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Thread: FLUSH!!!! US Dollar down the crapper

  1. #1
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    this is a forum chock full o economists and wall street guys - answer me this simple question

    why is it that our President continues to devalue the dollar through unchecked deficit spending and no one seems to care?

  2. #2
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    Bitonti - does the President determine interest rates? Does Congress exist?

    Why do you say that no one cares, when I have stated repeatedly that his spending is out of control? Do you care that the person you voted for would have [i]increased[/i] spending? Do you care that incremental yearly increases are written into a lot of legislation that was passed by his predecessors?

    Your general point is apt - it is not the greatest thing, though not necessarily the catastrophic thing people would have you believe...

    Anyway, I am not an economist. I do quantitative stress-testing and equity analysis for a firm. Big difference.

  3. #3
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    i didn't specifically mean you when i wrote this but still am thankful for the response - hopefully others can shed light (e.g. Kevin and LawyersGunsMoney)


    as for the President - he is driving this devaluation because outside investors look at his spending and they look at his open-ended war on terror and they realize that the dollar isn't a good bet.

    you say Kerry would have increased spending but you and I both know that it's hard for the President to increase spending when both the House and Senate are controlled by the opposing party - similar conditions (plus the dot.com boom obviously) gave rise to the balanced budget of the clinton years. does that make it a slam dunk that Kerry would have been more fiscally responsible? no, but at least there is historical precident. the way things are now it's pork city down there, with no checks and balances.

  4. #4
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    [quote][i]Originally posted by bitonti[/i]@Dec 29 2004, 11:34 AM
    [b] this is a forum chock full o economists and wall street guys - answer me this simple question

    why is it that our President continues to devalue the dollar through unchecked deficit spending and no one seems to care? [/b][/quote]
    Bit

    Why do you think a devalued dollar is bad?

  5. #5
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    [quote][i]Originally posted by bitonti[/i]@Dec 29 2004, 11:49 AM
    [b]

    you say Kerry would have increased spending but you and I both know that it's hard for the President to increase spending when both the House and Senate are controlled by the opposing party - similar conditions (plus the dot.com boom obviously) gave rise to the balanced budget of the clinton years. does that make it a slam dunk that Kerry would have been more fiscally responsible? no, but at least there is historical precident. the way things are now it's pork city down there, with no checks and balances. [/b][/quote]
    That is a great point Bit! That was the reason my father voted for Kerry. A deadlocked gov't can't spend.

  6. #6
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    That's a good point - the deadlock does help somewhat, yes.

  7. #7
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    [quote][i]Originally posted by Lawyers[/i]@ Guns and Money,Dec 29 2004, 11:49 AM
    [b] Why do you think a devalued dollar is bad? [/b][/quote]
    good question -

    besides the day-to-day individual effects (for example not being able to travel abroad or buy as many imports because everything foreign is out of price range)

    i am concerned about several outcomes -

    -most likely a loss in America's ability to be an economic leader - we are the largest but not the best - a weak dollar hurts our oil importation (we are an energy hog and everyone knows it), it hurts our ability to favorable arrange global trade negotiations such as rejections by Brazil and India in Cancun (Sept 2003) - it used to be USA called the shots - not anymore - yes the globalization has given more bargaining power to more countries but no one respects the dollar as much as they used to and that's not a good thing -

    -to a lesser extent i am concerned about a devaluation collapse a.k.a. crisis of confidence that could trigger not only local but a global recession -

    why do you think a devalued dollar is not bad?

  8. #8
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    [quote][i]Originally posted by bitonti[/i]@Dec 29 2004, 11:49 AM
    [b] i didn't specifically mean you when i wrote this but still am thankful for the response - hopefully others can shed light (e.g. Kevin and LawyersGunsMoney)


    as for the President - he is driving this devaluation because outside investors look at his spending and they look at his open-ended war on terror and they realize that the dollar isn't a good bet.

    [/b][/quote]
    Answered my question here and to a degree I agree, the dollar probably isn't the best bet of currencies right now. We are able to get away with borrowing as a % of GDP that other nations would never be able to do becasue of our currencies favored status (world currency.)

    That being said, and in my amatuer opinion, the falling dollar is not necessarily a bad thing for us. Im leaving work early today and will be able to write a more detailed response later but the crux of my argument is that a devalved dollar should eventually help exports, which would in effect stimulate the dollar since dollars would be needed to buy US products. What I would like to see to stablize the dollar would be changes to the tax structure, allowing accelarated depreciation, giving companies incentive to start invest in manufacturing home, increasing manufactoring, improving our worlds spot in manufactoring, increaasing exports and reducing imports, reducing the current account deficit therefore increasing the dollar (hope you follwed that incoherent rant.) But, this would be contigent on the increase manufactoring increasing GDP to a point where the tax shortfall in the current year would be offset since I dont want to borrow anymore. Id also like to see a change in the tax code with a flat tax over a certain amount (say 30k) and a national sales tax so there is an incentive to save, which or country deserately needs reducing the deficit.

  9. #9
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    Funny this is being discussed.

    I just read yesterday how Warren Buffett is predicting a monetary crisis in the USA and changing his dollards to Euros.

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    Bit, thanks for keeping me in mind since I havn't posted in this forum in a while. I guess I got kinda burnt out on the election. I'm not an economist either, I'm a trader, so I don't have a real good answer for you. All I can say is that I think the $ is way undervalued vs. the Euro simply because I believe our economy is in much better shape than theirs. Lawrence Kudow has written a bunch of articles on this that past few months on Nat. Review online. (Thanks 5ever for turning me on to that site). I actually trade foreign stocks and I can tell you that currency fluctuations have been as volatile the past few months as I can ever remember seeing them. I've had a few cases where I bought/sold a stock in it's local market and even though the stock went my way I lost money on the trade since the currency moved against me before I could covert it into ADR's (foreign stocks traded here in the U.S. in $'s)

    Anyhow I think the best way to help the $ is to strengthen the economy via cutting taxes and spending. Obviously spending is a problem and fiscal conservatives can't defend Bush. We can only hope he changes this in his second term.

  11. #11
    Kangaroo F*cker
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    I care! The fall in the US dollar value has hurt the Company I work for. The majority of our revenue is in US dollars and then converted to New Zealand dollars (My Company is based in Auckland, NZ with a small office here in Boston).

    With the dollar falling we have taken a huge hit in revenue. I just can't see what the government can do to change the slide.

  12. #12
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    [quote][i]Originally posted by kevin45[/i]@Dec 29 2004, 01:20 PM
    [b] Bit, thanks for keeping me in mind since I havn't posted in this forum in a while. I guess I got kinda burnt out on the election. I'm not an economist either, I'm a trader, so I don't have a real good answer for you. All I can say is that I think the $ is way undervalued vs. the Euro simply because I believe our economy is in much better shape than theirs. Lawrence Kudow has written a bunch of articles on this that past few months on Nat. Review online. (Thanks 5ever for turning me on to that site). I actually trade foreign stocks and I can tell you that currency fluctuations have been as volatile the past few months as I can ever remember seeing them. I've had a few cases where I bought/sold a stock in it's local market and even though the stock went my way I lost money on the trade since the currency moved against me before I could covert it into ADR's (foreign stocks traded here in the U.S. in $'s)

    Anyhow I think the best way to help the $ is to strengthen the economy via cutting taxes and spending. Obviously spending is a problem and fiscal conservatives can't defend Bush. We can only hope he changes this in his second term. [/b][/quote]
    Good point Kev, but the Euro will continue to take the brunt of the devaluzation as long as Asain contries, most notably China) peg their currencies to the dollar.

  13. #13
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    [quote][b]Good point Kev, but the Euro will continue to take the brunt of the devaluzation as long as Asain contries, most notably China) peg their currencies to the dollar[/b][/quote]

    This is the key LG&M......As long as the greenback is the "trusted currency", we'll be fine.

  14. #14
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    [quote][i]Originally posted by TerryBadway[/i]@Dec 29 2004, 02:33 PM
    [b] [quote][b]Good point Kev, but the Euro will continue to take the brunt of the devaluzation as long as Asain contries, most notably China) peg their currencies to the dollar[/b][/quote]

    This is the key LG&M......As long as the greenback is the "trusted currency", we'll be fine. [/b][/quote]
    agreed

  15. #15
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    Well, it means a nice cheap holiday next time I go over. :lol:

  16. #16
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    zzzz.....the us economy is stronger than europe's and the
    chinese currency is artifically pegged to a ratio that would drop it like a rock if the
    commies allowed it to move more freely...if the $ was stronger, we'd have less foreign investment and tourism and fewer exports. bottom line, the democrats spent, spent & spent deficits for years when they controlled congress, and outside of Carters disastrous reign, we still werent coming close to hauling around wheelbarrows full of greenbacks to buy loaves of bread.

  17. #17
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    [quote][b]bottom line, the democrats spent, spent & spent deficits for years when they controlled congress, and outside of Carters disastrous reign, we still werent coming close to hauling around wheelbarrows full of greenbacks to buy loaves of bread.[/b][/quote]

    never in this history of this country have we cut taxes and gone to war at the same time - and it's not shaping up to be a short war -

  18. #18
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    Never in the history of this country have we had the amount of wealth we have now, either.

  19. #19
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    [quote][i]Originally posted by jets5ever[/i]@Dec 31 2004, 11:47 AM
    [b] Never in the history of this country have we had the amount of wealth we have now, either. [/b][/quote]
    yes isn't it wonderful that bush has put us in a position to see what gives first, our massive spending or our massive wealth :lol:

    call me a cynic but i've seen Brewsters Millions - reckless spending trumps massive wealth everytime :lol:

  20. #20
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    I'm certainly not a economics expert but I will say that a falling dollar helps blue chip company's who have oversea invesments.

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