Comments on: Who Wins When the US Dollar Falls?

By: bsneath

bsneath — Mon, 07 Dec 2009 21:37:07 +0000

phb: I suppose you can call me a dollar capitulator. I honestly cannot think of another scenario where this economy will recover other than via a weak dollar; more exports and more domestic substitution for imports. If you can postulate a strong dollar scenario, I am all eyes.

I see our options as:

A. Either the dollar weakens now and forces the global economies to grow in a more balanced and orderly fashion, or

B. The dollar is artificially propped up for a period of time during which the imbalances become even greater and leading ultimately to a dollar collapse, or at a minimum an even weaker dollar than under Option A.

I believe our leaders and those around the world have resigned themselves to Option A. I suspect China will revalue once (and if) they feel confident they are out of the woods and generating sustained domestic demand and jobs.

By: phb

phb — Mon, 07 Dec 2009 20:29:48 +0000

bsneath – my mistake, I confused antagonizing style with dollar capitulation. Cheers!

By: CTB

CTB — Mon, 07 Dec 2009 20:13:05 +0000

b_thunder:

With currency pegged to the dollar, a weak dollar only further grows China’s export machine. Over-valuation of the yuan vs. the dollar has probably been sapping US employment for some time now.

By: bsneath

bsneath — Mon, 07 Dec 2009 20:10:45 +0000

phbs: Was just making a point in my customary antagonizing style.

By: gordon

gordon — Mon, 07 Dec 2009 19:56:46 +0000

The CNBC and financial media propaganda about 401Ks increasing is refuted because if you look at the MEDIAN 401K value, it’s around $35,000, but that isn’t all stocks. Americans live off wages,(as another poster said so well) not CAP GAINS, on Main Street, correct me if I’m wrong. Americans owning stocks is vastly overstated as a boost to the economy. Obama thinks it’s the tail wagging the dog also.

By: phb

phb — Mon, 07 Dec 2009 19:27:01 +0000

b_thunder: Correlation/causation – not always the same. Be careful throwing around notions.

By: phb

phb — Mon, 07 Dec 2009 19:24:38 +0000

bs-neath: It is information. What you choose to do with it is your call, but there is plenty to be done about managing your portfolio around the US greenback. To roll over and waive the the flag of surrender is not an educated response. Best wishes.

By: bsneath

bsneath — Mon, 07 Dec 2009 18:47:33 +0000

Let me suggest the question is somewhat irrelevant. The dollar will fall and there is little if any that can be done about it.

Perhaps we can manage the timing of its decline somewhat but the structural changes that are needed to remove the imbalances in our economy will dictate a decline in the dollar.

I suggest that there is no set of policies that Government or the Fed could undertake at this juncture that would counter act the inevitable decline of the dollar.

By: b_thunder

b_thunder — Mon, 07 Dec 2009 18:38:10 +0000

NYT forgot one of the largest (and imho the most important) category of losers: Us, The People.
More precisely, the vast majority of Americans draw vast majority of their income from wages, salaries, pensions and social security. They are workers first, investors distant second. They (we, I) are LOSERS. They may not be readers of this blog, but if they lose significant purchasing power, the investments of those who live off of investments will soon tank.

Another questionable “fact” that NYT presents is that the lower dollar leads to higher domestic employment. In the late 90s, as the US dollar strengthened, so did the employment. On the contrary, the economy created ZERO net new jobs during the 9 years of the “Bush-Obama Great Currency Debasement Experiment.” I’d guess 9 years is enough time to debase the notion that low dollar will lead to new job creation of any significant size.

P.S. Shame on NYT!

By: Adult Franklin411

Adult Franklin411 — Mon, 07 Dec 2009 18:13:57 +0000

Weak dollar/strong dollar is relative to other currencies and doesn’t necessarily impact a “closed system” between US domestic lenders and domestic borrowers. Strength of the dollar is relative to other currencies, not a function of inflation here.