War is linked to Euro vs Dollar?

[charrison]

Originally posted by: freegeeks

After you take a basic economy class, please re-evaluate your position.

Funny, there are multiple links here to backup the claim that using the euro in the oil trade would be devastating for the dollar (and US economy) and your only argument is -- Not true because .......well, ..... , because I said so.

did you won the Nobel prize for economy or something???

The only one who has no credibility in this discussion is you Charrison.

Actually someone posted a good link in this thread which backed up what I said. What I have said has been backed up by a credible economist, not a conspiracy theorist.

 

[alexruiz]

Originally posted by: charrison

Originally posted by: alexruiz

Originally posted by: charrisonThis argument about this this war being about the Euro is simply stupid.

I asked for it before, and I will repeat it.... bring NUMBERS, otherwise your points are hollow. Bring also some rules of economy.

You seem to think that just because a country spends more, its economy should be better..... given that logic, you could think that is would be impossible for a company like Microsoft (annual sales of aprox 28,000 millions) to take over a company like General Motors (annual sales of aprox 186,000 millions)......

After you take a basic economy class, please re-evaluate your position.

*cough* *cough* MBA degree here ....

How about you???


Well, you are "suggesting" that I don't know those rules, so please tell EXACTLY what rules I am violating in my assumptions. Numbers sir!! I already answered to your link posted in a different thread.

Alex

 

[alexruiz]

Originally posted by: rahvin

Why did you dredge up this dead thread? ChicagoMaroon provided a couple nice points on why this thread is waist deep. Dollars and Euro's are valued on the international markets. The value of the dollar goes down and US products become cheaper on international markets. Cheaper US products lead to increased consumption of those products and growth of the american economy. Growth of the US economy leads to a higher GDP and stronger financial position and will increase the value of the dollar on the open market.

You people act like if they start using Euro's for international transactions that suddenly the dollar won't be accepted. The fallacy of that arguement is stagaring.

Well, I don't even know how to start the reply here..... you give a very broad concept without going into NUMBERS.

I said many times that the key here is the commercial balance. A weaker dollar will bring down the cost of things made in the USA IF and ONLY IF the transaction is done in a stronger currency. If your trade remains in dollars, there is no effect. However, if the other nations wants to trade using EUROS, then the exchange rate starts to play. A weaker dollar compared to the EURO means your euros can buy more things in the USA...... BUT, there are several BIG BIG problems here:

1) To take advantage of the devaluated dollar, your commercial balance MUST be positive (selling more than you buy, trading in stronger EUROS, therefore more dollars for the euros....) Right now, guess what is the country with the largest commercial deficit......

2) In order to reverse the role of being the largest importer and become a strong exporter, other countries MUST want what you sell. To make it an attractive purchase, it needs to be cheaper, made with better quality or cover very specific segments of target markets (needs or people).

3) The largest trading partners of the USA are Canada, Mexico, Japan and China. The USA has trade deficit with ALL of them. In order to reverse the trend of the deficit, it is not as easy as saying "USA products are cheaper on international markets" Cheaper than what??? Cheaper than they used to be before?? or cheaper than COMPARABLE products from other countries??? Cheaper than they used to be before, sure! Cheaper than the competition, well, maybe not.

4) A bigger GDP doesn't always mean a stronger currency (hint, compare Japan and Germany..... Japan has a larger GDP, but there is no way you can tell me that the yen is stronger than the euro, or even the former Mark.... do you??) There are many more factors associated to the exchange rate, being the most important the perceived demand for the currency. The perceived robustness of a country is also important (inflation, exployment rates, productivity, commercial balance, security and stability, ) When a country keeps buying more than what it sells, there is no way its currency will appreciate

5) In order to make those products cheaper, it is usually required not only a change in exchange rate, but also in PRODUCTIVITY. If you haven't visited a plant in the USA that employs union workers, please do so...... the visit will be very didactic.


I insist, the commercial balance is KEY here..... and the only way to change it is with COMPETITIVE ADVANTAGE (try to read what Michael Porter, a very respectable source from Harvard graduate school of business has to say.....)

Alex

 

[rahvin]

Originally posted by: alexruiz

Originally posted by: rahvin

Why did you dredge up this dead thread? ChicagoMaroon provided a couple nice points on why this thread is waist deep. Dollars and Euro's are valued on the international markets. The value of the dollar goes down and US products become cheaper on international markets. Cheaper US products lead to increased consumption of those products and growth of the american economy. Growth of the US economy leads to a higher GDP and stronger financial position and will increase the value of the dollar on the open market.

You people act like if they start using Euro's for international transactions that suddenly the dollar won't be accepted. The fallacy of that arguement is stagaring.

Well, I don't even know how to start the reply here..... you give a very broad concept without going into NUMBERS.

I said many times that the key here is the commercial balance. A weaker dollar will bring down the cost of things made in the USA IF and ONLY IF the transaction is done in a stronger currency. If your trade remains in dollars, there is no effect. However, if the other nations wants to trade using EUROS, then the exchange rate starts to play. A weaker dollar compared to the EURO means your euros can buy more things in the USA...... BUT, there are several BIG BIG problems here:

1) To take advantage of the devaluated dollar, your commercial balance MUST be positive (selling more than you buy, trading in stronger EUROS, therefore more dollars for the euros....) Right now, guess what is the country with the largest commercial deficit......

2) In order to reverse the role of being the largest importer and become a strong exporter, other countries MUST want what you sell. To make it an attractive purchase, it needs to be cheaper, made with better quality or cover very specific segments of target markets (needs or people).

3) The largest trading partners of the USA are Canada, Mexico, Japan and China. The USA has trade deficit with ALL of them. In order to reverse the trend of the deficit, it is not as easy as saying "USA products are cheaper on international markets" Cheaper than what??? Cheaper than they used to be before?? or cheaper than COMPARABLE products from other countries??? Cheaper than they used to be before, sure! Cheaper than the competition, well, maybe not.

4) A bigger GDP doesn't always mean a stronger currency (hint, compare Japan and Germany..... Japan has a larger GDP, but there is no way you can tell me that the yen is stronger than the euro, or even the former Mark.... do you??) There are many more factors associated to the exchange rate, being the most important the perceived demand for the currency. The perceived robustness of a country is also important (inflation, exployment rates, productivity, commercial balance, security and stability, ) When a country keeps buying more than what it sells, there is no way its currency will appreciate

5) In order to make those products cheaper, it is usually required not only a change in exchange rate, but also in PRODUCTIVITY. If you haven't visited a plant in the USA that employs union workers, please do so...... the visit will be very didactic.


I insist, the commercial balance is KEY here..... and the only way to change it is with COMPETITIVE ADVANTAGE (try to read what Michael Porter, a very respectable source from Harvard graduate school of business has to say.....)

Alex

You want numbers? Lets talk numbers because you didn't.

The US wishes to purchase 300 Bushels of Wheat from France. Being that money is valued on nothing more than the paper it's printed on how does the US purchase 300 bushels of Wheat from france when france doesn't use the money that the US does? Lets say for example that the French want 30euro's for their Bushels of wheat. Lets say the US goes onto the open market and decides to purchase 30 euro's to buy the wheat with, lets say England offers to sell the US 30 euro's for 30 dollars. Then England takes the 30 dollars purchases 30dollars worth of cabbage from the US and sells that cabbage in Europe for 35euros. What is the problem with the scenario as I just described?

The simple answer is that if the cabbage has a value of 35euro's the US would have sold it for 35euros themselves and then used the 35euro's to purchase other hard goods. You can talk till you are blue in the face about how you need a competative advantage to value the dollar higher and the simple fact is the open market determines the value of the dollar. The hard good exchanged are what value the dollar. This completely neglects the fact that trade deficiet calculations are complete and utter garbage and don't reflect real world flows of money in the least.

The chicken littles in this thread believe that by moving world trade to the Euro that magically overnight no one would accept dollars. That by not being used in every transaction would harm our economy. The first question to ask would be how much harm to the Europeans suffer because world trade is done in dollars? The answer is none. The currency used in the exchange of hard goods is irrelevant to the value of the currency. GDP and it's growth is the single greatest value of a currency and the US leads in both catagories. The europeans can hope in their wettest dreams to have GDP growth like the US experiences.

 

[alexruiz]

Originally posted by: rahvin

You want numbers? Lets talk numbers because you didn't.

The US wishes to purchase 300 Bushels of Wheat from France. Being that money is valued on nothing more than the paper it's printed on how does the US purchase 300 bushels of Wheat from france when france doesn't use the money that the US does? Lets say for example that the French want 30euro's for their Bushels of wheat. Lets say the US goes onto the open market and decides to purchase 30 euro's to buy the wheat with, lets say England offers to sell the US 30 euro's for 30 dollars. Then England takes the 30 dollars purchases 30dollars worth of cabbage from the US and sells that cabbage in Europe for 35euros. What is the problem with the scenario as I just described?

The simple answer is that if the cabbage has a value of 35euro's the US would have sold it for 35euros themselves and then used the 35euro's to purchase other hard goods. You can talk till you are blue in the face about how you need a competative advantage to value the dollar higher and the simple fact is the open market determines the value of the dollar. The hard good exchanged are what value the dollar. This completely neglects the fact that trade deficiet calculations are complete and utter garbage and don't reflect real world flows of money in the least.

The chicken littles in this thread believe that by moving world trade to the Euro that magically overnight no one would accept dollars. That by not being used in every transaction would harm our economy. The first question to ask would be how much harm to the Europeans suffer because world trade is done in dollars? The answer is none. The currency used in the exchange of hard goods is irrelevant to the value of the currency. GDP and it's growth is the single greatest value of a currency and the US leads in both catagories. The europeans can hope in their wettest dreams to have GDP growth like the US experiences.

I took all the previous quotes out to allow for readability.

Your example is extremely oversimplistic..... it surely can work in fantasyland, but not in the real world.

1) You don't need the competitive advantage to value your currency higher, you need it to shift the commercial trade balance into your favor.

2) Again, if GDP is the most important indicator to determine the relative strenght of a currency, how could you explain the historical dominance the British pound had over the dollar???

3) "The currency used in the exchange of hard good is irrelevant to the value of the currency...."
False, because DEMAND for a currency appreciates it.

4) Europe can in fact benefit from a strong dollar.... if their commercial balance is POSITIVE and the trade is done in dollars.

My whole point is that if your commercial balance is deeply in the hole, a strong currency is key to keep the country economy afloat. If the comercial balance is negative, and the currency is weak, the country gets deeper and deeper into debt.... and you are skipping this part.

 

[rahvin]

Originally posted by: alexruiz

Originally posted by: rahvin

You want numbers? Lets talk numbers because you didn't.

The US wishes to purchase 300 Bushels of Wheat from France. Being that money is valued on nothing more than the paper it's printed on how does the US purchase 300 bushels of Wheat from france when france doesn't use the money that the US does? Lets say for example that the French want 30euro's for their Bushels of wheat. Lets say the US goes onto the open market and decides to purchase 30 euro's to buy the wheat with, lets say England offers to sell the US 30 euro's for 30 dollars. Then England takes the 30 dollars purchases 30dollars worth of cabbage from the US and sells that cabbage in Europe for 35euros. What is the problem with the scenario as I just described?

The simple answer is that if the cabbage has a value of 35euro's the US would have sold it for 35euros themselves and then used the 35euro's to purchase other hard goods. You can talk till you are blue in the face about how you need a competative advantage to value the dollar higher and the simple fact is the open market determines the value of the dollar. The hard good exchanged are what value the dollar. This completely neglects the fact that trade deficiet calculations are complete and utter garbage and don't reflect real world flows of money in the least.

The chicken littles in this thread believe that by moving world trade to the Euro that magically overnight no one would accept dollars. That by not being used in every transaction would harm our economy. The first question to ask would be how much harm to the Europeans suffer because world trade is done in dollars? The answer is none. The currency used in the exchange of hard goods is irrelevant to the value of the currency. GDP and it's growth is the single greatest value of a currency and the US leads in both catagories. The europeans can hope in their wettest dreams to have GDP growth like the US experiences.

I took all the previous quotes out to allow for readability.

Your example is extremely oversimplistic..... it surely can work in fantasyland, but not in the real world.

1) You don't need the competitive advantage to value your currency higher, you need it to shift the commercial trade balance into your favor.

2) Again, if GDP is the most important indicator to determine the relative strenght of a currency, how could you explain the historical dominance the British pound had over the dollar???

3) "The currency used in the exchange of hard good is irrelevant to the value of the currency...."
False, because DEMAND for a currency appreciates it.

4) Europe can in fact benefit from a strong dollar.... if their commercial balance is POSITIVE and the trade is done in dollars.

My whole point is that if your commercial balance is deeply in the hole, a strong currency is key to keep the country economy afloat. If the comercial balance is negative, and the currency is weak, the country gets deeper and deeper into debt.... and you are skipping this part.

Your whole premise is based on a "commerical unbalance" which I believe you are describing this as a trade deficet (correct me if I'm wrong). The problem with that is there is no trade deficet. The way it is calculated fails to take into account services and intellectual property.

 

[Zebo]

Alex, I think we are headed for a timebomb over here. Need a roomate? If for any second housing slows I think the US economy will collapse.

Take a shot, I have far far more questions than I have answers

 

[sandorski]

Rahvin: I've pointed this out before, but I'll say it again(see previous links for verification):

1) The US economy is in a Trade Deficit of $500 Billion/year. This means that $500 Billion leaves the US/year. Normally this would cause a severe de-evaluation of a currency.
2) The $US remains strong due to the Demand of it as an International Trade Currency. If the $US ceases to be demanded as a Trade Currency, the value of the $US will lessen(severely).
3) If the $US loses value, Inflation will increase, for it will take more $US to purchase imported items. Some Imports are producd Domestically(Autos being one major product), so they would benefit, but many items are not, such as Oil(at least in sufficient quantities).
4) Before the $US would stabilize, the Trade Deficit would have to reach $0. A $500 Billion combination of decreased spending or increased Exports. Whatever the numbers of this change is, it will(would) have a severe effect on the economy.
5) All the above assumes a reasonable scenario where the value of the $US declines at a gradual rate. If the change were to be sudden, the value of the $US could plummet for below what it should, investors are a fickle bunch.

 

[rahvin]

Originally posted by: sandorski
Rahvin: I've pointed this out before, but I'll say it again(see previous links for verification):

1) The US economy is in a Trade Deficit of $500 Billion/year. This means that $500 Billion leaves the US/year. Normally this would cause a severe de-evaluation of a currency.
2) The $US remains strong due to the Demand of it as an International Trade Currency. If the $US ceases to be demanded as a Trade Currency, the value of the $US will lessen(severely).
3) If the $US loses value, Inflation will increase, for it will take more $US to purchase imported items. Some Imports are producd Domestically(Autos being one major product), so they would benefit, but many items are not, such as Oil(at least in sufficient quantities).
4) Before the $US would stabilize, the Trade Deficit would have to reach $0. A $500 Billion combination of decreased spending or increased Exports. Whatever the numbers of this change is, it will(would) have a severe effect on the economy.
5) All the above assumes a reasonable scenario where the value of the $US declines at a gradual rate. If the change were to be sudden, the value of the $US could plummet for below what it should, investors are a fickle bunch.

Number one is a complete and utter fallacy. Without it all your other points are meaningless.

 

[charrison]

Originally posted by: alexruiz

Originally posted by: rahvin

Why did you dredge up this dead thread? ChicagoMaroon provided a couple nice points on why this thread is waist deep. Dollars and Euro's are valued on the international markets. The value of the dollar goes down and US products become cheaper on international markets. Cheaper US products lead to increased consumption of those products and growth of the american economy. Growth of the US economy leads to a higher GDP and stronger financial position and will increase the value of the dollar on the open market.

You people act like if they start using Euro's for international transactions that suddenly the dollar won't be accepted. The fallacy of that arguement is stagaring.

Well, I don't even know how to start the reply here..... you give a very broad concept without going into NUMBERS.

I said many times that the key here is the commercial balance. A weaker dollar will bring down the cost of things made in the USA IF and ONLY IF the transaction is done in a stronger currency. If your trade remains in dollars, there is no effect. However, if the other nations wants to trade using EUROS, then the exchange rate starts to play. A weaker dollar compared to the EURO means your euros can buy more things in the USA...... BUT, there are several BIG BIG problems here:

1) To take advantage of the devaluated dollar, your commercial balance MUST be positive (selling more than you buy, trading in stronger EUROS, therefore more dollars for the euros....) Right now, guess what is the country with the largest commercial deficit......

2) In order to reverse the role of being the largest importer and become a strong exporter, other countries MUST want what you sell. To make it an attractive purchase, it needs to be cheaper, made with better quality or cover very specific segments of target markets (needs or people).
This is part of the picture. It is not only a matter of want, it also has to be a matter of afford as well. Since the per capita earnings in the US is higher than most of the world, higher quality products or luxury items may not be exportable.




3) The largest trading partners of the USA are Canada, Mexico, Japan and China. The USA has trade deficit with ALL of them. In order to reverse the trend of the deficit, it is not as easy as saying "USA products are cheaper on international markets" Cheaper than what??? Cheaper than they used to be before?? or cheaper than COMPARABLE products from other countries??? Cheaper than they used to be before, sure! Cheaper than the competition, well, maybe not.

Can most US citizens afford to by products from Canada, Mexico, Japan and China?Yes.
Can most citizens of Mexico afford US products? no.
Can most citizens of China afford US products? no.
Can the US export untrained labor positions to the above countries and take advantages of lower labor cost? Yes.
Exporting untrained makes us more productive by putting our better trained and educated work force in more productive positions.

Once again, there is no clear simple answer.
[/b]


4) A bigger GDP doesn't always mean a stronger currency (hint, compare Japan and Germany..... Japan has a larger GDP, but there is no way you can tell me that the yen is stronger than the euro, or even the former Mark.... do you??) There are many more factors associated to the exchange rate, being the most important the perceived demand for the currency. The perceived robustness of a country is also important (inflation, exployment rates, productivity, commercial balance, security and stability, ) When a country keeps buying more than what it sells, there is no way its currency will appreciate


So you admit that the strength of a currency has a factor other than its ability buy oil?


5) In order to make those products cheaper, it is usually required not only a change in exchange rate, but also in PRODUCTIVITY. If you haven't visited a plant in the USA that employs union workers, please do so...... the visit will be very didactic.


I will not defend unions, but a lazy overpaid union worker could have higher productivity than their low paid foreign counterparts because of training and equipment.

 

[sandorski]

Originally posted by: rahvin

Originally posted by: sandorski
Rahvin: I've pointed this out before, but I'll say it again(see previous links for verification):

1) The US economy is in a Trade Deficit of $500 Billion/year. This means that $500 Billion leaves the US/year. Normally this would cause a severe de-evaluation of a currency.
2) The $US remains strong due to the Demand of it as an International Trade Currency. If the $US ceases to be demanded as a Trade Currency, the value of the $US will lessen(severely).
3) If the $US loses value, Inflation will increase, for it will take more $US to purchase imported items. Some Imports are producd Domestically(Autos being one major product), so they would benefit, but many items are not, such as Oil(at least in sufficient quantities).
4) Before the $US would stabilize, the Trade Deficit would have to reach $0. A $500 Billion combination of decreased spending or increased Exports. Whatever the numbers of this change is, it will(would) have a severe effect on the economy.
5) All the above assumes a reasonable scenario where the value of the $US declines at a gradual rate. If the change were to be sudden, the value of the $US could plummet for below what it should, investors are a fickle bunch.

Number one is a complete and utter fallacy. Without it all your other points are meaningless.

What's the "correct" figure then?

 

[EXman]

I thought this theory was shot down last week or so. Sounds very far fetched.

 

[charrison]

Originally posted by: EXman
I thought this theory was shot down last week or so. Sounds very far fetched.

Yes, finding a billion in US $100 bills in Iraq is not helping the argument at all either.

 

[sandorski]

Originally posted by: charrison

Originally posted by: EXman
I thought this theory was shot down last week or so. Sounds very far fetched.

Yes, finding a billion in US $100 bills in Iraq is not helping the argument at all either.

What does that have to do with anything?

 

[rahvin]

Originally posted by: sandorski

Originally posted by: rahvin

Originally posted by: sandorski
Rahvin: I've pointed this out before, but I'll say it again(see previous links for verification):

1) The US economy is in a Trade Deficit of $500 Billion/year. This means that $500 Billion leaves the US/year. Normally this would cause a severe de-evaluation of a currency.
2) The $US remains strong due to the Demand of it as an International Trade Currency. If the $US ceases to be demanded as a Trade Currency, the value of the $US will lessen(severely).
3) If the $US loses value, Inflation will increase, for it will take more $US to purchase imported items. Some Imports are producd Domestically(Autos being one major product), so they would benefit, but many items are not, such as Oil(at least in sufficient quantities).
4) Before the $US would stabilize, the Trade Deficit would have to reach $0. A $500 Billion combination of decreased spending or increased Exports. Whatever the numbers of this change is, it will(would) have a severe effect on the economy.
5) All the above assumes a reasonable scenario where the value of the $US declines at a gradual rate. If the change were to be sudden, the value of the $US could plummet for below what it should, investors are a fickle bunch.

Number one is a complete and utter fallacy. Without it all your other points are meaningless.

What's the "correct" figure then?

I don't know what the correct figure is. The problem with the "trade deficit" is that it's calculation only includes hard goods. It does NOT include services, it does not value intellectual property. When the US exports billions in software and music to foreign companies it isn't valued because it doesn't leave on a ship in a cargo container. If the US truely was exporting the 200+billion, that the trade deficit says we have, for the last 20 years we wouldn't have an economy left yet we are still the largest economy in the world.

 

[freegeeks]

I don't know what the correct figure is. The problem with the "trade deficit" is that it's calculation only includes hard goods. It does NOT include services, it does not value intellectual property. When the US exports billions in software and music to foreign companies it isn't valued because it doesn't leave on a ship in a cargo container. If the US truely was exporting the 200+billion, that the trade deficit says we have, for the last 20 years we wouldn't have an economy left yet we are still the largest economy in the world.

I don't think so

 

[rahvin]

Originally posted by: freegeeks

I don't know what the correct figure is. The problem with the "trade deficit" is that it's calculation only includes hard goods. It does NOT include services, it does not value intellectual property. When the US exports billions in software and music to foreign companies it isn't valued because it doesn't leave on a ship in a cargo container. If the US truely was exporting the 200+billion, that the trade deficit says we have, for the last 20 years we wouldn't have an economy left yet we are still the largest economy in the world.

I don't think so

That's because you don't think. US intellectual property exports are rarely counted at true value. Software and CD exports are often valued at the cost of the material that makes up the production of the disks and not the value of the IP itself. Here is an article from someone that is much smarter than you that explains why the "trade deficit" doesn't matter.

http://www.fool.com/Specials/2001/Specials06082001sprb.htm?source=EDSTRB

 

[sandorski]

Originally posted by: rahvin

Originally posted by: freegeeks

I don't know what the correct figure is. The problem with the "trade deficit" is that it's calculation only includes hard goods. It does NOT include services, it does not value intellectual property. When the US exports billions in software and music to foreign companies it isn't valued because it doesn't leave on a ship in a cargo container. If the US truely was exporting the 200+billion, that the trade deficit says we have, for the last 20 years we wouldn't have an economy left yet we are still the largest economy in the world.

I don't think so

That's because you don't think. US intellectual property exports are rarely counted at true value. Software and CD exports are often valued at the cost of the material that makes up the production of the disks and not the value of the IP itself. Here is an article from someone that is much smarter than you that explains why the "trade deficit" doesn't matter.

http://www.fool.com/Specials/2001/Specials06082001sprb.htm?source=EDSTRB

I think you linked to the wrong article, the link seems to support the arguement you are against.

 

[Trevelyan]

Originally posted by: rahvin

Originally posted by: freegeeks

I don't know what the correct figure is. The problem with the "trade deficit" is that it's calculation only includes hard goods. It does NOT include services, it does not value intellectual property. When the US exports billions in software and music to foreign companies it isn't valued because it doesn't leave on a ship in a cargo container. If the US truely was exporting the 200+billion, that the trade deficit says we have, for the last 20 years we wouldn't have an economy left yet we are still the largest economy in the world.

I don't think so

That's because you don't think......

Bahahahahaha! That was hilarious...

 

[Brie]

Originally posted by: ChicagoMaroon
Yawn, anyone who uses indymedia.org as a source is not credible. Like if a conversative used rushlimbaugh.com to support his arguments.

I wrote my BA thesis on the euro/EMU/ECB, and modeled the effect on the separate euro economies of various price shocks. I skeptical of the long-term viability of the euro given that its two largest members, France and Germany, have structurally distinct economies that are governed by one monetary policy. Suicide pact, if you ask me.

For example, there are various economic situations that will cause inflation in France, but not in Germany. What's the ECB to do in that case? If it tightens the money supply and raises rates to stem inflation in France, Germany's economy is strangled. The English rightly so have grave reservations about joining the euro suicide pact.

In short, the dollar is and will be the de facto currency of the world. The euro is essentially the German d-mark in disguise, and Germany may find it will want to shed that disguise someday.

Good Point Chicago,
Not wanting this to turn into a tax cut debate, I also wonder what effect the Bush tax cut will have on the situation? Wouldnt letting americans have all of this disposable income only increase our problems relating to the euro and oil by increasing spending by an already weak dollar??

In addition, I think that the Fool.com has a point in that foreign investors are helping prop up the dollar for us by investing in out economy and buying up US assets. While short term this is good, any pullout by these investors would wreck the dollar. Sandorski, are you saying that a pullout of international investors is likely? or that we just need to remedy the trade deficit to stay afloat? (which is what I believe needs to happen)