Why is no one talking about the dollar?

[NinetySix]

Maybe it's easy to get distracted by headlines and scandals in the Administration that make a big splash, but the most insidious danger these days is the precipitous slide of the US dollar. I watch the dollar every day, not as part of a vocation, but because it's in my interest to know the exchange rate: I'm an American living in Canada, and my student loan is in US dollars. Three years ago, the Canadian dollar (the "loonie") was trading at roughly 61 cents to the US dollar, but yesterday the loonie rose to around 90.4 cents, a rise of just about 50%. As a result, my loan payments have dropped by about 30%; not that I'm complaining, mind you, but the trend looks like a dangerous one to the health of the US economy to me. I'm no economist, but if you'll indulge me, I have a few thoughts on the matter.

First, the devaluation of a currency is not in itself a bad thing. Many countries who have fallen into economic straits voluntarily devalue their currency in order to boost exports and increase the inflow of capital, so it is often the right thing to do. Most of those countries, however, are countries that have a manufacturing base and produce desirable goods. Unfortunately, the United States has for years been gearing itself for what is called a "post-industrial" economy, that is, where the majority of workers are trained to participate in white-collar professions rather than blue-collar manufacturing. Couple this with the recent history of epidemic outsourcing, and the result is the sharp decline in manufacturing that we have seen in the last decade of last century and the first decade of this one.

Remember WalMart's "Made in the USA" marketing campaign of the late-80s and early-90s? Go to WalMart tomorrow and try to find ANYTHING that isn't made in China. The declining dollar in this context points to two unfortunate situations: a) fewer dollars will be coming in to the country from US exports, since most of our goods are produced overseas today; and b) Chinese goods are almost certain to become more expensive if and when the Chinese unpeg the value of the Yuan from the dollar, a policy which the US Administration has a history of encouraging.

If hiring illegal immigrants becomes officially accepted practice, which appears to be the preference of large corporations eager to reduce the price of labor, then the pursestrings of everyone in the country other than the already wealthy could be in danger of being unable to survive financially, even with the help of WalMart's low, low prices. Say what you will of the millions of illegal immigrants themselves, but the REAL bad guy here is the blinkered corporate focus on maximizing profit at the expense not only of workers, but of the safety of the economy itself.

Canadian economists are predicting the further rise of the loonie now that it has reached the 90-cent mark, and expect to see parity, that is, a one-dollar-equals-one-dollar even value between the two currencies. As I say, that's great for me; I'm cheering for the loonie, 'cause it saves me money every time it goes up. But what happens in the US when the rubber band breaks? There is going to be a huge upheaval very soon, I fear, and the economic effects will be felt right around the world.

Looks like the world economy is in for a major realignment, I'd say, but what happens to the people? What will life be like in that America? I already have contingency plans to be able to take in members of my family if need be, but what about everyone else? Maybe Canada should assist the US in building that ridiculous wall on their border after all....

[RUMMYisFROSTED]

1. The Canadian dollar nearing 1:1 ratio.

:wow:

[FloridaPat]

4. It was that back in the 70's. It was nice to go to border towns on

both sides of the border and the currencies were interchangeable when you bought something.

[RUMMYisFROSTED]

13. I had a Canadian McDonald's teller explain the exchange rate to me

in the 70's. I was a handful of years old. First I was ever exposed to it. That's why the 1:1 is so surprising/noteworthy.

[FloridaPat]

2. Stories I've read do not have a happy ending for the dollar.

Our gov't has sold us out. The repubs a lot faster then the Dems. Apparently when we went off the gold standard and backed the dollar with oil, we sort of lost it. Thus our military has been getting into countries with oil.

Few here seem to realize that with everything coming from China, letting China's money loose from the dollar would not be good. Yes, the price of almost everything would go sky high.

Rumor has it that the price of gold relfects how bad the dollar really could be if other countries stop backing it. Plus we need $2 billion a day in foreign investments - which seems to mean the US is for sale to any foreigner just to hold up the dollar. So what happens when everything is sold? What happens when everything is too expensive to buy from China? Who's going to pay the national debt?

Lastly - the M3 report was stopped in April. The amount of dollars around the globe has been pretty steady for 50 years. * has increased the amount using the printing presses by 50% since he's been in office. Plus an increase of the national debt about $3 trillion. Rumor has it the printing presses have been told to go whole hog and print up $2 trillion more.

The repubs seem to be intent on destroying the country. May have already done it. Maybe he's getting even for all of us that voted against him.

Yes, the US is in very big trouble. A few people see it. Most do not.

[NinetySix]

21. That's exactly what I'm talking about, Pat.

On the channel I look at to see the exchange, I see the oil and gold prices climbing steadily every day. I think oil finished at about $74 a barrel today, and gold is at almost $670 an ounce. Don't the corporations see that when no Americans have money anymore, the market for their imported goods is going to dry up like the Gobi Desert? It's hard to understand their motivation, and it doesn't help that the Administration in a zombie-like thrall cater to their every scheme.

[acmejack]

3. I have been!

But you are right no one is alarmed. My post earlier on this topic elicited all of two responses, one of which was to tell me I was mistaken. Gold is up 10USD today, I see that as extremely worrisome, I am very nervous right now. If I wasn't old and broken down I would be really freaked out.

[FloridaPat]

8. I've been reading and replying as often as I could For the first time

in my life I am actually scared of the future. There are a lot of "smart" people saying things are bad, but the results haven't taken place - yet.

[nankerphelge]

5. So what should we do with our $...

to weather the storm?

[pretzel4gore]

16. make friends...

family groups and that sorta stuff, community actioning, neighborhood watch....but face it, we'll survive collectively or not at all

[Blue_Forney05]

6. I was wondering something about the dollar devaluation and

the M3 report not being published in late March. Could it be that the fed is printing money so much so that the Dow Jones, S@P and the Nasdaq have to rise? I read somewhere awhile back that virutally all of the Dow's gains over the last 100 year have been due to inflation inflating the value of the Dow up.
I mean come on, the market thinks that the fed finishing lowering rates is going to help the economy? The economy is so vulnerable right now from many angles such as housing bubble, high debt levels, skyroketing gas prices, and personal income falling. How can the "suits" on wal street expect people to buy shit and thus increase company profits when everyone looses their jobs or takes pay cuts? This is just puzzling to me.

[FloridaPat]

10. No more rate hikes would help the economy. Cheap money to borrow.

The big problem is the national debt and foreigner holding all that money. If enough people loose interest - goodby what's left of the economy. We by everything from China. What happens when the price of everything goes up 1000%?

[newyawker99]

27. Hi Blue_Forney05!!

Welcome to DU!! :toast:

[unblock]

7. the continued decline of the usd means inflation

it means that buying foreign stuff becomes more expensive. since much of our "stuff" is foreign, that means general inflation.

on the plus side, that means that our exports become cheaper to foreigners, which means that manufacturing in the u.s. might start becoming a bit more attractive -- or at least a bit less unattractive, thus reducing the rush to outsource everything.

it also makes the u.s. debt more manageable since it is a fixed number of dollars, but dollars are easier to come by.

[FloridaPat]

12. What exactly do we export that would be able to help the economy?

Besides jobs and factories.

[karlrschneider]

14. That was my question...good thing I read thru the thread.

I guess we can wait for an answer...:eyes:

[lastliberalintexas]

31. I see that from a few posters all the time, but it is ridiculous to

think that a merely declining dollar would shore up the US manufacturing base. Even with a fairly significantly devalued dollar, it would still be much more expensive to manufacture goods here than in 3rd world countries with no labor and environmental laws or lax regulation of what few laws are on the books.

We would likely have to see a full on *collapse* of the US currency before we would see anything positive in the way of increased manufacturing. And by that point, have we really improved anything for the average American? Hardly.

[unblock]

34. i agree that the USD has a long way to go before manufacturing grows

in the near term the best the declining USD will do is make outsourcing more expensive. india will still have cheaper labor, but there are drawbacks to outsourcing, and you need quite a bit of price difference for it to be worthwhile.

do i hire a bunch of programmers at $75K or do i pay the equivalent of $15K for some indian programmers? well at that price difference it might be worth the time difference and loss of control and coordination headaches. but if the difference were $75K vs. $30K it might not be worth all that.

of course, in that example the dollar lost half its value....

[redwitch]

9. I'm scared.

I have no idea where this is all going to end but it isn't going to be pretty. The morons who are so proud of our vast superiority in EVERYTHING! Americans are going to be in for a real shock.

[FloridaPat]

11. You are not alone.

[Generator]

15. Wow I didn't know that about the Canadian dollar!!!!

GOD save America. I fear it's too late. I fear for war with Iran and armageddon. And dammit you people wonder why us little people need stupid distractions like American Idol. Anything to keep reality away. I sit here helpless praying China stops us from attacking Iran and that Rove is indicted. I don't know what else to do. Thank God for sweeps.

[acmejack]

17. I have been referring to it as the "pesoization" of the dollar

Because it is the only thing I can associate with it. About a decade ago in Mexico it happened to the Peso, it took an absurd amount of Pesos to purchase a loaf of bread. We're heading there. I fear we are in a bind that cannot be straightened out.

At the best case scenario, it can be adapted to at worst it will destroy mankind. Not to be melodramatic, but I believe that is the reality of it.

[lastliberalintexas]

32. Remeber the pictures from the 30s of Germans with wheelbarrows full of

Deutschmarks just to buy a loaf of bread? Probably the same situation.

[kineneb]

18. Decline of dollar has been predicted for some time

There has been lots of comments for the last several years about the dollar on the Asia Times website. And yes, I did notice on the DU daily financial comments about the value of the Loonie.

As for what to do, I have not a clue. Suggestions by others have included: buy gold, or plant a garden.

[pretzel4gore]

19. the pigmedia needs.....needs it bad

them bastards have been a 'plague' on society for 40 yrs, since jfk was murdered-they lied right to our faces about what went on there, they never asked questions, they let dulles brothers and hoover and upper class twitty bush etc, get away with murder....the pigmedia has been a pig forever, and notice that the very idea that 'public broadcasting' was something needed in the late 60's early 70's was the beginning of the rightwing reaction that has since then seen the mass corporate media become as vicious a anti social criminal as any serial rapist/murderer.....
keerist, the dow jones goes way up as soon as 'war' is threatened, loses stream when peace threatens! yet this is normal?

[Yollam]

20. Lucky you. I'm in the opposite situation.

I live in Japan and am paid in dollars by my US employer. If the dollar goes below 100 yen, I'll have to seek work with a Japanese company. I hope the dollar stays grossly inflated for a while longer...

[DisgustedTX]

22. Dollar? What about the PESO!!!!!

How DARE you trample on the ILLEGAL AGENDA! :)

[tinfoilinfor2005]

23. Well, having traveled to eight countries in the past few months

I can only go by what I have encountered. As a for instance: In England, one pound is worth approximately two American dollars. Let's say I bought a tube of toothpaste in England for one pound. In America that same toothpaste would cost me two dollars. But then we go over to Latvia. The Lat (their dollar) exchanges like the pound. One Lat to two american dollars. But for that Lat, I can buy four tubes of toothpaste. So one of these tubes in American dollars would cost me fifty cents.

As you can see, the exchange rate may be what you see on the boards, but there are other variables at play.

[jerry611]

24. It's not something to get worried about yet

The Euro isn't going to grow much more. By the numbers, the US economy is growing almost twice as fast as Europe and we have half the unemployment. The Euro is actually probably a bit overvalued. Plus there is some questions about the long-term stability of the Euro.

What is dragging the dollar down is the budget and trade deficit. If we were to balance the budget and cut the trade deficit in half...the Euro will fall behind the dollar.

We dont need to jump out windows or hit the panic button yet. But we need to have the budget balanced by the end of this decade or we may start to see some problems developing.

[lastliberalintexas]

33. You can't compare the 2 unemployment rates

The US rate doesn't include a number of people who are unemployed and is much more finagled than the European numbers. While I'm sure all governments play with the stats, ours does the best job of shaving a likely 2-4% off our unemployment figures.

You have to keep in mind that this is the same government which excludes energy costs from inflation calculations. They do no better a job in computing unemployment.

[slaveplanet]

25. First of all

There's really no such thing as the Dollar any longer.

In order for it to be a "Dollar" it had to be a specific amount and purity of a metal, and it had to minted by the United States government.

What we have are FRN's, monopoly money, digits on a balance sheet, made out thin air, backed by nothing but empty promises.

It has a lifespan(usually about a hundred years before the scam is all played out), there is no starting point to peg it to, but the ultimate value will always be zero...

That why Junior Achievement is busy teaching the kiddies about the Namero,
The new common currency of Mexico, Canada & the US. Set to replace the "Dollar" after they finally crash it.

see page 4

https://www.nutrimedical.com/news_file.jhtml?id=478&file=JA_Achievement_North_American_Currency_Globalist_Plans.pdf

[OneBlueSky]

26. regarding our manufacturing base . . .

and this is just off the top of my head . . .

might it be a good idea to establish a nationwide system whereby products "Made in the USA" -- and certified as such -- are exempted from all state and local sales taxes? . . .

[BooScout]

28. I don't talk about it much.....

Because it's costing me money by it falling. I live in the UK and still have funds in the US I need to transfer over here in the fall. So far it's looking bleak for what I'll be able to get for my money. :-(

[rman]

29. 50% in one day?

If so, that's spectacular - and ominous.

[NinetySix]

30. Not in one day....

The loonie reached the 90-cent mark for the first time since the mid-1970s after climbing fairly steadily for the last three years. Nothing so dramatic as what you're suggesting, but still a remarkable increase in value over quite a short period. It's down fractionally in today's trading, but still over 90 cents before close.