BF2S Forums Worthless Dollar

My president says our economy is just fine.

Europe can't export anything to the US.  It's very cheap for Europeans to travel to the US.  It's very expensive for Americans to travel to Europe.

Cougar wrote:

I'm not entirely money savvy myself, however, someone from Norway sent me 120.00 NOK the other day through paypal and made my day. 

Then I converted it to USD and it was $16.94 which made me a sad panda.

Cougar on skype:

OMFG 120 dollars!!!!!!! im rich bitch! Wait... 17 usd

Me: pwned.

Try being in Romania in the last 3 years...my paycheck was 85,000,000 Lei/month before they converted and dropped a bunch of zeroes off the currency.  I loved conversations with my family back home.  "So son, how much you making now at that studio of yours?"  "Oh, 85 million a month...no big deal."

You want the original chart explained though?  It means that the current spend-and-spend administration has been slowly maxing out the credit cards of the USA since they took full control of the purse strings in 2001.  This means that our treasury bills, whose worth is based on the fact that the people that hold them think they'll eventually be re-paid, are slowly becoming not worth the paper they're printed on.  This means in turn that the currency takes a dip every time someone loses confidence and decides to hold their assets in another currency.

The "national debt", though massive, is just a small fraction of the total picture.  Every city and state in the US also can run their own debt, and private citizens ("consumer debt") also adds to the picture.  All added up, the average american is in hock about $1 million if they were to divide the debt evenly among the population.  5 years of completely fiscally irresponsible government, mixed with more than that many years of personally irresponsible fiscal behavior for the average American, means that those that lend us the money are losing confidence that we'll ever be able to even make our interest payments (nobody minds if we never pay back the capital).  This makes US treasury bills a very unnattractive thing to be holding, so most foreign banks are very slowly unloading them, which drives currency value down.  If these same banks don't act in unison, it would turn into some sort of Mexican stand-off where the last guy to dump his dollars would go bankrupt, so they're playing nice.

And that's just part of the picture.  The other half is the relentless printing of money out of thin air, basically tripling the amount of currency in circulation since 1990, by the Federal Reserve.

Look forward to the dollar continuing its slow fall into oblivion.

http://www.house.gov/paul/legis_tst.htm
My congressman, forever and always, and about the only one that actually understands the mess we're in.  And he's a Republican...go figure.

On the housing bubble:

Ron Paul wrote:

The Fed has roughly tripled the amount of dollars and credit in circulation just since 1990.  Housing prices have risen dramatically not because of simple supply and demand, but because the Fed literally created demand by making the cost of borrowing money artificially cheap.  When credit is cheap, individuals tend to borrow too much and spend recklessly.

This is not to say that all banks, lenders, and Wall Street firms are blameless.  Many of them are politically connected, and benefited directly from the Fed’s easy money policies.  And some lenders did make fraudulent or unethical loans.  But every cent they loaned was first created by the Fed.

On the federal reserve:

Ron Paul wrote:

Federal Reserve Chairman Ben Bernanke testifies twice every year before the congressional Financial Services committee, and I look forward to these opportunities to raise questions about monetary policy.  I believe monetary policy is critically important  yet overlooked in Washington.  Money is the lifeblood of any economy, and control over a nation's currency means control over its economic well being.   Fed bankers quite literally determine the value of our money, by controlling the supply of dollars and establishing interest rates.  Their actions can make you richer or poorer overnight, in terms of the value of your savings and the buying power of your paycheck.   So I urge all Americans to educate themselves about monetary policy, and better understand how a small group of unelected individuals at the Federal Reserve and Treasury department wield tremendous power over our lives.

On War Time spending:

Ron Paul wrote:

The Pentagon recently reported that it now spends roughly $8.4 billion per month waging the war in Iraq, while the additional cost of our engagement in Afghanistan brings the monthly total to a staggering $10 billion.  Since 2001, Congress has spent more than $500 billion on specific appropriations for Iraq.  This sum is not reflected in official budget and deficit projections.  Congress has funded the war by passing a series of so-called “supplemental” spending bills, which are passed outside of the normal appropriations process and thus deemed off-budget.

This is fundamentally dishonest: if we’re going to have a war, let’s face the costs-- both human and economic-- squarely.  Congress has no business hiding the costs of war through accounting tricks. <snip>

Congress and the Federal Reserve Bank have a cozy, unspoken arrangement that makes war easier to finance.  Congress has an insatiable appetite for new spending, but raising taxes is politically unpopular.  The Federal Reserve, however, is happy to accommodate deficit spending by creating new money through the Treasury Department.  [Editor note - This is done by issuing the treasury bills mentioned above.] In exchange, Congress leaves the Fed alone to operate free of pesky oversight and free of political scrutiny.  Monetary policy is utterly ignored in Washington, even though the Federal Reserve system is a creation of Congress.

The result of this arrangement is inflation.  And inflation finances war.

It was in this last snipped that you can also see how the value of the dollar could drop.  Say Britain prints 10,000 new pounds every year steadily for 5 years.  Now say the USA prints $10,000 the first year, and then increases it by just $500 each year after ($10,500 in year 2, $11,000 in year 3, etc).  In 5 years, you now have a big difference in currency without a proportional difference in property or economy to back it up.  American paychecks go up by the same proportions, but did the value really increase?  Nope, but they wouldn't know it until they tried to trade some dollars for pounds to go visit Britain.  In reality, it is not that extreme but it is still valid, and that's ANOTHER underlying cause of currency devaluation of the almighty dollar.

Last edited by GorillaTicTacs (2007-04-18 06:23:00)

Mason4Assassin444 wrote:

My president says our economy is just fine.

He sais a lot of things...

17-year lows against the Australian dollar

Ownage! I might buy some camera gear online from America...


Mcminty.

IG-Calibre wrote:

konfusion wrote:

.. and if you're European - now is your time to visit the USA.

-konfusion

Why on earth would anyone want to visit a country that treats you like a criminal on entering it, and, the population is all armed to the teeth and paranoid? no thanks, even if you gave me 3 dollars to the pound..

Well, this is a great opportunity to gain working experience, to visit some of the nice parts of the US (including the Grand Canyon, the (edit)Sleeping Bear Dunes, the Great Lakes, Las Vegas, LA, .....) or to visit family and friends.
I don't agree with much of the US policy, but that doesn't make the country itself a bad place. In fact, I quite like the USA.

-konfusion

Last edited by konfusion (2007-04-18 12:17:18)

Just because the American dollar is currently falling, does not mean it is worthless, or will be worthless.

In a really simplified manner, currency exchange has a lot to do with interest rates. This means that the value of a currency will reflect the interest rates of that countries central bank. Currently, like the Sterling, the Australian Dollar is rising against the US Dollar (17 year high of $0.83 AU for $1US), this reflects speculation that the Reserve Bank of Australia will raise interest rates to combat rising inflation.

Now obviously interest rates are not the only effect upon exchange rates, you can look at Net Foreign Debt, xxport and import trends, but for an increasing number of FOREX traders, they are the best indicator.

I had to study an economics module in my first year of university and I would have been able to explain the implications.  Now in my second year I cant remember much of it

CameronPoe wrote:

http://news.bbc.co.uk/2/hi/business/6566715.stm

Any financially-savvy types care to explain the implications of a worthless dollar to me?

Short story: If you want something from America, get it now.

CameronPoe wrote:

Any financially-savvy types care to explain the implications of a worthless dollar to me?

It means invest in the US economy now...
Edit: ghettoperson understands.

Mason4Assassin444 wrote:

My president says our economy is just fine.

In other Economic news today..
http://www.stltoday.com/stltoday/busine … enDocument
http://phoenix.bizjournals.com/seattle/ … ily13.html
http://www.chicagotribune.com/business/ … siness-hed

Last edited by Kmarion (2007-04-18 08:39:21)

Kmarion wrote:

CameronPoe wrote:

Any financially-savvy types care to explain the implications of a worthless dollar to me?

It means invest in the US economy now...

I dunno. That's one reason behind the fall in value of the dollar. Investors are not investing in the dollar because of the low interest rates. American financial centres are slipping too, with London recently overtaking New York as the largest financial centre in the world.

Kmarion wrote:

Define largest financial centre in the world.

http://www.google.co.uk/search?hl=en&am … &meta=

First one, apparantly, I didnt read the whole thing

Martyn