I can see them lining up at Cobo Hall now...
Posted on 10/23/2009 2:53:26 PM PDT by blam
King Dollar Forced To Abdicate
Currencies / US Dollar
Oct 23, 2009 - 04:12 PM
By: Peter_Schiff
For the most part, the value of the dollar is given cursory attention by the financial media. Typically, its movements are assigned an importance on par with much less determinative metrics such as natural gas futures and construction permits. It's only when major milestones are reached that anyone really takes notice of the dollar. We are living through one of those times.
The great dollar rally of 2008-2009 has come full circle. When the financial crisis exploded in its full ugliness in mid-2008, the dollar, which had steadily declined over the previous four to five years, put in a rally for the record books. By March 2009, as investors across the world sought safety from the financial storm, the index had surged more than 25%. Since then, the dollar has steadily declined to the point where nearly all those gains have vanished. In short, the panic rally has given way to the long term trend.
So, as the dollar index makes fresh 52-week lows on a nearly daily basis, discussion on the greenback is heating up. And while real insight on the topic is hard to find, the debate centers on the battle between two conventional opinions – both of which are wrong.
The first camp, which is generally supportive of government intervention in the economy, argues that dollar's decline is a positive for both the economy and the stock market. The second camp, which tends to fall on the more conservative end of the political spectrum, views the dollar's decline as a problem but feels that tough talk and slightly higher interest rates are all that is needed to restore 'King Dollar' to its throne.
[snip]
While I do understand the calamity of "collapse", doesn't a weaker but generally stable dollar increase the volume of our exports and help start an offset of the trade imbalance and therefore lead eventually to bringing some of those jobs back to the United States?
or to ask it another way, just why is a strong dollar good for the U.S. other than the cheap consumer goods it provides?
A weak dollar correlates with increased oil prices. A weak dollar may increase exports but it will also increase inflation as oil becomes more expensive. The huge and irresponsible domestic deficit is causing a lack of confidence in the dollar to the point where enemy and foe are demanding a new reserve currency. That fosters economical and political instability which in the long run will lead to a major war as USA PAX is replaced with a less benign power, most likely China.
Maybe Obama should outlaw gold like his hero FDR (my grandmother told me about it.) Obama-dollars to save america.
But what do we export, is the question. Has much changed since this was written in 2002?
What does the high tech U.S. economy export? Are you ready for this? Hides and skins, metal ores and scrap, pulp and waste paper, tobacco and cigarettes, rice, cotton, coal, meat, wheat, gold, animal feeds, soybeans and corn.
We can’t even make our own clothes. Clothing is the third largest contributor to our trade deficit, after vehicles and crude oil.
Even our agricultural exports are declining as the “green revolution” takes hold abroad and U.S. farming shuts down.
But, that was actually my point... decades of a "strong" dollar have made our manufactured goods too expensive outside the United States and a weaker dollar should actually help reverse this.
I myself am a retailer of automotive performance parts and I can see direct correlations between the percentage of my sales being exported each time the value of the dollar shifts significantly.
And again, I'm no expert but until I see evidence to the contrary, I'll continue to believe a weaker but generally stable dollar is in our own longer term interests.
heh heh, I’m old enough to remember when it was illegal for private citizens to own gold.......
I can see them lining up at Cobo Hall now...
Well I don’t disagree really.. it’s just that, even if all of this was magically cleared up tomorrow, there are alarmingly few areas of exported goods anymore, overall. You happen to be in one of them, which is great. Hope it continues to work out.
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