How low can U.S. dollar go?

[NoStateofMind]

Proof of a "bretton woods" and proof of some switch over?

Comparing US inflation to that of the Weimar, in gold, is one of the most ridiculous comparisons that I've ever seen. Do you even know anything about Weimar Germany or what precipitated the inflation?

Well the George Soros funded economic policy meeting in Bretton Woods was the closest you can come to that. As for some kind of "deal" thats BS. Soros himself said they have fallen farther apart since the G20 meeting.

 

[freegeeks]

I hope it goes even lower against the Euro, I have a USA trip in June - July
Despite all these problems with the PIGS in Europe, the dollar is at 1,46 which is insane, it should be the other way around!!!!! I guess a cheap dollar softens a bit the high oil prices but it is not good for our export!!!

 

[NoStateofMind]

LK - Isn't flooding the market with dollars a bad thing in the long run? Initially we may fuck up China but what does that mean for people who save their money? Shouldn't we be very careful about debasing our currency?

 

[LegendKiller]

LK - Isn't flooding the market with dollars a bad thing in the long run? Initially we may fuck up China but what does that mean for people who save their money? Shouldn't we be very careful about debasing our currency?

You're assuming they can't take some of the money back, they can and are already doing it on a limited basis through reverse repos.

What's worse in the long-term? Have China completely gut our manufacturing for the next 5-10 years so they can complete the transition to a consumer based economy on our dime, or go through a little pain now, cut them off at the knees, and force their hand?

Personally, I prefer that the Fed defend our country rather than let somebody rob us blind. This isn't just about manufacturing jobs, it's also about trillions in GDP and tax revenue.

 

[sdifox]

You're assuming they can't take some of the money back, they can and are already doing it on a limited basis through reverse repos.

What's worse in the long-term? Have China completely gut our manufacturing for the next 5-10 years so they can complete the transition to a consumer based economy on our dime, or go through a little pain now, cut them off at the knees, and force their hand?

Personally, I prefer that the Fed defend our country rather than let somebody rob us blind. This isn't just about manufacturing jobs, it's also about trillions in GDP and tax revenue.

Defend the US dollar with what? PRC has over 1 trillion US Dollars at hand. You pull back US Dollars, they release it.

Oh and Japan will be releasing quite a bit of US bills too since they have to pay for reconstruction.

 

[LegendKiller]

Defend the US dollar with what? PRC has over 1 trillion US Dollars at hand. You pull back US Dollars, they release it.

That's why they are making FCR irrelevant through QE. For every $1 USD the Fed buys in treasuries, ~8 Yuan need to be created to keep the peg in place. They are, effectively, hyperinflating the Chinese purposefully in order to force them off the peg.

You're still not getting it. Look at China's currency issuance. Then look at the "hot money" going into their economy. Then look at how liberal the Chinese bureaucrats that control the banks and manufacturing sector has been with credit. Then look at how big the NPLs are growing at Chinese banks. Then look into the ghost cities (not towns, but entire cities). Then realize that ~70% of Chinese GDP is real estate driven and almost all of that credit based.

That's because, in order to keep growing ahead of inflation, they must issue far more currency than we do on a relative basis. That's why they build cities, they can't build more manufacturing plants, nobody needs to buy more stuff and it'd depress prices. So they just mal-invest in things they absolutely don't need. It's going to crush them.

Also, look up what they did about 10 years ago to all of the NPLs in the PBOC and other Chinese banks ahead of IPOs. They effectively split the "Good bank" from the "bad bank", to the tune of ~$1TR USD through effectively SPVs. In other words, they pulled an Enron to prop up their balance sheets.

Many think they are continuing to do that because the NPLs are not raising as much as they should be with all of the credit flying around there.

This is the problem with a Command Economy, politicians will tell other politicians to "build" they build, regardless of whether it makes any sense. Why are so many people down on the USG being involved in the "free market" when there's really no free market in China at all?

Are their politicians that much better than ours?

What's worse is that the command economy politicians lie to each other. There's no regulatory body to look after them since they are the regulatory body. Thus nobody tells the truth. The Sovs saw this too with industrial and agricultural production, they all lied to each other.

I love how people bash the shit out of the US economy but love a far more corrupt, manipulated and over heated one. The hypocrisy is amazing.

 

[sdifox]

That's why they are making FCR irrelevant through QE. For every $1 USD the Fed buys in treasuries, ~8 Yuan need to be created to keep the peg in place. They are, effectively, hyperinflating the Chinese purposefully in order to force them off the peg.

You're still not getting it. Look at China's currency issuance. Then look at the "hot money" going into their economy. Then look at how liberal the Chinese bureaucrats that control the banks and manufacturing sector has been with credit. Then look at how big the NPLs are growing at Chinese banks. Then look into the ghost cities (not towns, but entire cities). Then realize that ~70% of Chinese GDP is real estate driven and almost all of that credit based.

That's because, in order to keep growing ahead of inflation, they must issue far more currency than we do on a relative basis. That's why they build cities, they can't build more manufacturing plants, nobody needs to buy more stuff and it'd depress prices. So they just mal-invest in things they absolutely don't need. It's going to crush them.

Also, look up what they did about 10 years ago to all of the NPLs in the PBOC and other Chinese banks ahead of IPOs. They effectively split the "Good bank" from the "bad bank", to the tune of ~$1TR USD through effectively SPVs. In other words, they pulled an Enron to prop up their balance sheets.

Many think they are continuing to do that because the NPLs are not raising as much as they should be with all of the credit flying around there.

This is the problem with a Command Economy, politicians will tell other politicians to "build" they build, regardless of whether it makes any sense. Why are so many people down on the USG being involved in the "free market" when there's really no free market in China at all?

Are their politicians that much better than ours?

What's worse is that the command economy politicians lie to each other. There's no regulatory body to look after them since they are the regulatory body. Thus nobody tells the truth. The Sovs saw this too with industrial and agricultural production, they all lied to each other.

I love how people bash the shit out of the US economy but love a far more corrupt, manipulated and over heated one. The hypocrisy is amazing.

Who said anything about liking the PRC? It's just what it is. Americans, at least the rich folks helped put the US in the current situation.

Shit, I am from Taiwan, I hate the PRC. But that has nothing to do with my evaluation of the situation.

QE2 was designed to stick it to PRC.

 

[NoStateofMind]

Is "QE2" short for purchasing our own debt? Not sure I understand. Although this is something I've found.

AP QE2 to end in June

Under QE2, the Fed buys Treasurys from investors who can then put the money in stocks and other investments. Economists call it quantitative easing, and it is the second time the Fed has used the tactic.

Correct me if I'm wrong. Quantitative Easing is buying Treasury's (Which is U.S. debt?) so they can invest that money somewhere else. Right?

 

[Gintaras]

Pickpocket for whom?

Do you know who is the biggest pickpocket in history? China.

They are using the currency peg to keep their manufacturing price low, chaining us to them, preventing us from leaving an abusive relationship. They are using the peg to bootstrap the Chinese economy up far faster than it would have with a floating currency. They aren't letting economics take its natural course, demand for Renminbi would make it appreciate as more goods are sold. However, instead, they keep it pegged to the dollar to make it flat to the dollar, screwing US manufacturers.

http://en.wikipedia.org/wiki/File:1_RMB_to_US_dollar.svg

See how artificial that is? Notice the timeframe? Just as they dropped the currency down is when Chinese manufacturing became attractive and prevalent.

How many jobs has this cost the US? How much GDP? How much tax receipts? Millions, trillions, trillions.

Pickpockets indeed!

Bernanke is forcing their hand. He is dropping the dollar so that for every dollar we produce they must produce 8-10 Yuan in order to keep the peg in place. This is flooding their domestic market with credit and cash, causing huge inflation, so much inflation that they face a dual decision, appreciate the Renminbi, unpeg the currency, or slow their economy drastically.

I wish Bernanke would employ QE3 and buy $2TR in treasuries. Watch how fast China drops then.


People like you suffer from such myopia regarding the true nature of whats going on.

LegendKiller post is full of s**t

In normal economics, every printed $ should be covered by goods produced...
As of today, US$ is actually has almost same value as dollar of Zimbabwe...
Difference is, that US$ is used for all transactions of oil. If this would be changed today, tomorrow you could use US$ as a wallpaper...Wonder, what for wars in Iraq, "threat from Iran", "unrest in northern Africa"?

Federal Reserve are biggest criminals today in the World(Bernie Maddoff vs. Federal Reserve - like a small pickpocketer) by printing $ bills not covered by produced goods. US
Euros are printed now almost at the same pace as dollars...

How money are "made":
http://www.youtube.com/watch?v=Dc3sKwwAaCU

Ever heard:

"If you buy @ Wallmart, money - US$ goes to China,
If you buy a car, money goes to Germany, Japan or South Korea,
If you buy fruits/vegetables, money goes to Honduras, Guatemala...etc...
If you want to keep money $ - in US, spend on prostitutes and beer - ONLY product(s) made in US..."

 

[Gintaras]

Hope it keeps going lower, fuck China.

How can you fuck someone else, if you can't fuck yourself?

And how you can even fuck China? Would you like to be left even without underwear? Who makes underwear you have on now?

 

[LegendKiller]

LegendKiller post is full of s**t

In normal economics, every printed $ should be covered by goods produced...
As of today, US$ is actually has almost same value as dollar of Zimbabwe...
Difference is, that US$ is used for all transactions of oil. If this would be changed today, tomorrow you could use US$ as a wallpaper...Wonder, what for wars in Iraq, "threat from Iran", "unrest in northern Africa"?

Federal Reserve are biggest criminals today in the World(Bernie Maddoff vs. Federal Reserve - like a small pickpocketer) by printing $ bills not covered by produced goods. US
Euros are printed now almost at the same pace as dollars...

How money are "made":
http://www.youtube.com/watch?v=Dc3sKwwAaCU

Ever heard:

"If you buy @ Wallmart, money - US$ goes to China,
If you buy a car, money goes to Germany, Japan or South Korea,
If you buy fruits/vegetables, money goes to Honduras, Guatemala...etc...
If you want to keep money $ - in US, spend on prostitutes and beer - ONLY product(s) made in US..."

Kid, please, this is a discussion among adults at a high level. We don't need YouTube videos or ridiculous notions of Zimbabwe situations.

I love how doofs, like above, continually post about Weimar or Zimbabwe but yet really have no grounding about how those situations occurred or how they actually worked. The hyperinflation in those two situations were political, not economical, decisions.

Tell me, on what basis is the Dollar comparable to Zimbabwe? Purchasing Power? At what starting point?

What about Purchasing Power Parity? What about long-term wages (real) keeping up with long-term inflation? Who gives a crap about Purchasing Power of a currency at one point, it is immaterial. Do you make 1930s dollars or 2011 dollars? Can your 2011 dollars buy the same type of goods that 1930s dollars could buy when you made them?

The answer is that your 2011 dollars can buy more than the 1930s dollars considering real wages have exceeded inflation over the long-run.

As far as "printing" money not covered by goods. Sure, they are covered by goods, US government goods and people (services). Further, treasuries can be sold to drain excess liquidity from the market, so your comparison is even more ridiculous, Weimar or Zimbabwe didn't have anything to sell or repo.

When you're saying somebody is full of shit, do us all a favor and look in the mirror.

 

[LegendKiller]

How can you fuck someone else, if you can't fuck yourself?

And how you can even fuck China? Would you like to be left even without underwear? Who makes underwear you have on now?

You don't think that somebody else would take up the slack, for example, a country that has a floating currency that will eventually reach equilibrium resulting from trade surpluses that would eventually increase one currency and decrease another, eliminating benefits from FX differentials of currencies in production benefits?

This is the point people don't seem to get. The only reason why the Chinese keep purchasing Treasuries is because they HAVE to accumulate US assets. They have dollars from artificial trade surpluses driven almost exclusively by the peg that they must have to do something with. THey can't dump the dollars, otherwise the USD would decline and they would have massive inflation. They can't buy US hard assets, otherwise that would prop up our assets, driving the economy, then they'd run into the Japan scenario (increasing US economy, increasing Yen driving down USD assets, resulting in massive losses). Thus, in order to keep the peg in place they just accumulate Treasuries.

They are hostages to their own economy. There is *NO* other trading "partner" with this situation. So things would equalize in the FX market.

 

[Spikesoldier]

Kid, please, this is a discussion among adults at a high level. We don't need YouTube videos or ridiculous notions of Zimbabwe situations.

I love how doofs, like above, continually post about Weimar or Zimbabwe but yet really have no grounding about how those situations occurred or how they actually worked. The hyperinflation in those two situations were political, not economical, decisions.

Tell me, on what basis is the Dollar comparable to Zimbabwe? Purchasing Power? At what starting point?

What about Purchasing Power Parity? What about long-term wages (real) keeping up with long-term inflation? Who gives a crap about Purchasing Power of a currency at one point, it is immaterial. Do you make 1930s dollars or 2011 dollars? Can your 2011 dollars buy the same type of goods that 1930s dollars could buy when you made them?

The answer is that your 2011 dollars can buy more than the 1930s dollars considering real wages have exceeded inflation over the long-run.

As far as "printing" money not covered by goods. Sure, they are covered by goods, US government goods and people (services). Further, treasuries can be sold to drain excess liquidity from the market, so your comparison is even more ridiculous, Weimar or Zimbabwe didn't have anything to sell or repo.

When you're saying somebody is full of shit, do us all a favor and look in the mirror.

pwned.

good discussion until someone ruined it.

ive always wondered the reasoning behind the RMB to USD peg and legend has done a good job explaining it.

 

[FoBoT]

LK - Isn't flooding the market with dollars a bad thing in the long run? Initially we may fuck up China but what does that mean for people who save their money? Shouldn't we be very careful about debasing our currency?

its only bad if you have savings. like most of our parents. their 401k are being devalued despite the DOW being all high and mighty

people who are broke (on govt foodstamps/welfare/unemployment for example) , no problem for them, they don't have any dollars and are 'entitled' to the new QE2 dollars hot off Bernanke's press

spend your money NOW ,before it is worthless

 

[FoBoT]

Proof of a "bretton woods" ...

it wasn't a secret
http://www.washingtonpost.com/busin...-bretton-woods/2011/04/12/AFzsHtSD_story.html

 

[FoBoT]

What's worse is that the command economy politicians lie to each other. There's no regulatory body to look after them since they are the regulatory body. Thus nobody tells the truth. The Sovs saw this too with industrial and agricultural production, they all lied to each other.

there is a lot of lying going on from the US govt
they say "what inflation?", no you can't count that 'volatile' food and energy, we'll pretend that didn't go up, lalalalallalla

govt officials tried to suppress the S&P outlook downgrade, no, the US govt isn't into lying to the people either

 

[FoBoT]

Correct me if I'm wrong. Quantitative Easing is buying Treasury's (Which is U.S. debt?) so they can invest that money somewhere else. Right?

it means the Federal Reserve is buying US Treasury debt. with what you might ask? yes, with what is the question. you can't audit the Fed, do they have any 'real money'? i dunno
if you buy a T-bill with nothing, what do you call that?

 

[FoBoT]

The hyperinflation in those two situations were political, not economical, decisions.

i rest my case
or are you going to say there are no 'political decisions' driving QE? oh wait, you already said that in your posts

you can call me an idiot if you want. i know i don't know much, but i know i don't trust either side. as far as i can tell, 'they' are all in on what is going on, there are people all over the globe getting in on this deal and none of them are 'poor' or middle class. U.S. politicians in both democrat and republican party are clearly on board with what is happening

i have trouble not believing that this is about switching the whole world to single currency and putting the Oligarchs in overt control , so they can quit hiding in the shadows

 

[FoBoT]

Further, treasuries can be sold to drain excess liquidity from the market, so your comparison is even more ridiculous,

what if there is no one buying treasuries? the dollar is worth less. we have $75 trillion in unfunded liability
PIMCO not only sold all his treasuries, he is shorting them. is his plan to start buying them up from the FED later? does that make sense?

"If I were sitting before Congress," Gross recently remarked, "and giving testimony on our current debt crisis, I would pithily say something like this: 'I sit before you as a representative of a $1.2 trillion money manager, historically bond oriented, that has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden. Unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies – inflation, currency devaluation and low to negative real interest rates.'"

can explain why the guy running the $1.2 trillion fund is wrong and is about to get fired for losing a crap load of money

 

[iGas]

Hope it keeps going lower, fuck China.

You might not want to wish that.

It could mean that the Chinese can buy up more companies and properties in the US, and turn those that said "fuck China" into their slaves.

 

[Sea Moose]

I am loving ordering stuff from the Usa right now

i bought a multi meter for 150 from the us. Local Australian suppliers trying to hock the same meter for 400. THey can go fudge their pants

 

[NoStateofMind]

it means the Federal Reserve is buying US Treasury debt. with what you might ask? yes, with what is the question. you can't audit the Fed, do they have any 'real money'? i dunno
if you buy a T-bill with nothing, what do you call that?

So QE2 is just a fancy term for monetizing the debt?

 

[LegendKiller]

its only bad if you have savings. like most of our parents. their 401k are being devalued despite the DOW being all high and mighty

people who are broke (on govt foodstamps/welfare/unemployment for example) , no problem for them, they don't have any dollars and are 'entitled' to the new QE2 dollars hot off Bernanke's press

spend your money NOW ,before it is worthless

Long-term stock prices have far exceeded inflation and any other asset class out there. That's because most companies can pass on inflation to consumers, especially with demand inelastic goods.

People aren't "broke", some are on government help, but this country is not destitute.

Money being worthless? Hardly. I doubt it'll happen in our lifetime. You know, Warren Buffet's father and uncle said the same thing back in the 1930s when we went through some troubles and racked up more debt. His uncle went as far as to buy a farm in the country and his father stashed wheat, flour and sugar in the attic "just in case".

 

[LegendKiller]

it wasn't a secret
http://www.washingtonpost.com/busin...-bretton-woods/2011/04/12/AFzsHtSD_story.html

New currency regime not found. Want to bet on it?

 

[Schadenfroh]

We are inflating our debt away, while improving our export numbers. The inflation is intentional.