The Falling dollar, which I have been watching, of course everyone runs to gold or other precious metals OR some even to the YUEN, of China. but what does it really mean to American's and who's doing it.
I was watching someone on TV, who said- he isn't investing in gold or other commodities, cause ya can't eat gold- he's buying grain and planning to live as much without anything from the government NOR connections with them in a "rural" as possible, TOTALLY, if he can, there are good reasons for this too.
Have you seen the headlines lately? The news seems to be loaded with talk of new entitlement programs, federal spending projects, angry protesters, Obama talk, global elections, etc. Well, what's new? And most important, what does this mean for you?
Behind the President's comfortable rhetoric and agreeable headlines about the failing economy lurks the powerful vote by global trade participants. That is, the depreciating US dollar has fallen to 14-month lows compared to a basket of foreign currencies. I must sound the alarm because in the end, we will pay. A falling dollar will lead to inflation, and the US consumer will gradually feel the effects.Now, some Washington elite may try to cloud this fact with brand-spanking-new spending projects to stall inflation, and in turn play a good political game so we vote them back into office to reseal the economic band-aid. However, the voice of market participants is one vote that is hard to manipulate.
Foreign investors who trade currencies, commodities and assets act as voters in the global economy. Their hedging and speculation are votes that influence the value of our dollar, which is the base currency of the world.
There are many reasons for the gradual fall of the US dollar. Recently, The Independent, of London broke a story about secret talks between Russia, China and several Gulf Arab states to devise a plan to trade oil in other currencies instead of the US dollar. The deadline for currency transition for oil is 2018, which makes this an important issue. In the meantime, as Sarah Palin mentioned in a Facebook note, "[this is] further proof of the need for energy independence", but most important is that, if this were to happen, the US dollar will be crushed by 2018. The countries accused of participating in these secret talks denied all allegations. But, it wouldn't be a secret anymore if say, Russia snitched on China. But, the markets looked at the fundamentals, and knew very well how to react.
This Independent article sent fears rippling through the markets. Speculators fueled a rally in commodity prices and, in turn, the dollar was beaten down severely. Gold hit all time highs as investors fled in panic. Gold is a hedge for the US Dollar and fear is what pushed those hikes. The frenzy that took place on Wall Street this past week raised a red flag that sure is visible around the world.
The problem with the US dollar is the increasing money supply that far exceeds global demand. It is clear that global participants are trying to rid themselves of the depreciating dollar, yet the Fed continues to print more, and DC politicians are calling for new spending. When domestic spending becomes exhausted, the American consumer will pay higher prices to balance the aftermath of the recession -- hence, the term inflation.
For now, Asian and European Central Banks are trying foreign exchange intervention as their main monetary tool to prevent the US dollar from falling against their currency. The world relies heavily on the dollar as a base currency, but the WSJ article states that foreign intervention made little difference. A weak dollar helps with US exports, making domestic goods cheaper for foreigners, and thus balances out the world economy. This is a good thing for trade, but again, the US consumer will hurt in the long-term. One can argue that the increase in foreign investment will bring back the dollar to its value before the increase in money supply. For now, even foreign demand is low. This leaves many people anticipating the Fed's next move.
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Comments: 16
neatly passionate
If the dollar drops a lot that will make goods from the U.S. less expensive in the world markets so sales should increase (according to what the economists tell us) and that means more jobs in the U.S. producing those goods. How would you feel about the increased employment that would result?
I don't understand what you are saying with this comment.
Everything we buy has gone up and looks as if it will continue to- including the numbers of those out of work- it's impossible to dole out the benefits this administration demands and make it in this world today. Other nations make part of or all of most of our goods, our lives almost all of us, have already been affected. What with new taxes, the housing market and the ability of other nations, MANY also in a recession/depression-downsizing whatever, they also CANNOT afford what we make in many cases.
Diseases RAGE, prices are going up and too many out of work, house prices continue to fall and third world nations cannot usually afford our products, they are in many cases in decline.
We make the same amount of money (roughly) but that amount of money will buy less foreign goods making U.S. made less expensive by comparison. Thus this, too, will result in greater sales of U.S. made goods and more U.S. employment.
We have had inflation over the last 10 years. But I believe that there has been less or no inflation in prices recently. Certainly the price of real estate has gone down in the U.S. The price of gas is down over the last year or so. Food varies, of course, but housing and gas are rather basic things that almost everyone needs to buy.
Yes, I expect the unemployment in the U.S. to increase but that tends to hold down prices rather than contribute to inflation. The decrease in people producing goods and services implies that we do need an increase in money supply. Especially if that increase can be placed in to the hands of the poor to buy consumer goods. That prospective increase in demand would result in more people being employed here in the U.S. rather than in China since U.S. goods would be relatively cheaper than they are now.
Since the increase in money supply is not from increased taxes (taxes do not affect the money supply), consumer spending from thins increase should not decline. The money supply increase is due to borrowing.
Yes things are bad and I expect them to get worse but not because of a weakening in the dollar. That's sort of a side effect.
TAXES, already "EFFECT" everything, we buy and that going up is just one more blow to the consumer. You haven't seen our electricity bill, the highest in the nation's electricity costs and buying a large item for a home, where taxes are among the highest income and property taxes in the nations means hundres and/or thousands more every year, to a person who's "
real" income is going down.
Taxes are not going up. Keep that firmly in mind. The rich will always be able to evade them and the rest of us will vote to increase the national debt instead of pay it off. So you can safely ignore increases in taxation.
Your real income isn't going down at present though over the last 30 years as the wealthy have grabbed a larger and larger share of the nation's wealth and the rest of us have lost ground. Recently, prices have gone down just a little. But before very long (perhaps six months?) prices will be able to increase again if unemployment is reduced.
Now in your particular location, there may well be inflation in energy costs and the real estate bubble may have considerably increased your property taxes. But I would suggest that one move to a smaller home or to a different part of the country. I wouldn't want to do that myself and it is an unpleasant option, but it does exist. But you will note that such problems are much to be preferred to unemployment and foreclosure. Those additional jobs (from an increase in money supply and a weaker dollar) will help considerably for those who are able to get those jobs.
I do oppose our current system and handouts to the rich but they are inevitable given that the rich will always control Congress. Naturally, they will have Congress do things that benefit the rich at the expense of the rest of us.
My solution is described in detail at:www.nopom.info.
This is the highest household income and the most expensive state in the US, I wanna move where there aren't many jobs, live in rural and want us to retire and get out, but you may be right- the cost of moving and all the other things, jus' dunno anymore.
I LOVE RURAL and what you said about the rich is just simply TRUTH