The USD is not worth what it use to be...

[Pabst]

You're not really understanding the situation. First of all budget deficits as measured by GDP are no greater in the U.S. than those in the Euro zone and in fact the national debt of Japan is twice that of the U.S. on a per capita basis.

Secondly the decline in the Dollar over the past four years has been abetted by the U.S. Treasury and the Bush administration as a viable anecdote to runaway trade deficits. There's only three ways to shore up an account balance. Either citizens "boycott" lower priced foreign produced goods, government enacts protectionist legislation such as tariffs, or one devalues their currency until it reaches a level where it facilitates trade. Because the dollar was ridiculously strong after the Euro's inception it made sense to bring the dollar down to these levels. I posted late last year that I sold EuroFx at 135 and I'd be surprised if the Euro ever reaches those levels again. IMO the Euro will fluctuate between 112-129 for quite some time.

This is not to say that deficits don't matter. Much has been made of the strength in the Gold market. Many believe Gold is moving up because of inflationary fears. I disagree. I believe it's rallied on currency fears. ALL of these governments (except perhaps the Swiss) suck. A hear much talk from dollar bears. I'm quick to remind them that whether it's Australia or Italy or the UK or Japan or Canada, ALL of these currencies are backed by debt, aging populations that are outliving the fiscal viability of their pension systems, and neo-socialistic domestic policies that no one wants to pay for. The song of this millennium may be "The Dollar's a Dog But the World's a Kennel."

Quote from dandxg:

I believe the reason for the dollar being worthless is two fold

First you have an irresponsible government that continues to spend more than they take in

Two, countries around the world are starting to realize the national debt is getting to a level where it becomes increasingly difficult to pay off so as they move to other currencies the dollar will continue to go down.

If some MBA economist would like to give me their spin I would love to hear it. It is simple economics you can't continue to spend more than you take in and expect that people with have confidence in your business model, yet that is what the US does!

Maybe we can get a fiscally repsonsible government, there's an idea!

 

[kowboy]

Quote from Ivanovich:

Exactly!

My point was not that the government does or does not manipulate the CPI. It was simply how entertaining these forums are - and how some "traders" love to come here and posts innane connections like the price of hot dogs in relation to the USD.

Yes we get your observation on the connection to the hot dog.

But in all seriousness, how about the price of a new pickup, or the price of a home, health care, or some other big ticket item, or whatever you choose...

It's unsettling if you have any assets at all and are concerned about trying to figure out how to protect against the devaluation of the dollar.

I'd simply like to know some strategy for asset protection against the devaluation of the dollar.

 

[dandxg]

I will give you one kowboy, although you have to do some of your own homework, you can invest in CD's that invest in foreign currencies with Everbank.com.

I don't do it myself, but I have heard of many of people doing and making money so long as the dollar declines, if it rallies you will lose money.

 

[dandxg]

Pabst,

I appreciate the post, it has me thinking for sure, I will take your figures at face value, they seem to make sense.

I have an idea for tariffs, although I call them tax breaks. People whom buy american made products produced by american based entities get a tax break, people whom buy american made products, but the parent company is foreign based get a less taxer break, those whom buy products that don't fit into this category may choose as they wish , but get no tax break. I use cars for example, buy a ford get a full tax break, buy a toyota made in America, get a lesser tax break. Buy a subaru, get no tax break. I figure it would result in reinvesting in America. Any thoughts folks? I don't see it happening soon though.

 

[SteveD]

The grass is always greener till some government defaults on their debt, LOL

Don't think it can't happen, it has and does more often than one can imagine!!

SteveD

 

[Sam123]

Quote from The Kin:

I paid $7.96 for a footlong chicken teriyaki at subway. This is criminal... a couple years back it was $4.69.

Criminal.

The USD is becoming shit paper as far as I'm concerned.

You are confusing real inflation with a falling Dollar. Your foot-long chicken teriyaki is priced in dollars and you pay in dollars. So, if the currency falls with respect to other currencies, your sandwich still costs $7.96.

Unless, of course, you believe the sandwich is imported from China. In that case, the Chinese-made sandwich will cost more to Subway, which may pass this expense onto you. And if sizable proportions of U.S. sandwiches are slapped together in China, a longer-term devaluation of the dollar with respect to the Yuan will spur inflationary pressure on sandwiches to U.S. customers.

Meanwhile, as the Dollar falls with respect to the Yuan, Applied Material’s goods and services get cheaper to Chinese companies who frantically buy from AMAT to make semiconductors. Boeing’s airplanes get cheaper with respect to Airbus, (if the dollar is falling with respect to the Euro, as well). The cost of America’s education gets cheaper too, to foreigners who want their children to get an excellent higher education…

In time, employees from Boeing and Applied Materials get pay raises and bonuses, which allow them to survive the horrifying inflationary pressures of a Chinese-made sandwich.

By the way, if the dollar is shit paper, then the Euro has a value of 1.2131 times that of “shit paper.”

 

[stock777]

The problem is many fold.

When you pay for a Subway sandwich, a mediocrity at best, most of that $ is going to pay the rent, the health bennies of the workers there, and all kinds of other overhead.

Prob 25% of it is for the food.

Rents are too high, we allow landlords to get away with murder. The people are to blame, you paid the $7+, not me.

Refuse to pay, they will either fold up, or lower the price. Go home and eat like a human being.

 

[Longhorns]

Quote from The Kin:

I paid $7.96 for a footlong chicken teriyaki at subway. This is criminal... a couple years back it was $4.69.

Criminal.

The USD is becoming shit paper as far as I'm concerned.

I don't know what to say, I'm horrified!!! People actually eat at Subway???

After that sandwich, you're definitely going to get some use out of that "shit paper" in the bathroom.

 

[jem]

I agree with longhorn and Pabst.

Regarding longhorns statement.

My stomach can no longer handle the preservatives that restaurants put on their food. My wife likes to buy all natural stuff for my kids. Once you start eating that food you just can not eat the mass produced hormone filled stuff.