When prices start going up at Walmart because China got used to the previous exchange rate and decides going by the market is no longer fun then things will be right back where they started.
FreeRepublicans.com - 09:11am on 11/09/2007
"US Trade Deficit Falls As Dollar Weakens”
“Dollar Weakens” is not a good thing for businesses or people in the U.S. It means that things will cost more for everyone in the U.S. and less for everyone outside of the U.S.
Embracing manufacturers in 3rd world countries is as clueless as hugging Muslim radicals. They consider cheating you to be good business and they don’t like us. They consider themselves to be superior and Americans stupid. They smile, shake your hand, get you drunk, and pat you on the back long enough to get your money and get you on a plane back home. They will then make every attempt, most often secretly, to supply you with a product inferior to the one they quoted. They will kill your children and you to get your money.
Our economy is not vibrant. The Fed has just about played this “lower the interest rate to artificially prop up the economy” one too many times. An economy based on debt is doomed to fail. Ask your self why the Chinese are dumping U.S federal notes.
“Dollar Weakens” is not a good thing for businesses or people in the U.S. It means that things will cost more for everyone in the U.S. and less for everyone outside of the U.S.
The dollar is weakening because we run a trade imbalance. The dollar weakens and while it makes foreign goods more expensive to US importers, it makes US good more competitive and increases our exports becuase to the rest of the world they are cheaper in relation to what they were and therefore more competitive with lower cost producers.
There are absolute and hard fast rules on how this whole thing should work. Problem is that this didn’t happen decades ago and normalize our trade deficit. That is because most folks worldwide prefer to invest their money in US dollars and US bonds and US property and US securities because they do not risk the nationalization of their investments. You make a capital investment in the US and you don’t expect the new government regime to come in and quadruple property tax, take your holdings by force, have a military coup, etc. Our currency has long been a haven for folks. Note why Saddam’s kids had half a billion in US Currency, not Euros, not Yen. Dollars.
That is one half of the equation. The second half is that foreign countries manipulate their currencies and often peg them directly to the dollar. they will devalue their currencies on purpose to make their imports more competitive causing massive inflation that their citizens and businesses have to deal with. But they do it anyway because they use the money made off of the exports to import stuff they want like military technology, high tech equipment, and so on.
I don’t know what you expect. We can either have the dollar drop and consequently the trade deficit drop, or have the dollar stay strong and have US citizens continue to purchase more and more goods from overseas and US exports continue to be non-competitive. It is an either or. We risk inflation due to the dollar dropping and risk rising prices for imports, but that encourages US manufacturing to make products because products made at home are not more competitive. Realistically, inflation is less of a risk becuase we lead the world in supply chain improvements and worker efficiency. It keeps rising and the improvements in productivity and efficiency allow us to keep most prices in check.
I am worried about Raw Materials prices like oil because our oil consumption is not as sensitive to price increases as one would hope. But it should slowly start encouraging domestic production.
Don’t go all doom and gloom on us. The dems complain about our manufacturing jobs going overseas, our trade deficits, and so on. They want tariffs and import bans and tax subsidies for manufacturers to keep union jobs in the US. And a strong dollar so that American consumers can continue to get cheap goods from overseas. It is a complete contradiction. Their economic policy makes no sense.
Justin B. - 11:11am on 11/09/2007
A weak dollar is bad for imports and good for exports, the problem is we import a sheetload of oil, so as the cost of oil rises so does the cost to transport and produce those goods to export. Once the increase in oil prices take full effect and producers have to raise their prices it will offset any weak dollar advantage.
The dollar has fallen mainly because of fed funds rate cuts, that’s why when the dollar slides you hear the name Benanke mentioned. When fed rates are lowered it means we are printing more money which devalues all existing dollars.
We have had a trade deficit for decades
The dollar index was around 125 (near record high) back in Jan 2001 and now is at a record low of 75.
Foreigners and investors have lost faith in our currency because Ben is caving to Wallstreet demands and refuses to strengthen the dollar by raising rates.
Where is Paul Volcker? Any old timers still have those W.I.N. pins in the attic? It looks like we may need to start wearing them again.
Mark D - 12:11pm on 11/09/2007
When fed rates are lowered it means we are printing more money which devalues all existing dollars.
No it doesn’t.
The Whistler - 01:11pm on 11/09/2007
Mark: In our system, things are worth what people are willing to pay for them. End of story.
robert108 - 01:11pm on 11/09/2007
When fed rates are lowered it means we are printing more money which devalues all existing dollars.
The truth is that when the money supply is expanded for non-productive use(mostly social spending), it devalues all existing dollars. Trying to change the so-called “trade deficit” is social spending.
robert108 - 01:11pm on 11/09/2007
r108
And in our system people will be willing to pay $6.00 for a gallon of gas because our currency is losing it’s purchasing power and they will have no choice. I believe it’s called Inflation.
What? When the fed lowers the rate it’s not monetary expansion with inflationary pressures? Cool, then lets lower it to 0%
Mark D - 01:11pm on 11/09/2007
And in our system people will be willing to pay $6.00 for a gallon of gas because our currency is losing it’s purchasing power and they will have no
choice. Wrong; it’s because they made a discretionary spending decision, and decided it was worth it. You just don’t get it. Since we have individual independence, we aren’t victims. I believe it’s called Inflation. Social spending is the major source of inflation, with its attendant taxation and regulation; individuals choosing to drive their cars in order to make money isn’t.
When prices start going up at Walmart because China got used to the previous exchange rate and decides going by the market is no longer fun then things will be right back where they started.
"US Trade Deficit Falls As Dollar Weakens”
“Dollar Weakens” is not a good thing for businesses or people in the U.S. It means that things will cost more for everyone in the U.S. and less for everyone outside of the U.S.
Embracing manufacturers in 3rd world countries is as clueless as hugging Muslim radicals. They consider cheating you to be good business and they don’t like us. They consider themselves to be superior and Americans stupid. They smile, shake your hand, get you drunk, and pat you on the back long enough to get your money and get you on a plane back home. They will then make every attempt, most often secretly, to supply you with a product inferior to the one they quoted. They will kill your children and you to get your money.
Our economy is not vibrant. The Fed has just about played this “lower the interest rate to artificially prop up the economy” one too many times. An economy based on debt is doomed to fail. Ask your self why the Chinese are dumping U.S federal notes.
Treasury Prices Dive
China to Lead U.S. Economy to Collapse, China Dumps Tainted Honey in the U.S., China Dumping U.S. Dollar, Treasury Prices Take a Dive, China to reduce Exposure to Dollar, Curious George Dolls Lead Tainted, Toy Laced with Date Rape Drug
More Children put at Risk Worldwide, Fed Sees Period of Slow Growth, Stocks Continue Slide, The Greatest Threat to National Security
Walmart controls our monetary policy? Since when?
The dollar is weakening because we run a trade imbalance. The dollar weakens and while it makes foreign goods more expensive to US importers, it makes US good more competitive and increases our exports becuase to the rest of the world they are cheaper in relation to what they were and therefore more competitive with lower cost producers.
There are absolute and hard fast rules on how this whole thing should work. Problem is that this didn’t happen decades ago and normalize our trade deficit. That is because most folks worldwide prefer to invest their money in US dollars and US bonds and US property and US securities because they do not risk the nationalization of their investments. You make a capital investment in the US and you don’t expect the new government regime to come in and quadruple property tax, take your holdings by force, have a military coup, etc. Our currency has long been a haven for folks. Note why Saddam’s kids had half a billion in US Currency, not Euros, not Yen. Dollars.
That is one half of the equation. The second half is that foreign countries manipulate their currencies and often peg them directly to the dollar. they will devalue their currencies on purpose to make their imports more competitive causing massive inflation that their citizens and businesses have to deal with. But they do it anyway because they use the money made off of the exports to import stuff they want like military technology, high tech equipment, and so on.
I don’t know what you expect. We can either have the dollar drop and consequently the trade deficit drop, or have the dollar stay strong and have US citizens continue to purchase more and more goods from overseas and US exports continue to be non-competitive. It is an either or. We risk inflation due to the dollar dropping and risk rising prices for imports, but that encourages US manufacturing to make products because products made at home are not more competitive. Realistically, inflation is less of a risk becuase we lead the world in supply chain improvements and worker efficiency. It keeps rising and the improvements in productivity and efficiency allow us to keep most prices in check.
I am worried about Raw Materials prices like oil because our oil consumption is not as sensitive to price increases as one would hope. But it should slowly start encouraging domestic production.
Don’t go all doom and gloom on us. The dems complain about our manufacturing jobs going overseas, our trade deficits, and so on. They want tariffs and import bans and tax subsidies for manufacturers to keep union jobs in the US. And a strong dollar so that American consumers can continue to get cheap goods from overseas. It is a complete contradiction. Their economic policy makes no sense.
A weak dollar is bad for imports and good for exports, the problem is we import a sheetload of oil, so as the cost of oil rises so does the cost to transport and produce those goods to export. Once the increase in oil prices take full effect and producers have to raise their prices it will offset any weak dollar advantage.
The dollar has fallen mainly because of fed funds rate cuts, that’s why when the dollar slides you hear the name Benanke mentioned. When fed rates are lowered it means we are printing more money which devalues all existing dollars.
We have had a trade deficit for decades
The dollar index was around 125 (near record high) back in Jan 2001 and now is at a record low of 75.
Foreigners and investors have lost faith in our currency because Ben is caving to Wallstreet demands and refuses to strengthen the dollar by raising rates.
Where is Paul Volcker? Any old timers still have those W.I.N. pins in the attic? It looks like we may need to start wearing them again.
No it doesn’t.
Mark: In our system, things are worth what people are willing to pay for them. End of story.
The truth is that when the money supply is expanded for non-productive use(mostly social spending), it devalues all existing dollars. Trying to change the so-called “trade deficit” is social spending.
r108
And in our system people will be willing to pay $6.00 for a gallon of gas because our currency is losing it’s purchasing power and they will have no choice. I believe it’s called Inflation.
What? When the fed lowers the rate it’s not monetary expansion with inflationary pressures? Cool, then lets lower it to 0%