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Value of the US Dollar





hunterm
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.


It's also a worry to economies that hold large reserves of american dollars. If these countries begin to lose confidence in the $ then they may start dumping them, further exacerbating the situation.

For the US the problem is that this is likely to result in higher inflation/ and higher interest rates.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?
badai
no worry. the rest of the world will keep buying US 's bonds.

http://globalresearch.ca/index.php?context=viewArticle&code=ENG20061014&articleId=3482
truespeed
hunterm wrote:
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.


It's also a worry to economies that hold large reserves of american dollars. If these countries begin to lose confidence in the $ then they may start dumping them, further exacerbating the situation.

For the US the problem is that this is likely to result in higher inflation/ and higher interest rates.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?


Maybe the US should ditch the dollar and join the euro.
badai
they can't. US budget deficit is 25%. you need budget deficit less than 3% to join euro. beside, US is on the other side of the pond.

truespeed wrote:
hunterm wrote:
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.


It's also a worry to economies that hold large reserves of american dollars. If these countries begin to lose confidence in the $ then they may start dumping them, further exacerbating the situation.

For the US the problem is that this is likely to result in higher inflation/ and higher interest rates.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?


Maybe the US should ditch the dollar and join the euro.
ocalhoun
truespeed wrote:


Maybe the US should ditch the dollar and join the euro.

Interesting Idea, though.
faker_phil
badai wrote:
they can't. US budget deficit is 25%. you need budget deficit less than 3% to join euro. beside, US is on the other side of the pond.


Hah. We've been above that mark a lot of times in the past decade. Although it has never been that drastic. Ever since Germany was reunited, West Germany had to work for East Germany to adapt. It's been hard, but this year is signaling a change. I think we're through the recession, yay Smile

The Euro is ridiculously strong, politicians of the EU are already talking about pushing it back down. That isn't even the end, the Euro will rise further, so prognoses say.

About the US joining the Euro: I don't think a country being far away from Europe will be able to join the Euro, much less the EU, the European Union Wink
bangala
hunterm wrote:
My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?

In the states, I don't think so. Americans are not concerned about a lower value Dollar. Besides, US foriegn trade is very much limited compared to its total income. Other countries, however, specially those whos currencies are linked with the Dollar are concerned.
bogger
As I see it:

The only reason that the dollar hasn't collapsed further is because of a lot of countries being pegged to it (i.e. Hong Kong) If these countries decided to offload their VAST reserves of dollars, the greenback would collapse,definately causing an american downtrun, and possibly causing a global downturn. Of course, the deficit has been worse

http://www.maxmatsuda.com/QCECO215documents/Reuters%20US%20Budget.gif

But only as a percentage of the economy...
Montressor
faker_phil wrote:
About the US joining the Euro: I don't think a country being far away from Europe will be able to join the Euro, much less the EU, the European Union Wink


Maybe they'd change the name to the "North Atlantic Union", or perhaps the U.S. could get in based on the number of military establishments we have in Europe (CIA prisons as well, I don't know specifics, but the total land area might be close to the amount of land Turkey has in Europe), or we could even buy pieces of former soviet republics if needs be, rent Lichtenstein for a few years...

Then again, we are eligible to petition membership into the Commonwealth of Nations, but have never considered that seriously. Personally, I don't think that the public would look favorably at our politicians asking another nation or group of nations for membership into a "country club" especially one where we aren't top dog... we would probably be rather displeased to have our elected officials essentially admitting that as a nation we can no longer be the world's only superpower doing as we please without regard to others

As far as public concern for the value of the dollar, if I tried talking about it to any of the more enlightened people I know, I'd probably be given vacant looks and remarks such as, "I took economics, but still don't understand a thing about it" etc. Ah well, bliss is ignorance.
Mannix
In the long run, I'm really not worried about it. The US has gone through way worse than this as far as the dollar market in concerned(in the mid-eighties, for example). In the short term, it's a problem, but overall, I think we'll be fine.
Zeusik
To the beginning of 20 th century value of dollar was in gold. On each banknote you could read - "You could exchange this banknote for some weight of gold" (or something else in the same sense".
Then was a big crisis and you couldnt exchange in gold but still it was rule that dollar is worth some weight of gold (presumably about 10 times lower than before - you should exactly).
In 1970-ties in Bretton Woods was subsrcribed rule which gives free hand for Rulers and National Banks and dollar wasn't longer connected with worth of gold. From this time your dollars was only so much worth as trust to our rulers (for me - almost nothing).
In my opinion worth of dollar was most connected (in this time) with China which invest a big amount money in US bonds. If they think that Euro is much more trustworthy dollar will decrease as it appears now. Where it stops we will see.
bogger
Mannix, In the 80s, the bust was oil price fuelled.

This one is being fuelled by the Current account deficit,and the housing price bubble bursting

Your hopes for a soft landing are based on whether 3rd world countries dump american money or not.

Personally, I wouldn't do anything yet, but unless the new Federal Reserves boss has a deft hand at these things, we're looking at those thirty times again, (i.e. stock up on food, it devalues slower than money)
100BillionDollars
hunterm wrote:
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?


I think the true problem is the US I would contribute it to the lack of education which would scare Americans into doing something about it.

Tell me what you think about my theory

here it is lets say all currency is the same and I mister LONDON decide to come to america and start a business and make millions of dollars and send all my money to my home land that directly increase the amount of currency in what ever country.

So now we ad a new factor computer which almost all middle to upperclass owns them with internet access.
Think now some one does not have to come to America at all all they have to do is set up a site and you visit them. and give you money.

But that I do not think is our true down fall it is debt this is the core problem what do we actually own mostly every thing has a loan out and do you actually know who fund those loans?

US $8.837 trillion dollars or $8,837,000,000,000.00 in debt to other countries.

Does America actual own the land we live on? the home? the cars? Does america even care?
I think they do we have to educate them.
Detremmerie
The dollars decline isn't such a bad thing. the first reason why it is collapsing is actually the fact that U.S. economy isn't doing that good. Data is worse than expected on much fronts which leads to the belief that the U.S. is heading for recession. Therefore, consumer spending and such decline, which eventually results in the Fed lowering the interest (to boost consumer spending and corporate revenues) which has its results on the dollar.
Inflation has little to do with this mechanism, especially when you are looking into an economic cooldown.

This is the actual present situation. It points towards a worsening U.S. economy.

The only thing that may curb that is indeed as you say that European and overseas export is becoming more expensive. Unfortenately, this effect lags and usually only kicks in at full effect once the economy has cooled down enough to start a new upward period.

History has shown this has occured several times. Therefore it is assumed that economic deterioration in Europe is linked with that in the U.S., only to lag 6 months.
supjapscrapper
truespeed wrote:
hunterm wrote:
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.


It's also a worry to economies that hold large reserves of american dollars. If these countries begin to lose confidence in the $ then they may start dumping them, further exacerbating the situation.

For the US the problem is that this is likely to result in higher inflation/ and higher interest rates.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?


Maybe the US should ditch the dollar and join the euro.



This will never happen, firstly because what's happening to the dollar will definitely happen to the euro the yuan or the pound, like it is happening to the yen.
secondly the anglo-saxons will never lose their pride and take on foreign currencies, not even the brits have the euro, even in the 90s where the pound was way weaker than now they didn't wanna join.
thirdly it is a question of balance, it is a lot better but also more complex to have many strong currencies than one that is global and unreactive and dependant on too many factors, there are new currencies that are gonna be deterministic for the future, the yuan and the indian pound, as well asthe saudis dirhams. The US have to get their currency back to its strength, otherwise the balance would be too string for lucrative trade ..... even the chines possess too much dollar stocks and a weak dollar will treaten them a lot!
John6000
============================
bogger
The big mac index is a good way to compare quality of life, but for macro economic policy, it means very little.

The fact of the matter is that the Dollar has gone from €1 - $0.80 in 2000 (rough estimate) to €1 - $1.30 (rough estimate) now. that's around 10 cent a year. The reason for this is the current account deficit, imo. And the deficit isn't shrinking, so I don't think the dollar will go back
lyddi8
The weakening of the USD is good for US exports, though.
With countries like China becoming more and more competitive with their export prices, the US would be edged out significantly if the currency didn't fall slightly. The USD has been overvalued for a number of years imo.
irinaonline
the usd will decline more and more. this is the incredible chance for everyone outside the u.s. for an real estate investment in dollar-bounded-countries.
dlougha
lyddi8 wrote:
The weakening of the USD is good for US exports, though.
With countries like China becoming more and more competitive with their export prices, the US would be edged out significantly if the currency didn't fall slightly. The USD has been overvalued for a number of years imo.


Such a slide in the value of the US dollar attracts foreign investment especially in the property market.

But as the US dollar continues to decline, commodities such as oil will change their price indexing from Dollar to Euro. This would cause an accelleration in the devaluation of the US Dollar and scare away investment in the Currency.

The future looks bleak for the US Currency.
vynes18
In this past Malaysia RM and USA $ exchange rate is RM3.80 to $1 for about 9 years since 1997.

Last year, Malaysia goverment increase RM value into RM3.60/3.70 for $1.
Their also promised that this year will raise value till RM3.50 for $1, this is very bad new for Malaysian Internet Entrepreneur.

Our earning turn into smaller, no.......
charlieg
I was going to say, aren't the two biggest factors that influence US currency national deficit and oil prices? I mean, Oil really is the US' political and economic Achilles heel. I think that so long as the US can basically spend on deficit and do so legitimately because they say so, deficit will never so much influence currency value as their ability to back it up. And what really drives the bus is cheap oil.

In any event, it really sucks changing dollars to pounds.
Coclus
yes I m concerned with the value of the dollar as it's breakdown could lead to an economic catastrophy.
bogger
Coclus wrote:
yes I m concerned with the value of the dollar as it's breakdown could lead to an economic catastrophy.


It shouldn't hopefully, if another currency becomes the world standard, or 2 even. This is happening at the moment coincidentially, with the Euro and Yuan becoming much more popular for investors
budiman
Few signs in the global economy suggest that this trend is likely to continue into the new year. First, countries that previously have majority of their investments in the U.S. dollar-based assets begin to diversify their investments.

Last week, the United Arab Emirates announced that it would shift more of its currency reserves away from the dollar, joining countries like Russia, Switzerland and Venezuela.

Those moves come amid ambiguous recent signals from China about possibly pulling back from the dollar, and word last week from Iran, one of the largest oil producers, that it would prefer euro payments for oil, which typically is priced in dollars.

Second, experts speculate that the interest rates in the U.S. and Europe may move in opposite directions in 2007. In 2006, the economic growth of the European countries was surprisingly strong, which led the European Central Bank (ECB) to raise interest rates several times. In the U.S., the Fed has paused to raise interest rates because of a slower economy and inflation rate. Should the U.S. Fed decide to cut rates in 2007 and ECB decide to raise rates in 2007, investors will likely to put more of their money in the euro and not in the dollar.

Still, many economists were unwilling to predict that the almighty dollar faced an inevitable demise.

“The dollar is still the world’s No. 1 currency, and it’s going to stay that way,” said Nigel Gault, chief United States economist for Global Insight, a market intelligence firm. “The euro is gradually going to become more important, but I don’t see it becoming more important than the dollar.”
illegalhost
Well, guys, just take a look here. Which is more influential? US or the Europe? I think that the US has most investments in all over the world more than the Europe. The rest ofthe world are picking up. The US will not take it down without a fight. So no worries this would be just a tide passing over. It would subside after maybe the election? LOL. No evidence in there - just my 2cents worth. US is a smart country mates. They still have Bill Gates and Apple. Not forgetting tons of investment gurus there with billions to spare! I don't think they would leave their country when it is in need the most. Hmm. That is food for thought. LOL. Maybe they would? LOL. Maybe they wouldnt. Hmm. It's anybodies guess. After all, people are just humans. Back to the issue. This is just a passing.
bogger
illegalhost wrote:
Well, guys, just take a look here. Which is more influential? US or the Europe? I think that the US has most investments in all over the world more than the Europe. The rest of the world are picking up. The US will not take it down without a fight. So no worries this would be just a tide passing over. It would subside after maybe the election? LOL. No evidence in there - just my 2cents worth. US is a smart country mates. They still have Bill Gates and Apple. Not forgetting tons of investment gurus there with billions to spare! I don't think they would leave their country when it is in need the most. Hmm. That is food for thought. LOL. Maybe they would? LOL. Maybe they wouldn't. Hmm. It's anybodies guess. After all, people are just humans. Back to the issue. This is just a passing.


While your patriotism is touching, it is, unfortunately, wrong

Economically, you'll find the EU is much more powerful than the U.S.A
GDP of the USA is: $13.13 trillion
GDP of the E.U. is: $15.7 trillion

I can't get FDI figures, sorry

Microsoft "only" gets $44billion income, not quite close to a trillion, while the impact of apple and Microsoft is large, they won't save the country, and trust me, they can't be relied upon, if financial reasons make them move to another country, they will. People don't make money by being sentimental.

My cynical view is that you make money by screwing people over, and saving your country isn't a way to make money, rest assured, if there's a profit to be had in leaving, they'll leave faster than you can say their names.

In brief, it remains to be seen, but the Euro is now becoming the Standard of Exchange as opposed to the Dollar
imagefree
hunterm wrote:
At the moment it looks like the dollar is collapsing valued at nearly $2 to the GB pound.

The problem for countries for outside of the US is that products we manufacture look more expensive - sales go down - profits reduce - jobs get lost.


It's also a worry to economies that hold large reserves of american dollars. If these countries begin to lose confidence in the $ then they may start dumping them, further exacerbating the situation.

For the US the problem is that this is likely to result in higher inflation/ and higher interest rates.

My question:
Are there many in the States (or anywhere else for that matter) that are concerned about the value of the dollar?


I think that the US products will become more costly to the world!! Shocked .

So how there will be impact on Jobs and Sales of all the world?? can you please explain?

Thanks
bogger
imagefree wrote:
I think that the US products will become more costly to the world!! Shocked .

So how there will be impact on Jobs and Sales of all the world?? can you please explain?


US products will not be more costly to the world. I can't find a link to explain it, so I'll just have to type it Mad

The Dollar's value has recently lowered compared to other countries, so where $1 used to get you €1, now $1 gets you €0.50.
This means that €1 gets you $2, as opposed to $1.

This means that a jumper in America which costs $20 now costs €10, where it used to cost €20. so the price has halved.
This means that U.S.A exports are cheaper for other countries, while other countries' products in U.S.A are more expensive for American consumers. Thus, this spurs U.S.A producers, and revives the U.S.A economy, while weakening foreign producers, who export to U.S.A.

You could say that exchange rates are self rectifying in this manner.
--------------------------------
Higher prices -> Less sales -> less profit -> less money to hire people -> less people with money to buy things -> less sales -> etc. (it's a vicious cycle)
imagefree
bogger wrote:
imagefree wrote:
I think that the US products will become more costly to the world!! Shocked .

So how there will be impact on Jobs and Sales of all the world?? can you please explain?


US products will not be more costly to the world. I can't find a link to explain it, so I'll just have to type it Mad

The Dollar's value has recently lowered compared to other countries, so where $1 used to get you €1, now $1 gets you €0.50.
This means that €1 gets you $2, as opposed to $1.

This means that a jumper in America which costs $20 now costs €10, where it used to cost €20. so the price has halved.
This means that U.S.A exports are cheaper for other countries, while other countries' products in U.S.A are more expensive for American consumers. Thus, this spurs U.S.A producers, and revives the U.S.A economy, while weakening foreign producers, who export to U.S.A.

You could say that exchange rates are self rectifying in this manner.
--------------------------------
Higher prices -> Less sales -> less profit -> less money to hire people -> less people with money to buy things -> less sales -> etc. (it's a vicious cycle)



Many Many thanks!!
Actually i forgot the exchange difference. I was taking $ a standard currency but whily exchanging local currency of any importing country i used the old rate Very Happy

Thanks again for Guidance.
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