The US dollar falls again - is this massive debts economic warfare or what ?
By The Canadian Press
TORONTO - The soaring Canadian dollar closed above US.05 on Wednesday for the first time in decades and appears headed for uncharted waters as a combination of factors pushes it further and further ahead of the American currency.
The Canadian dollar ended the official trading day in Toronto at 105.85 cents US. That’s the highest closing price for the loonie since Aug. 21, 1957 and just short of a modern-era high of 106.14 cents US.
http://ca.news.yahoo.com/s/capress/soaring_loonie
I am begining to think that the Chinese are making good on their threat to use nuclear "bonds" on the US - refering to their massive holdings of US bonds and currency. Dumping than as has been reported in the Gaurdian as a punitive measure aainst US foriegn policy
http://thefilter.ca/articles/usa-and-world/chinas-nuclear-option-is-real/
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nice turn of phrase - nuclear bonds….
I’ve been clutching my heart over this mess for months, but it hasn’t seemed to even caused a ripple in the American consciousness.
I’m glad the hubby went into the Canadian markets a few years ago when we were attempting to diversify. Ironically what has been a mess for the country has been a boon for us personally.
I’d rather have fiscal responsibility in the US, though.
Falling interest rates aren’t helping it.
What dollar?
too bad yahoo reported today that the U.S.’s economy is growing by 3.9 percent per year
A true testimony of the best economic thinker of our time BUSH (43)!
Two documentaries will answer that question for you … and both can be found on google video and MANY other places online.
Zeitgeist the Movie
and
: http://video.google.com/videoplay?docid=1070329053600562261&q=alex+jones+endgame+-trailer+duration%3Along&total=16&start=0&num=50&so=1&type=search&plindex=2
OMG!!!!
The sky is falling
At least Gore says we’ll all be dead from global warming before the falling sky..er..dollar kills us
If this keeps up, I am thinking of becoming a landed immigrant.
I think the overall plan is for us to be Europes China.
Most Americans believe the goverment has very deep pockets. That’s why most people don’t think about it.
That plus the belief that this country is going to be around forever.
But no one, not even a nation, is able to spend more then it could take in. And I don’t know if a nation could declare bankrupcy either.
Whatever it is,
I just don’t want to be here when it happens.
Most people see the devaluation of the dollar and automatically think "OH THE HORROR!!"
This is completely natural. The terms "Devalued" or "fallen" naturally imply a less than favorable situation.
What people fail to realize is that this isn’t necessarily a horrible thing.
For example:
Devaluation is defined as: deliberate downward adjustment to a country’s official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country’s government (i.e. central bank) can alter the official value of the currency. Contrast to "revaluation".
There are two implications for currency devaluation. First, devaluation makes a country’s EXPORTS relatively LESS EXPENSIVE for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to REDUCE A COUNTRY’S TRADE DEFICIT.
http://www.investopedia.com/terms/d/devaluation.asp
The Marshall-Lerner Condition states: As a devaluation of the exchange rate means a reduction on price of exports, demand for these will increase. At the same time, price of imports will rise and the demand for imports will diminish
The net effect on the trade balance will depend on price elasticities. If goods exported are elastic to price, their quantity demanded will increase proportionately more than the decrease in price, and total export revenue will increase. Similarly, if goods imported are elastic, total import expenditure will decrease. Both will improve the trade balance.
http://en.wikipedia.org/wiki/Marshall-Lerner_Condition
And there is also something known as a J-Curve which sates:
The shape of the trend of a country’s trade balance following devaluation. A lower exchange rate initially means cheaper exports and more expensive imports, making the current account worse (a bigger deficit or smaller surplus). After a while, though, the volume of exports will start to rise because of their lower price to foreign buyers, and domestic consumers will buy fewer of the costlier imports. Eventually, the trade balance will improve on what it was before the devaluation. If there is a currency appreciation there may be an inverted J-curve.
Following the depreciation / devaluation of the currency the volume of imports and exports will remain level due in part to pre-existing contracts for imported goods that have to be honored. However, the depreciation in the pound will cause the price of imports to rise and therefore total spending on imports will subsequently increase; it is this that causes the worsening of the current account.
Over the longer term a depreciation in the exchange rate can have the desired effect of improving the current account balance - as can be seen in the diagram expenditure switching will occur. Demand for exports picks up and domestic consumers will switch their expenditure to domestic products and away from expensive imported goods and services.
http://www.investopedia.com/terms/j/jcurve.asp
http://en.wikipedia.org/wiki/J_Curve
What I’m getting at is that a devalued dollar is not necessarily a bad situation. The lower value will hardly affect us (seriously, have you really noticed any difference). But because foreign money will be worth more here, having a lower currency value will encourage tourism, it will encourage foreign investments, increase exports and decrease the consumption of imports. More money being invested in our economy and less being spent on foreign goods means an overall positive effect to our economy.
Additionally, some countries INTENTIONALLY devalue their currency for these very reasons. China is a perfect example of this. Because of their extremely devalued currency they are able to offer extremely cheap exports. Ever here the "made in China" jokes? This is the reason for them.
http://www.livevideo.com/media/playvideo_fs.aspx?fs=1&cid=BE99AB836E97459489DF8188CC4294CE
After so long, the currency has finally taken a dip. With mounting domestic debts, the Fed guys are trying to reduce the deficits and stabilize the US’s economy. Coupled with both monetary and fiscal policies, the controls on interest rates and taxes will relax translating to increased overall spendings, employment spike and econmic growth. Hopefully, the Chinese will not have the last laugh…