Dollar Creates Political Unrest in Europe

New York Post ^ | May 23,2003 | Paul Tharp

[bert]

This article correctly reports the situation and the relation between things American and things Euro.

[Pikachu_Dad]

Balderdash: This is just another 'blame America first' article.

Notice that it is all the American dollars fault for the state of their economies and their recession:
"The dollar is largely blamed for pushing the continent to the brink of recession."

And the cause of poor French wine sales - as opposed to our boycot of French products.

BOOO.

[Clara Lou]

Question: Bush (or any POTUS) controls the value of the dollar? [honest question]

[ClearCase_guy]

The dollar continued its silent war against Europe ... raising new demands for the European Union to fight back.

President Bush, meanwhile, fired another shot across the Atlantic ... trade disputes have grown worse from the dollar's assault.

Bit of hyperbole, focused on military imagery, IMO

[meenie]

A good example when fiat money on both sides causes disputes between parties because the money has no value. A sign of the times when even nations recognize the phony money.

[Dog Gone]

Question: Bush (or any POTUS) controls the value of the dollar? [honest question]

Not very much. This is monetary policy set by the Federal Reserve, which is independent of the White House. The Fed controls the amount of dollars in existence through a variety of tools, and they have deliberately created more dollars in an effort to drive down their value against foreign currencies.

[bert]

...Bit of hyperbole, focused on military imagery, IMO....

"We will attack at a time and place of our choosing" Tommy Franks CENTCOM

Hyperbole? or a description of power selectively focused on a problem not solvable with military force?

[cake_crumb]

Geee...those darned, evil American dollars! Always trying to undermine EUrope.

I'll tell you how this sinister plot works: dollars for overseas banks are fitted with a nearly undetectable, super-duper powerful microchip preprogrammed with AI software which contains the sum of all of our most important imperialist spying/subversion tactics gleaned during the Cold War.

The only way to defeat the chip is to wrap all US dollars in heavy aluminum foil and spend them ASAP! The less they're handled by EUro-consumers, the less harm they can cause!

[cake_crumb]

"Question: Bush (or any POTUS) controls the value of the dollar? [honest question]"

No POTUS can control the value of the dollar except by making good (or bad) trade deals which directly affect the US (and therefore global) economy.

I'm sure not gonna diss the president for looking out for the best interests of his country. Bill Clinton may be the only POTUS who actively made trade deals which undermined the value of the dollar. Carter did the same through stupidity.

[The Other Harry]

the greenback slid toward another new low against the euro, at $1.1729.

I don't think that is correct. It seems to me like the eoro came out at about $1.20 and traded a bit over that before slipping.

Could be wrong.

[cake_crumb]

"Hyperbole? or a description of power selectively focused on a problem not solvable with military force?"

It's nothing more than economic survival. These trade wars break out a couple of times a decade. Why's the EUropean press acting as though this is the first time such a thing has happened?

I vividly remember the month leading up to the official beginning of circulation of the EUro a couple of years ago: EUrope promised the EUro would undermine and take over the dollar as base of international currancy. What was that? A shot across the US bow, or the leaders involved hoping to stimulate and benifit their own economies?

[arthurus]

In this case America has considerable blame. "Letting the dollar fall" is another term for "inducing inflation." The key to understanding is the comment about French wines becoming so expensive that American vintners can raise their prices and still shut out French wines. That will happen throughout the economy. That is increasing prices generally . That is the definition of a declining standard of living.

At the same time we are partially defaulting on the national debt because we will repay borrowed money with dollars that are worth less than the dollars that were borrowed. That is a classic government device for reducing debt. It erases capital and brings an eventual steep rise in interest rates. Richard Nixon and Jimmy Carter brought us a bad spell of that with the same tactics. That chicanery perpetrated by a Democratic administration helped mightily to bring us Ronald Reagan. I can only hope that that policy in a conservative Republican Administration does not bring us Clinton redux.

These things are not instantaneous in their effects and will problably not endanger the 2004 election but will be affecting us with the soaring interest rates and prices during the second term and will make it difficult to hold on for a Republican win in 08 either for president or for Congress.

[Ahban]

Don't you think W has supported greenspan in all of this? Also, they are monetizing the debt, which is inflationary.

In other words, Greenspan may control interest rates, but Bush controls the printing presses. We are printing money to buy back our own debt. That is inflationary and weakens the dollar.

Greenspan and W are moving together on this one. The question is why?

[Teacher317]

Rather amusing since at home we refer to this as a weakening dollar, LOL.

[expat_panama]

No POTUS can control the value of the dollar..

Don't forget that these are the same Europeans that said that dubya was responsible for too much rain last year. 

 

 

[arthurus]

The Federal Reserve controls the value of the dollar and is responsive to policy from the president. The value of the dollar is affected by the amount of money that is created and added to the economy compared to the amount needed to maintain the price level. If more money is put into the system than is needed prices go up. If too little money is added or if money is withdrawn we have deflation which is not economically no better than inflation. If the dollar's value were maintained level, recessions and booms would be mitigated, or rather inflations and deflations exacerbate, sometimes to the extreme, the normal swings of the economy. Iflation induced booms are more apparent than real and more apt to end in sudden busts.

[InterceptPoint]

The dollar is largely blamed for pushing the continent to the brink of recession.

Well of course it must be the United States' fault. It couldn't be the high taxes imposed by European socialist governments.

They had better wake up and smell the tax cutting coffee that is being brewed in the U.S. If they want to improve the competitiveness of their industries just reduce taxes. The chances of that are slim. They are digging their own socialist grave.

[americanbychoice]

To balance our Trade. Remember, Oil is purchased in U.S. Dollars. Other than going to Europe on vacation, there is little downside to this.

[Dog Gone]

I think economists are concerned about deflation, which is actually a much harder problem to solve than inflation. Bush can't tell Greenspan what to do, but I think Bush has probably told him that the White House economists favor a weaker dollar right now.

It is stimulative to the economy, and the interest rate mechanism for stimulation is just about gone.

You're right about the effects of inflation, although it's not all bad news. There is a benefit to homeowners who are paying off loans with cheaper dollars, for example.

I'm not advocating a return to inflation. These things must be done carefully to avoid creating new problems. But adjustments in monetary policy are a legitimate tool in keeping an economy growing.