The Federal Reserve's Explicit Goal: Devalue The Dollar 33%

[cheguevara]

Nope, not with you. You still think the US Dollar is this "limited" commodity. This very likely comes from the gold standard way of thinking. I really suggest you go read that book 2centsworth linked in the other thread.



It isn't. Not since the gold standard. As a matter of fact, that's a good reason not to go back to the gold standard.

check my post above. I give up on you

I understood you clearly since post 1. It's the same thing. This "new" currency would be backed by gold, and fluctuate very much the same way gold fluctuates. Since I know for a fact that you'll be converting progressively to the gold backed currency and you're going to need gold to do that, the obvious reaction is to go buy gold, since it's going to become more scarce (and thus more valuable) during your conversion process. At the same time, the market will saturate with old currency, and thus depreciate, reinforcing the demand for gold.

Newsflash, gold is already scarce and already being bought and sought after. Newsflash, a burst of the dollar bubble will exponentially increase the price of gold, even more so than a gradual conversion to gold standard.

[cheguevara]

The majority of Americans are not cognizant to the fact that the ‘strength’ of our current economy is founded on the dollar’s two pivotal advantages following the ’Bretton Woods Conferences’ of 1944-45. First is the dollars role as the world’s dominant international reserve currency, which affords the US market with its “safe harbor” international status. The second crucial factor is the dollar’s role as the fiat and sole currency for global oil transactions.

See there. Dollar has 2 main advantages. And one of them is the "dollar's role as sole currency for oil"

You take that 1 factor away, and poof goes the dollar.

So saying dollar is pegged to "it's role as sole currency for oil trade" is a fair statement IMO.

[Winehole23]

so you assume. seems doubtful to me. with Europe tanking the smart money will seek safer refuges -- such as the USA.

[ElNono]

check my post above. I give up on you

What you posted is in agreement with what I said. It's funny though you don't even understand what you quote

Newsflash, gold is already scarce and already being bought and sought after. Newsflash, a burst of the dollar bubble will exponentially increase the price of gold, even more so than a gradual conversion to gold standard.

what "dollar bubble"?

[cheguevara]

The euro was doomed from the beginning. The yen on the other hand, at least it will get a better shot at prime time.

[ElNono]

See there. Dollar has 2 main advantages. And one of them is the "dollar's role as sole currency for oil"

You take that 1 factor away, and poof goes the dollar.

So saying dollar is pegged to "it's role as sole currency for oil trade" is a fair statement IMO.

On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."

Bretton Woods system

[Winehole23]

The yen on the other hand, at least it will get a better shot at prime time.

why so, forex sensei?

[cheguevara]

On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."

Bretton Woods system

Reading comprehension

by "following the Bretton Woods" means AFTER

The majority of Americans are not cognizant to the fact that the ‘strength’ of our current economy is founded on the dollar’s two pivotal advantages following the ’Bretton Woods Conferences’ of 1944-45. First is the dollars role as the world’s dominant international reserve currency, which affords the US market with its “safe harbor” international status. The second crucial factor is the dollar’s role as the fiat and sole currency for global oil transactions.

[cheguevara]

why so, forex sensei?

my bad. I meant yuan:

The Yuan’s Road to Becoming a Reserve Currency
http://blogs.wsj.com/chinarealtime/2...erve-currency/

[ElNono]

Reading comprehension

you need to keep reading. The fact that the entire world decided to allow the US to be their trade accountant is the reason the value of the US dollar is basically locked up (asserting my point).

It's not just oil that's traded under those rules. Pretty much everything else is. And since 1971, countries can't take their dollars away from the Fed other than by buying US goods or services.

It's really a nice scam, but one countries agreed to when they put their money in the Fed. The quicker you stop thinking in gold standard (or home) equivalences, the faster you're going to understand how nice a scam they have set up for themselves.

[CosmicCowboy]

The link between oil and the dollar is fragile. China, Iran, Russia, etc. are all doing oil deals now that don't involve the dollar. It will just get worse and not better. Formalizing Iran not to be able to clear dollars for oil WILL drive them to other currencies sooner...They are still going to produce and sell oil...it just won't be for dollars.

[ElNono]

The problem with the Yuan is that it's value is artificially pegged to the US dollar in order to keep them compe ive, and so it needs to constantly absorb US dollars in their reserves to keep that going.

[Wild Cobra]

I don't care what it sounded like. Apparently, you're the only one complaining about it.

The $120/month is what your average Chinese employee makes today. It makes complete sense when you're discussing bringing back manufacturing to this country.

So that doesn't relate well to the market cost. Labor is typically a small percentage of a product price. So many items would be cheaper to make with the US cost of labor is our dollar was devalued. If it was worth ~70% of what it is now, imports would cost ~40% more. That should be more than enough to make up for labor cost differences in most cases.

[ElNono]

So that doesn't relate well to the market cost. Labor is typically a small percentage of a product price. So many items would be cheaper to make with the US cost of labor is our dollar was devalued. If it was worth ~70% of what it is now, imports would cost ~40% more. That should be more than enough to make up for labor cost differences in most cases.

Let me know when you move the goalposts back and want to talk again about bringing back manufacturing jobs.

[greyforest]

I'm not talking about starving them. I'm talking about reducing subsidies to the point they can't buy flat screen TVs, Bluray players, expensive Nike shoes, etc. Luxuries are for those who can afford them on their own.

Flat screen TVs are startlingly cheap, especially when inflation is taken in to consideration. Big screen TVs are not very luxurious now.

Health care, however, is luxuriously expensive. Raising middle class children is luxuriously expensive.

[TDMVPDPOY]

lowering the dollar, what happens if china wants you to pay in another currency...lol increasing ur debt obligation when conversion

[ElNono]

Flat screen TVs are startlingly cheap, especially when inflation is taken in to consideration. Big screen TVs are not very luxurious now.

Health care, however, is luxuriously expensive. Raising middle class children is luxuriously expensive.

His crusade is against the poor... or so he thinks...

[Winehole23]

On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."

Bretton Woods system

Students of economic history are in for a treat. An official studying deep in the bowels of the US Treasury library has recently uncovered a prize of truly startling proportions – an 800 page plus transcript of the Bretton Woods conference in July 1944, the meeting of nations which established the foundations of today's international monetary system.

Bizarrely, this extraordiary manuscript has never before come to light.

Professor Steve Hanke of John Hopkins University, whose former student it was who discovered the do ent, is now dashing to publish it in full in conjunction with his friend, Jacque de Larosiere. The first stage of the process, transcribing the type-written do ent into digital form is now complete, though it is not yet available. It's hoped eventually to produce a hard copy, book version.

http://blogs.telegraph.co.uk/finance...medium=twitter

[boutons_deux]

If the dollar drops really low, then imported products, esp oil, are cheaper, but exports get a huge boost.

If the policy is to inflate America out of its deficit (as was done after WWII), then all those blood-thirsty, other-peoples'-troops, suckered, flag-wavers who loved invading Iraq will finally start paying for the deficit caused by the war and by dubya's tax cuts for the wealthy and UCA.

[RandomGuy]

my bad. I meant yuan:

The Yuan’s Road to Becoming a Reserve Currency
http://blogs.wsj.com/chinarealtime/2...erve-currency/

That has got to be one of the most thinly argued bits I have read in a while.

It’s far behind on others: Its exchange rate doesn’t trade freely (as other reserve currencies do). China still maintains extensive capital controls, limiting the yuan’s trading in global markets. And the country still has “relatively shallow and underdeveloped” bond markets, the study says.

China will not become a reserve currency in my lifetime. (presumedly 20-40 years or so).

The barriers to China's currency assuming that role will not be surmounted by the current form of government, namely transparency in their financial markets.

The corruption and rot at the heart of their state form of capitalism is far worse than ours.

I will take all of that back the instant you can trust the balance sheets of the companies trading on their markets.

That won't happen quickly, and the forces preventing that are profiting far too much.

Erk. Now I sound like a conspiracy nut. Dammit.

(edit)

The Economist did a rather long article in just this subject.

[ElNono]

Dollar bubble!!!1!1

[cheguevara]

coming back with a response after a week

and with Nono piggybacking

[cheguevara]

since you were so kind to bump this thread...

Ron Paul: "Mr. Bernanke do you do your own shopping?... ok so you are aware of prices"

[cheguevara]

[boutons_deux]

What's Randian fantasist Paul's point?

And what specifically is policy alternative to what BB is doing now?