Why current administration doesn't intervene US$ decline?

Quote from crgarcia:

The Fed rising rates would kill the US economy, yet oil prices would keep quite high.

A strong dollar would hurt america exports. It would also make oil too expensive for europe, sending them in an severe recession.

Europe can't export much either, their higher wages, tight labor requeriments, and super high taxes, make them a no-no when you can manufacture in China at pocket change with almost no taxes.

So, in short, a strong dollar would hurt both US and europe.
More...

Oh man. so many errors I dont know the best place to begin. we will start in order. 1-The fed raising rates would attract foreign investement. Would make the dollar strong. 2- oil prices are sitting now with a pop in the dollar. 3- higher dollar = lower oil 4- Imports make no sense from europe given current exchange rates with the euro. 5- imports from china are the only way to combat inflation and for the average american, much more practical.

The big problem is too many people are getting away with too much product from the chinese. The more product you have means the more wealth you can accumulate. Paulson does not want this nor do the bankers. They would rather the chinese throw in the towel to their "special interests".

<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/PHYzuR4qXMQ&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/PHYzuR4qXMQ&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object>
 
Today was short term bottom on dollar. People got all concerned all a sudden, and then it reversed. Things never change...

Quote from a529612:

WASHINGTON -- The U.S. dollar has fallen 9.5% against major currencies since Henry Paulson became U.S. Treasury secretary 16 months ago. His response has been to repeat the mantra that a "strong dollar is in our nation's interest."

What would it take to make Mr. Paulson and Federal Reserve Chairman Ben Bernanke, who has seen the dollar fall 11% since he took office in February 2006, respond to the dollar's drop? And what could they do?

The U.S. government hasn't many options if it wanted to arrest the decline. It could use stronger rhetoric to talk up the dollar. It could, in coordination with other countries troubled by the dollar decline, buy dollars in foreign-exchange markets. Or the Fed could raise interest rates, since money flows to countries with higher rates.

Neither the Bush administration nor the Fed has shown any inclination toward any of those, preferring instead to let market forces operate. In testimony before Congress last week, Mr. Bernanke said he remains "optimistic" that current U.S. economic conditions "will lead to a sound dollar in the medium term."

http://www.moneyweb.co.za/mw/view/mw/en/page94?oid=170153&sn=Detail
More...
 
Quote from ShoeshineBoy:

This is all out of everyone's hands. Most of it is an inevitable consequence of globalization as we decrease and the rest of the world increases. There simply is no way, in an interdependent world, to avoid the monstrous, black hole market forces sucking every country into it. Seriously, what could Congress or the Fed do that would have significantly changed all of this? Not much really. The dollar is going to settle where it's going to settle and there's no nation that can stop it: even the Chinese will eventually have to unpeg the Yuan. You can't swim upstream forever...

Of course, I agree that with low taxes and properly structured taxes, etc., things could be significantly different. But this, after all, is the real world where governments are a black hole in themselves, slowly sucking the life out of its citizens while the citizens cheer and laugh...
More...

Shoeshine, I want to go on record as disagreeing with the premise in your post that there is little that Congress could have done to prevent the freefall of the dollar and that what is happening to our currency is a result of globalization.

As I stated earlier, i believe the weakness in the dollar is largely a consequence of excessive deficit spending resulting in equally excessive borrowing leading to the political necessity of monetizing the resulting debt.

Congress was ineffective in stopping the President from engaging in unconstitutional, and therefore illegal, acts and seizing powers not granted to him, and this led directly to our present fiscal situation. Nevertheless the Congress had all along, and still has, the power and authority to stop him from committing these acts and seizing these powers.

The weakness in our currency is not a result of globalization, but a consequence of our poor fiscal management. The myriad of countries that are equally affected by globalization but have maintained strong and robust currencies is sufficient proof of this. Furthermore it is not necessary to have a weak currency to have a robust export economy. There is ample proof of this as well.
 
Quote from piezoe:

Shoeshine, I want to go on record as disagreeing with the premise in your post that there is little that Congress could have done to prevent the freefall of the dollar and that what is happening to our currency is a result of globalization.

As I stated earlier, i believe the weakness in the dollar is largely a consequence of excessive deficit spending resulting in equally excessive borrowing leading to the political necessity of monetizing the resulting debt.

Congress was ineffective in stopping the President from engaging in unconstitutional, and therefore illegal, acts and seizing powers not granted to him, and this led directly to our present fiscal situation. Nevertheless the Congress had all along, and still has, the power and authority to stop him from committing these acts and seizing these powers.

The weakness in our currency is not a result of globalization, but a consequence of our poor fiscal management. The myriad of countries that are equally affected by globalization but have maintained strong and robust currencies is sufficient proof of this. Furthermore it is not necessary to have a weak currency to have a robust export economy. There is ample proof of this as well.
More...

I am completely opposed to the deficit. But I don't see it as causing all the things you said. I believe interest on the deficit, for example, is "only" about 12% of the total budget. That's ugly and stupid, but I don't see how it lead to all the above?
 
Quote from ShoeshineBoy:

There simply is no way, in an interdependent world, to avoid the monstrous, black hole market forces sucking every country into it. Seriously, what could Congress or the Fed do that would have significantly changed all of this? Not much really.
More...

1 - Not kept rates so low for so long
2 - Not increase and increase the money supply
3 - Not spend, spend, spend like drunken sailors
4 - Maybe have done something in when the mortgages were getting rediculously out of control
5 - Not sent us in to an unwinnable war

Not much they can do now. Stagflation anyone?
 
Quote from TravelTrader:

1 - Not kept rates so low for so long
2 - Not increase and increase the money supply
3 - Not spend, spend, spend like drunken sailors
4 - Maybe have done something in when the mortgages were getting rediculously out of control
5 - Not sent us in to an unwinnable war

Not much they can do now. Stagflation anyone?
More...

2 is your best argument imo. 2 led to a mountain of liquidity which created a feeding frenzy that created an environment ripe for excesses in lending behavior.

Btw, don't 1 and 2 contradict each other? They were caught between a "rock and a hard place", weren't they?
 
Having low interest rates is likey to devalue a currency. Heard of the carry trade?

Increasing the money supply substantially is going to devalue a currency unless there is a greater demand for the currency.

What happened to "capitalism" and letting free markets dictate the interest rate.
 
You must log in or register to reply here.
Back
Top