The Falling US Dollar

[billinchina]

The US Dollar has been falling in comparison with other currencies around the globe for quite a while now. Congratulations Canada, our dollars are the same now (actually yours are worth more than US dollars).

Things are starting to make sense. Rising stock market at record highs. Rising oil prices at record highs. Rising real estate at record highs (well, except for a recent dip). Dollar goes down, prices go up and records are set.

I see purchasing power being eroded as inflation skyrockets for certain items.

So, if things continue, be very excited about rising PPC and rising domain values. However, since dollars will probably be worth less, perhaps you will be no better off.

Just my observations...

 

[AussieDomainer]

Yep, great for me at the moment as the Aussie dollar was buying US 89c the other day and I have been buying like mad! Actually, on second thoughts maybe it's not such a good thing if it gives me another excuse to be buying domains

I'm just hoping the US dollar comes back up a bit when I cash out on sales.

 

[geb9696]

With the US Federal Reserve cutting interest rates it could be a long while before US dollars start to gain value back.

 

[shockie]

so now i have more money than i would normally want in my paypal account (in usd), and i'm reluctant to withdraw at a "loss" to cad - especially since pp has fees for conversion as well. since i don't see a rally for the american dollar anytime soon, i've buying things online and looking to spend consistently more in early 08.

 

[goodkarmaco]

The federal reserve has been increasing the money supply at record rates to keep the ponzie game going.

Not since the early 80' has the money supply been growing this fast. This past year it has grown at 14%!. The Pres does not want this mess to show on his watch, even though his activities were the contributing factors to the huge increase, so to keep the economy afloat as long as possible the printing presses have been running over time, ( and then some).

More money is not a better economy.

More money without any gold backing means more dollars floating around trying to purchase the goods available. If it was backed by gold, then only the amount it was backed by could be printed. This huge increase in paper money is the reason prices go up.

Its called inflation. Inflation may seem good in the early stages as we can now get more for our products or services. This may last for only a short while.

The trouble is the strain on the economy starts to bring bad results, housing markets slow down, credit crunches are common, interest rates rise up, commodity prices rise, factories lay off people and we go into a recession.

How bad will it get? Well each period can be different, You only have to ask, has this government watched its spending and has it had control over its debt?

If you say "we have a pretty good government with honest politicians and they have not been going into debt", well then we will be ok.

If you say, " this government is deceitful, dishonest and has been selling our future out with irresponsible debt management" then all hell is about to break lose.

 

[cchaal]

1€ = $1.41 ans still growing but life price is teh same... some a domain just cost sumtin like 5e for me

 

[SLL]

Things Don't Add Up

My observations...

1) The U.S. dollar is at a historic lows against many international currencies.
You have to believe the speculators have gone a little mad (or no fear).
Yes, the FED just dropped rates to calm fears of a credit crunch,
but the U.S. has a free-market economy with consistent
growth and worker productivity that other countries could only dream of
emulating.

2) The countries that are doing spectacularly well against the U.S. dollar
are Australia, Canada and Russia, whose economies are heavily dependent
on raw materials and oil. China seems to be driving the prices of these
materials with the unquenchable surge in their economy and infrastructure.
Why the Euro would vault higher against the U.S. dollar is anyone's guess.
Until recently, U.S. interest rates had been moving higher and economic
growth had been better than the European Union, but the dollar has slid.
Perhaps the budget deficit is to blame, although it has not grown that
much with Europe over the last 5 years. Perhaps speculation in the Euro
has become frothy.

3) Oil prices have shot to $80/barrel, but out here in California I am still
paying less than $3 for a gallon of gasoline. I was paying $3.50 a gallon
when oil prices were less than $70 per barrel. Why is that?
OPEC/Saudi Arabia has repeatedly stated that there are no oil shortages in
the world, supply is plentiful, and they have no idea why prices have shot
up. Since we in California are always being gouged by the oil companies,
and historically have had the highest gas prices in the nation, I would tend
to agree with OPEC that there is plenty of supply out there. The
speculators have increased the price of oil, but the gasoline companies
have not increased prices to previous high levels. You must remember that
it is in the best interests of OPEC to keep the world supply close to
equilibrium, so as not to cause a world economic shock and throw the
world into recession. They have seen that oil prices plummet under such
a scenario.

4) Australia, Canada and Russia remind me of the state of Texas in the late
1970's and early 1980's. When oil and gas prices shot up during that
period, Texas was heavily dependent on the whims of the oil industry (not
so much now), and it was boom times in the state of Texas. Real Estate
and Condo development went nuts. The developers couldn't build stuff
fast enough. But when oil prices dropped you couldn't give away a home
or condo. All the projects were foreclosed on by the banks and
Condo projects that were nearly complete were ripped down and
demolished! I am sure there are some Texans out there that remember
those dark days.

5) My point is, would you rather have your assets planted in Australian,
Russian or Canadian currency that is so heavily dependent on one area of
economy, or would you rather have it in U.S. dollars, with a diversified
economy that is not dependent on any one industry or service, and can
boast of the most productive workers in the world? The flexibility of the
U.S. economy to allocate resources where they will be most productive, is
second to none in the world. The risk of being in Australian, Russian or
Canadian currencies is substantial. The risk in being in the slower growth
European Union is also substantial given the unprecedented rise in the
Euro.

6) The U.S. economy is not close to a recession. It is growing at 3-4% a
year, which gives the FED plenty of room to raise rates once the
sup-prime loan scare is over (it seems we are well on our way to
accomplishing that right now).

7) The U.S. dollar is the "gold standard" of currencies because the U.S.
economy is the one which most countries want to emulate. This has not
changed. When the speculators change direction, watch out, because
the bloodbath of the herd will be fast and overpowering.

8) Speculation drives currency markets, real estate markets, raw materials
markets, stock markets and domain markets. When this speculation moves
farther and farther away from the realistic, long-term demand/supply for
these markets, we get corrections. In this age of immediate information,
the corrections can be swift and devastating.

9) Do you really believe the dollar will be lower in 1-2 years? I wouldn't bet on
it. As domainers, I would think that going against the crowd might be
quite appealing.

Like the NASDAQ/Tech stock market of 1999, things just don't add up.
If I were one of these countries that were heavily dependent on raw material
prices to sustain growth, I would look at the devastation in Texas in the 1980's as my model for the potential disaster waiting to occur. Again, because of the diversification of the U.S. economy, it was able to weather the problems in Texas and continued to grow. Texas, on the other hand, was absolutely crushed.

Let me know your take on things where you live.

Take Care, Steve L.

 

[pergamon]

The US is virtualy bankrupt. Both personal and public debt is sky high.

However I don't blame the US people for this mess. Banks and especialy the Federal Reserve are the ones to blame. Fiat money and capitalism as we know it has since WW2 brought prosperous times for many people. However like Marx once said, capitalism goes from crisis to crisis and it usualy ends in tears.

Just look at yourself. You're working harder every year, you have 2 kids, a house, a nice car,... and still you don't feel rich when in fact you should be.
You know why? Because of inflation. Because your money devalues year after year and you need to work harder every year to keep up your living standard.

1$ in 1910 is now worth 0.02$ or so in purchasing power
With a gold backed currency you don't have inflation.
A 20$ gold coin from 1930 or so is now worth close to 700$.
That same coin buys you now what it buys you back then.

Now you may ask yourself, why did we change from a gold based currency to a fiat(debt) based monetary system. The answer is simple.
- There is only a limited amount of gold in the world
- People would save their money instead of spending it

I'm a big fan of GOLD and with GOLD I mean bullion gold. Not the fancy instruments like gold stocks or ETF's,...
GOLD has no claim against anything or anyone. My $ bill is a claim against the Federal Reserve. You should ask yourself what will the Federal Reserve give in return of my $ bill. The answer is nothing. Money is debt these days when in fact money should simply be money.


To sum it up. Stocks etc... are probably going to rise more (in nominal figures), on the other hand the purchasing power of your dollar is going to decrease. This will lead to infla la la la tion. This can go on for a while. In fact it will go on for so long that China, EU,... are prepared to lend the US money. Once that stops many people will have a very hard reality check.
Your purchasing power will be decreasing so $$ will go down more, that can also take a while. This will result in inflation (and it's much higher then the Government tells you it is!). The annual money supply in the US alone is probably around 10-12% alone. This means for every 100$ there is in the system now there will be 112$ next year. All the extra money goes somewhere, it goes in stocks, houses,...

So buy some gold coins or bars or buy soms silver (poor man's gold). You will protect yourself against the devaluing dollar and you won't regret it in the years to come.

 

[SLL]

The federal reserve has been increasing the money supply at record rates to keep the ponzie game going.

Not since the early 80' has the money supply been growing this fast. This past year it has grown at 14%!. The Pres does not want this mess to show on his watch, even though his activities were the contributing factors to the huge increase, so to keep the economy afloat as long as possible the printing presses have been running over time, ( and then some).

More money without any gold backing means more dollars floating around trying to purchase the goods available. If it was backed by gold, then only the amount it was backed by could be printed. This huge increase in paper money is the reason prices go up.

Spoken like a true Democrat and watcher of gold infomercials.

Do you really believe that the President or Congress controls the FED?
Sure, they can bitch and moan sometimes when they want rates decreased or credit eased, but the Fed is an independent body of economic experts that have to dance around politics, but are only concerned with the well-being of the U.S. economy.
If you want to beat on the Fed, then ask why they did not take more concern in these crazy sub-prime mortgage programs that artificially drove up home prices by allowing people to qualify for mortgages they had no business getting.
Perhaps we should go back and blame Clinton for the NASDAQ/Tech stock debacle of 1999 which created a similar economic shock.
If you don't want the Pres or Congress running the economic show, then who
should we choose? An independent body of economists that live, eat and breathe this stuff (ie. The Fed).

On top of that, you want to restrain the FEDS money supply tool by making dollars gold-backed? Why?
Lack of Trust? The economy is growing at 3-4%.
Inflation? Inflation has picked up a notch, but is still relatively low relative to the last 25 years.

Leave this doom and gloom for the infomercials.
There is not a developed country in the world that has gold-backed currency.
Gold is nice and shiny and cool to look at, but I don't get a return on gold unless inflation is on the increase or speculators are driving buyers into a froth because the dollar is dropping or jewelry/industrial uses are increasing for the metal. Should gold prices double because inflation has ticked up a few 1/10% over the last 10 years?

At least I get paid interest when I hold (save) my dollars.

You say the Pres' "activites were a contributing factor" to this mess.
What mess and what activities?
Defense spending certainly has increased, but why would the FED increase money supply, if the government is spending more (inflationary)?
Hello, the economy is growing at a healthy rate and inflation is still in check.

When I Google "money supply increase", I find that the largest increase in the money supply in U.S. history was right before Y2K on Clinton's watch.
And do you have any stats on the velocity of the U.S. dollar (how quickly it is spent/circulated) because this also affects inflation. Higher U.S. worker productivity also keeps U.S. inflation low.

If you have lost faith in the FED, I can see your points, but I am not one of those "sky is falling" guys.

Steve L.

 

[champ_rock]

The worrying this is the looming recession that many fear might set in the US economy. if that happens, prices will crash (ya for domains also)

 

[italiandragon]

US dollar? WHAT`S that??

USA? WHO ???



INDIA , CHINA ......are going to be the new leaders of the World in the 21th Century.

 

[ilcesco]

The only thing I know is that I get paid in USD and I live with Euros. $1000 a few months ago were 800€ now $1000 is 700€. That's quite something.
The dollar is getting closer to be just toilet paper to me..

 

[pergamon]

Spoken like a true Democrat and watcher of gold infomercials.

Do you really believe that the President or Congress controls the FED?
Sure, they can bitch and moan sometimes when they want rates decreased or credit eased, but the Fed is an independent body of economic experts that have to dance around politics, but are only concerned with the well-being of the U.S. economy.
If you want to beat on the Fed, then ask why they did not take more concern in these crazy sub-prime mortgage programs that artificially drove up home prices by allowing people to qualify for mortgages they had no business getting.
Perhaps we should go back and blame Clinton for the NASDAQ/Tech stock debacle of 1999 which created a similar economic shock.
If you don't want the Pres or Congress running the economic show, then who
should we choose? An independent body of economists that live, eat and breathe this stuff (ie. The Fed).

On top of that, you want to restrain the FEDS money supply tool by making dollars gold-backed? Why?
Lack of Trust? The economy is growing at 3-4%.
Inflation? Inflation has picked up a notch, but is still relatively low relative to the last 25 years.

Leave this doom and gloom for the infomercials.
There is not a developed country in the world that has gold-backed currency.
Gold is nice and shiny and cool to look at, but I don't get a return on gold unless inflation is on the increase or speculators are driving buyers into a froth because the dollar is dropping or jewelry/industrial uses are increasing for the metal. Should gold prices double because inflation has ticked up a few 1/10% over the last 10 years?

At least I get paid interest when I hold (save) my dollars.

You say the Pres' "activites were a contributing factor" to this mess.
What mess and what activities?
Defense spending certainly has increased, but why would the FED increase money supply, if the government is spending more (inflationary)?
Hello, the economy is growing at a healthy rate and inflation is still in check.

When I Google "money supply increase", I find that the largest increase in the money supply in U.S. history was right before Y2K on Clinton's watch.
And do you have any stats on the velocity of the U.S. dollar (how quickly it is spent/circulated) because this also affects inflation. Higher U.S. worker productivity also keeps U.S. inflation low.

If you have lost faith in the FED, I can see your points, but I am not one of those "sky is falling" guys.

Steve L.

M3 (money supply numbers) haven't been published since years, so you and I don't know what the annual money supply is. Do you honestly believe inflation is at 3-4%??

How much have milk prices, gas prices, ... risen over the past years?
Has your income risen as much?
Under Clinton we had 20$ oil. we recently touched 85$
Do you earn 4 times more then 10 years ago?

Did you know that gas, milk,.. are not in the official Fed inflation numbers. Mobiles, pc's, laptops are in and we all know these things get cheaper every year.

As said we don't know what the money supply is in the US. It was 10-12% before they stopped publishing it. In the EU it is published and it is around 10%.

The US is probably headed for a recession. In contrary to what most say it will probably be a true "monetary recession" which means that the recession will be in the decreasing power of your currency and not in the DOW going to 10,000 points.

The DOW can go to 100,000 points with you being in deep trouble.

And I'm not saying that the EU is any better off. The problem is that the entire system is sick. Wealth is only illusional these days.
Money is based on trust. People agree on something to use to exchange goods. When everyone figures out that money these days is debt and in fact is no different then just a piece of paper with a claim on it "I owe mr X this..." we will probably be in very deep trouble.

 

[italiandragon]

The only thing I know is that I get paid in USD and I live with Euros. $1000 a few months ago were 800€ now $1000 is 700€. That's quite something.
The dollar is getting closer to be just toilet paper to me..

yes? how about in Feb 2002 when the US dollar was 1.3 Euros ? Yes that was the latest time the US currency was above the Euro.

Then Mr Bush started his wars...and his politics could only lead to this.

 

[Peter]

3) Oil prices have shot to $80/barrel, but out here in California I am still
paying less than $3 for a gallon of gasoline. I was paying $3.50 a gallon
when oil prices were less than $70 per barrel. Why is that?
OPEC/Saudi Arabia has repeatedly stated that there are no oil shortages in
the world, supply is plentiful, and they have no idea why prices have shot
up. Since we in California are always being gouged by the oil companies,
and historically have had the highest gas prices in the nation, I would tend
to agree with OPEC that there is plenty of supply out there. The
speculators have increased the price of oil, but the gasoline companies
have not increased prices to previous high levels. You must remember that
it is in the best interests of OPEC to keep the world supply close to
equilibrium, so as not to cause a world economic shock and throw the
world into recession. They have seen that oil prices plummet under such
a scenario.

Shortages for oil companies are big business. During supposed shortages oil companies post their biggest profits.

 

[ssamriga]

I am happy, alows me to buy more stuff for dollars
Since I get paid in LVL, 1 Lat now gets 2$, all time low for dollar...

 

[billinchina]

I read somewhere online that Alan Greenspan admitted on "60 Minutes" that he personally had already diversified his own assets out of the US Dollar. I also read that he forecasted that both inflation and interest rates would eventually rise to double digit levels. If the guy who knows the economy inside and out decided to do that with his own stuff, it shows you something.

My intention of creating this post is just to get people to think about rising domain prices in light of a falling dollar (so that people make sure they are seeing a true net increase after accounting for inflation). The weird thing about inflation (in my opinion) is that certain items are under extreme inflation while others are not.

I'm glad to see your posts!

 

[kemjika11]

not extremely surprising. ALot of americans think the US economy is doing "great", but in reality its not. It could and should be doing much better. The war is sucking our funds out, and we're not competing as well as we think we are. All hope isn't lost though, but we need to start getting fiscally wise and getting things back on track the right way.

 

[italiandragon]

I read somewhere online that Alan Greenspan admitted on "60 Minutes" that he personally had already diversified his own assets out of the US Dollar. I also read that he forecasted that both inflation and interest rates would eventually rise to double digit levels. If the guy who knows the economy inside and out decided to do that with his own stuff, it shows you something.

My intention of creating this post is just to get people to think about rising domain prices in light of a falling dollar (so that people make sure they are seeing a true net increase after accounting for inflation). The weird thing about inflation (in my opinion) is that certain items are under extreme inflation while others are not.

I'm glad to see your posts!

The thing is that you assume that domains must be in US dollars. At least SEDO allows to list and bid in 3 different currencies.

This whole internet thing seems to belong only to americans. Here on NP , it`s assumed that all prices are in USD.

If you want , you can use Euros so not only you will see the prices increasing but also you`ll gain in currency exchange if this trend continues.

 

[pergamon]

I read somewhere online that Alan Greenspan admitted on "60 Minutes" that he personally had already diversified his own assets out of the US Dollar. I also read that he forecasted that both inflation and interest rates would eventually rise to double digit levels. If the guy who knows the economy inside and out decided to do that with his own stuff, it shows you something.

My intention of creating this post is just to get people to think about rising domain prices in light of a falling dollar (so that people make sure they are seeing a true net increase after accounting for inflation). The weird thing about inflation (in my opinion) is that certain items are under extreme inflation while others are not.

I'm glad to see your posts!

Greenspan is an old fool. He knows he will probably go in the history books as the evil one and wants to repair the damage a bit. Afterall it is Greenspan who lowered interest rates to 1% and fueled this irrational exuberance.

The funny thing is with all this bla bla about recession is that most people don't understand it and it fact it is hard to understand. People will cheer when the DOW goes to 15,000-20,000 and even more then that.
In inflationary times everything goes up being it domains, food, stocks,...

You don't need to be a visonary to see where this going. I know exactly where we are heading. Smart money will move towards gold and silver.
This problem is not economic but monetary.