What are the implications of the purposeful devaluation of the dollar?

[EdwardBaiamonte]

It's also not just commodities, but our entire way of life.

lets no be too dramatic. Americans now own 60 million Iphones toys so the going is pretty good despite the fiat currency.

Also, I'm with you on Snowden, sort of. I just wish the law was written such that anyone who used phone or email information for anything other than terrorism gets 10 years in jail and anyone who turns anyone in for doing such gets $1 million dollars.

 

[snowdenisahero]

It's also not just commodities, but our entire way of life.

lets no be too dramatic. Americans now own 60 million Iphones toys so the going is pretty good despite the fiat currency.

Also, I'm with you on Snowden, sort of. I just wish the law was written such that anyone who used phone or email information for anything other than terrorism gets 10 years in jail and anyone who turns anyone in for doing such gets $1 million dollars.

Cell phones don't equate to squat any longer. Barely anyone has a home phone now (unless you have a fax and many just efax), and cell phones and plans are getting cheaper and cheaper. Groceries, daily living, buying a home, living paycheck to paycheck like most do are more severse issues. The fact the dollar is worth NSA must love that. We should all get track phones so they can't listen in on our calls.

Not sure where you going with the 10 yrs million dollar deal.

This was a good post I enjoyed reading:

" A great read for anyone who don't understand the Fed, thr Federal reserve, the Gold standard.
What is a dollar really worth? « Mind of Matthew

In the history of mankind, the average lifespan of a currency has been about 200 years. Guess how old the US dollar is? A little over 200 years. We are in prime territory for a CCM (complete currency meltdown), so get ready for some fun facts.

The Romans were the first civilization to come up with a real, viable currency. Prior to them, civilization bartered for goods and services. The Romans changed that with a currency that could be exchanged for goods and services instead of having to give away something of your own. Guess how long it lasted? About 200 years. It is likely the single thing that brought the Roman Empire down. Their money meant nothing anymore and the kingdom collapsed. This very same thing has happened hundreds of times since then and it will happen again. Two more recent and documented cases are in Germany and Brazil, not to mention the former USSR, but we’ll get there.

Originally, the US dollar, and most foreign currencies for that matter, was based on what we all know as the Gold Standard. One dollar could buy you exactly one dollar’s worth of gold. I believe it was in 1914, two economic guys devised a new plan and decided that to grow the economy, the dollar should be able to buy you 40 cents worth of gold. Strange, don’t you think? So from that time until 1972 when Nixon was president, the US economy operated under this new standard which was a combination of their names, which pardon me, but escape my memory. In 1972, by himself, with no approval from Congress or economic advisors, Nixon decided that the dollar shouldn’t be backed by any tradable commodity, so he got rid of the gold-based backing all together and created the Dollar Standard, which is pretty much how all currencies have traded since. Those countries that did not move to the Dollar Standard, crumbled within decades as they could not compete in the world market anymore. That’s the power that the largest economy in the world has.

So now, the dollar is worth just what the government decides it’s worth. As well as how it trades, but that has been manipulated, too. Did you know the US dollar has always had a credit rating of AAA, the highest credit rating a currency can be given. Just within the past couple of years, just after the bubble of 2008, the banks were going to downgrade the dollar to a AA rating, something that has never happened before. Obama and his infinite wisdom (don’t get me wrong here, I am a big Obama fan) sent economic ambassadors to the crediting banks and what happened? They were somehow “convinced” to keep the dollar rating where it was. What does this rating mean? It’s a rating that demonstrates our ability to borrow and payback. Since its inception, having the highest rating it could have, the dollar has always been strong, saying to the world, we are worth investing in. Had it been downgraded as planned, the world view of the dollar would have changed forever.

Fun fact #1: Printed money accounts for only 15% of the wealth in this country. The rest is just numbers in computers. More on this later.

Did you know that the Federal Reserve, say that name to yourself again, the Federal Reserve, is a PRIVATE bank. It has no ties to the government except that the government is obligated to borrow through the Reserve and they are obligated to do so at a 6% interest rate. The Federal Reserve was created in 1913 by a group of 6 wealthy and influential men who presented their ideas to stimulate the economy to the government who agreed and so became The Fed. It was supposed to last only 20 years, but in 1933, we were in the middle of The Great Depression and FDR decided it wouldn’t be good to break those ties during that time, so The Fed, and rules around it, remain to this day. Take a look at a dollar bill. The only mention of the government you’ll see on it is a signature of the Secretary of the Treasury, who basically signs off on the deal with the Reserve. But right at the top, it says very clearly, “Federal Reserve Note.” Again, a private bank, wholly owned and not publically traded by who knows.

Fun fact #2: The government has on hand at any given moment of any day a little less than $15 billion. It takes a little more than $13 billion per day to keep the country running. Without the ability to borrow, the government would last one day before folding.

How did we get to a point where all of our economy is just numbers in computers without even the backing of the paper it’s printed on? Banking regulations have changed throughout our young history, but as it stands now, lending works like follows. You go deposit $100 into your bank for safe keeping. That bank is allowed to loan out 90% of what you deposit. So they loan Joe Smith $90 and he goes to deposit it in his bank. That second bank can now loan out another $81 from his deposit. The next $72. And on down the line. Basically, creating money out of thin air with nothing to back it. Seems a little odd to me. But that’s how it works.

We all know what a Ponzi scheme is. It’s where you gather the money of others and loan it out or pay off other customers. You can only do that for so long until the time everyone wants their money back, but then it’s too late. You’ve over extended and loaned out what wasn’t yours to loan out. Sound a little bit like our banking system? The US economy has been called the greatest Ponzi scheme in all of history. I think I might agree.

Fun fact #3: After the fall of Germany in World War II, they went through a CCM. On one day, you could buy an egg for maybe 2 marks. The very next day, an egg cost $87 TRILLION marks! Talk about inflation. There are pictures documenting children using “bricks” of printed marks to build forts with for fun. They were worth so little, children were using bricks of them for forts.

How much longer can we last? One researcher has tracked economies since the Roman Empire and found a distinct pattern outlining 7 phases in the life of a currency. He says we are in the beginning of the 7th phase for the US dollar and will likely face a CCM in 6 to 30 months. The dollar is dying.

Gold, silver, precious stones… those things always have value. That’s why burgeoning economies are based on them. What has always happened it happening now. The price of gold is steadily climbing. Soon, supply and demand will kick in and the price of gold will fall through the floor, bringing the dollar with it. A complete currency meltdown. The only thing that will have any value at that point will be the gold and silver and other commodities, as well as goods and services made by companies. That will still have value, so stock is a nice hedge against the impending doom. But the dollar will be worth nothing and will become irrelevant. History shows that when this happens, the economy will have to switch back to a pure Gold Standard and begin to rebuild wealth where there really is some; not just numbers in a computer.

Fun fact #4: Brazil went through a CCM in recent history. Their rate of inflation reached over 80% PER DAY. That meant that the dollar you earned on your first hour of the work day was worth less than 80% of what it was when the day was over. They have documented photographic proof of store keepers re-pricing items on the shelf throughout the entire day. By the time they reached the end of the store, it was time to begin re-pricing back at the front of the store again. All day. Because of an 80% inflation rate per day. They eventually went back to the pure Gold Standard and rebuilt.

Speaking of rebuilding… the recent tragedy in Japan has huge implications for the US economy. Japan has always been the biggest trader in US treasuries and bonds. However, considering they must now rebuild half their country from Tokyo to the north, they no longer have the ability to buy and sell our currency. In fact, they need their own money to get the rebuilding going. So we are about to see them sell off US treasuries and bonds to get back to their Yen. The market will become flooded. The prices will drop. Thus sparking the end of the dollar as we know it. Watch it happen.

So anyway, I’m certain there is more. But, I can’t remember it all right now. It’s late and I haven’t slept, but keep these points in mind

- The average lifespan of any currency since the beginning of modern banking is 200 years. Our dollar is older than that. We are poised.

- The US banking system creates money out of nowhere. Always has. It can only be extrapolated so far until the dollar fails. Ponzi scheme.

- The dollar is backed by nothing. Not gold, not silver. Nothing. Just the world’s belief and faith that our economy will hold.

- The US has no government banking system. The Federal Reserve is private, just like any other bank. The US must borrow on a daily basis just to stay afloat.

- CCMs have always happened since there has been money. All the way back to the Romans. Over a dozen times in just the past few decades. Germany, the USSR (which led to the break-up of the country), Brazil, and Mexico, just to name a few.

- Japan’s sell off of US treasuries and bonds, which will happen, will drop the dollar to worthlessness."

 

[OohPooPahDoo]

Bueller?

Not gonna happen. Everybody is trying to devalue at the same time, a mathematical impossibility. We are stuck being the numeraire.

Until somebody breaks out of the mold and adopts a gold standard, thereby becoming the world's premiere currency.

If you want a gold backed asset buy a share of GLD.

 

[The Rabbi]

Not gonna happen. Everybody is trying to devalue at the same time, a mathematical impossibility. We are stuck being the numeraire.

Until somebody breaks out of the mold and adopts a gold standard, thereby becoming the world's premiere currency.

If you want a gold backed asset buy a share of GLD.

Not an asset, idiot. If someone wanted that he'd buy a piece of gold. A gold backed currency.
Personally I'm not a fan of it. Our original currency was bimetallic. Friedman advocated that and I agree with him.

 

[OohPooPahDoo]

Not gonna happen. Everybody is trying to devalue at the same time, a mathematical impossibility. We are stuck being the numeraire.

Until somebody breaks out of the mold and adopts a gold standard, thereby becoming the world's premiere currency.

Like libia tried to do with the gold dinar, and why Gaddafi was murdered. China could also crash the dollar in an instant.

If they did so they would immediately lose the pre-crash equivalent of $1,200,000,000,000 from their economy, with more to follow.

 

[OohPooPahDoo]

Bueller?

Not gonna happen. Everybody is trying to devalue at the same time, a mathematical impossibility. We are stuck being the numeraire.

It's already happening. Food prices, gas prices, everything has gone up.

Yep, food prices are going up alright.

World Food Prices Fall on Rising Supplies of Dairy to Sugar - Bloomberg

 

[The Rabbi]

Not gonna happen. Everybody is trying to devalue at the same time, a mathematical impossibility. We are stuck being the numeraire.

It's already happening. Food prices, gas prices, everything has gone up.

Yep, food prices are going up alright.

World Food Prices Fall on Rising Supplies of Dairy to Sugar - Bloomberg

You're so stupid.
The Real Reason the Middle East is Rioting -

Why food riots are likely to become the new normal | Nafeez Mosaddeq Ahmed | Environment | guardian.co.uk

 

[Staidhup]

Like libia tried to do with the gold dinar, and why Gaddafi was murdered. China could also crash the dollar in an instant.

Given that they hold trillions of dollars worth of bonds it would be most unwise.

Most unwise for who? China's sitting pretty regardless. What do they care, as they don't want the debt any longer. That's precisely what will speed up the crash of our economy.

Apparently your understanding of China's current economy and the significance of the US as a principle trading partner escapes you. China has no desire to shoot itself in the foot they have enough problems maintaining their manipulated economic dreadnaught as it is. As for devaluation of the dollar, no fear, the purchasing power of the dollar is eroding just fine on its own along with the Euro and others that have used the printing press rather than make tough decisions.

 

[SteadyMercury]

Barely anyone has a home phone now

Source?

What are you talking here, only a few hundred people? A few million? Tens of millions? Most households?

 

[AmazonTania]

A few pre-market notes to consider, Crude Oil is still $106 dollars a barrel:

The momentum of this upside break could carry Crude to through it's benchmark to $110 - $115 dollars a barrel before it levels off and goes much higher than that.

Also, the dollar is not falling relative to other currencies.

So this is a Global Price increase for oil...

 

[OohPooPahDoo]

A few pre-market notes to consider, Crude Oil is still $106 dollars a barrel:

The momentum of this upside break could carry Crude to through it's benchmark to $110 - $115 dollars a barrel before it levels off and goes much higher than that.

Bunch of baloney. It could go either way. If you could predict which way oil would go you wouldn't be wasting your time here.

The mean expected value of crude oil 1 year from now is 1.0014 X its present value.

 

[editec]

Bueller?

What are the implications of the purposeful devaluation of the dollar?

Devalued AGAINST what, exactly?

Against other currencies or against commodities?

Makes a difference to the "implications"

The implications are the same. Devaluing the dollar does both. It's also not just commodities, but our entire way of life. This fiat paper is only backed by the power of the US military, and it's reach. Libya tried to compete with the Gold dinar, and Gaddafi was kileld for it.
The Federal Reserve's Explicit Goal: Devalue The Dollar 33% - Forbes
Enjoyable and informative video I just found: Stansberry's Investment Advisory

How does the FED devalue the dollar now that all currencies are bought and sold on the market?

Now if the Treasury increases the total amount of dollars by 33% I can see that happening but not otherwise.

Our dollar is backed by american productivity in comparison to all other national productivities.

Our dollars are worth exactly what can be purchased with them.

Their exchange values cannot be arbitrarily altered as long as they are freely exchanged with other currencies. (again..unless the aggregate number of them is dramatically increased).

 

[oldfart]

How does the FED devalue the dollar now that all currencies are bought and sold on the market?

The answer is in posts #2 and #15 in this thread, but I'll expand a bit. Think of the international trade system as a barter system. Like any barter system, keeping track of the exchange ratios for trillions of commodity pairs is a royal pain in the ass, so traders come to accept one good as the "numeraire", an item which has stability over time, will be commonly accepted, and has certain characteristics like uniformity. In the cases of jails and POW camps, this has been cigarettes. In the case of international currencies it is (along with a few others) the United States dollar.

This leads to the dollar becoming a reserve currency. Since everyone who trades knows its value and can readily convert currency A into dollars and dollars into currency B, it makes more sense to keep a stock of dollars to facilitate trade rather than stocks of 150 or so currencies. So far so good.

Now if a little country like say, Denmark, wants to stimulate its economy it might want to raise exports and reduce imports by devaluation. So how mechanically do they do this? They go into the foreign currency markets and buy dollars. Right now it takes about 5.7 Danish krone to buy a dollar. Now what Denmark does is not going to materially effect the numbers of dollars in circulation, but it sure as shootin' will effect the number of krone. Increased supply of krone floating around the world will drive the price of krone down. Tomorrow it might take 6 krone to buy a dollar, so Danes see the prices of what they buy abroad go up and Danish exporters see the same sales yield them more krone. Mission accomplished.

But how about Denmark's neighbors the Dutch? They phased out the guilder and now are part of the Eurozone. By themselves there is no way to devalue like the Danes. If they want to buy dollars, that's fine. But they will pay for them in Euros. And where do they get the Euros? They can't just print them like they used to do with guilders. So the whole Eurozone is stuck with a situation where they cannot devalue against the dollar except as a concerted action of all 17 members! The recent economic history of Europe suggests that there is a vast difference between the Eurozone members and those nations that still have their own currencies such as Iceland which has devalued. The latter nations have the option to devalue, take a sharp but short adjustment as most nations have been able to do since they went off the gold standard; but the Eurozone is stuck in a quagmire from which it does not seem able to extricate itself.

But what about America? If the dollar is the numeraire, it is virtually impossible to devalue. What would America buy in the currency markets? Baskets of a hundred different currencies? We could try targeting a few of the larger currencies (and thank to the Eurozone there is one really tempting target!) but the mechanics are really clunky. And of course it is mathematically impossible for every nation to devalue at the same time. Attempting to devalue is great for a small country with its own currency that doesn't account for enough world trade to change the global trade much, but it is different for the big boys. The probable result would be a trade war and we don't really know if anybody would win. Think of everyone behaving like China at the same time.

So again, ain't happenin'.

 

[AmazonTania]

The US Dollar is not impossible to devalue. It is devalued. The only reason why it seems strong now is because other countries are also devaluing to prop of the value of the dollar. And the Eurozone has devalued quite a bit against the Dollar. The US Dollar is just so weak that it can't even maintain it's value against the Euro, aside from the fact that the Euro just made a new all time high yesterday. Thanks Bernanke!

Aside from it's inability to keep it's value against the Euro, the dollar is weak. It's 14% below it's average and 49% below it's all time high. It's devalued. Overvalued in the case of many other currencies, but still devalued. The only thing keeping the dollar from going into a free fall are the world's willingness to devalue their currency faster than the United States devalues theirs.

 

[oldfart]

[T]he Eurozone has devalued quite a bit against the Dollar. The US Dollar is just so weak that it can't even maintain it's value against the Euro, aside from the fact that the Euro just made a new all time high yesterday.

Devaluation only has meaning when comparing the value of one currency against another or some standardized basket of currencies. As I read the above, it seems to me that you argue that the Euro "has devalued" against the dollar and simultaneously "just made a new all time high yesterday."

I don't think you meant your post to be read that way, so could you clarify?

Also my position is that it is exceedingly difficult to devalue the dollar so long as it serves as numeraire and a reserve currency. Could you walk me through how the monetary authorities would go about attempting to devalue the dollar? Were the dollar an ordinary currency, this would be done by flooding the currency markets with dollars buying up other currencies. But as I outlined previously, what currencies could be bought in this way without setting off a trade war?

Aside from it's inability to keep it's value against the Euro, the dollar is weak. It's 14% below it's average and 49% below it's all time high. It's devalued. Overvalued in the case of many other currencies, but still devalued. The only thing keeping the dollar from going into a free fall are the wor[l]d's willingness to devalue their currency faster than the United States devalues theirs.

Again, you seem to think that everyone can devalue simultaneously. Against what? Gold? The price of oil?

I'm not trying to be snarky here; I'm trying to understand your argument as I have encountered at least two possible interpretations of statements such as yours. One involves a fallacy of composition and the other is an observation that two currencies can be weak to the point that both lose value relative to a third standard. In such a case, the falling currency values would appear to be identical to inflation in each economy. This used to be called "debasing the currency" instead of "devaluation".

I hope this helps.

Jamie

 

[william the wie]

[T]he Eurozone has devalued quite a bit against the Dollar. The US Dollar is just so weak that it can't even maintain it's value against the Euro, aside from the fact that the Euro just made a new all time high yesterday.

Devaluation only has meaning when comparing the value of one currency against another or some standardized basket of currencies. As I read the above, it seems to me that you argue that the Euro "has devalued" against the dollar and simultaneously "just made a new all time high yesterday."

I don't think you meant your post to be read that way, so could you clarify?

Also my position is that it is exceedingly difficult to devalue the dollar so long as it serves as numeraire and a reserve currency. Could you walk me through how the monetary authorities would go about attempting to devalue the dollar? Were the dollar an ordinary currency, this would be done by flooding the currency markets with dollars buying up other currencies. But as I outlined previously, what currencies could be bought in this way without setting off a trade war?

Aside from it's inability to keep it's value against the Euro, the dollar is weak. It's 14% below it's average and 49% below it's all time high. It's devalued. Overvalued in the case of many other currencies, but still devalued. The only thing keeping the dollar from going into a free fall are the wor[l]d's willingness to devalue their currency faster than the United States devalues theirs.

Again, you seem to think that everyone can devalue simultaneously. Against what? Gold? The price of oil?

I'm not trying to be snarky here; I'm trying to understand your argument as I have encountered at least two possible interpretations of statements such as yours. One involves a fallacy of composition and the other is an observation that two currencies can be weak to the point that both lose value relative to a third standard. In such a case, the falling currency values would appear to be identical to inflation in each economy. This used to be called "debasing the currency" instead of "devaluation".

I hope this helps.

Jamie

Sound argument that leaves out two components ignored by modern economics:

The pace of productivity driven deflation appears to be going hyperbolic damn near across the board. So devaluation against a market basket of goods is the goal. But it is hard to figure out what market basket of goods make sense. As with Japan's insane levels of stimulus leading to deflation for the past 20 years nobody most especially yours truly can figure out how this works.

Since the banking system cannot handle this situation shadow banking has come about. Japan has damn near killed its own shadow banking system and the EU is trying mightily to do so. However if shadow banking is the way to go central banks make teats on a boar look real useful as pacifiers.

Unhappily I cannot find the popcorn eating smilie so I am signing off.

 

[AmazonTania]

[T]he Eurozone has devalued quite a bit against the Dollar. The US Dollar is just so weak that it can't even maintain it's value against the Euro, aside from the fact that the Euro just made a new all time high yesterday.

Devaluation only has meaning when comparing the value of one currency against another or some standardized basket of currencies.

That's really only in the case of the USD, GBP, EUR and Yen. Other crosses and pairs, the is already a vast ground work to consider. If I were to look at the progress of the Hong Kong Dollar, there is really only one currency pair I need to look at and this is the USD/HDK, because the HDK is pegged to the USD.

With most exotic currencies, the only pair I really need to look at is USD/[random currency]. Or if I'm not sure on how well a certain currency is doing, I will tend to look at the crosses instead of the actually pair. But the United States and the Euro are the two most widely paired currencies in the world. And there is really only one pair you generally need to took at when determining the valuation of the EURO, and this is the EUR/USD.

As I read the above, it seems to me that you argue that the Euro "has devalued" against the dollar and simultaneously "just made a new all time high yesterday."

I don't think you meant your post to be read that way, so could you clarify?

Actually, it is not an all time high. My trading platform doesn't go back as far as 1985 to spot it's all time high. The Euro is actually trade at a two year high against the US Dollar. This is the highest it's been since the ECB's rate cut in 2009. Since the rate cuts in 2008 - 2009, the Euro has taken a 13% hit while the US Dollar has taken a 12% hit.

Also my position is that it is exceedingly difficult to devalue the dollar so long as it serves as numeraire and a reserve currency. Could you walk me through how the monetary authorities would go about attempting to devalue the dollar? Were the dollar an ordinary currency, this would be done by flooding the currency markets with dollars buying up other currencies. But as I outlined previously, what currencies could be bought in this way without setting off a trade war?

The reserve currency can be devalued, depending upon who the currencies weighed against it are doing against the USD. Of all the other major currencies, the US Dollar is only doing well against three: The Yen, The Franc and the Pound. The others are doing so-so, with the exception of the Euro, which is doing extremely well. As for which currencies can be bought, I've noticed a rather recent upward trend in the Pound and the Euro. More of these are being bought every hour. The Aussie dollar is another currency, but it's gains are merger compared to the Pound and Euro.

Again, you seem to think that everyone can devalue simultaneously. Against what? Gold? The price of oil?

No, I don't. The only countries in the world which have decided not to participate in this foolishness are Australia, New Zealand and South Korea. Those are really the only major economies which are not devaluing. Also even these central banks are attempting to make their currencies weak. The Reserve Bank of Australia cut rates from 3% to 2.75% a few months ago. South Korea cut cuts from 2.75% to 2.5%. These bankers have somehow convinced themselves that a strong currency is not a very good thing.

Well, relative to the US Dollar anyway. They're cutting rates, whether their economies need it or not.

I'm not trying to be snarky here; I'm trying to understand your argument as I have encountered at least two possible interpretations of statements such as yours. One involves a fallacy of composition and the other is an observation that two currencies can be weak to the point that both lose value relative to a third standard. In such a case, the falling currency values would appear to be identical to inflation in each economy. This used to be called "debasing the currency" instead of "devaluation".

I hope this helps.

Jamie

1. What I am trying to say that the US Dollar is weak. Not all across the board but it is weak against the currencies it's heavily weighed against. Most of it's downward pressure is coming from the Euro, which has managed to remain stronger than the Dollar for the latter part of the Crisis. Dispute the fact that both countries have cut their rates. But the many reason why the dollar remains strong is because many countries around the world are devaluing theirs to prop up the value of the dollar. Whether it's to sell exporters more exports or just for the sake of global policy, this is a fact. They don't call it a currency war for nothing.

2. I know inflation is very bad in Japan, and I know inflation is worse than the US Government would like to admit. The Euro Zone seems more modest when you compare the two.

 

[oldfart]

Back in the days I was in school, what was called "International trade and tariffs" was my absolute worst area. If I had to pass exams in it I would have been out of luck. In those days with fixed exchange rates, foreign currency markets were pretty boring except for the panics when somebody devalued. I still have trouble with it and do the equivalent of count on my fingers!

That's really only in the case of the USD, GBP, EUR and Yen.

I would agree. Add SDR's and that's the list of reserve currencies.

Again, you seem to think that everyone can devalue simultaneously. Against what? Gold? The price of oil?

No, I don't. The only countries in the world which have decided not to participate in this foolishness are Australia, New Zealand and South Korea. Those are really the only major economies which are not devaluing.

My reason for asking is that there are some old studies where people tried to measure changes in major currencies against producers of certain raw materials like petroleum, copper, and so forth. The idea after the oil shock of the 70's was that certain events might effect the currencies of all the major industrial nations. The big insight is that this is perceived in the industrial powers as inflation in raw material prices. It turned out that most of this effect was petroleum. With hundreds of billions flowing into OPEC the issue was how to "recycle" petrodollars.

1. What I am trying to say that the US Dollar is weak. Not all across the board but it is weak against the currencies it's heavily weighed against.

I think that every economy and every currency shows weakness due to the global slowdown. My fear is that it is becoming permanent.

2. I know inflation is very bad in Japan, and I know inflation is worse than the US Government would like to admit. The Euro Zone seems more modest when you compare the two.

The last I heard, Japan had a deflationary problem, but I don't keep up with their economy very closely. I think we've had the debate about inflation in the US before so I won't rehash it here.

It's my bedtime so I'll get my beauty rest. I have all the ugly my office can stand!

 

[EdwardBaiamonte]

As with Japan's insane levels of stimulus leading to deflation for the past 20 years nobody most especially yours truly can figure out how this works.

Its about rational expectations and animal spirits. Stimulus has to be private sector and real based on real money and real animal spirts. When liberal government is printing and wasting money everyone knows it and treats it that way. They get afraid to spend and invest and Keynesian animal spirtis die off because everyone knows a mal-investment liberal bubble is about to burst.

The USA is in an identical situation only to a lessor extent.

 

[snowdenisahero]

As with Japan's insane levels of stimulus leading to deflation for the past 20 years nobody most especially yours truly can figure out how this works.

Its about rational expectations and animal spirits. Stimulus has to be private sector and real based on real money and real animal spirts. When liberal government is printing and wasting money everyone knows it and treats it that way. They get afraid to spend and invest and Keynesian animal spirtis die off because everyone knows a mal-investment liberal bubble is about to burst.

The USA is in an identical situation only to a lessor extent.

What does liberal or republican have to do with jack? It's the FED that's doing it.