Cost of living? (I love this part!) Since China has pegged the Yuan to the Dollar, everything we get from China costs exactly the same! Maybe this will convince them to unlink the Yuan. Then we'll REALLY see who's the best producer.
4) Buhh... buhh... buhh... but foreigners will stop buying American Treasuries! What? In order to buy Russian ones? Chinese ones? Venezualian ones? Give me a break.
A weak Dollar equals: more exports, more jobs, more tourists (spending money) and the same or higher standard of living.
Bring it on!
Don’t shoot the messenger.
I like as much news as possible posted on FR, both good and bad.
I then choose what I read. That’s the way it should be. If I’ve had enough of one particular “bad news” subject I don’t read those threads anymore.
Either you choose the good and the bad or you let someone else choose what is “good” and “bad” for you.
I’ll choose myself thank you.
One more thing...
This thread was started on what the poster claimed was “good” news...
His/her headline was sarcasm...
So this entire thread was mostly about whether it really is good news or bad news.
Inflation sucks. The deflation we suffered under the gold standard and the panics and depressions caused by the shocks to the money supply were worse.
At the extremes though, how does hyperinflation differ from deflation? Broke and unemployed, starving, society ripe for revolution, extremism, fascism, communism, whatever - what’s the difference again? This is admittedly using the extremis. I think I’ll fondle my I-bonds again. ;)
Mr. Robinson, this looks my long haul stop. I wish you and all here the absolute best in all future endeavors. Please close my account. Regards,
It's easier to adjust to inflation than to deflation. But we're not talking about hyper inflation. We've survived 2% plus inflation for how many years? And we've done okay. Japan had modest deflation since 1989 and they didn't do nearly as well.
What I don’t understand is, Japan has had essentially what, 0 per cent interest rates in recent times? How does that work - they are essentially giving money away when inflation is taken into account as well. The yen carry trade results. But I’ve also read that it is very difficult for the average consumer to get those lowest interest rates, and their economic culture is far different - they don’t write off loans and wager their bankruptcy laws are far different. Why haven’t they taken off in recent years??
That shows why deflation is so scary. You can’t push on a string. If consumers think prices of everything will be lower next year, even interest rates of 0% can’t get them to borrow and spend today. They spent a huge amount of money on public works projects to spend themselves out of their recessions and all they did was boost their government debt to 176% of GDP (ours is about 65%).
Hyper-inflation is probably the worst because it destroys all currency denominated savings and kills any incentive to work for the currency undergoing the inflation. I don’t want to go through either one if I can help it, but a mild inflation can be survived if necessary. We’ve been doing it for 70+ years.
No argument there. Hyperdeflation is scary stuff. But the “pushing on a string” analogy works for liquidity injections too. One of the criticisms of the economy before the ‘29 crash was that “easy” money will always find its way into the market one way or the other, pushing up equity prices into a bubble. In recent years we saw the dot.com bubble, then a real estate bubble, what’s next?
One adage that I’ve heard is “you can’t fool the bond market”; and I guess that makes sense. It dwarfs the stock market in $$ terms. But I see my spreadsheet on I series bonds (used as short term savings, because checking only pays 1/10th of 1 per cent!) shows yields varying from 3 to 4 per cent. Better than a kick in the pants, but inflation is ticking up more than that. Is that what we’re seeing here, is foreign bondholders cashing out and chasing higher yields?
Shouldn’t the FED be raising interest rates?
Doom and gloom posts on FR are experiencing a bull market.
Total yield? What's the coupon? Before the inflation payout.
I bonds are a little different, they are sold at par/face value and have a fixed rate for the life of the bond (in recent years around 1 or 2 per cent) and an additional inflation rate that is adjusted every six months. I just use them as an enforced savings plan, since they can’t be cashed for at least one year.
Put your money on the line, then talk to me when your options expire.
George Soros and his good buddy Warren Buffett have already made big bets that the Dollar is going to crash and burn. It's the same game that Soros played with the Pound (when he became known as "the man who broke the Bank of England"). All of the levers of power and influence that Soros has amassed are being used to try to wreck our economy and markets and the two of them stand to make a fortune if our economy tanks.
Of course they could equally lose big if it doesn't. I hope, I hope, I hope!
I sincerely believe that this is a technique he was taught by the KGB and that they sent him forth with seed money to be an "agent of influence" during the cold war. Yuri Andropov ran a program in Eastern Europe recruiting talented young people to send into the west, not to be spies but to "stir the pot" and mess with our system, particularly our financial system, from the inside. Soros "escape" from Hungary and his getting established in London so quickly has always looked way too convenient, particularly given his subsequent career.
I wish I’d read this post earlier. I’ve already hung myself.
Hanged. It’s always “hanged” when used in that reference.
Unless the poster bought one of those pumps...
Exactly. But mild deflation caused Japan to lose a decade of economic growth.
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