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Weakening dollar's impact on market
- Thread starter Option Trader
- Start date
By 2012 at latest, but for the grace of God, there go we...
If America buys raw materials* from other countries then devalues their currency for whatever reason, the real winners is America. I appreciate the input from everyone, but meanwhile, is there really any proof that printing money is anything mroe than taxing the world?
*The same hypothetically should apply to labor, only if foreignors are doing the work instead of America, that means Americans are decadent. But if ultimately the foreign countries will buy more American products because they don't know what to do with the dollars, that is a pull to bring American's back to work.
*The same hypothetically should apply to labor, only if foreignors are doing the work instead of America, that means Americans are decadent. But if ultimately the foreign countries will buy more American products because they don't know what to do with the dollars, that is a pull to bring American's back to work.
You are making a good point because the American's are being "taxed" by the dollar devaluation more than anyone. But the Americans receive current benefit of lower prices for their retail goods, which creates that situation. Of course a shrewd American can avoid that "taxation" by keeping his assets in pounds or Euro's instead of dollars (i.e. if dollar devaluation is an ongoing issue).Quote from daddyeaux:
the trade deficit is being financed by dollar devaluation and foreign banks propping up the US debt (the consumer)
the unwinding of this is rather bloody and your purchasing power is declining (in US Dollar terms)
witness the cost of housing which requires 15% more dollars every year to afford....
and a tank of gas costs $70
you're being sold down the river if dollar devaluation is any kind of fix for out of control debt
ULTIMATELY, I believe the real issues are:
a)whether or not this all could lead to decadence (that's what led to the downfall of the Roman empire)--and we can only hope that will be corrected by foreign countries then demanding more American products.
b) If we own a stock which has increased from $45 to $50, the reality is that our investments have decreased, not increased, and we would have been doing better to have been holding a different currency instead without the huge budget deficits.
part of the reason we are a consuming nations is because the dollar was too high.
You think we would have been able to consume as much stuff if the dollar were a lot lower.
Our consumers are very rational and our businessmen were able to smoke the Japanese in the last round.
I bet we do it again.
But there is the fear that our Congress will be bought off. then all bets are off.
You think we would have been able to consume as much stuff if the dollar were a lot lower.
Our consumers are very rational and our businessmen were able to smoke the Japanese in the last round.
I bet we do it again.
But there is the fear that our Congress will be bought off. then all bets are off.
you must understand that we are spending beyond our ability to produce because interest rates and lending standards are at rock bottom.....
foreign CENTRAL banks buy our treasury paper at any price since central banks dont have to show profit/loss on the stuff...
debt paper is being used as a currency control mechanism, which is v. dangerous imho......
Japan and China are effectively subsidizing consumption of their stuff by you....
you wake up on a bed made in Mexico, shave with a razor made in China, get in your Japanese made car, drink out of a cup made in Taiwan, and go to your $5.50/hr. job at McDonalds....
get the picture?
foreign CENTRAL banks buy our treasury paper at any price since central banks dont have to show profit/loss on the stuff...
debt paper is being used as a currency control mechanism, which is v. dangerous imho......
Japan and China are effectively subsidizing consumption of their stuff by you....
you wake up on a bed made in Mexico, shave with a razor made in China, get in your Japanese made car, drink out of a cup made in Taiwan, and go to your $5.50/hr. job at McDonalds....
get the picture?
Sooner or later interest rates canât go lower debt levels higher and lending standards looser.
Reality will kick in sooner or later, when this happens the necessary adjustments will be done. Americans have to save more, consume less, work harder or become more creative. High debt levels, higher interest rates and a weaker $ will eventually give americans
the necessary push. If politicians try to push before market forces are strong enough to cause change they only delay the necessary adjustment process.
If the rest of the world does not respond by consuming more when americans starts to consume less the world economy suffers in tandem with the US economy.
Central banks are no doubt powerful but market forces are stronger. Whenever a central bank is intervening it is fighting the market. I donât think central banks can manipulate americans to consume themselves to death. The manipulators are fooling themselves and americans are getting cheap goods.
Reality will kick in sooner or later, when this happens the necessary adjustments will be done. Americans have to save more, consume less, work harder or become more creative. High debt levels, higher interest rates and a weaker $ will eventually give americans
the necessary push. If politicians try to push before market forces are strong enough to cause change they only delay the necessary adjustment process.
If the rest of the world does not respond by consuming more when americans starts to consume less the world economy suffers in tandem with the US economy.
Central banks are no doubt powerful but market forces are stronger. Whenever a central bank is intervening it is fighting the market. I donât think central banks can manipulate americans to consume themselves to death. The manipulators are fooling themselves and americans are getting cheap goods.