# US Dollar in free fall



## thereisnospoon (Apr 21, 2011)

News Headlines.
For those of you who blame speculation on oil prices as the sole reason for the recent price spikes in gasoline, look no further than Capitol Hill and 1600 Pennsylvania Ave to point the finger. Oh you can add the Federal Reserve as well.
Anything which ties it's value to the US Dollar will see huge price increases for the foreseeable future due to out  of control government spending, an increasingly illogical domestic  energy policy and the Federal Reserve's refusal to raise interest rates and take action to correct it's monetary policies.


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## JackDan (Apr 21, 2011)

this spells trouble. gold, silver, nickel, copper, and all precious metals and commodities are going to keep going up.  hopefully you have been moving your greenbacks into these categories.


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## LordBrownTrout (Apr 21, 2011)

Big time troubles are looming.


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## Toro (Apr 21, 2011)

The US peso. 

I will pedict this though. Sometime within the next 12-18 months there is going to be a violent rally in the dollar and precious metals are going to get hammered. But you should put zero credence in predictions.


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## Mr. H. (Apr 21, 2011)

Yeah and oil will crater too. Maybe just in time for the elections. Convenient.


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## JackDan (Apr 21, 2011)

pretty much the US needs to cut all spending.  shrink the government completely. Get rid of all the handouts to both people and big business.  Cut the deficit. do it now. not just a little, all of it.  This country needs to run like a business, and business can't survive in the red forever.

This will never happen, but it is the only way to right the ship.


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## JackDan (Apr 21, 2011)

Toro said:


> The US peso.
> 
> I will pedict this though. Sometime within the next 12-18 months there is going to be a violent rally in the dollar and precious metals are going to get hammered. But you should put zero credence in predictions.



I could see it.


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## LordBrownTrout (Apr 21, 2011)

I'm starting my third company and this is the first time that I've ever had to worry/contemplate have contingency plans on a horrid dollar crash.


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## william the wie (Apr 21, 2011)

As best of the worst on unfunded liabilities the US dollar will eventually rally. The iron rice bowl of the Chinese housing bubble assures that, as China's export machine gets hurt by the declining dollar and China's own shrinking labor force the dollar will be forced up. Likewise with the EU.


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## signelect (Apr 21, 2011)

When we start to elect businessmen and women to congress and elect presidents with real world experience where you have to understand basic economics we are going to continue down the road.  Blame Bush all you like, we blamed Clinton, but now it's your turn again, wear it like a man.


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## william the wie (Apr 21, 2011)

The sinking dollar will do wonders for our trade balance.


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## MikeK (Apr 21, 2011)

JackDan said:


> pretty much the US needs to cut all spending.  shrink the government completely. Get rid of all the handouts to both people and big business.  Cut the deficit. do it now. not just a little, all of it.  This country needs to run like a business, and business can't survive in the red forever.
> 
> This will never happen, but it is the only way to right the ship.


I frequently hear the, "get rid of handouts," refrain but it's never supported by specifics.

You've included big business in your recommendation, which is a plainly comprehensible specific and one I readily agree with.  But your reference to "people" is entirely generic, so I can't say I agree or disagree with it.

Which "people" do you believe should be cut off from federal aid?  All recipients?  If so, how do you suggest we get rid of all the corpses that will derive from starvation and untreated illnesses?  Burial? (Where?)  Cremation (Hmmm.)  

Have you thought about how to control the multitude of new homeless who will inhabit the Nation's streets?  And have you considered the cost of policing and imprisoning the wave of property criminals who will necessarily need to steal and rob to survive?  

I don't know how you feel about it but the thought of millions of dying, sick and hungry people living on the streets is rather depressing to me.

But if you wish to get rid of the "handouts" to only specific categories, please tell me which ones so I can either agree or disagree.


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## JackDan (Apr 21, 2011)

MikeK said:


> JackDan said:
> 
> 
> > pretty much the US needs to cut all spending.  shrink the government completely. Get rid of all the handouts to both people and big business.  Cut the deficit. do it now. not just a little, all of it.  This country needs to run like a business, and business can't survive in the red forever.
> ...



This converation could go a many of ways.  Since it will never happen, there is no reason to argue but I would give you some specifics of an overall plan to reduce handouts and the deficits.  I would pretty much just cut everything I could.  Now don't get me wrong here, I think that most of these things are really good for society, but not for our debt, so as a business owner I would simply cut them.  You are speaking from a quality of life issue and I am speaking fiscally.  Eventually if we were to experience hyper inflation and the dollar collapsed and a loaf of bread was 10,000$, then your senario would play out anyway. It would be the same thing with people in the streets and crime you speak of.  So why not try to prevent it ahead of time by cutting the things you can?  Social programs have gotten out of control, and the government has grown to be too large.  Also it would be temporary, and some things you could cut wouldn't even effect people in this country.

Absolutely zero funds going to:
foreign aid
illegal immigrants - free schooling, health, and everything else that entails,
Politicians (no salary at all, make it public service)
special interests - from planned parenthood, labratories, colleges, and companies, the government funds to many different things and it just needs to back off for now.

I would largely decrease funds to:
defense spending
New road construction
overall government - buildings, staff, panels,commitees, etc.
welfare
foodstamps
unemployment


Yes some of these last ones will hit home for you, and yes I believe they are necessary to some degree. As I said this would be scaled back to save money because it has proven that we are not sustainable at this rate of spending. I think you are over estimating the amount of people that would die, millions? Probably not. Just think of it as survival of the fittest and the USA population correcting itself to sustainable levels.

On the flip side, do you propose we just keep giving out more and more and more until we become a third world country?


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## thereisnospoon (Apr 21, 2011)

william the wie said:


> The sinking dollar will do wonders for our trade balance.


the economy will slow dramatically as consumers slam shut their wallets.


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## thereisnospoon (Apr 21, 2011)

MikeK said:


> JackDan said:
> 
> 
> > pretty much the US needs to cut all spending.  shrink the government completely. Get rid of all the handouts to both people and big business.  Cut the deficit. do it now. not just a little, all of it.  This country needs to run like a business, and business can't survive in the red forever.
> ...



Oh please. Here we go ..The "homeless dying in the streets"; "starving children" straw man argument....
Thwe federal government does NOT keep people in their homes with spending on social entitlements. The amount of crime does not increase with reductions on social spending. 
Those arguments are horseshit political blurbs from elected officials who's political careers continue based on the amount of government dependency they can create.
Sen Charles Schumer (D-NY) was quoted referring to the original GOP plan to cut the budget by $60billion as "draconian"....$60 billion of $3 trillion is less than one half of one percent of the total budget. This is the shit we have to put up with. Lies and deception.
Your argument that in the absence of social entitlements we will have mob rule where criminals will be created out of decent people is nonsense. Excusing this is even worse.
Look, if you think the world needs saving, write a check.


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## JackDan (Apr 21, 2011)

thereisnospoon said:


> MikeK said:
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> > JackDan said:
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## william the wie (Apr 21, 2011)

thereisnospoon said:


> william the wie said:
> 
> 
> > The sinking dollar will do wonders for our trade balance.
> ...


People will hold on to rapidly depreciating dollars during inflation or foreign consumers will not buy ever cheaper America imports in the EU and Far East?


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## Trajan (Apr 21, 2011)

william the wie said:


> As best of the worst on unfunded liabilities the US dollar will eventually rally. The iron rice bowl of the Chinese housing bubble assures that, as China's export machine gets hurt by the declining dollar and China's own shrinking labor force the dollar will be forced up. Likewise with the EU.



yes but the tripod like a triumvirate is the weakest of structures...


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## thereisnospoon (Apr 21, 2011)

JackDan said:


> MikeK said:
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> > JackDan said:
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Infrastructure and national defense are essential functions of government. So is "promoting the general welfare" of the people....
Now, let's address social spending.....In and of itself, social programs are not the problem. It is the administration of said programs. The cost to administer these programs eats up nearly half of the funding. This is due to the number of employees to do the work. Add to that the bureaucratic costs. Few would disagree with the idea of social safety nets provided these things were well run and not full of non-essential employees and un-elected bureaucrats who's job it is to keep their job.


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## thereisnospoon (Apr 21, 2011)

william the wie said:


> thereisnospoon said:
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> > william the wie said:
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Happens every time there is economic malaise. People simply stop spending.


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## MikeK (Apr 21, 2011)

JackDan said:


> MikeK said:
> 
> 
> > JackDan said:
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Thank you for the intelligent and sensible reply.  The following is an itemized response to your list of proposals:


Absolutely zero funds going to:

foreign aid. - I agree.

illegal immigrants - free schooling, health, and everything else that entails. - I agree.

Politicians (no salary at all, make it public service). - Offhand I don't think this is a practical idea because it invite only the independently wealthy to serve.  But it's something to think about in the interest of attracting true statesmen to the task.

special interests - from planned parenthood, labratories, colleges, and companies, the government funds to many different things and it just needs to back off for now. - I agree.


I would largely decrease funds to:

defense spending. - I (strongly) agree!

New road construction. - Except for essential purposes, I agree.

overall government - buildings, staff, panels,commitees, etc. - I agree

welfare. -  I believe there needs to be review and revision of existing programs.

foodstamps. - Same as above.

unemployment. - Same as above.


My pessimistic vision (re: millions dying in the streets) was based on my anticipating that you (like so many others who recommend cuts) would advocate eliminating Medicare and Social Security -- which undoubtedly would kill off millions of the totally dependent, mainly seniors.  

As I'd mentioned, so many of the calls for budget reform I read in these forums come from smart-ass adolescent interlopers and indoctrinated water-carriers for the corporatocracy and the super-rich.  These brainwashed acolytes, most of whom don't have a pot to piss in, are capable only of parroting Limbaugh, Beck and Hannity.  Their specific ideas for "reform" consist of depriving mainly those who are most dependent.  

So, again, thanks for the intelligently detailed reply.


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## matty (Apr 27, 2011)

:


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## Avorysuds (Apr 27, 2011)

MikeK said:


> JackDan said:
> 
> 
> > pretty much the US needs to cut all spending.  shrink the government completely. Get rid of all the handouts to both people and big business.  Cut the deficit. do it now. not just a little, all of it.  This country needs to run like a business, and business can't survive in the red forever.
> ...



First you tell us who you will cut first when the country tanks due not making the make cuts early on when it still couldn't afford to be paying out for everyone's welfare.

What I'm asking you is, how can you claim to have moral higher ground in that you believe you are "saving people" today and pretending cuts will kill people when soon enough more drastic cuts will have to happen. Kill some today or kill a lot tomarrow... You pick.


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## Avorysuds (Apr 27, 2011)

MikeK said:


> JackDan said:
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> > MikeK said:
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SS and MC need to be looked at. Pretending that they are not a problem is childish.

The programs would be fine if we could fund them, however even with all the cuts and ending of wars you would still be in too much debt... These programs never stop consuming, they are not perfect and to many people have learned to "play the system."


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## william the wie (Apr 27, 2011)

Avorysuds said:


> SS and MC need to be looked at. Pretending that they are not a problem is childish.
> 
> The programs would be fine if we could fund them, however even with all the cuts and ending of wars you would still be in too much debt... These programs never stop consuming, they are not perfect and to many people have learned to "play the system."


All true but the we are the cops of the world attitude has to end as well.


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## Zander (Apr 27, 2011)

I have faith that the USD - aka "the best of the worst" or "the tallest midget in the circus" will rally.


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## Avorysuds (Apr 28, 2011)

william the wie said:


> Avorysuds said:
> 
> 
> > SS and MC need to be looked at. Pretending that they are not a problem is childish.
> ...



Ron Paul 2012 =D


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## MikeK (Apr 28, 2011)

Avorysuds said:


> First you tell us who you will cut first when the country tanks due not making the make cuts early on when it still couldn't afford to be paying out for everyone's welfare.


*Defense spending.  <============ * (Number One!)  

Corporate subsidies.

All non-essential "pork" projects. 

Corporate and individuals over $1m tax loopholes.


I wouldn't wait for the country to "tank."  I'd start making those cuts right now.  And I would restore the income tax rate to the pre-Reagan level -- as well as restoring every regulation that phony, dimwitted corporatist puppet removed.   

I would impose a tax on every stock transaction executed, a 50% tax on inheritances over $1m and all corporate bonuses.  

And I expect to read angry protests from a lot of Ayn Rand worshippers, most if not all of whom don't have a pot to piss in but who harbor the cultist mentality and little else.


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## editec (Apr 28, 2011)

When the dollar tanks nobody is going to have to DECIDE to stop funding our military.

That will happen regardless of what we'd LIKE to happen.

This makes some of us wonder if destruction of our econmony hasn't been THE PLAN all along.

It was either _THE PLAN_, or the USA is becoming another example of an enoromous national TRAGEDY OF THE COMMONS.

But tragedies of the commons are to be expected any time any society decides that GREED IS GOOD.

In fact GREED IS GOOD is the number one cause of _most_ tragedies of the commons.


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## LordBrownTrout (Apr 28, 2011)

Social programs and military spending will fall off the cliff once the dollar is over the cliff.


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## Toro (Apr 28, 2011)

The Bernank is a Gold Bug's best friend.


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## expat_panama (Apr 28, 2011)

thereisnospoon said:


> ...look no further than Capitol Hill and 1600 Pennsylvania Ave to point the finger. Oh you can add the Federal Reserve as well.
> Anything which ties it's value to the US Dollar will see huge price increases for the foreseeable future due to out  of control government spending...



Hey, I like pointing fingers as much as the next guy but how about we also try and hang on to reality.   

In this wonderful information age we live in anyone can look at past exchange rates (from say, the Fed here) and compare them to the CPI (from the BLS here) or the federal budget history (from the GPO here).

First, government spending and the dollar aren't affecting each other--







--and second, a falling dollar has not increased inflation:





Sure, people can say that the facts don't sense and that the newspapers say otherwise, but reality is what_ is_ and it doesn't have to make sense and get reported.


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## Mr Liberty (Apr 28, 2011)

Toro said:


> The US peso.
> 
> I will pedict this though. Sometime within the next 12-18 months there is going to be a violent rally in the dollar and precious metals are going to get hammered. But you should put zero credence in predictions.



What will cause this dollar rally?  The reason for the dollars slide is the Feds debasing policy.  Are they going to start burning dollars in the next year?  I think the dollar will continue its fall.  The G20 are talking about a new reserve currency and a new global central bank.  When the dollar is removed as the reserve currency, we will have hyperinflation.
I'll hang onto my silver.


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## Avorysuds (Apr 28, 2011)

MikeK said:


> Avorysuds said:
> 
> 
> > First you tell us who you will cut first when the country tanks due not making the make cuts early on when it still couldn't afford to be paying out for everyone's welfare.
> ...



Ok, you're still short, now answer the question... Who gets cuts, people, you know like you meant. People on SS/Welfare/MC.

"*a 50% tax on inheritances *" Lol, go fuck yourself you greedy pos. You are part what's wrong with this country and that's not a joke. 

You're not even worth talking to be honest. Not only did you not fix the problem you seem to perpetuate the other half of the problem. Sure, cut military (wars) but the fact you believe that is all that is needed is laff out loud funny. Even with all you new taxes (that have consequences btw) you STILL fall short, like almost 1 trillion short I believe, LOL.


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## thereisnospoon (Apr 28, 2011)

MikeK said:


> Avorysuds said:
> 
> 
> > First you tell us who you will cut first when the country tanks due not making the make cuts early on when it still couldn't afford to be paying out for everyone's welfare.
> ...



and what would such confiscatory socialist style taxes accomplish?
More money for government to waste? To feed the trough for more freeloading gamers of the system?
Why is it you liberals never consider fiscal responsibility, reduction of the number of government employees or a balanced budget amendment?
Why is your end game "increase taxes on everyone is sight?
Look, when government increases taxes on business, the end user always pays them. That's us. The consumer. When those who have investment capital are over taxed, they stop spending and investing. Jobs disappear and new ones are not created. Fewer taxpayers and less investment translate to lower tax revenues.
The only conclusion a logical person came come to is that the Left views taxation as means to punish.
The argument that government can create jobs is one of failure. Oh sure government can create jobs but those jobs are non producing. Government employment simply creates government spending deficits because simply appointing a new "czar" or hiring new people to staff the Capitol landscaping crews takes more money way from the private sector.
Wealth and production are created from the private sector. With more money going to government the private sector suffers. The result is smaller GDP. 
Government borrowing and excessive spending has created a necessity to print more dollars. That has resulted in the value of the Dollar shrinking to 30 year lows. The US Dollar has not been this weak since the Carter years.


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## thereisnospoon (Apr 28, 2011)

Mr Liberty said:


> Toro said:
> 
> 
> > The US peso.
> ...


The main problem is the federal government has monetized the debt. In other words, the federal reserve has simply created more currency to offset government spending. Of course this policy is suicidal. And to sweeten the pot, the Fed continues to hold interest rates to unrealistic levels.
Interest rates need to rise and credit needs to be tightened.
The economy is cyclical. The down cycle is being stagnated by government interference. The more govt interferes, the longer this economic malaise will last.
Precious metals are the correct investment. However, most people cannot afford to buy futures contracts, Buying physical Gold or Silver carries with it commission obligations when gold is purchased and when it is sold.


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## expat_panama (May 3, 2011)

thereisnospoon said:


> Mr Liberty said:
> 
> 
> > ...the federal reserve has simply created more currency to offset government spending. Of course this policy is suicidal...
> ...


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## thereisnospoon (May 3, 2011)

expat_panama said:


> thereisnospoon said:
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> > Mr Liberty said:
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## expat_panama (May 4, 2011)

thereisnospoon said:


> expat_panama said:
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> 
> > Seems like what's really happening is that most Americans measure price trends with  tools like the PCE deflator, the CPI-U, etc., and then regulate the dollar's value at a couple percent above last year's prices.
> ...



OK, if we're talking politics and what everyone says then we're agreed that the buzz is that dollars are worthless.   In real life we keep our dollars locked up safe becuase we know they're worth well, money.  When we personally go to exchange our dollars for foreign money we know it's stable:






Real life/politics.  I've never been comfortalble with double think.



thereisnospoon said:


> Suppose the largest holders of US Federal debt decide because of the pace of US borrowing and the rapidly declining value of the dollar, decide to sell off their paper at rock bottom values?


--you mean, the People's Republic is selling $10k T-bills for fifty cents each first come first serve while they last?  In real life I'd buy all I could as would a world of bond traders.  I'd make a fortune and China would loose trillions.


thereisnospoon said:


> Additionally, a call could be made to suspend the Dollar as the basis currency for oil and other futures. Does this not trigger a red flag for you?


China loosing trillions would hurt the Yaun not the dollar.


thereisnospoon said:


> How much longer and how much more are you willing to see the US go into debt and how much larger can you stand to see deficit spending go on?


The national debt's important, and treasury notes are traded in dollars, not foreign money.

You had lots of other good stuff there but like I said we're talking in different worlds, political banter vs. real life.


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## Gadawg73 (May 4, 2011)

JackDan said:


> MikeK said:
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> > JackDan said:
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No salaries for politicians? Make it public service.
That assures only the wealthy will run.
Who in their right mind goes to Washington, spends 50K out of their own pocket to live there and gives up another 100K a year in lost wages?
Who has 150K a year to burn? 
You need to think on that one again.


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## editec (May 4, 2011)

william the wie said:


> The sinking dollar will do wonders for our trade balance.


 
AT FIRST, only because imports will go down, of course.

But if the decline in the dollar become the norm?

Well then that will also make our manufactures cheaper on the world markets.

A slow decline in the dollar's worth over time can be a good thing.

A rapid drop in value will be disaster.


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## editec (May 4, 2011)

expat_panama said:


> thereisnospoon said:
> 
> 
> > ...look no further than Capitol Hill and 1600 Pennsylvania Ave to point the finger. Oh you can add the Federal Reserve as well.
> ...


 
I have one problem with the above XPat...mostly I agree with your POV, *but...*

The way our government measures INFLATION is by HALF TRUTH.

Inflation is ALREADY WAY UP _for consumers._

Telling us that energy prices and food are NOT to be factored  into inflation (using those dubious decisions they make about how to measure inflation, like SUBSTITUTION, for example) is pure nonsense.

And the reason Inflation stats was done these nonsensical way was to save the government money on COLAs.

Now I am NOT saying that inflation is happening BECAUSE of government spending.

But I am saying that the rate of inflation stat they're giving us is total bullshit.

That number has been BS since the Clinton Admin when they (once again) changed the way they compute it.


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## expat_panama (May 4, 2011)

editec said:


> ...The way our government measures INFLATION is by HALF TRUTH.  Inflation is ALREADY WAY UP _for consumers._  Telling us that energy prices and food are NOT to be factored  into inflation (using those dubious decisions they make about how to measure inflation...



That plot of mine you showed has the CPI-U which is all items.  There's another one without the food & energy but I didn't use that.



editec said:


> ...like SUBSTITUTION, for example) is pure nonsense...



You're free to provide a different a index with your preferred cost records whenever you want, and until then we'll say that this is the best one on this thread.



editec said:


> ...And the reason Inflation stats was done these nonsensical way was to save the government money on COLAs...



Everyone says that and everyone's wrong, the BLS even put on their website that:


			
				Bureau of Labor Standards said:
			
		

> ...none of the prominent legislated uses of the CPI excludes food and energy. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI ...


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## william the wie (May 4, 2011)

editec said:


> william the wie said:
> 
> 
> > The sinking dollar will do wonders for our trade balance.
> ...


This has already been seen in autos with the Japanese earthquake/tsunami with the spike in auto parts. Look at the threads and news stories about GM and Chrysler to see how rapid this change can happen. A collapse of the dollar has several stop breaks:

Military Survival. China's economy will collapse within 30 days if the expense of US anti-piracy patrols exceed US direct and indirect revenues from them for any length of time. The costs of replicating the US navy would be in the range of one year's US GDP. (Ships have a useful life of 30-50 years and DOD budgets are net of sales of used vessels to friendly powers likewise used planes. However the real expense is in trained personnel and training infrastructure, which is very hard and expensive to replicate.)

Physical survival. The US farmbelt is the dietary Saudi Arabia of the world. The Arab spring is the direct result of the US ethanol program at least according to almost all people in the affected areas. 

Economic survival. The US consumes 25% of World product because the rest of the world with very few exceptions needs US consumption to fund economic growth.

So while a collapse to $10 = 1 Euro is possible it will happen only over the dead bodies of the ECB governing board.


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## expat_panama (May 4, 2011)

william the wie said:


> The sinking dollar will do wonders for our trade balance...



It's amazing how many people say that, including so many people who should really know better.

Fact: exchange rates don't affect the balance of trade.

Rather than get into a chat about _why_ there's no affect (though I'm perfectly willing to explain it all with sources), the only thing that's really important is that exchange rates don't affect the trade balance and all we need to do is look at the trade balance and the exchange rates and see for ourselves:





They got nothing to do with each other.


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## thereisnospoon (May 4, 2011)

expat_panama said:


> thereisnospoon said:
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> > expat_panama said:
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This IS real life. I am not sure I care for your dismissive position on this issue.
The fact of the matter is the current economic conditions are as a result of political pressures which dictate policy.
How anyone can just blithely dismiss the federal reserve's policy of pouring printed money into the stock market just to give the appearance of prosperity is a mystery. 
The DJIA is over priced right now. People are simply "playing" the markets to realize quick profits. There is actually little "investment" In other words, buy and hold is out of the picture for large traders. When QE II money is exhausted it is entirely probable there will be a major "correction". 
"treasury notes are traded in dollars, not foreign money."
Not sure I get the connection of that statement to the issue at hand. That fact that other nations buy US Paper with THEIR currencies.


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## william the wie (May 4, 2011)

expat_panama said:


> william the wie said:
> 
> 
> > The sinking dollar will do wonders for our trade balance...
> ...


Create that thread if you would please, sir. I'm far more interested in the why rather than the what because that result does not conform to any economic model that I am aware of. Given the way Keynesianism is being given the heave ho in most of Europe we are rapidly running out of economic models that have not been disproven.


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## expat_panama (May 4, 2011)

thereisnospoon said:


> ...How anyone can just blithely dismiss the federal reserve's policy of pouring printed money into the stock market just to give the appearance of prosperity is a mystery. .



First, the printing presses are not under the control of the Federal Reserve.  They're run by the Treasury Dept. which is a separate agency.   Sure, political pundits say 'the Fed prints money' but they don't do it in real life.  Even if they did, the printed currency is just a couple percent of the total money supply. 

Second, the minutes of the board of directors of the Federal Reserve have no recorded decision to buy up common stock for the purpose of artificially raising indexes.  Even if we went the conspiracy route and said the order was given in secret, then to make total market capitalization go from $12T to $24T would have taken $12T worth of stock purchases.  That would also mean the Fed's now filling out half the proxy forms for the entire US corporate market, or voting the shares to directly.

What you're saying is bounced around a lot so I have to admit you're in very good company, but please cut me some slack here and see why this has got to look like something out of a comic book.


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## Toro (May 4, 2011)

expat_panama said:


> thereisnospoon said:
> 
> 
> > ...How anyone can just blithely dismiss the federal reserve's policy of pouring printed money into the stock market just to give the appearance of prosperity is a mystery. .
> ...



Bernanke believes that QE2 has affected stock prices, and that's a good thing.  He said so in a Washington Post article and I think at his Humphrey-Hawkins testimony, or whatever its called now.  Whether or not the FOMC comes right out and says it doesn't mean it doesn't enter their calculus.  I'd be shocked if they admitted they were targeting stock prices.  If the Fed actually said they were targeting stock prices, stocks would go to the moon.


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## expat_panama (May 5, 2011)

Toro said:


> ...Bernanke believes that QE2 has affected stock prices, and that's a good thing.  He said so in a Washington Post article and I think at his Humphrey-Hawkins testimony, or whatever its called now...


The 'dead-tree' press has a really bad habit of turning Bernanke's words upside down so for me the press is only good for letting me know what the press is saying, not what the fed says.  For that the fed can speak for itself and the fed's website has a page of all their testimony. 

The quote you mentioned didn't jump out by googling "Bernanke"stock "Washington Post" "Humphrey-Hawkins" .  In Bernanke's most recent (Apr. 20) posting there's no mention of stocks, but you're still right because he was heavy on 'financial markets' and stock markets are as financial as markets can be.  My point is that the Fed doesn't pour money into stocks while letting Joe Sixpack starving.  

Everyone gripes about the Fed, but their job is stable prices with full employment and they're doing a far better job than their predecessor JP Morgan.


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## editec (May 5, 2011)

The policy of cheap money to those who don't need anymore isn't working.

What is that policy, really?

More SUPPLY SIDE solutions that not only won't work, but that actuallly exascerbates the problem of the imbalance between supply and demand.

It's like pushing on a string.


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## Zander (May 5, 2011)

Time to go long the USD.......I expect a major rally.  

Long T-bonds were at 4.75% earlier this year when I bought them- they are now at 4.36%. With a duration of 15 thats around 6% so far this year not counting the dividends. Add in the dividends and the are poised for double digit gains.....again (made over 15% on them last year). But but, the interest rates are going higher right???  The dollar is going lower right??? Buy Gold??  

See which way the herd is running, then go the other way.


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## expat_panama (May 5, 2011)

editec said:


> ...More SUPPLY SIDE solutions that not only won't work, but that actuallly exascerbates the problem of the imbalance between supply and demand....



Well a very happy morning to you on this beautiful new day!  Your post didn't have a quote so I wasn't sure, but if you were talking about--


expat_panama said:


> ...Everyone gripes about the Fed, but their job is stable prices with full employment and they're doing a far better job than their predecessor...



--then it might be fun for us to get out price and unemployment numbers going back to the 1800's.  Let me know...


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## expat_panama (May 5, 2011)

Zander said:


> Time to go long the USD.......I expect a major rally....



Huh.  Of course the long term trend in dollars is down, although the long term trend in stocks is up and I'm selling.  Lots of people I know can make a living in foreign exchange rates but I was never able to get a handle on it.  Same with real estate too I guess but hey, more power to you!


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## william the wie (May 5, 2011)

Zander said:


> Time to go long the USD.......I expect a major rally.
> 
> Long T-bonds were at 4.75% earlier this year when I bought them- they are now at 4.36%. With a duration of 15 thats around 6% so far this year not counting the dividends. Add in the dividends and the are poised for double digit gains.....again (made over 15% on them last year). But but, the interest rates are going higher right???  The dollar is going lower right??? Buy Gold??
> 
> See which way the herd is running, then go the other way.


Seems early to me but currencies are not a market I deal with.


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## Trajan (May 5, 2011)

Zander said:


> Time to go long the USD.......I expect a major rally.
> 
> Long T-bonds were at 4.75% earlier this year when I bought them- they are now at 4.36%. With a duration of 15 thats around 6% so far this year not counting the dividends. Add in the dividends and the are poised for double digit gains.....again (made over 15% on them last year). But but, the interest rates are going higher right???  The dollar is going lower right??? Buy Gold??
> 
> See which way the herd is running, then go the other way.



not this time amigo...we will test a new low ( below June 08's as well)....

you can keep your Mercedes  in my garage till you can afford it again...


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## Toro (May 5, 2011)

You're going to have to start seeing spreads widen out between US and foreign bonds before there is a significant move in the dollar.  There has been a fairly strong correlation between two-year spreads of US and foreign bonds, i.e. as US 2-year interest rates have fallen more than Japanese 2-year rates, the yen has gotten stronger.

I do think that if I had to lock in for five years, I would choose the dollar over any of the other big currencies, though probably not against gold.


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## Zander (May 5, 2011)

The long bond fell all the way to 4.29 today.....I am feeling a bit smug. Maybe time to cash out!


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