Europe as a whole has shorter work weeks and more vacation time. If they can get all their work done in a 35 hour week, sounds like they were under utilized before.
Europe as a whole has shorter work weeks and more vacation time. If they can get all their work done in a 35 hour week, sounds like they were under utilized before.
Zebo
Elite Member
- Jul 29, 2001
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This article is dead on. The Dollar has no intrinsic value like gold since it's no longer backed by gold. It's paper. The only thing which gives it value is what someone will trade for it. We get goods, china gets worthless dollars, these worthless dollars then go to SA to buy Oil, then the SA shiek buys himself a mercedes from germany with these dollars. Germany buys some Capital Equipment from japan which then "loans" it back to us so we can pay to build our military to defend these dollars. Why do they trade on the world market for these worthless dollars vs. the worthless Columbian peso? Because the US can make your countries currency deflate with embargos and ultimatly war. Not by us nessesarly, but we can sell the best arms in the world (another way in which we get the worthless dollars back) to your enemy (our friend) to do the job for us. So all we really need to do is make the best weapons and grow the CIA to have the highest standard of living in the world. Let everyone else work for us.
This article has a single event replacing the Dollar with the Euro. There is much more involved than a single item. Right and for the forseeable future, the US has the dominate and most productive economy. This will change just because OPEC starts to the US Euro. It will without a doubt make the Euro strong and dollar weaker, but it will not cause the US to not be the dominate economy in the world.
Other things to consider in this economy strength equation.
1. The US is responsable for more than 40% of the worlds Research and developement.
2. Declining EU population with large social programs
3. Shorter work weeks in EU as a whole
4. Lack of defense spending in the EU.
This is just what I can think of off the top of my head, and I am sure there are many more.[/quote]
i dont think you're quite understanding the economics here. the transition of dollars to euros, would greatly dwarf any productivity advantage the u.s. has had.
Other things to consider in this economy strength equation.
1. The US is responsable for more than 40% of the worlds Research and developement.
2. Declining EU population with large social programs
3. Shorter work weeks in EU as a whole
4. Lack of defense spending in the EU.
This is just what I can think of off the top of my head, and I am sure there are many more.[/quote]
i dont think you're quite understanding the economics here. the transition of dollars to euros, would greatly dwarf any productivity advantage the u.s. has had.
sandorski
No Lifer
- Oct 10, 1999
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I think Drewshin's statement "i dont think you're quite understanding the economics here. the transition of dollars to euros, would greatly dwarf any productivity advantage the u.s. has had." sums up my response.
The value of the $US or Euro has very fundamental affects to the US and/or European economies.
1) The > Currency gains Labour efficiency
2) The > Currency gains purchase power
3) The > Currency has lower Inflationary pressures
4) The > Currency has more ability to stimulate their economy using low interest rate policy
5) The < Currency has increased Export capability
Other than your first point, none of your points support a possible continuation of US economic domination, IMO.
alexruiz
Platinum Member
- Sep 21, 2001
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I read that one before, but magomago beats me to the punch.... 
I am still digesting it, but no doubt it is COMPLETELY logical.
It is very simple. Forget about research, population, who writes the cheques, etc and focus ONLY on the commercial balance. There are 2 cases, positive and negative flow (superavit vs deficit). Also, consider the relative streght of your own currency. Given these conditions, you have 4 possible scenarios.
1) Your currency is stronger and your balance is positive: (Non existant right now, but it means you own the world. The EU would be the closest one)
2) Your currency is stronger and your balance is negative (This means that you buy more than you sell (USA), but because your currency is stronger it means you can afford more witht the same amount of currency)
3) Your currency is weak, but your balance is positive (This means you sell more than you buy (Mexico), but despite the fact that your currency is weak you make more money because the "trade currency" used yields more of your own currency. It basically means you got free money)
4) Your currency is weak and your balance is negative (This spells disaster, and it is the case is several countries of sister LatinAmerica. You buy more that you sell, but because you do it in a foreign currency that is stronger that your own, you keep falling further in debt because of the exchange rate.)
Now, if you take the world's largest importer (USA) with a strong dollar, it means that more goods can be bought with the SAME amount of dollars. However, if the dollar slides, it means that in order to buy the SAME amount of goods, you need to put more money.... Are you following it??? More money for the SAME amount of goods is called INFLATION.
Now, you basically got yourself further in debt, and if the currency used is stronger, you keep getting further and further in debt. That means, that to get the same amount of goods, you need to work harder....
The rest is simple to explain....
Alex
I am still digesting it, but no doubt it is COMPLETELY logical. It is very simple. Forget about research, population, who writes the cheques, etc and focus ONLY on the commercial balance. There are 2 cases, positive and negative flow (superavit vs deficit). Also, consider the relative streght of your own currency. Given these conditions, you have 4 possible scenarios.
1) Your currency is stronger and your balance is positive: (Non existant right now, but it means you own the world. The EU would be the closest one)
2) Your currency is stronger and your balance is negative (This means that you buy more than you sell (USA), but because your currency is stronger it means you can afford more witht the same amount of currency)
3) Your currency is weak, but your balance is positive (This means you sell more than you buy (Mexico), but despite the fact that your currency is weak you make more money because the "trade currency" used yields more of your own currency. It basically means you got free money)
4) Your currency is weak and your balance is negative (This spells disaster, and it is the case is several countries of sister LatinAmerica. You buy more that you sell, but because you do it in a foreign currency that is stronger that your own, you keep falling further in debt because of the exchange rate.)
Now, if you take the world's largest importer (USA) with a strong dollar, it means that more goods can be bought with the SAME amount of dollars. However, if the dollar slides, it means that in order to buy the SAME amount of goods, you need to put more money.... Are you following it??? More money for the SAME amount of goods is called INFLATION.
Now, you basically got yourself further in debt, and if the currency used is stronger, you keep getting further and further in debt. That means, that to get the same amount of goods, you need to work harder....
The rest is simple to explain....
Alex
Honestly I was expecting some insane backlash mainly because i showed this article to a pro-war junkie who is really conservative and he began yelling at me calling me an idiot saying any ass could write bullshit.
I think here is what we would aruge:
Would Bush put hundreds of thousands of lives at risk for the economy?
And what About Eastern European nations that support us? Doesn't Eastern Europe want to join the EU bloc?
I think here is what we would aruge:
Would Bush put hundreds of thousands of lives at risk for the economy?
And what About Eastern European nations that support us? Doesn't Eastern Europe want to join the EU bloc?
My guess is that EE just wants a better relationship with the US. And some of them have their own interests in mind. Bulgaria, one of the US supporters in the UNSC, supported the US because Iraq owes them about 2Billion and the US guaranteed that they'll get their money if they supoort the US...
Also, keep in mind that their stance on the war will not do anything to their membership. Poland, Czech republic, hugary, slovenia etc etc will all join next year, regarless of their position on Iraq. They have been negotiating with the EU for years (I believe it takes about 5-6 years) and this current situation won't change anything.
sandorski
No Lifer
- Oct 10, 1999
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Hehe, I could imagine.
If the articles conjecture of the Iraq war having to do with propping up the $US is true, it would be a moral outrage. An act of desperation, to be sure, but also an act of evil. That said, I hope to God it isn't true.
For me though, this thread seems to have become one of an exploration into the validity of the Economic issues raised by the article and not whether the war on Iraq has been decided upon as a way to protect the $US. Not only do I not want to believe that, even it were true we'd likely never know that within our lifetime.
i dont think you're quite understanding the economics here. the transition of dollars to euros, would greatly dwarf any productivity advantage the u.s. has had.[/quote]
I dont think you understand that OPEC using the Euro is not a large enough event to displace the dollar as the dominant currency in the world.
sandorski
No Lifer
- Oct 10, 1999
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Originally posted by: alexruiz
Thumb up for your post!!! As supplement, if you are in case 5, but your commercial trade balance is NEGATIVE...... What do you get???
Alex
I'm not an economist, but I play one on ATOT!
Do I win if my answer is correct?
I dunno for sure, but I'd imagine something like this: As long as the Trade Balance was negative a number of things are likely to happen, until a Neutral Balance could be acheived:
1) increase in inflation which would only get worse(runaway inflation)
2) continued devaluation of the $ which would continue to exacerbate the other problems
3) increase in Corporate and Personal bankruptcy
4) increase in Unemployment
5) decrease in government revenues forcing program cuts
6) increase in Interest rates making debts more costly to maintain(an increase in Interest Rates would be one of the first attempts to prop up the Currency)
7) all hell would/could break loose! Or not, depending on the severity of the Negative Balance
Zebo
Elite Member
- Jul 29, 2001
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Charrison, Today, all monies are fiat. Even the commies. It's the only way the capital classes in the world can keep all thier real intrinsic wealth such as property, gold, works of art, do absolutly no work, but to loan out this worthless paper to you and me to do work for them. It's exactly why the rich do get richer. If they had to pay me 5 acres in montana and 1 oz or thier gold a month to do work you can see how they would quickly loose thier wealth.
Sure every man has the option to just buy these things with their monthly paper right, but laws of supply, would quickly make these things of value out of reach to 99% of the popluation if everyone chose to do so. No, they are banking on our appitite for the worthless and or self-gratifying human nature to buy things like MTV, Cars, Boats, the latest and greatest everything. Ever wonder why in this technological age we work longer hours and have less free time? It should be easier. It's not because we are programmed from birth to get into debt to the capitalist class. Wether by home mortgage debt or our appitite for goodies we can't stop working for them. Even if we buy, in cash, that self-sustaining ranch in Oregon with our dollars we are taxed on it every year and actually never own it. It can be taken for a multiude of reasons the capitalists have, though legislation, put in place to insure you actually never own anything.
As this relates to the discussion, our US dollar, has value because we could bankrupt any country in the world tomorrow. we are the largest market for thier capitalists to sell thier goods to. If they don't play nice the first step is to stop buying things from them. The politcal fallout would quickly replace whatever leader was stupid enough to initiate such a drastic move such as excluding the dollar for thier produced goods and ultimatily as the worlds currency. If that does'nt work, like in hermit countries like Iraq and NK, we have other means.
It all boils down to who can actually enforce the rule of law makes the laws. Only one country on the planet can do this, the USA. This is why I say WE are the UN and WE are NATO. You think if france unilaterally attacked Algeria (they have a big terrorism/crime problem from them) we would'nt quickly smack them down? This is why they all hate us right now, they've known this to be a fact for 75 years, but we are actually highlighting it and parading this fact of life in pubic latley. They could care less about Iraqis.
Sure every man has the option to just buy these things with their monthly paper right, but laws of supply, would quickly make these things of value out of reach to 99% of the popluation if everyone chose to do so. No, they are banking on our appitite for the worthless and or self-gratifying human nature to buy things like MTV, Cars, Boats, the latest and greatest everything. Ever wonder why in this technological age we work longer hours and have less free time? It should be easier. It's not because we are programmed from birth to get into debt to the capitalist class. Wether by home mortgage debt or our appitite for goodies we can't stop working for them. Even if we buy, in cash, that self-sustaining ranch in Oregon with our dollars we are taxed on it every year and actually never own it. It can be taken for a multiude of reasons the capitalists have, though legislation, put in place to insure you actually never own anything.
As this relates to the discussion, our US dollar, has value because we could bankrupt any country in the world tomorrow. we are the largest market for thier capitalists to sell thier goods to. If they don't play nice the first step is to stop buying things from them. The politcal fallout would quickly replace whatever leader was stupid enough to initiate such a drastic move such as excluding the dollar for thier produced goods and ultimatily as the worlds currency. If that does'nt work, like in hermit countries like Iraq and NK, we have other means.
It all boils down to who can actually enforce the rule of law makes the laws. Only one country on the planet can do this, the USA. This is why I say WE are the UN and WE are NATO. You think if france unilaterally attacked Algeria (they have a big terrorism/crime problem from them) we would'nt quickly smack them down? This is why they all hate us right now, they've known this to be a fact for 75 years, but we are actually highlighting it and parading this fact of life in pubic latley. They could care less about Iraqis.
Charrsion
This is my point. These articles state that the switch from OPEC countries to the Euro is a big enough trigger (in fact the most important). Like I said before, the authors of these atricles have a financial/economical background and they are convinced that it would displace the dollar. It's your word (I don't know your financial/economical background) against the authors (with a financial/economical background).
Can you back up your opinion with some links
Thx
I am sure i could find some biased links, but I have not found any economist willing to waste there time on such a silly thing. Just look at the raw numbers of gdp and the cost of oil. That alone should convince you that this single event would not be enough to bring the Dollar down as the dominant world currancy.
The author of this article seems to ignore that the Euro is also a fiat(not back by some precious resource) currency like the US Dollar.
It is one of the many theory that has been floating around since the US/Brits being playing game with EU/UN.
It is an interesting theory but the truth is highly doubtful, because China & India is not in the equation.
alexruiz
Platinum Member
- Sep 21, 2001
- 2,836
- 556
- 126
Originally posted by: sandorski
Originally posted by: alexruiz
Thumb up for your post!!! As supplement, if you are in case 5, but your commercial trade balance is NEGATIVE...... What do you get???
Alex
I'm not an economist, but I play one on ATOT!
Do I win if my answer is correct?
I dunno for sure, but I'd imagine something like this: As long as the Trade Balance was negative a number of things are likely to happen, until a Neutral Balance could be acheived:
1) increase in inflation which would only get worse(runaway inflation)
2) continued devaluation of the $ which would continue to exacerbate the other problems
3) increase in Corporate and Personal bankruptcy
4) increase in Unemployment
5) decrease in government revenues forcing program cuts
6) increase in Interest rates making debts more costly to maintain(an increase in Interest Rates would be one of the first attempts to prop up the Currency)
7) all hell would/could break loose! Or not, depending on the severity of the Negative Balance
Well, you surely know the rules of the game.....
Also, if the federal reserve tries to withdraw dollars from the market in order to contain inflation, the reduction of cash flow leads to money holding, witch affects investment.... Regarding the severity of the balance, well, you make the call.....
You have a very good point, but history has shown that the US patern isn't long term thinking. Like you have said we a just the pawn therefore it is difficult to see the big picture. And, you are correct regarding the US intervention of Guatamala & Indonesia, which are just a few of many America crimes. However, it the American publics don't have access to the information that the rest of the world do, because of popaganda & media control. But, it seemed as if the internet has been shaping the American ideal of their administration, because there are a good number of political conscious US citizens that are protesting this war instead of screaming lets nuke them all & turn them beloved patriot country into a parking lot.
I dont think you understand that OPEC using the Euro is not a large enough event to displace the dollar as the dominant currency in the world.[/quote]
it will be, if opec starts using the euro, it will cause countries that currently have reserves in dollars to exchange them for euros. most international trading, which is now done in dollars, will then be done in euros. it will have a ripple effect, where the dollar's value will greatly lessen. here's a chart of the euro vs. dollar over the last two years. the euro is worth about 20% more vs. the dollar than a year ago, and you can expect this trend to continue.
Euro Chart
it will be, if opec starts using the euro, it will cause countries that currently have reserves in dollars to exchange them for euros. most international trading, which is now done in dollars, will then be done in euros. it will have a ripple effect, where the dollar's value will greatly lessen. here's a chart of the euro vs. dollar over the last two years. the euro is worth about 20% more vs. the dollar than a year ago, and you can expect this trend to continue.
Euro Chart[/quote]
Doesn't look like it'll last...and yes of course the Euro is Fiat and that is why Germany and France are against the war - so he did address the issue.
What I get is that people blow up in my face when I talk about this... One person in particular starts screaming saying the president would never had thousands of troops die to make the economy better.
I find it very amusing that people who cannot spell correctly or use proper grammar are disputing the likelihood of this scenario. A number of posters here have contributed links to other sources which advocate the theory that switching from the US Dollar to the Euro would have an adverse affect on the US economy and possibility diminish its role as the world's sole superpower.
To those who disagree I say this: produce proof in the form of links to other respectable/believable sources that this would not occur, or contribute some meaningful statistics that can be used to logically argue that the theory postulated is bunk.
Charrison has repeatedly argued the point, yet has zero credibility with me due to his ineffectual arguments and lack of supporting evidence. This is my opinion, others may disagree. I think that the theory is a valid one, and it certainly does explain the behaviour of the United States, especially when other, more historical events are examined using the above theory.
The clincher for me is the shift in the security policy of the United States to one of pre-emptive strikes and the stated goal of having a dominant role in the world. No country will be allowed to challenge the United States militarily. It follows that given the stated goal of global dominance, it would intervene in any situation that would threaten that dominance, militarily or economically. These are not the ramblings of a conspiracy theorist; they are stated fact by the United States government.
Feel free to disagree with me. This is my first post to the Anandtech forums. I hope to make a few more on this subject before it is retired.
To those who disagree I say this: produce proof in the form of links to other respectable/believable sources that this would not occur, or contribute some meaningful statistics that can be used to logically argue that the theory postulated is bunk.
Charrison has repeatedly argued the point, yet has zero credibility with me due to his ineffectual arguments and lack of supporting evidence. This is my opinion, others may disagree. I think that the theory is a valid one, and it certainly does explain the behaviour of the United States, especially when other, more historical events are examined using the above theory.
The clincher for me is the shift in the security policy of the United States to one of pre-emptive strikes and the stated goal of having a dominant role in the world. No country will be allowed to challenge the United States militarily. It follows that given the stated goal of global dominance, it would intervene in any situation that would threaten that dominance, militarily or economically. These are not the ramblings of a conspiracy theorist; they are stated fact by the United States government.
Feel free to disagree with me. This is my first post to the Anandtech forums. I hope to make a few more on this subject before it is retired.
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