The value of the dollar

Shabbaman · 14-01-2008, 22:36

I just saw a documentary on a possible scenario of the (further) devaluation of the US dollar. The weird thing is that is was a rerun of two years ago. I had read a lot about this thing, especially after the recent mortgage crisis.

The weird thing is that at the very point that the US government took action (a protectionistic one), the value of the dollar was about 1.50 USD for a euro. At the moment the value of the euro is 1.49 USD (*click*). If you compare the decline of the USD with the rise of the US national debt (9 trillion dollars, which sounds like a lot but is "only" 60% of the GNP. Comparatively with 39,4% for the Netherlands it isn't that much. Or at least it sounds like less than 9 trillion.) it seems frightening. It doesn't seem like an issue in the current elections though. I know our national debt is a pretty big issue here, so why isn't it in the states?

Robboo · 14-01-2008, 23:38

Its not an issue because its not what the press or the politicians want to be an issue..

I will probably take heat for this from the other Americans on here.....But America is a nation of sheep. They eat what they are told to eat on TV, ask the doctor for the drugs advertised on TV and are more interested in American Idol than the election. Start talking national debt and most common Americans will say "print more money" as a solution. I am sure someone will tell me if I dont like it to move, but despite its shortcomings I woudln't want to live any where else. And in general..Louisianan isn't the rest of the country.

Darkness · 15-01-2008, 00:00

Cheap dollar = great for tourism in the US.

Though in september 1 euro was still about 1,36 USD...

Should've gone this summer...

Shabbaman · 15-01-2008, 00:08

We live in a world of sheep, no doubt about it.

Robboo · 15-01-2008, 00:13

Quote:

quote:Originally posted by Darkness

Cheap dollar = great for tourism in the US.

Though in september 1 euro was still about 1,36 USD...

Should've gone this summer...

Yeah only problem is it wont really help stimulate our economy. It will help the illegals that work in hotels and drive cabs...

Not a sheep..I am a wolf in sheep's clothing.

romeothemonk · 15-01-2008, 02:49

If you look at the dollars tracking vs the passage of the patriot act and other money checking devices, you may have noticed a strong correlation that the more scrutiny that is placed on high dollar liquid mobile accounts, the lower the value of the dollar. They seem to want to move to countries that are less "stringent" on owning, trading in and banking large denominations with few questions.

Just a thought.

sz_matyas · 15-01-2008, 05:04

The one that caught my attention was the devaluation of the dollar when European nations offered one time, unlimited, relatively no questions asked transfer of currency to the Euro.

There are advantages to both weak and strong currency, a lot of asian countries fight hard to keep their currency weak, while the US used to fight hard to keep the dollar strong. If other things change in cost accordingly there isn't a big problem with the dollar losing relative value (production tends to shift from strong currency countries to weak currency ones, so it may even generate jobs).

Regarding the national debt, it is largely the political elephant in the room. To pay down the debt you have to cut programs and it's hard to buy votes by promising to cut support from your constituents. The other way to pay down the debt is to raise taxes, but in a potential recession, that is a great way to kill what is left of the economy and Bush's tax cuts actually increased revenue over projections from before the cut, so it isn't even guaranteed to help. I'll agree that the reason it isn't an issue is the press and politicians don't want it to be an issue though and part of the reason I'm not in favor of any of the democrat candidates, all of whom promise more programs without giving solid funding ideas.

Shabbaman · 15-01-2008, 08:22

Quote:

quote:Originally posted by sz_matyas

I'll agree that the reason it isn't an issue is the press and politicians don't want it to be an issue though and part of the reason I'm not in favor of any of the democrat candidates, all of whom promise more programs without giving solid funding ideas.

They'll probably raise the deficit, or cut some military program. I found a pretty nice graph about US government spendings btw. Looks like there are a lot of areas of improvement.

Still, it's a one way street. The deficit gets higher and higher, and at a certain point you're only paying interest. I'm amazed that there's no long term planning in US politics (apparently).

socralynnek · 15-01-2008, 08:56

I guess, the low value of the dollar is not as big a problem as for countries like Germany.

In Germany, wages were growing less than the prices of goods has risen, therefore Germany is currently living from exporting. The stronger the Euro gets, the less profit German firms make outside the EU (but most of our exports go to the EU anyway)

But I guess there would be a point when countries like China or Russia switch their savings from US-Dollar to Euro, which means the USA probably should take care of their currency, otherwise they might be losing economical power.

Concerning deficit: Other countries are doing even worse than the US. OTOH in bad times one should spend to help the economy, but I thought that the worst after 9 11 was over, so they should start saving some now again...

Matrix · 15-01-2008, 12:27

I saw the documentary too. It's a nice scenario for a movie.

14-01-2008, 22:36	#1
Shabbaman Administrator Join Date: Mar 2003 Location: Costa La Haya Posts: 8,493	The value of the dollar I just saw a documentary on a possible scenario of the (further) devaluation of the US dollar. The weird thing is that is was a rerun of two years ago. I had read a lot about this thing, especially after the recent mortgage crisis. The weird thing is that at the very point that the US government took action (a protectionistic one), the value of the dollar was about 1.50 USD for a euro. At the moment the value of the euro is 1.49 USD (click). If you compare the decline of the USD with the rise of the US national debt (9 trillion dollars, which sounds like a lot but is "only" 60% of the GNP. Comparatively with 39,4% for the Netherlands it isn't that much. Or at least it sounds like less than 9 trillion.) it seems frightening. It doesn't seem like an issue in the current elections though. I know our national debt is a pretty big issue here, so why isn't it in the states? __________________ "Our spam is backed with COMETS!"

15-01-2008, 00:00	#3
Darkness Moderator Join Date: Aug 2003 Location: Netherlands. Posts: 4,169	Cheap dollar = great for tourism in the US. Though in september 1 euro was still about 1,36 USD... Should've gone this summer... __________________ "Death is lighter than a feather, but duty is heavier than a mountain..." - The Eye of the World

15-01-2008, 00:08	#4
Shabbaman Administrator Join Date: Mar 2003 Location: Costa La Haya Posts: 8,493	We live in a world of sheep, no doubt about it. __________________ "Our spam is backed with COMETS!"

15-01-2008, 02:49	#6
romeothemonk King Join Date: Aug 2004 Location: Yankton, SD. Posts: 1,310	If you look at the dollars tracking vs the passage of the patriot act and other money checking devices, you may have noticed a strong correlation that the more scrutiny that is placed on high dollar liquid mobile accounts, the lower the value of the dollar. They seem to want to move to countries that are less "stringent" on owning, trading in and banking large denominations with few questions. Just a thought. __________________ I am not crazy cause I take the right pills..................................... Everyday

15-01-2008, 05:04	#7
sz_matyas Join Date: Oct 2005 Location: Madison, WI. Posts: 555	The one that caught my attention was the devaluation of the dollar when European nations offered one time, unlimited, relatively no questions asked transfer of currency to the Euro. There are advantages to both weak and strong currency, a lot of asian countries fight hard to keep their currency weak, while the US used to fight hard to keep the dollar strong. If other things change in cost accordingly there isn't a big problem with the dollar losing relative value (production tends to shift from strong currency countries to weak currency ones, so it may even generate jobs). Regarding the national debt, it is largely the political elephant in the room. To pay down the debt you have to cut programs and it's hard to buy votes by promising to cut support from your constituents. The other way to pay down the debt is to raise taxes, but in a potential recession, that is a great way to kill what is left of the economy and Bush's tax cuts actually increased revenue over projections from before the cut, so it isn't even guaranteed to help. I'll agree that the reason it isn't an issue is the press and politicians don't want it to be an issue though and part of the reason I'm not in favor of any of the democrat candidates, all of whom promise more programs without giving solid funding ideas. __________________ \"All men are frauds. The only difference between them is that some admit it. I myself deny it\" H. L. Mencken

14-01-2008, 23:38	#2
Robboo King Join Date: May 2006 Location: Cajun Country. Posts: 2,002	Its not an issue because its not what the press or the politicians want to be an issue.. I will probably take heat for this from the other Americans on here.....But America is a nation of sheep. They eat what they are told to eat on TV, ask the doctor for the drugs advertised on TV and are more interested in American Idol than the election. Start talking national debt and most common Americans will say "print more money" as a solution. I am sure someone will tell me if I dont like it to move, but despite its shortcomings I woudln't want to live any where else. And in general..Louisianan isn't the rest of the country.

15-01-2008, 08:56	#9
socralynnek Moderator Join Date: Nov 2004 Location: USS Defiant Posts: 3,827	I guess, the low value of the dollar is not as big a problem as for countries like Germany. In Germany, wages were growing less than the prices of goods has risen, therefore Germany is currently living from exporting. The stronger the Euro gets, the less profit German firms make outside the EU (but most of our exports go to the EU anyway) But I guess there would be a point when countries like China or Russia switch their savings from US-Dollar to Euro, which means the USA probably should take care of their currency, otherwise they might be losing economical power. Concerning deficit: Other countries are doing even worse than the US. OTOH in bad times one should spend to help the economy, but I thought that the worst after 9 11 was over, so they should start saving some now again... __________________ Being without a signature since November 2004.

15-01-2008, 12:27	#10
Matrix Administrator Join Date: Mar 2003 Location: Tampere, Finland Posts: 4,828	I saw the documentary too. It's a nice scenario for a movie. __________________