The falling US dollar...

[Makalakumu]

I was talking to some of my english friends yesterday about taking a trip and pretty much decided against it. A pint of cheap beer over there would cost me about 10 dollars. That's how low the dollar has really fallen.

With that in mind, how far will it go? What kind of inflation can we expect? What can people do to protect their wealth?

Basically, what it comes down to is that every dollar we save or invest is worth less and less every year.

Is the USD going to bounce back?

 

[michaeledward]

I don't have a great understanding of macro economics. But on this subject there have been some looming warning signs for well over a decade. Some of those signs have become much brighter recently.

However, I think a more immediate problem for those of us within the US Borders, is the pace of inflation. The numbers released last month by our government, and by the Federal Reserve, point to obvious inflation problems. The Producer Price Index was up. The Consumer Price Index was up. This double whammy is quite probably happening in no small part, because of the price of a barrel of petroleum; which is up, no doubt, because of unstability in the middle east (wonder how that happened).

So, the dollar is getting weaker here at home, and it is getting weaker in the international economy. Well, that just can't be good news, can it?

With the relative strength of the Euro against the dollar, we may find that international banks and business begin to shift their capital reserves from the greenback. Well, that just can't be good news, can it?

For some good news, I did see this article. http://www.nytimes.com/2007/12/15/b...96a68ec00&ei=5090&partner=rssuserland&emc=rss

The increase in incomes of the top 1 percent of Americans from 2003 to 2005 exceeded the total income of the poorest 20 percent of Americans, data in a new report by the Congressional Budget Office shows.
The poorest fifth of households had total income of $383.4 billion in 2005, while just the increase in income for the top 1 percent came to $524.8 billion, a figure 37 percent higher.

Carefully not ... it is not that the richest 1 % of Americans earn more than the bottom 20% ... but that the gains in their income; the increase, was more than the total earnings of their fellow citizens in the first quintile.

Well, as I think about it, that just can't be good news, can it?

 

[Ping898]

my own personal opinion based upon what I've read is the USD is in the crapper and it isn't going to get better anytime soon. There is too much liquidity of USD's and until the idiots running the fed stop just cutting interest rates and hoping it helps (most of the current problems IMO can be blamed on Greenspan and his policies) and start mopping up the excess dollars with 30 or 50 year T-Bills this isn't going to get better. I don't see any promising improvement anytime in the near term....no clue about the long term though....

 

[Brian R. VanCise]

The upside is that they will be buying more of our products. My book's and DVD's have always sold well in Europe. (particularly the UK and the Netherlands) However, in the last few month's the sales have doubled. So at least for me this is a good thing at the moment.

Provided I do not take a trip to Europe! (as that would be real expensive)

 

[Tez3]

Your economic problems are causing us problems too, we recently had the first run on a bank for over a hundred years because of that bank lending the 'sub prime' mortgage market in America which is collapsing. The Bank of England had to prop it up with a huge loan, that's of tax payers money!

http://en.wikipedia.org/wiki/Northern_Rock

http://news.bbc.co.uk/1/hi/business/7103168.stm

However while travelling to the UK may be expensive for you, I look forward to making the Meet and Greet next year lol!

 

[michaeledward]

Your economic problems are causing us problems too, we recently had the first run on a bank for over a hundred years because of that bank lending the 'sub prime' mortgage market in America which is collapsing.

The husband of a colleague of mine was busy over the last ten years selling those sub-prime mortgages. Today, if he so chooses, at the age of 45, he is able to retire from work completely, and spend his time in the Atlantic City Casino's.

In my opinion, he made his wealth by screwing people who mis-placed their trust; in him.

In his opinion caveat emptor; a person signing a mortgage should know to what they are agreeing. If they bought more house than they could afford, it is not his doing.

I'm certain that he sleeps very comfortably at night. I think he should be in prison.

I don't suppose I can apologize in any meaningful way for what his greed, and our country's laise-faire policies have wrought. But, if I could do so meaningfully, I would.

 

[Cruentus]

Well, as I think about it, that just can't be good news, can it?

No... no it is not.

Revamping our tax structure would help this tremendously. Our tax structure is completely screwed right now when you consider that not only does that wealthy 1% keep growing disproportionately to the rest of us, but they don't pay taxes, for the most part. At least, they pay a much smaller % then the rest of us. Meanwhile, if you are in the middle to upper middle class, you pay for virtually everything. You pay for the taxes that both the bottom and the top do not pay. The harder you work, the more you make if your between 50 and 150K, the more you pay and get penalized.

It is ridicules. If we want to fix things like healthcare (and even look at having a nationalized program) and the debt., then we have to rearrange the tax structure so that the middle 40% isn't paying for EVERYTHING.

The best thing would be a flat tax of some sort, and a no tax for people at the poverty level. Economists have crunched the numbers, and it always works out where when that top 10% has to pay the same share as everyone else, then it reduces the burden for the middle 40%, and we are able to afford to let people below the poverty level not have to pay.

Anyway, fix the tax system, and we can actually pay down the national debt. If we pay down the debt. and operate in a surplus, then we will see our dollar get stronger.

If we don't do this fairly soon, we will find ourselves ****ed.

 

[Tez3]

There was a programme on the BBC about the people losing their homes in America over the sub prime mortgage problem, it is truly a tragedy. Street after street of empty houses, it showed police officers evicting people who'd lived in their houses for years and leaving them homeless. Why on earth the mortgage companies didn't allow the people to live in their houses paying rent I don't know, it would have benefited everyone as the houses lying empty weren't selling and were losing value by being vandalised.
My heart goes out to those left homeless by the problem, things are alright here because the government backed up the bank. Funnily enough though the more the government said don't panic and get the money out the more people did so and joined the queues for the bank! When asked why they said they didn't trust the government!

 

[Steel Tiger]

The Australian economy has been very strong in the last five years or so and as a result we are only beginning to feel the repercussions of the crisis in the US economy (we are expecting maybe two interest rate rises in the first quarter 2008). We are still running a surplus, but traditionally Labour governments are big spenders and usually end up running a deficit economy. We'll just have to wait and see.

This sub-prime situation has reached far and wide on the international market and the full implications of that have yet to be felt. So I'm afraid that its only going to get worse before its starts to improve.

 

[Makalakumu]

The worst part about this is that the management at the "federal" level is pretty much the cause of most of the inflation. When the "fed" raises interest rates or blows the cap on credit or raises the fractional reserve ceiling to infinite those moves only benefit the uberrich while impoverishing everyone else. And then there is the fact that the "fed" is run by the very people who benefit from these schemes. The "federal reserve" is a private corporation, not a government entity!