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...

 

[-REECE-]

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.

^^

:great:

Couldn't it be a coincidence that every single fiat money based system has failed :red: When someone -- regardless if it's a king, president, prime minister, etc can authorize more money to be printed "just because", that is cause for serious concern. When you print this paper money -- which is a debt, and refuse to pay off your debt, what value does this money have?

Canada is a good example of exactly what the USA should be doing.. The 2006-2007 fiscal surplus was a whopping 14 billion (and remember, our population is 10 times less than you Americans). Compare that to the USA and you have to really wonder why it took so long for the Canadian dollar to reach parity with the greenback.

If you pay off the debt, then theoretically, a fiat system can work -- because the IOU is honored. When you print money year after year with no interest in paying down your balloning debt, that is cause for concern. This has been happening for as long as documented history.. Back B.C. in China, in Rome with Nero,... In the end, it always leads to people trusting only what has always held value -- bullion.

 

[onewordonly]

I hope the US dollar returns to where it was, i don't like this at all as I make my money in the US but live in Aussie.

 

[pergamon]

^^

:great:

Couldn't it be a coincidence that every single fiat money based system has failed :red: When someone -- regardless if it's a king, president, prime minister, etc can authorize more money to be printed "just because", that is cause for serious concern. When you print this paper money -- which is a debt, and refuse to pay off your debt, what value does this money have?

Canada is a good example of exactly what the USA should be doing.. The 2006-2007 fiscal surplus was a whopping 14 billion (and remember, our population is 10 times less than you Americans). Compare that to the USA and you have to really wonder why it took so long for the Canadian dollar to reach parity with the greenback.

If you pay off the debt, then theoretically, a fiat system can work -- because the IOU is honored. When you print money year after year with no interest in paying down your balloning debt, that is cause for concern. This has been happening for as long as documented history.. Back B.C. in China, in Rome with Nero,... In the end, it always leads to people trusting only what has always held value -- bullion.

Exactly. Fiat money is used to exchange goods. Gold is being used to preserve wealth. Not fiat money!
My 100$ is illusionary wealth. It is backed by nothing and it is only of value if my trading partner thinks the same way about it like I do.

 

[-REECE-]

Exactly. Fiat money is used to exchange goods. Gold is being used to preserve wealth. Not fiat money!
My 100$ is illusionary wealth. It is backed by nothing and it is only of value if my trading partner thinks the same way about it like I do.

Germany post-WW1 paints a very clear picture of that. If the USA said tomorrow that your ounce of gold was worth $1, you simply wouldn't sell it to them.. You could sell it to Canada, Europe, etc and recoup your investment. The sad part about this example is that the numbers used here (ounce of gold ~ $740USD versus $1USD) actually reflect reality in terms of how bad many fiat based systems have crashed in the past..

 

[Charley]

It is VERY good for Europeans, Asians and others to take advantage and grab good domains as the dollar value is reducing.

 

[-REECE-]

It is VERY good for Europeans, Asians and others to take advantage and grab good domains as the dollar value is reducing.

There is 1 downside though.. I bought some names back when it took >$1.50CDN = $1.00USD.

So if I sell a name today for a 40% profit (in US dollars), in actuality, I haven't made any profit whatsoever once I convert the money. Alas, it's a loss I'll have to eat. But domain renewals are looking mighty good right now :tu:

 

[italiandragon]

ehm...as far as I know "FIAT" is the Italian car manufacturer.

What else does FIAT stand for?

Thanks

 

[-REECE-]

ehm...as far as I know "FIAT" is the Italian car manufacturer.

What else does FIAT stand for?

Thanks

Money not backed by metal (usually gold or silver).

edit: Good info here: http://en.wikipedia.org/wiki/Fiat_currency

 

[italiandragon]

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.

I don`t see the problems in having low interest rates if you know what you`re doing with your Country.
Problem is that half of Usa elected a President who did not like women as Lewinsky as much as doing wars.

Why don`t you take a look at the economy in Japan. They have interest rates at just 0.50 %

 

[champ_rock]

japan had interest rates at that level back at the time of asian crisis.. not anymore

 

[italiandragon]

Money not backed by metal (usually gold or silver).

edit: Good info here: http://en.wikipedia.org/wiki/Fiat_currency

Thanks Reece

 

[pergamon]

I don`t see the problems in having low interest rates if you know what you`re doing with your Country.
Problem is that half of Usa elected a President who did not like women as Lewinsky as much as doing wars.

Why don`t you take a look at the economy in Japan. They have interest rates at just 0.50 %

Low interest means "free money". Savers gets punished and cash is trash.
So what happens?

Money flows into "higher yielding assets", like stocks and houses. sounds familiar?

Would you allow someone in the world with a blanco checkbook just to write as many cheques as he wished. Because that is what the USA is doing.

If money is too cheap everybody gets diluted. Imagine owning stock in a company and the total shares this company has are 100. you own 10% of the company being 10 shares. Then suddenly the company decides to issue new stocks to raise cash. They will increase the outstanding shares by 20%

Now suddenly your 10% stake has decreased with 20% too. You still own 8% of the company.

This is what happens when the printing presses get out of control. Money supply should be limited. If not you get a bubble and bubbles bust at some point in time.

Japan is another story, they keep interest rates lower to make their export cheaper. In contrary to the USA Japan has a high savings rate, etc...

 

[italiandragon]

japan had interest rates at that level back at the time of asian crisis.. not anymore

uhm...I looked the box on the left in this page:

http://www.dailyfx.com/story/specia...D_CAD__Zoning_in_on_Parity_1190067691151.html

And this news of mid September confirms it:

http://www.theaustralian.news.com.au/story/0,25197,22419738-20142,00.html

 

[pergamon]

japan had interest rates at that level back at the time of asian crisis.. not anymore

Japan still has interest rates of 0.50% as of today.

Japan still has interest rates of 0.50% as of today.

It is called the Yen carry trade. You borrow in Yen at 0.50% and move it f.e. to the Aussie or the Kiwi which stand at around 5%

You pocket immediately 4.50%

The Yen is being kept artificialy low for cheap export to the US and the EU. At one point in time it will rocket higher. You can hold a balloon in the water under but when you let it go it comes to the surface.

So when the Yen rises a lot of big investors will be in trouble because they see their 4.50% profit melting away

 

[italiandragon]

Low interest means "free money". Savers gets punished and cash is trash.
So what happens?

Money flows into "higher yielding assets", like stocks and houses. sounds familiar?

Would you allow someone in the world with a blanco checkbook just to write as many cheques as he wished. Because that is what the USA is doing.

If money is too cheap everybody gets diluted. Imagine owning stock in a company and the total shares this company has are 100. you own 10% of the company being 10 shares. Then suddenly the company decides to issue new stocks to raise cash. They will increase the outstanding shares by 20%

Now suddenly your 10% stake has decreased with 20% too. You still own 8% of the company.

This is what happens when the printing presses get out of control. Money supply should be limited. If not you get a bubble and bubbles bust at some point in time.

Japan is another story, they keep interest rates lower to make their export cheaper. In contrary to the USA Japan has a high savings rate, etc...

Usa made this to get export cheaper as well to re-load the bubble created in 1999 that busted in March 2000.

At the end, These are facts:

Clinton left his seat with the Usa in green position.
Bush not only used all the cash left but in 7 years (still one more to go) put the Usa in a position that may ruine the Country forever.

Japan still has interest rates of 0.50% as of today.




It is called the Yen carry trade. You borrow in Yen at 0.50% and move it f.e. to the Aussie or the Kiwi which stand at around 5%

You pocket immediately 4.50%

The Yen is being kept artificialy low for cheap export to the US and the EU. At one point in time it will rocket higher. You can hold a balloon in the water under but when you let it go it comes to the surface.

So when the Yen rises a lot of big investors will be in trouble because they see their 4.50% profit melting away

6.50 % in Oz and 8.25 NZ

 

[pergamon]

Usa made this to get export cheaper as well to re-load the bubble created in 1999 that busted in March 2000.

At the end, These are facts:

Clinton left his seat with the Usa in green position.
Bush not only used all the cash left but in 7 years (still one more to go) put the Usa in a position that may ruine the Country forever.

That is not true. The USA has been become an indebted nation since the closing of the goldstandard with Nixon in 1971 (Bretton Woods).

Clinton succeeded in turning the annual deficit positively. But under Clinton both personal and public debt was already sky high. It got worse under Bush of course and the USA has been running deficits again.

 

[italiandragon]

That is not true. The USA has been become an indebted nation since the closing of the goldstandard with Nixon in 1971 (Bretton Woods).

Clinton succeeded in turning the annual deficit positively. But under Clinton both personal and public debt was already sky high. It got worse under Bush of course and the USA has been running deficits again.

If what you say is correct then I heard wrong and I need to get more info about it.

Surely , if a wrong trend started in 1971 , I wonder why nothing has changed.

 

[pergamon]

If what you say is correct then I heard wrong and I need to get more info about it.

Surely , if a wrong trend started in 1971 , I wonder why nothing has changed.

Much has changed. US public and personal debt has grown to over 40 TRILLION $$$

The reason why this ponzi scheme hasn't imploded yet is because first Japan financed the US debt, then the Europeans, then the Middle East and now China!

They all own trillions of bonds! (which the US needs to pay back at some point of course)

To correct this sytem you need a currency that is (partialy) backed by gold again and you will need to go through a VERY BIG depression again. Much worse then we all have ever seen. This will leave millions homeless but there really is no way around.

 

[-REECE-]

If what you say is correct then I heard wrong and I need to get more info about it.

Surely , if a wrong trend started in 1971 , I wonder why nothing has changed.

Perhaps a few reasons..

Gold -> Accountability.. You can't just create gold out of thin air (at least not economically in the forseeable future). That means unaccounted for spending is out of the question -- you'll have less gold afterwards.

Gold -> Limited Spending.. You can only spend what you have. That means that expensive wars in Iraq are out of the question (unless you can seize enough oil to pay for additional gold[money])

Gold -> Additional Saving.. People don't need to invest or spend their money, because gold's value won't deflate like the dollar is.

In short, gold stops anyone from "playing God" and creating additional money for whatever self-serving purposes they may very well have, regardless of the economic situation their respective country is currently facing..

 

[bizwiz]

My income from webmastering has been reduced due to the falling dollar.