Foreign banks dumping the dollar?
posted at 9:30 am on October 13, 2009 by Ed Morrissey
Economists have long predicted the dollar’s demise as the global currency of choice. Some, such as Paul Krugman, hailed it as a means of correcting the American trade imbalance. Love it or hate it, the weakening of the American dollar has begun as central banks have started to buy euros and yen while dumping the dollar (via Instapundit):
Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
This could not come at a worse time, as the current American administration busies itself with massive new spending — and massive new debt. The weaker dollar will make the sale of Treasuries that much more expensive, which should warn the US government away from further deficit spending. The biggest problem afflicting the dollar, Bloomberg reports, is that there is just too much of it on the market, thanks to the increased need to cover deficit spending and the monetary policy that accompanies that need.
Does a weak dollar matter? Should Americans care whether our currency dominates world markets? James Pethokoukis says that whether we should or not, the decline of the dollar will almost certainly become a large political problem for Barack Obama:
A recent Rasmussen poll, for instance, found that 88 percent of Americans say the dollar should remain the dominant global currency. Now, the average voter may not fully understand the subtleties of international finance nor appreciate exactly how a dominant dollar has benefited the U.S economy. But they sure think a weaker dollar is a sign of a weaker America.
And that’s the political problem for the Obama administration. Its benign neglect of the dollar is another example of an economic policy — along with TARP and the $787 billion stimulus — that the White House thinks is helping the economy, but many Americans find wrongheaded.
In his New York Times column today, Paul Krugman makes the usual case for a weaker dollar: It helps U.S. exporters and is a necessary part of a global economic rebalancing. And there is some truth in that, particularly the idea that Rising Asia will result in a less-dominant dollar. Then again, a devalued currency hasn’t exactly been a proven path to prosperity. (Ask Jimmy Carter.)
But Krugman too easily dismisses the idea that the dollar’s decline could tumble out of control. Former Clinton economic officials such as Robert Rubin and Roger Altman have been making the case that investor concern about budget deficits could lead them to abandon the dollar. As Altman argued in a Financial Times op-ed piece today: “The dismal deficit outlook poses a huge longer-term threat. Indeed, it is just a matter of time before global financial markets reject this fiscal trajectory. That could lead to a punishing dollar crisis.”
Pethokoukis imagines a campaign slogan for 2010 and 2012 being, “Who lost the dollar?” It might make for a good slogan at that, but blaming it all on Obama would be a little too easy. The crisis has its roots in policies that go back at least a decade, and in deficit spending that began to get out of hand with a Republican Congress and Republican President and went insanely wrong when Democrats took control.
However, Obama’s fiscal policies are the worst we’ve seen in a generation. In a crisis which demands a return to fiscal sanity, the White House has instead become the asylum, as these deficit projections show — even without ObamaCare and cap-and-trade:
Instead of finding new ways for the federal government to spend money, Congress and the President should be finding new ways to curtail it and demonstrate that we intend to end our irresponsible spending and massive government overreach into the private sector. In that sense, we can blame Obama for losing the opportunity to stop the dollar crisis before it reaches a tipping point.
Blowback
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No no no, Mr. Pethokoukis. The WH doesn’t think their moves are going to help the economy, they say the think it will be helping the economy while the results are exactly what they’re working toward – the weakening of America.
cpr on October 13, 2009 at 9:35 AM
I still think this is alot of saber rattling internationally against us, reading our political tea leaves.
jp on October 13, 2009 at 9:37 AM
0% prime rate monopoly money from the Fed == worthless dollar?
Whoda thunkit.
spmat on October 13, 2009 at 9:39 AM
We’re encouraging it. A weaker dollar lessens the debt load and makes our exports a bit more competitive. It may not be the right strategy, but this isn’t so much a foreign action against us…its a cooperative effort.
ernesto on October 13, 2009 at 9:39 AM
If Obooba et al were merely idiots, now and then something would go right by accident.
Akzed on October 13, 2009 at 9:39 AM
If the White House wants a depression it would do well to listen to Krugman.
The gig is about up. The foriegn bondholders must realize the only way they’re going to get paid on those securities is by printing the dollars.
Chris_Balsz on October 13, 2009 at 9:39 AM
A weak dollar would help the economy, but it’s going to make it tough to sell our Treasure notes in order to fund the deficit.
Obama won’t have a problem if he balanced the budget.
blink on October 13, 2009 at 9:40 AM
Devalued currency does indeed have consequences. The Weimar Republic did that in Germany in the 1920s and the end result was the takeover of the country by a Mr. A. Hitler.
Everyone was broke, the Mark was violently erratic in value, people were paid twice daily (11AM and 4PM) since currency “revaluations” occurred at noon and 5 PM. It gave people time to run to the store before the Mark lost even more value. It took a wheelbarrow of cash to buy a loaf of bread. THAT is the end result of currency devaluation. It didn’t work out particularly well before, I doubt it will today.
bradley11 on October 13, 2009 at 9:41 AM
The weaker dollar will make the sale of Treasuries that much more expensive, which should warn the US government away from further deficit spending.
……
HAHAHAH
Hiccup…
HAHAHHA
artist on October 13, 2009 at 9:41 AM
Can’t afford to buy much gold, but I can afford peanut butter. Stocking up the pantry.
publiuspen on October 13, 2009 at 9:42 AM
Palin needs to start her “Drill Here, Drill Now” narrative, framed around how that would strengthen the dollar by lessening our Trade Imbalance
jp on October 13, 2009 at 9:43 AM
we still have by far, the top Economy in the world, with the least amount of Regulations compared to the other large economies.
jp on October 13, 2009 at 9:44 AM
“This could not come at a worse time, as the current American administration busies itself with massive new spending — and massive new debt.”
This statement seems oblivious of the fact that the current administrations policies are the tipping point causing the flight from the dollar. If we were not printing and spending ourselves into oblivion they would not be dumping the dollar.
If we adopted sane fiscal policies like capital gains tax holidays for a year or three and slashing corporate taxes we would see a massive influx of foreign capital looking to do business here and they could care less that it would be denominated in dollars.
The fixes are not rocket science. Which makes it all the more damning that the exact opposites are being implemented while rome is burning. This is what they want and they are not even being called on it or on how unneccessary ot all is.
America1st on October 13, 2009 at 9:44 AM
Our own printing press is doing more damage.
Vashta.Nerada on October 13, 2009 at 9:45 AM
while the results are exactly what they’re working toward – the weakening of America.
cpr on October 13, 2009 at 9:35 AM
Both foreign and domestic.
artist on October 13, 2009 at 9:45 AM
Agreed. She should seize this opportunity. She is absolutely driving this debate, just as she has been driving every policy debate this year. If she pens a Facebook note or an op ed about it, it will suddenly make its way into the public discourse as a serious option. And we need this option.
Cuda rules the world. ;o)
NoLeftTurn on October 13, 2009 at 9:45 AM
A dollar collapse means higher interest rates, something that the economy can’t afford right now. Most lines of credit that individuals and businesses use have variable rates pegged US treasuries, so if those rates go up (as they must to compensate foreign borrowers for the increased risk of an unstable currency) then the cost of business goes to up. And, it’s a cost not easily passed on the the consumer, so your margins take a huge hit.
For the life of me I don’t s how any of this i going to work out well – this has to be the most anti-growth, anti-business, anti-entrepreneurial admin. EVER. I don’t care what the talking heads say about a recovery, this admin. is laying the groundwork for 10% UE to become the norm, they’ll have to b/c these policies WILL NOT spur demand which is a prereq for increased employment.
volnation on October 13, 2009 at 9:46 AM
No new news here!…Glenn Beck done warned us over a year ago or so,that the dollar was going to be knocked out as the currency of the world….
hawkman on October 13, 2009 at 9:46 AM
Nazi Pelosi wants another “stimulus” package, and by GOD she will get it! I would like 2 each of the new million dollar bills, please!
SouthernGent on October 13, 2009 at 9:48 AM
A snapshot of time is blind to the trend.
Saltysam on October 13, 2009 at 9:50 AM
Not who lost the dollar but “Who surrendered the dollar”.
the_nile on October 13, 2009 at 9:50 AM
It also makes the U.S. more attractive to foreign tourists. The problem isn’t the weakened dollar itself; it’s the policies required to get it. The money supply is so out of control right now that high rates of inflation are practically unavoidable. What good is having your exports be more attractive if, as a net importer of goods, most of the things you buy cost a lot more and your paycheck doesn’t go nearly as far?
Also, the Heritage deficit graph needs to be updated to reflect the actual numbers from FY 09.
BadgerHawk on October 13, 2009 at 9:51 AM
The weaker currency does not directly imply a weaker nation.
ernesto on October 13, 2009 at 9:51 AM
Why buy the Yen? Correct me if I am wrong, but Japan is 5 to 10 years ahead of us in debt-to-GDP ratio and aging population. Why is their crap better than our crap?
WashJeff on October 13, 2009 at 9:52 AM
A weaker dollar implies their is less demand to invest in the country. Less investment results in less innovation and a less dynamic economy. This allows other countries, like China, to catch up, and poteniently surpass us, economically.
WashJeff on October 13, 2009 at 9:55 AM
They made the same mistakes we are making, just ten years earlier. The difference is that they still have a manufacturing base.
Vashta.Nerada on October 13, 2009 at 9:55 AM
This is thing that most, including Ed, are missing. It doesn’t matter all that much that foreign banks are dumping the dollar. It matters that we keep printing and selling them. Stop for a minute to think about the point a nation has to reach before it starts buying its own money in order to keep rates down. If rates go up the economic ‘recovery’ collapses, but we can’t find enough buyers at low rates, so we start buying our own treasuries.
Scary stuff.
BadgerHawk on October 13, 2009 at 9:55 AM
Kind of impossible when the actual goal is the destruction of the economy and the strategy for achieving same is massive government overreach into the private sector.
TXUS on October 13, 2009 at 9:55 AM
Isn’t this like celebrating high unemployment,low GDP and overall low economic growth because it produces lower energy costs.
Krugman will spin anything to help Obama.His only dissent was that Obama was not “spending enough” money.
Now in liberal land, deficits don’t matter:
Paul Krugman is a shameless scumbag
http://minx.cc/?post=291488
—Uncle Jimbo
Paul Krugman now:
OHHHHHHHHHHHHHHHH YEAAAAAAAAAAAAA…….trillion dollar deficits and the dollar tanking are the reasons we can rest easy during the day and party all night…..what infinite wisdom.
Paul Krugman when Bush was President:
PROFESSOR PAUL KRUGMAN, PRINCETON ECONOMIST:
So super smart Krugman says we need to get our financial house in order and that America is looking at a collapse of confidence when the dollar was strong,deficit was at 400 billion,and unemployment was at 4.5 %.
Now with the dollar tanking,deficits hitting 2 trillion,and unemployment reaching 10% (with higher taxes on the way) Krugman says “keep it coming, we’re on a roll”.
Forgive me if I don’t take this liberal shrill seriously.
Baxter Greene on October 13, 2009 at 9:56 AM
Zimbabwe….or Bust!
Just A Grunt on October 13, 2009 at 9:56 AM
This is thing that most, including Ed, are missing. It doesn’t matter all that much that foreign banks are dumping the dollar. It matters that we keep printing and selling them. Stop for a minute to think about the point a nation has to reach before it starts buying its own money in order to keep rates down. If rates go up the economic ‘recovery’ collapses, but we can’t find enough buyers at low rates, so we start buying our own treasuries.
Scary stuff.
BadgerHawk on October 13, 2009 at 9:55 AM
___________________________________________________
That has been happening with the Fed purchasing Treasuries to artificially hold down interest rates.
ICBM on October 13, 2009 at 9:57 AM
Yes, Dumb luck would have something work for them once in awhile.
If they aren’t stupid, that only leaves the choices of them being evil or insane.
The real question is, which one is it?
Juno77 on October 13, 2009 at 9:59 AM
That’s why I typed what I typed. I guess I didn’t make it very clear that we’re already doing it.
BadgerHawk on October 13, 2009 at 9:59 AM
Should be enough to buy a Quarter Pounder w/ Cheese meal.
jimmy2shoes on October 13, 2009 at 10:00 AM
I’d like to know what you’re smoking?
Every economy in the world is coming out of recession. We are not. Brazil, Russia, India, China are starting to complete their settlements in currencies other than the Dollar. China is buying up every large commodity entity around the world for sale in DOLLARS. ie..they are dumping their Dollar reserves before they become worthless. The Treasury sales are becoming a joke. Third party buyers buy Treasuries and then a few days later the Fed buys them back from the third party. ie..they are adding to their balance sheet and thereby printing money like mad.
I suggest you drop the joint and buy gold if you can instead.
PatriotRider on October 13, 2009 at 10:01 AM
But from data I have seen, we are still the largest manfacturer in the world, accounting for roughly 20% of the world’s production. Production is also a highly automated process nowadays and does not produce jobs as it did in the past. I am amazed when watching How It’s Made how many manfacturing lines do not involve people. Many of the jobs that do exists, I would not wish on anyone due to monotony.
WashJeff on October 13, 2009 at 10:01 AM
So what are the Norks going to do? Throw away their $100 bill printing presses and move into Chinese currency counterfeiting business?
WashJeff on October 13, 2009 at 10:02 AM
Our economy is screwed. It’s going to be like the carter administration with higher unemployment and it’s going to last for 4-5 more years.
jhffmn on October 13, 2009 at 10:03 AM
What a great time for enemies of our country to create more conflict in the world and attempt to bankrupt us.
WashJeff on October 13, 2009 at 10:04 AM
Good idea. They’ll no doubt have Peace Prize Boy’s pretty face on them, suitable for framing.
TXUS on October 13, 2009 at 10:06 AM
The weaker currency does not directly imply a weaker nation.
ernesto on October 13, 2009 at 9:51 AM
Financial Times:
The notion that Mr Obama is a weak leader is now spreading in ways that are dangerous to his presidency.
artist on October 13, 2009 at 10:07 AM
I guess this kinda ruins Barry’s dream to have his picture on the dollar bill.
Buy Danish on October 13, 2009 at 10:08 AM
Soros is probably betting heavily against the dollar, and the traitorous Osama Obama is meekly doing his bidding.
It’s all a game to scum like Soros and the money-market manipulators. They don’t give a damn about the consequences to the country they live in, since they always have an exit strategy. As long as they’re raking in the profits — in their currency of choice — they can afford to insulate themselves against the human misery they cause.
It’s time for the Chicago Jesus to be removed from office, and for a thorough investigation of sharks like Soros. They need to be stripped of both power and their ill-gotten gains.
MrScribbler on October 13, 2009 at 10:12 AM
But we consume much more. Just like in oil production. The US is the third largest producer of oil in the world, but we consume twice that amount. We are a consumer nation instead of a producer nation. Japan can at least export a decent percentage of its goods.
Vashta.Nerada on October 13, 2009 at 10:12 AM
…which is a more likely reason he won the Nobel…
cntrlfrk on October 13, 2009 at 10:15 AM
At least a decade? That’s an understatement. Destructive and wasteful spending has been going on for several decadeS to say the least but it is hitting such a elevated pace under this admin. that it should be clear as day even to an economic novice that it can’t work which means ideology is clouding the judgment of too many people with too much power.
Yakko77 on October 13, 2009 at 10:16 AM
This gives me goose bumps. Didn’t Obama say something to the effect of: ‘a country cannot continue to be a military super power if they are not an economic super power’? Who here believes that Obama wants the US to remain a military super power? Yikes.
Now… where… did I put that tinfoil? I feel like someone is reading my thoughts from a satellite.
bitsy on October 13, 2009 at 10:16 AM
I blame Obama and the democrats!
Blake on October 13, 2009 at 10:16 AM
krugman’s Nobel appears to be as deserved as Obama’s.
DFCtomm on October 13, 2009 at 10:17 AM
As the value of the dollar collapses, has anyone thought of asking Soros if he is shorting the dollar? If Soros is shorting, is he putting pressure on the Obama Administration to not defend the dollar? What contacts has Soros had with the Administration lately?
We should be making a huge political issue of this – is the Obama Administration deliberately destroying the value of the dollar to benefit Democratic currency speculators?
Realist on October 13, 2009 at 10:18 AM
At over $1050/oz I don’t imagine many can. Silver might be a better metal as it’s roughly $15-17/oz IIRC.
Yakko77 on October 13, 2009 at 10:18 AM
I’d be willing to bet a sizeable chunk of money that Soros has been shorting the dollar for at least a year now.
BadgerHawk on October 13, 2009 at 10:20 AM
Ya’ know… those are good questions.
bitsy on October 13, 2009 at 10:20 AM
Rahm: “Foreign Banks are dumping the dollar.”
Obama: “And why are you telling me this?”
Rahm: “Just wanted you to know, everything is going according to plan.”
Obama: “Great, let’s proceed then. I want every nuclear missile in our inventory dismantled. Chop Chop.”
fogw on October 13, 2009 at 10:21 AM
Scary stuff is right:
Update–Teetering on the edge of economic collapse
http://www.examiner.com/x-3704-Columbia-Conservative-Examiner~y2009m8d21-UpdateTeetering-on-the-edge-of-economic-collapse
As Karl Denninger states in the Market Ticker article cited above:
Our government is encased in a Berkeley bubble that thinks everything will be okay with just a lift of Obama’s hand combined with another great speech.
He has a gift you know.
To bad history shows that these policies are absolute failures:
Confirmed: Stimulus Spending Didn’t Work– Keynesian Economics a Bust
http://gatewaypundit.blogspot.com/2009/10/confirmed-stimulus-spending-didnt-work.html
But Obama and his gallant administration does not want to hear from anyone else.
We all just need to “shut up” according to Mr. bi-partisanship.
No need to worry though, our failed community organizer is on the case,everything will be fine because Obama has “Valarie Jarrett”.
Pretty much the same way Obama treats our military.
But don’t worry, the adults are in charge.
Baxter Greene on October 13, 2009 at 10:21 AM
That’s precisely what’s going on. Unfortunately, I’m afraid the Soros-Obama train has already left the station.
And, any effort to hold either of them to account will be too little too late.
TXUS on October 13, 2009 at 10:22 AM
Correct. You have to factor in all the other components like runaway deficit spending, over regulation, a indication of even higher taxes, trending centralized control of economy, anti-sovereignty foreign policy objectives, and unemployment rising while the pressure to raise interest rates is at an all time high, and the kicker:
…the territory of small business, which is the leading indicator of a free and healthy middle class, is being invaded by the fascistic nature of big government. That, in and of itself, is a clear illustration of a weak nation. Unless, of course, you have a different idea of what represents a “nation”.
Saltysam on October 13, 2009 at 10:22 AM
Well, it sucks for me because it’s incredibly expensive to go to Munich (in laws live there)…..yet family/friends from Germany want to come here for 2-3 week stays at our house in order to hit the outlet malls. Yes, it “stimulates” our economy but it drives me bat sh*t crazy….aaarrrggh!!!
atlgal on October 13, 2009 at 10:23 AM
Maybe this is necessary to reduce the startlingly large trade imbalance? Not pretending to be an economist, in fact I have checkbook balancing issues..lol. But, I do know that you can’t have everything and perhaps, just perhaps, the temporarily fading dollar is a price we must pay for a while? Now, if the Obama administration has anything even remotely resembling fiscal common sense–we might be able to use this situation to our advantage over the long term…but definitely not while shouting from the house tops that we are prepared to nearly double our spending and borrowing. It appears we desperately need someone with monetary talent–neither Barry nor Bush seems to have had that.
jeanie on October 13, 2009 at 10:24 AM
Prediction: Dollars bottoms soon. Republicans take House in 2010 and a multi-year dollar rally begins.
Bill C on October 13, 2009 at 10:25 AM
Our GDP is $14 Trillion dollars, we produce most of the worlds resources. No other nation is anywhere close.
Sure we have alot of bad policies in place, so does most of the rest of the world, especially Europe. They are no where close, nor have the means anytime soon, of taking over anything.
the doomsday crowd of the 1930′s would be shocked if you told them what was going to happen over the next 60 plus years, at the time, yet it happened.
The Goldbug Doomsday crowd has been predicting Doom and Gloom for decades now, in the early 80′s when Gold was at its all time peak of over $2k/ounch adjusted for inflation they were telling everyone to sell everything and buy gold. Had you followed their advice you would be down 50% over this period to date. Compare that to the S&P 500 over the last 25 yrs for comparison
jp on October 13, 2009 at 10:26 AM
Why does anyone take Paul Krugman seriously? I’m not joking… I really want to know. This is the same dude that in 2006 said our sky-scraper deficits were going to lead to American ruin, then in 2009 said our new stratospheric deficits were a-ok.
Seriously… the dude’s an unserious hack.
Lehosh on October 13, 2009 at 10:32 AM
We are pretty evil country in that way. ;-)
This recession seems to bringing this over consumption to a more sustainable path.
We know this is fixable if our federal and state governments say we are open for drilling.
If I can get group X to make a product more cheaply than I can, I will always accept that trade. The question comes down to why we cannot make things more cost effectively here. Labor rates are the most obvious villian, but OSHA, regulations, taxes (at all levels of government), union work rules, expensive energy, etc. are self inflicted wounds. Until, if ever, we tear down these impediments to our own production, I am not going to get bent out of shape over wages in other countries. Not implying one way or the other that your are.
WashJeff on October 13, 2009 at 10:33 AM
The dollar has been falling relative to the Yen since 2007, and the Japanese purposely devalue their currency to boost exports. So an economy that intentionally tries to lower its currency can’t keep up with President Obama.
Our trade imbalance is sufficiently large that currency shifts alone can’t eliminate or even sizeably reduce it. Our economy just consumes too much stuff that can be made more cheaply elsewhere, no matter how worthless the dollar becomes. The one area where we could make a serious dent is energy; drilling domestically for oil could elimnate a decent chunk of our trade deficit, but the curreny administration obviously has no plans to do so.
BadgerHawk on October 13, 2009 at 10:34 AM
Those running this country had rather sink the dollar than allow the credit bubble to deflate. Meanwhile people who live lives of thrift and save get hosed, as they always do. They watch their hard work slip away bit by bit as the governmment sells out our way of life.
flyfisher on October 13, 2009 at 10:36 AM
America as we knew it is over. Welcome to the decline of the best country humans have produced in the history of the world.
Neo on October 13, 2009 at 10:36 AM
Corporate tax rates and the cost of labor are the two biggest culprits, in my opinion. Paying someone $30 an hour (plus benefits) to watch a machine work or a construction worker $18 an hour to hold a slow sign (a job that could be performed by a bucket of sand) means, apart from high cost or specialized items, the U.S. will never be able to regain its manufacturing advantage.
BadgerHawk on October 13, 2009 at 10:37 AM
Gold is going inverse to the USDX. The tipping point is around 72, then 62 then 52. After that we are Zimbabwe. Pay attention, and follow http://www.JSmineset.com The Fed and Treasury have no realistic exit strategy for all of the dollars/liquidity they have injected into the system. Now couple that with debt of 10% of GDP and a disaster is in the offing. It will be a long cold winter for the dollar.
PatriotRider on October 13, 2009 at 10:38 AM
We’re on the same page.
Vashta.Nerada on October 13, 2009 at 10:38 AM
The false assumption is that the donks and Obama want the dollar to stabilize.
jukin on October 13, 2009 at 10:40 AM
http://www.heritage.org/index/
kc8ukw on October 13, 2009 at 10:41 AM
Between astounding incompetence from several consecutive administrations, national consumption on the level of a million Michael Moores at a Twinkie factory, and no restraint on government spending, this is the end result.
Say hello to the Weimer Republic v2.
Dark-Star on October 13, 2009 at 10:45 AM
You are correct, this is government policy. Sadly, President Bush also had a weak dollar policy.
flyfisher on October 13, 2009 at 10:46 AM
What should we, as individuals do? Should we be investing in the Euro and Yen as well- become money traders (which sucks since we will have to pay taxes on it).
Virginia Shanahan on October 13, 2009 at 10:46 AM
Forget money trading. Build up a ‘bug-out house’ somewhere safe. Share it with others if you have to. The coming crisis is, IMHO, going to make planning for retirement and investing as useless as rearranging deck chairs on the Titanic.
Dark-Star on October 13, 2009 at 10:48 AM
Why aren’t the Soros Democrats defending the dollar?
Realist on October 13, 2009 at 10:48 AM
Good. A weak dollar makes imports more expensive and exports less expensive. We are seeing supply and demand here, children — supply and demand.
A weak dollar will improve the hunks of our economy which are export related. As for everyone who wants a cheap wide screen TV from China, you can all go sun yourselves.
unclesmrgol on October 13, 2009 at 10:49 AM
We have some of our money in the Merk Hard Currency Fund, which owns ~10% gold, and then bonds denominated in euros and other “harder” currencies. You can see how it has done this year: http://finance.yahoo.com/q?s=merkx
kc8ukw on October 13, 2009 at 10:51 AM
Isn’t it interesting that the two glaring factors that drop the overall score of the United States are:
1. Size of government
2. Freedom from corruption
Equally telling is the direct relationship between these two factors. If one of these are relatively low, then so is the other one…
….duh.
Saltysam on October 13, 2009 at 10:52 AM
A weak dollar will improve the hunks of our economy which are export related. As for everyone who wants a cheap wide screen TV from China, you can all go sun yourselves.
And anyone who uses oil, has an employer who uses oil, and relies on goods shipped by burning oil, go sun yourselves as well. International experience has shown that currency devaluation generally does not have beneficial effects.
Realist on October 13, 2009 at 10:55 AM
And if anyone thinks that the Obama administration has the strength,intelligence,or leadership it takes to steer this country through it’s international or domestic problems,look no further than today’s news on Drudge:
Clinton, Lavrov agree to delay sanctions against Iran
http://en.rian.ru/russia/20091013/156451209.html
Oh My God….Sanctions don’t work…say it isn’t so….how could this be.
Liberals have done nothing but yell about how important sanctions and negotiations were in dealing with our enemies.
This administration is spinning and backtracking itself right off a cliff.
The Obama administration is dangerously weak and inept.
Baxter Greene on October 13, 2009 at 10:55 AM
Gold that is backed by paper is not gold, it is still paper. Delivery and possession is mandatory in order to remove as many people or entities from between yourself and your assets. What people do not understand about commodities such as gold is that unless you are a speculator you are not “investing”. Gold is a method to PRESERVE WEALTH, not make money.
PatriotRider on October 13, 2009 at 10:59 AM
Correct. My mother told me that her father would go to buy bread during his lunch break because if waited until the end of the work day, there was no guarantee he’d have enough money to buy that same bread.
Her family survived my growing their own veggies [and rabbits].
My mother’s stamp collection includes a 5 mil RM stamp.
Will it get that bad here? Dunno.
Without a rebuke of the ‘rats in 2010, who knows.
I know this much: you DON’T want to find out how bad it can get. Trust me on this.
CPT. Charles on October 13, 2009 at 10:59 AM
Houston, all-systems go, we have Interest Rate lift-off in t-minus 10.9.8.7.6.5.4…
Archimedes on October 13, 2009 at 11:00 AM
I also noticed our labor freedom was exceptionally high. For now.
BadgerHawk on October 13, 2009 at 11:03 AM
It ain’t over yet.
But we’re getting WAY too close to the edge of the of that cliff.
CPT. Charles on October 13, 2009 at 11:04 AM
My church funds several missionaries in Zimbabwe…the horror stories they bring back are enough to make you an insomniac for life.
Dark-Star on October 13, 2009 at 11:06 AM
I know some zimbabweans…uh quite well…shall we say?
and its a tragedy…a lovely land and people…destroyed by socialism…and whats even worse is some of the zimbabweans I know are all for Obama…wanting to turn the US into their homeland..amazing.
right4life on October 13, 2009 at 11:12 AM
The thing I see here is that among those that claim a weak dollar is beneficial, they’re leaving out everything else. This isn’t introductory economics where we isolate a variable, in order to define it.
What good is exporting if it takes 90-110 working hours per week just to keep the heat on and feed the children oatmeal for supper?
I have an idea! Lets tie two hands behind everyone’s back, blindfold ‘em, strap on the harness, snap the whip, and make ‘em pull this plow. We have pyramids to build.
Saltysam on October 13, 2009 at 11:12 AM
What do you mean by trade imbalance? I have “trade imbalance” with my local grocery store. I keep sending them money and all I get back is bread, cereal, and milk. Of course, I value bread, cereal, and milk more than I value the dollars in my pocket and for the grocery store the reverse is true.
The point is that a mutually-agreed upon trade is never out of balance since both parties are the winner by it.
So my question again is a simple one: what do you mean by a trade imbalance?
PackerBronco on October 13, 2009 at 11:13 AM
You make some interesting points but you misunderstand the purpose of gold. We buy gold not because we are trying to make money…we are merely trying to preserve buying power. Gold preserves buying power and the dollar does not.
Yes the United States has a HUGE economy…many times larger than the next. Are you arguing that we are too big to fail? Our money’s value is based on confidence…historically that has never ended well. Are you arguing that this time it will be different? This time a country that is funding HUGE spending by printing money will avoid hyper inflation?
Fiat money has always ended ugly…from the Romans to Zimbabwe.
PierreLegrand on October 13, 2009 at 11:15 AM
Like California?
nolapol on October 13, 2009 at 11:15 AM
and uh where have I heard about a global currency before??? hmmmmmm?? I think some guy named JOHN wrote about it…a while ago…..
right4life on October 13, 2009 at 11:17 AM
Balancing the trade ledger is ultimately a moot point should our economy crater, which it is likely to do in the near future. Yes it’s a problem but it has to take a backseat for the moment.
Gah…er…wha?
*faints*
Dark-Star on October 13, 2009 at 11:17 AM
Obama has succeeded in getting every problem to be discussed in terms of “who started this problem” rather than solving the problem. We have a major dollar problem now, which includes the world understanding that Obama and the democratic congress have gone wild, which will cause the further destruction of the dollar and real harm to Americans. Never for a moment, however, will Obama consider slowing down, much less stopping, any of his ridiculous spendthrift policies. He may, however, decide to cut a few more defense programs.
We are in deep trouble, and Obama does not care.
GaltBlvnAtty on October 13, 2009 at 11:18 AM
Try silver
JIMV on October 13, 2009 at 11:20 AM
But the next hundred years look awesome!
Theworldisnotenough on October 13, 2009 at 11:20 AM
Can you be a little more specific? I follow gold and I have not heard any one saying buy gold sine the 1980′s. Peter Schiff has been suggesting gold since before the internet bubble burst. Whats the return from 1998 to present day?
Theworldisnotenough on October 13, 2009 at 11:24 AM
The Fed and their Central Bank Cartel homies know how to create a monetary crisis. They’ve done it for centuries. Awesome!
It’s cool too see how totally ignorant the population is to this crime.
True_King on October 13, 2009 at 11:26 AM
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