I never cease to be amazed by those who claim to know what is going on when their perspective is severely limited by their crania being firmly inserted in their dorsal orifices.
Let's have them try accepting as evidence an opinion that the Dollar certainly is tanking from people whose economic expertise I readily admit is much greater than my own, the staff of The Economist of Britain, who say, "Indeed, there are good reasons to expect [the dollar's] slide to continue, dragging it below the record low of $1.36 against the Euro that it hit in December 2004."
Now if that comment is a bit too offshore for you, you might try listening to former Federal Reserve Chairman Paul Volker, another person whose economic knowledge is much greater than my own, who said two years ago, "the odds of a dollar crash [are] 75 percent within five years."
That time may now be upon us.
Robert Kuttner, co-editor of The American Prospect, wrote in The Boston Globe, "The dollar dilemma is the Republicans’ economic Iraq."
What does Kuttner mean by this? That there are no good choices available to repair the damage done to the dollar by the misguided actions of the Bush Administration.
We can't take the steps any other country would when in our stead, because it would affect the confidence of those foreign investors who are keeping our economy afloat. Thus, Treasury Secretary Henry Paulson grandstands for the hometown crowds to boost slipping consumer confidence by publicly demanding that China revalue the Ruan relative to the Dollar while doing almost nothing behind the scenes to bring this about.
As American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo puts it, "By refusing to level the playing field, the U.S. government is allowing China to seize our market share by subsidizing U.S. importers at the expense of domestic American manufacturing."
[Hal Pawluk wrote about American outsourcing subsidies here on blogcritics.org back on November 15, 2004.]
Why? Because the moment the ruan rises against the dollar, nations around the world will dump Dollars faster than US Republicans scraped off their Bush/Cheney-04 bumper stickers. We depend on foreign financing of our trade imbalance, and the confidence of other nations' central banks that they won't be left holding less-valuable Dollars is critical to that situation.
It doesn't stop with our government letting us down over this problem. We are also being betrayed by our own business community.
Article comments
1 - Ruvy in Jerusalem
Like old uncle Ruvy has been saying for some time - get "realistic" and buy gold coins and a troy scale. Forget the banks, forget the euro, forget sterling. When the sawbuck is sawed up and people start putting up signs, "the buck definitely does not stop here", those gold coins will stand you in good stead.
2 - handyguy
If anyone ever manages to convince China to adjust their currency's value, it might not be such a bad thing for the dollar to slide a bit more. If it really crashes, however, and China continues to dig in its heels, watch out. It's not solely the Republicans' problem, though. Democrats had better step up with some ideas and responsibility as well.
3 - troll
Ruvy - your idea of buying gold might actually stabilize the situation were it legal for Americans to buy gold at its monetary value
4 - Ruvy in Jerusalem
Troll,
You mean there is as ban on buying gold coins again? Boy, your government is a lot more thorough than I thought it was in restricting economic freedom.
5 - Bliffle
I don't think most americans realize the extent to which this republican cabal has chained us citizens to bad economics, whether it's pharma monopolies, no medicare negotiatins in part D, no bid Iraq contracts, unending future indebtedness, etc., all the while spouting propaganda about Economic Freedom.
6 - Maurice
Realist
your lack of understanding of currency trading shows in this post. The dollar drop is very beneficial to trade imbalances. Having a low dollar value allows more trade with other nations especially big ticket items. Having a 'valuable' currency like the euro can cause economic problems.
Here is a quote from a related Economist article.
American policymakers seem happy to let the dollar slide. Europeans, however, complain that the burden of adjustment has fallen disproportionately on their currency, the euro. As the euro has soared against the dollar, central banks in Japan, China and other Asian countries have bought dollars to hold down the value of their own currencies.
7 - Ruvy in Jerusalem
Maurice,
Exchanging one worthless piece of paper for another is fine just so long as the ones exchanging the paper agree that the worthless paper they trade has value. So for now, even the New Israeli shekel, a dubious currency printed and minted in merry olde England, is rising against the dollar. The pathetically dependent Israeli economy is a temporary shelter from the fears of a a falling dollar.
But gold has intrinsic value. At some point a five dollar bill will become nothing more than a nice painting of Abraham Lincoln. The imbalances in America's economy and the unwillingness to do anything to rectify those imbalances, brings that day closer and closer. And the guy with the gold coins will have money and everybody else will be trading different colored toilet paper.
8 - Bliffle
"But gold has intrinsic value."
But it's been a poor investment for many years. And it's clumsy to deal with. Friend of mine inherited a lot of gold from an eccentric uncle. Had to pay rent to store it in a Dallas bank; had to pay armored trucks to haul it around; big brokerage fees to sell the stuff. he dollars per pound is not good, and that's why modern high-level crooks prefer diamonds and other gems for ransom payoffs, etc.
9 - Bliffle
Actually, an economist can argue that gold doesn't have intrinsic value since you can't use it for anything useful. Can't eat it, for example. Gold has the value that society wills it to have, which is extrinsic value. It has perceived value.
10 - Dennis Francis
The falling dollar is great for some. The middle class have not seen a real pay raise. Small business has been screwed by Big Government while feeding their big corporate buddies. Politicians screw the poor and middle class while insisting that they are our only hope for the future.
The investment class fool the middle class into thinking that they are investing for eventual wealth. They forgot to tell them that the Wall Street Ponzi scheme is in full effect.
I love this country, there is never a dull moment.
Much love to my right, left and middle-of-the-roaders.
11 - Teri Motley
Does anyone know if gold coins are actually being used in places like Iraq, Somalia, and other government-free zones?