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THE Dollar Crash Thread pt 2

For discussions of events and conditions not necessarily related to Peak Oil.

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Sat 16 Jul 2011, 18:27:00

Return of the Gold Standard as world order unravels
As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.

http://www.telegraph.co.uk/finance/comm ... avels.html
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Re: The Dollar Crash Thread pt 2

Unread postby Outcast_Searcher » Sat 16 Jul 2011, 18:46:56

OilFinder2 wrote:Interesting calculation.


So best case, the masses, who mostly don't bother to SAVE anything might have more jobs, but their dollars will buy them less.

So what - should we go ahead and devalue the dollar to a penny now? Then we can have a BOOMING economy! We can RULE THE WORLD!!! :razz:

This kind of thinking reminds me of the hard right that says that lower taxes create more income NO MATTER WHAT. Great -- let's make all the tax rates a trillionth of a percent. Soon, we should have so much money we can solve ALL the world's problems! We can RULE THE WORLD!!! :roll:

I'm happy for the masses if a lower dollar (temporarily) buys them less pain. This certainly does nothing to inspire the long term productive investment this country SO BADLY NEEDS though.

Meanwhile, I will stay diversified and hedge against the dollar and higher inflation and higher interest rates down the line, thank you very much.

(Until the political class convinces me I can trust the dollar, via intelligent long range policies. I WON'T be holding my breath). :-x
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Dollar Crash Thread pt 2

Unread postby Outcast_Searcher » Sat 16 Jul 2011, 18:57:39

AgentR11 wrote:The question becomes, does China try to fight appreciation, or do they accept the inevitable and try to preserve what value they have already acquired. Fighting means they have to keep financing the US deficit; preservation means they have to gut their ability to export to the US. No wonder they are upset.

And no wonder they are diversifying and buying lots of REAL assets. One of the things they (and their citizens) are buying is lots of US stocks and real estate.

Their govt. buying/stockpiling LOTS of commodities they will inevitably need in coming decades to meet growth seems brilliant to me. Diversification. Currency hedge. Practicality. Foresight. From GOVERNMENT! Who would have thought?

Now by "helping Europe through their crisis" they will have a serious stake in Europe and another large consumer market to sell to.

Their politicians are engineers. Ours are idiot lawyers.

Their system is far from perfect, but in the area of intelligent strategic planning, they perform so much better than us that it's both frightening and astounding.

It makes me want to kick everyone's ass on Capital hill about 5000 times, but it's not like my going to jail will fix anything. :x
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Thu 28 Jul 2011, 22:09:38

China’s Dagong set for another U.S. downgrade
A Chinese agency which has already cut the United States’ credit rating said on Thursday it plans a further downgrade as early as next week, even as politicians race against the clock to avert a ruinous debt default.

Guan Jianzhong, Chairman of the Beijing-based Dagong Global Credit Rating Co, said he still believed U.S. lawmakers will clinch a last-minute deal on the U.S. debt ceiling, but the damage has been done.

“We will react soon, probably next Monday or Tuesday. We need to look at whether they reach a compromise and the scope of the compromise, then we decide how deep the rating cut will be,” Guan told Reuters in an interview in his spacious office.

http://business.financialpost.com/2011/ ... downgrade/
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Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Sat 30 Jul 2011, 06:19:52

I just saw the video by Andrew Nikiforuk on Tar sands and suddenly some things are making sense to me.
A strong currency is good for countries whose economy is dependent on natural resources, especially OIL. If you have more oil than you need, you can just sell it and use your strong currency to live in luxury. All these petro-states have low taxes and almost no manufacturing industries. Also the same regimes rule in these countries for very long periods, thanks to their low tax policies. The politicians( and kings) just live off the oil revenues. There is no real competition in natural resource industries, because they are only concentrated in a few areas on earth. There are no substitutes for resources(oil in particular).
But if you have a manufaturing economy, you need a weak currency. Because there is intense competiotion in these industries and devaluing your currency will give you an edge over competitors.
So it makes sense why the Republicans are calling for a strong dollar. They come from states like Texas that are rich in oil. They want their oil revenues to be as high as possible. And of course they are getting rich off the $ 100 a barrel oil. In the mean time, manufacturing states like Michigan are dying.
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Re: The Dollar Crash Thread pt 2

Unread postby Cloud9 » Sat 30 Jul 2011, 09:29:26

Zero Hedge on how China ate our lunch. http://www.zerohedge.com/contributed/ho ... icas-lunch
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Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Mon 01 Aug 2011, 21:54:10

Bank of Korea buys gold. Central banks worldwide are stocking up.

http://af.reuters.com/article/metalsNew ... SC20110801
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Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Tue 02 Aug 2011, 03:33:28

Ron Paul warns of dollar collapse.

http://www.youtube.com/watch?v=FHCkFPaePPQ
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Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Wed 03 Aug 2011, 22:15:52

Absolute must-read on why the dollar has been falling the past 10 years, and why a secular trend toward a falling dollar is likely to continue for some time.

And it has nothing to do with the Fed "printing money."

Dollar debasing and other short stories
To me, all of this suggests something else is at work — despite the power of the simple narrative. ... That something is structural. There are two tectonic forces at work ...

There is a global dollar overhang that is being unwound. This is not a result of the U.S. monetary policy of the past 10 years, but rather the legacy of the last 60 years when liquid wealth across the planet had only one currency choice: the U.S. dollar. In the wake of WWII, as global trade increased, global wealth grew, and precautionary financial buffers got fatter, the global demand for dollars soared. We are now witnessing the backside of that slope.

The decline of the dollar started in 2002 largely because this is when the paradigm shift in emerging markets began to take hold and people across the world began, slowly, to trust their home currencies. The financial deepening of foreign markets everywhere supported this process, as did the decline in transactional demand for the dollar (hotel bills in India and Brazil are now, for example, in local currency, not dollars).

But this phenomenon doesn’t stop there. Central banks are major part of this unwind, too. As other currencies became more trustworthy and alternatives became available, they realized it is sub-optimal to hold such a large percentage of their reserves in one currency. Many of them have been seduced by the cyclical story as well. So they are trying to bring their dollar holdings down to a level that that more accurately reflects their trade and financial exposures. And the faster the dollar goes down, the more frenetically they force the pace of unwind.

This stock adjustment will continue until a new equilibrium is found. The dollar is some 63% of global reserves, but the U.S. is now only 20% of global output. I am not suggesting that equilibrium is at 20%, but 40% doesn’t seem like an intellectual stretch. In any event, these statistics from the BIS (plus the flow dynamic of the feedback effect from heavy currency intervention in many EM countries) suggest the unwind of the global dollar overhang is far from over.

Maybe my "interesting calculation" link at the top of the page will come to fruition after all! :lol:
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Wed 03 Aug 2011, 22:22:35

Absolute must-read on why the dollar has been falling the past 10 years, and why a secular trend toward a falling dollar is likely to continue for some time.

And it has nothing to do with the Fed "printing money."


The US has been running trade deficits for decades now. So the dollar should have fallen a lot further. It makes no sense complaining about the falling dollar now. That's the correction for lopsided the consumer binge. The reason dollar didn't fall in the past was because exporting nations like China were buying large quantities of US treasury bonds. This kept their currency low and their goods cheap which helped to keep their employment high.
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Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Wed 03 Aug 2011, 22:32:22

For those who think a strong currency is necessarily a good thing, I hope you've been following the news out of Switzerland and Japan today.

>>> Swiss National Bank Cuts Rate to Curb ‘Overvalued’ Swiss Franc <<<
>>> Silent Scream of Swiss Franc Shows Great Distortion Amid Great Moderation <<<

And from Japan, in just the past couple hours:

>>> Yen slides after Japan intervenes to curb its rise <<<

A lot of nations would love to be in our shoes right now.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Wed 03 Aug 2011, 22:38:25


Holy crap!! 8O :shock:
In Zurich, home to UBS AG (UBSN) and Swiss Life Holding AG (SLHN), some restaurants are touting meals in euros to avoid losing money to tourists from euro-region countries. At Swiss Chuchi, meaning Swiss kitchen, located just off the river Limmat, the menu offers a cheese fondue for four for 126 francs ($165) or 97 euros ($139). The actual bill derived from the spot rate at 7 a.m. each day may show a different total.

Remind me not to go visiting Switzerland any time soon. :lol:
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Wed 03 Aug 2011, 22:46:54

Fed Policy Makers May Consider Additional Stimulus as U.S. Economy Slows
Federal Reserve policy makers may start weighing additional steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts.

Chairman Ben S. Bernanke said in congressional testimony in July that the Fed may take new action if the economy stalls, including beginning a third round of bond purchases. The central bank could also cut the interest rate it pays banks on excess reserves and pledge to hold its assets at a record high and interest rates at record lows for a longer period, he said.

Give me a "Q". Give me an "E". Give me a "3"! What's it spell? Hyperinflationary depression.
http://www.bloomberg.com/news/2011-08-0 ... slows.html
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Re: The Dollar Crash Thread pt 2

Unread postby Outcast_Searcher » Wed 03 Aug 2011, 22:57:43

OilFinder2 wrote:For those who think a strong currency is necessarily a good thing, I hope you've been following the news out of Switzerland and Japan today.

....

A lot of nations would love to be in our shoes right now.

OF2, unless I am missing something, the thoughtful (as opposed to the constantly fanatical or panic inducing) folks on this board aren't overly worried about relatively minor or gradual swings in the relative value of currencies to reflect various evolving differencies in various national or area economies.

That is all normal and natural and has been going on for as long as paper currencies have existed (and we have good records, etc).

The concern is about unsustainable debt loads, and using the printing presses to (eventually) create hyperinflation, thus DESTROYING paper currency(s), and thus COMPLETELY SCREWING OVER:

1). The economy using that currency.
2). The citizens who saved with that currency.
3). The investors who trusted a responsible stewardship of that currency, etc.

Perhaps I'm mistaken, but I think the "virtues" you're extolling of weak vs. strong currencies are based on SEVERAL ORDERS OF MAGNITUDE difference in the type of weakness the "currency vigilantes" are concerned about.

I believe much of the pricing of various commodities in recent years is based on just such currency concerns for things like gold, BTW.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Wed 03 Aug 2011, 23:09:41

O_S, the article I linked above would indicate that US debt loads have nothing to do with why the dollar has been declining. It is entirely because other nations are trusting their own currencies more, and because the US is becoming a relatively smaller portion of world GDP. This would all still be true even if the US were running budget surpluses.

I actually agree that very low interest rates (and a low dollar) have harmful effects on many segments of the economy and population, and if I had my druthers they'd be higher than they are now (and even for me the dollar has been getting a bit too low for my tastes - my personal "sweet spot" is to have DXY somewhere in the low 80's). However, there's no denying there are some advantages of a low and falling currency, so if the unwinding of 60-year-old mega-forces is condemning us to have a falling currency, there's little we can do about it, and we might as well shrug it off and take advantage of its advantages.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Wed 03 Aug 2011, 23:17:14

Do you own gold OF2?
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Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Thu 04 Aug 2011, 00:21:03

The whole idea that interest rates control the state of the economy is fallacious. High interest rates don't necessarily dissuade people from borrowing. People borrow money at 20% on their credit cards.
The other fallacy is that economy is some kind of a steady state equilibrium. It is just a system. The only reason people participate in the system is because they expect the system to grow. There is a reason nobody invests in africa. Nobody expects their system to grow. And you can only make a profit in the system if your contribution causes the system to grow. If your innovation does not cause the system to grow, you will not make squat, no matter how brilliant your innovation was.
The high private debt levels is the indication that individuals have made huge bets on the future growth of the system. And the deficits the government is running now is an indication that the system has stopped growing. If government deficits can keep the essential services up, that is the best thing to do. The system will not be saved if the starving poor people accept austerity. If it causes hyperinflation, that's simply the end of the system. You will have to issue a new currency and get a new system going.
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Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Thu 04 Aug 2011, 00:56:42

mattduke wrote:Do you own gold OF2?

I do not invest money in any equity, bond or commodity. The only "investment" I have is my 401K which is entirely in the Vanguard Balanced Index. Other than that, it's just not my style to earn money from anything other than my work income.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Thu 04 Aug 2011, 01:47:04

I do not invest money in any equity, bond or commodity. The only "investment" I have is my 401K which is entirely in the Vanguard Balanced Index. Other than that, it's just not my style to earn money from anything other than my work income.


I appreciate that. There are a lot of bloodsuckers out there who expect to get paid just for sitting on gold. And the god bugs(return to the gold standard) will reward them.
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Re: The Dollar Crash Thread pt 2

Unread postby americandream » Thu 04 Aug 2011, 02:06:02

OilFinder2 wrote:
mattduke wrote:Do you own gold OF2?

I do not invest money in any equity, bond or commodity. The only "investment" I have is my 401K which is entirely in the Vanguard Balanced Index. Other than that, it's just not my style to earn money from anything other than my work income.


I day trade for a living. It's a job like any job.
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