according to bloomberg the chinese are holding their annual "high-level" meetings this weekend and many think their currency peg to the usd is being considered...studies i have bumped into suggest that if the yuan was to float freely on the open market the us trade and current account problems would be reduced by some 2 percentage points...same with the korean buck..these guys have been selling their own bucks by the boat load as of late...as a bundle of currencies..the asian $$ continue to hammer the dollar due to competitive cost...next time buy USA...
<!-- / icon and title --><!-- message -->It will be very interesting to see what happens to the dollar going forward. Is this the time where it will collapse and we see the rise of the Euro as the world currency of choice? The Chinese are already dumping their dollars. Something is afoot.
Foreign central bankers have trillions of US dollars in their vaults. And their economies depend upon the U.S. consumer.
In order to spend, the U.S. consumer must have access to EZ credit - for he has no savings and his income barely increases. In order to keep the U.S. consumer consuming, central bankers must lend him money.
Indeed, a study by the New York Fed showed that it takes more than the entire world's savings to keep Americans living in the style to which they've become accustomed.
Private investors have already withdrawn much of their support for the dollar and the U.S. consumer. If central bankers pull out too - the jig is up.
The entire world economy will have to face the consequences of a collapse in consumer demand, a collapsing dollar...and the end of the Dollar System.
For the moment, dollar holders don't seem to believe their own eyes. They have been told the dollar is falling. They have seen it fall. They have every reason to believe it will fall more.
Foreign central bankers have trillions of US dollars in their vaults. And their economies depend upon the U.S. consumer.
In order to spend, the U.S. consumer must have access to EZ credit - for he has no savings and his income barely increases. In order to keep the U.S. consumer consuming, central bankers must lend him money.
Indeed, a study by the New York Fed showed that it takes more than the entire world's savings to keep Americans living in the style to which they've become accustomed.
Private investors have already withdrawn much of their support for the dollar and the U.S. consumer. If central bankers pull out too - the jig is up.
The entire world economy will have to face the consequences of a collapse in consumer demand, a collapsing dollar...and the end of the Dollar System.
For the moment, dollar holders don't seem to believe their own eyes. They have been told the dollar is falling. They have seen it fall. They have every reason to believe it will fall more.
My God Doc - you are so ignorant of tthe facts that I'm shocked; I thought you were a fairly well educated man - and maybe you are - but your knowledge of macro economics is retarded.doc mercer said:
The Euro's are the people who are hocking the furture to pasy for today. The European socialist economy is constantly on the edge of collapse.
The average western European worker has 10 to 12 weeks of vacation each year. They retire at an early age, and guess what - they also have credit cards.
Doc - every time you post it becomes more and more obvious that you hate America! Why don't you move to Canada and be happy!
I agree with bblight in that Europeans work a lot less than their US counterparts. It's not just vacation time, but also coffee breaks and generally taking things slow and easy, usually on the company tab. Corruption here is rampant, and I'm not only talking Eastern Europe...prices are artificially held high on items like cars, fuel, airlines and telecom services -- and what a coincidence -- these are precisely the items whose markets can logistically be centrally contolled, go figure!
It's true America has a credit bubble waiting to burst, but Europe has one of its own relating to artificially overpricing stuff...if consumers here ever started to demand value in a serious way, you could have more goods produced and consumed with GDP figures going down all the while. Scary thought.
It's true America has a credit bubble waiting to burst, but Europe has one of its own relating to artificially overpricing stuff...if consumers here ever started to demand value in a serious way, you could have more goods produced and consumed with GDP figures going down all the while. Scary thought.
Why does economics always turn into a pissing war with you people. No the Euro is not about to take over as the world's currency and anyone who tells you that is either misinformed or kidding. That still doesn't mean the dollar can't take a serious slide downward. People will still take dollars, just at a different rate than before. This is serious stuff because at some point our economy will get whacked with a bad case of stagflation just like we did in the 70s if we don't tread carefully. Our savings rate must go up, either abruptly or smoothly. We cannot have a properly functioning economy at these rates we have now. I won't listen to dissent on this for all these wacky reasons because none of them are based on logic. If we invest 2% in our economy as a factor of GDP, either we will have no capital to refurbish and expand, or we will have to cannibalize our economy to keep it moving. For a short period we can use the resources of others, but it cannot keep going on forever because reality sets in at some point and the people that are loaning us money either decide to take up residence in our home or they decide to spend their earned capital making their homes or someone elses homes a better place.
I am stunned though at how people try to oversimplify things. The amount of time off and social net Europeans give to their employees has almost zero effect on exchange rates unless you are looking at things over decades. Prices are higher in Europe because taxes are levied at the consumer level, the VAT that some Republicans want is in effect and it makes things more expensive and leads to less robust consumerism. That is exactly what would happen in the US if we changed to a VAT. On the bright side less consumer power means less trade deficit.
Amazing to me, but most pundits and even vast numbers of economists completely overlook the taxing structure of much of the world, ignoring a root cause of the endless trade deficits. Our economy runs based on the model we have chosen and it creates all the after effects. On the good side we aren't beholden to demand from other countries for our business cycle. On the bad side, other countries can produce at lower costs to a great degree because we tax business so heavily compared to most of the world. Our decision has been to go savagely against business at the benefit of consumers, and then our politicians scratching their collective heads wondering why jobs go offshore is insanely laughable. The only jobs you keep here in a high-tax regime (for businesses) are the ones you must keep around, namely services. Anything else will by definition be more productive elsewhere, where tax policy is far more balanced in favor of business. You make your bed, now live in it.
And the comment about busing Mexicans to Canada, I am still trying to figure that one out. What exactly was the point there?
I am stunned though at how people try to oversimplify things. The amount of time off and social net Europeans give to their employees has almost zero effect on exchange rates unless you are looking at things over decades. Prices are higher in Europe because taxes are levied at the consumer level, the VAT that some Republicans want is in effect and it makes things more expensive and leads to less robust consumerism. That is exactly what would happen in the US if we changed to a VAT. On the bright side less consumer power means less trade deficit.
Amazing to me, but most pundits and even vast numbers of economists completely overlook the taxing structure of much of the world, ignoring a root cause of the endless trade deficits. Our economy runs based on the model we have chosen and it creates all the after effects. On the good side we aren't beholden to demand from other countries for our business cycle. On the bad side, other countries can produce at lower costs to a great degree because we tax business so heavily compared to most of the world. Our decision has been to go savagely against business at the benefit of consumers, and then our politicians scratching their collective heads wondering why jobs go offshore is insanely laughable. The only jobs you keep here in a high-tax regime (for businesses) are the ones you must keep around, namely services. Anything else will by definition be more productive elsewhere, where tax policy is far more balanced in favor of business. You make your bed, now live in it.
And the comment about busing Mexicans to Canada, I am still trying to figure that one out. What exactly was the point there?
