Do you think that America will face problems?

[gavinmccallister]

I have read that China is getting ready to pull their investments in the dollar and when that happens could we expect things to get worse? I believe so anyone have any opinions on this?

[sweeps]

Sure, there will be downward pressure on the dollar. This is a good reason to have a third of your portfolio in global funds.

Will there be a mass exodus from dollar-based investments? Unlikely. There's a good reason foreigners invest in American investments: the stability of our financial, economic and political systems.

[PRICEPLUS]

Sweepsplayer is spot on!

[jmjj215]

The lack of corruption (and there really is a lack when you study other countries' economic systems) makes investing in the US very cheap - relatively.

[VJW]

Originally Posted by Sweepsplayer

Sure, there will be downward pressure on the dollar. This is a good reason to have a third of your portfolio in global funds.

Will there be a mass exodus from dollar-based investments? Unlikely. There's a good reason foreigners invest in American investments: the stability of our financial, economic and political systems.

Hmmmmm.

As you can see from the following chart, the dollar has been declining since the ’29 Crash:

CHART

#

[sweeps]

Originally Posted by VJW

Hmmmmm.

As you can see from the following chart, the dollar has been declining since the ’29 Crash:

Uh, relevance? We're talking about the value of the dollar compared to other currencies. Of course the value of a dollar compared to a basket of goods is declining. That's the concept of inflation -- can you say inflation? I knew you could. If this chart was heading upward, that would mean we're in perpetual deflation - a bad bad thing. A dollar used to buy a hell of a lot more 100 years ago. But if you haven't noticed, our wages are a little more than $0.10/day here in 2006.

[VJW]

Originally Posted by Sweepsplayer

Uh, relevance?

The dollar ?

We're talking about the value of the dollar compared to other currencies.

You don’t think it effects the value compared to other currencies ?

A dollar used to buy a hell of a lot more 100 years ago. But if you haven't noticed, our wages are a little more than $0.10/day here in 2006.

But you apparently haven’t noticed that American’s wages have fallen rather dramatically as well. Just during the 12 years of Reagan/Bush, the real wages of the vast majority of working American went backwards by about 20%, and during the last five years the real wages of the vast majority of working American went backwards each and every year.

#

[sweeps]

News flash: Inflation affects other countries too!

[VJW]

However:

Swiss franc


Japanese Yen


German Mark


And remind me, what has happened to the EURO since the end of 2000 ?

#

[sweeps]

Those links don't work for me (404), but I assume they show those currencies walloping the dollar. No doubt the dollar has been declining (hence my comment that there is downward pressure on the dollar). But my opinion is that it won't fall that much more. The world economy depends on a stable U.S. dollar. That's why China has kept their currency unnaturally low -- so we'll keep buying lots of stuff from them.

A declining dollar isn't all bad, I might add. Our goods become more competitive overseas, for example.

[VJW]

Originally Posted by Sweepsplayer

Those links don't work for me (404), but I assume they show those currencies walloping the dollar.

Yep. Apparently the site blocks outside linking.

No doubt the dollar has been declining (hence my comment that there is downward pressure on the dollar). But my opinion is that it won't fall that much more.

I’d be interested in learning by what possible basis, given the track record.

The world economy depends on a stable U.S. dollar.

Then the “world economy” is in deep trouble.

A declining dollar isn't all bad, I might add. Our goods become more competitive overseas, for example.

Nice theory, but it’s wrong.

The Bushies came to power with just that theory, that if they intentionally pushed the dollar down, it would increase exports for Corporate America. They pushed the dollar down and the trade deficit has WIDENED.

Another in a long string of failed RightWing theories.

#

[sweeps]

VJW, I know you'll have to get in the last word, so hopefully this'll be the next-to-last comment in this thread...

I strongly encourage you to read up about the difference between causation and correlation. The economy is affected by a huge number of variables. The charts and figures you give to us (when not misleading and/or irrelevant) may correlate to some macroeconomic event but are likely not the cause (or at least sole cause) of the event.

[VJW]

Originally Posted by Sweepsplayer

VJW, I know you'll have to get in the last word, so hopefully this'll be the next-to-last comment in this thread...

I merely respond in kind.

I strongly encourage you to read up about the difference between causation and correlation. The economy is affected by a huge number of variables. The charts and figures you give to us (when not misleading and/or irrelevant) may correlate to some macroeconomic event but are likely not the cause (or at least sole cause) of the event.

Sez you, without any substantiation, as usual.

#

[VJW]

Oh, BTW:

No doubt the dollar has been declining (hence my comment that there is downward pressure on the dollar). But my opinion is that it won't fall that much more.

Warren Buffett disagrees with you. He has recently placed a rather large bet against the dollar, utilizing $21.4 billion of Berkshire Hathaway money, by purchasing foreign exchange contracts in 12 different currencies that will only pay off if the dollar declines a lot further.

#

[sweeps]

Yikes! You've convinced me. First thing on Monday, I'm selling my entire portfolio and putting everything in gold bullion. Thanks for the heads up.

[VJW]

Your attempt at sarcasm is undermined by the fact that there is no inverse relationship between the value of gold and the value of the dollar.

An accurate relationship is provided by Bill Gates:


BILL GATES DUMPS DOLLAR FOR EURO

Bill Gates, whose net worth of $46.6 billion makes him the world’s richest person, is betting against the U.S. dollar.

“I’m short the dollar,” Gates, chairman of Microsoft Corp., told Charlie Rose in an interview late yesterday at the World Economic Forum in Davos, Switzerland. “The ol’ dollar, it’s gonna go down.”

Gates’s concern that widening U.S. budget and trade deficits are undermining the dollar was echoed in Davos by policymakers including European Central Bank President Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

The dollar fell 21 percent against a basket of six major currencies from the start of 2002 to the end of last year. The trade deficit swelled to a record $609.3 billion last year and total U.S. government debt rose 8.7 percent to $7.62 trillion in the past 12 months.

“It is a bit scary,” Gates said. “We’re in uncharted territory when the world’s reserve currency has so much outstanding debt.”

LINK

#

[JBinKC]

Right now the federal deficit just cracked above the legal limit of 8.14 billion. That also goes with the halt of providing M3 money supply data. What do you think the government will ultimately do? Inflate its way out of debt. Hopefully it doesn't end like the Weimar republic in the 1923. Now couple that with 100% mortgages on inflated real estate. I don't have a very optimistic outlook.

Lets say right now a big percentage of my assets are in foreign natural resource stocks mostly in oil and industrial metals and looking to buy even more when I see an opportunity.

Lot of people here are talking holding physical gold but I am afraid the government may attempt to repossess it again given that many Al-Queda funds are transferred this way.

[VJW]

Originally Posted by JBinKC

Right now the federal deficit just cracked above the legal limit of 8.14 billion. That also goes with the halt of providing M3 money supply data. What do you think the government will ultimately do?

Nothing.

I don’t see this administration doing anything to address the financial calamities they’ve created by implementing failed RightWing policies. Their four rounds of tax cuts for the Rich & Corporate have caused income tax revenues to plummet to 1959 levels, which has caused massive federal deficits and debt, even larger than that of the 12 years of Reagan and Poppy Bush. The federal debt has gone from $5.7 Trillion to $8.2 Trillion, UP 44%!, in just five years.

But this crowd is in the cab of an 18-wheeler that is Southbound on a Northbound freeway with the gas pedal wired wide open and an incompetent fool at the wheel. Trouble is, we’re all in the trailer box in the back.

#

[sweeps]

Originally Posted by JBinKC

Lot of people here are talking holding physical gold but I am afraid the government may attempt to repossess it again given that many Al-Queda funds are transferred this way.

Wouldn't gold become more valuable if the government started repossessing it?

[JBinKC]

I agree gold will go up but you will have to be able to store it safely abroad. What good would it do if it were illegal to sell it. I heard a case this year of someone owning a rare 1933 $20 gold piece who didn't turn it in during the Roosevelt gold confiscation and was recently arrested when it sold for 7.5 million.