View Full Version : OT: Currency
Johny
12-04-2006, 11:10 AM
1.00 GBP = 1.97777 USD
1.00 EUR = 1.33235 USD
http://www.xe.com/ucc/
What's going on?
dave thompson
12-04-2006, 11:14 AM
The dollar is being devalued against other currencies. Great for our exports but lousy for things we buy from other countries.
Kevan
12-04-2006, 11:22 AM
never got the answer.
Processing those T&E's is a trip. You spent how much for dinner?!!!!
catulle
12-04-2006, 11:22 AM
We ought to be thankful that it hasn't devalued more as a result of the immense debt. I truly hope the next administration reverses the trend.
ChrisK
12-04-2006, 11:35 AM
This is not unexpected. Betting on currency fluctuations is one of the hardest thing to do, but even Warren Buffet has been betting against the dollar. I transferred over half our investment into non-dollar instruments several years ago and am making a killing. But more importantly, I feel better about the future. The fact of the matter is that Asian banks are getting ever more nervous about the dollar debt and may loose the discipline needed to continue propping it up. It would be alarmist to predict a wholesale dollar crash, but for the first time in decades it is a possibility.
CNY rider
12-04-2006, 11:43 AM
Where's Ahneida? I won't presume to steal the big guy's thunder by answering, but I will say that I've been buying gold and silver for the past 3 years, and will continue to do so.
You can invest in them easily now, in ETF form without using futures. Symbols are GLD and SLV.
You can also bet against the dollar using FOREX.
Ahneida Ride
12-04-2006, 11:47 AM
It's rather easy.
The World is finally catching on the WE create $$$$ (federal reserve notes) outa thin air to pay our debt. We need more $$$$, just create more frn,
No problemo. We are being diluted alive. Inflation is simply dilution.
We are creating worthless fiat government shopping coupons.
It's too much water in the Gatorade.
The frn is rapidly loosing it's hegemony as the worlds reserve currency.
Banks then practice fractional reserve which can expand our shopping coupons by a factor of 9. Expand is a polite euphemism for counterfeit.
Our Money supply has gone from 3-4 Trillion in the early 90's to almost
12 Trillion. The Fed ( a private bank, not a government agency) does not
even publish this M3 number anymore.
All thoses frn's the fed created out thin air will come back to haunt us.
The good news is that we will all own multi million dollar houses and drive
very expensive cars. :confused:
The bad news is that pair of jeans will cost 250 frn. :eek:
catulle
12-04-2006, 11:53 AM
.
The bad news is that pair of jeans will cost 250 frn. :eek:
Obviously you haven't been to the mall lately, atmo. Otherwise, your vision is 20/20.
Also, $1.00 = 115.38 Yen.
I don't have an opinion worth expressing about currency values and fluctuations but if you love the crazy cool Japanese stuff that I do---Toei, Nagasawa, MKS, Nitto, and other NJS-like things---well, this is costly too. Expect American builders to raise prices commesurate with the cost of Colnagos and Pinarellos, which will rise to maintain profits against the dollar/euro. Yikes.
dbrk
The economy in much of Europe is moving along reasonably well. Asia too. Many economists are pessimistic about the US economy.
oracle
12-04-2006, 01:10 PM
The economy in much of Europe is moving along reasonably well. Asia too. Many economists are pessimistic about the US economy.
unless the e.u. enlarges (integrates turkey), then the economy is very likely headed for a slowdown.
Kevan
12-04-2006, 01:36 PM
Money...it's a gas (http://www.oanda.com/products/fxnews/html/fxnews.shtml)
sspielman
12-04-2006, 01:52 PM
It's rather easy.
The World is finally catching on the WE create $$$$ (federal reserve notes) outa thin air to pay our debt. We need more $$$$, just create more frn,
No problemo. We are being diluted alive. Inflation is simply dilution.
We are creating worthless fiat government shopping coupons.
It's too much water in the Gatorade.
The frn is rapidly loosing it's hegemony as the worlds reserve currency.
Banks then practice fractional reserve which can expand our shopping coupons by a factor of 9. Expand is a polite euphemism for counterfeit.
Our Money supply has gone from 3-4 Trillion in the early 90's to almost
12 Trillion. The Fed ( a private bank, not a government agency) does not
even publish this M3 number anymore.
All thoses frn's the fed created out thin air will come back to haunt us.
The good news is that we will all own multi million dollar houses and drive
very expensive cars. :confused:
The bad news is that pair of jeans will cost 250 frn. :eek:
The worst part of this is that most people think that the Federal Reserve is an agency of the federal government...it is not. It is a private institution. Theirs is a good gig. I like to say that the Federal Reserve is NEITHER (federal nor are there any reserves)....
Fat Robert
12-04-2006, 04:14 PM
i'm completely ignorant about all of this
so tell me
what does the US export, if we are a primarily wal-mat service economy (are we?)?
how would US currency hold its value if we are buying all that junk to retail it?
its obviously more complex than that, so break it down for me
economics, i don't know nothin nohow
Ahneida Ride
12-04-2006, 04:36 PM
If my memory is correct.
Wasn't the British Pound = to 5 dollars at one time?
i'm completely ignorant about all of this
so tell me
what does the US export, if we are a primarily wal-mat service economy (are we?)?...
http://www.census.gov/indicator/www/ustrade.html
food, cars, machinery, airplanes...and some other stuff.
Here's a detailed list:
http://www.census.gov/foreign-trade/Press-Release/current_press_release/exh7.txt
1centaur
12-04-2006, 06:08 PM
Pound was $5, before it was devalued.
Currencies are bought to the extent they are stable storehouses of value vs. the buyer's currency, are needed to transact, and/or are needed to buy investments that are attractive on a hedged or unhedged basis.
As befits the currency of a country of laws and relative economic freedom, the dollar has long enjoyed popularity for all of those reasons and will continue to do so. The rise of China, Brazil, India and Russia have increased transactional and investment needs away from the US; interest rate differentials have started to favor Europe lately; the carry trade (short the Yen, long the dollar to take advantage of interest rate differentials) is fading a bit; the generic assumption outside the US is that our housing market may create a recession (remember our thread on whether a house is an investment, and I said it was if the price was declining?); and it's politically popular in the Bush era to diversify one's central bank reserve currencies.
However, the Chinese NEED to keep our currency strong so we can keep buying their output so they can keep their employment problem under control for political reasons. They have the discipline and the US advice (if necessary) to succeed. If there is a world slowdown the dollar will gain popularity because our economy is more dynamic than most and we have such a stable system. Europe's economic and political constipation, to the extent it is not aped by Democrats, makes the Euro a worse bet in the long run than the dollar.
However, the fact that major terrorist events are likely to be aimed at the US over time is a major risk to our economic growth and thus our stability and thus our currency.
Bottom line: For many years, investing abroad was a fool's game because the US was a better grower AND a safer haven. With the safety mantle at risk, diversifying your investments globally is the only rational choice, but you should expect some pain from time to time as politicians "over there" treat their economies with less respect than they would if they were capitalists.
rbtmcardle
12-04-2006, 07:41 PM
as someone who travels overseas fairly often - south america, europe and china - to purchase materials, I do have some observations, no education in economics mind you but I will share what I have seen.
EU - has much potential and is relatively stable but struggles with rampant illegal immagration and centuries of bad blood. Italy, France and Germany are struggling like us with the influx of cheap goods from Poland and other eastern european countries. Turkey would help but Greece wont have it.
China - Think about this - they need to grow their economy at 11% a year just to keep up with population growth. There will be a great struggle between the haves and have nots, there is no middle class. NO regard for the enviroment, pollution is very apparent in almost all areas. on the other hand they unlike europe and the good ole usa have no built in restraint system - we until recently had the judeo christian society that celebrated all of our holidays, had blue laws on sundays etc... China has no natural restraint and if it takes 7 days a week 24 hours a day to suceed then thats what they will do. they will be the penultimate capitalist society.
As I tell everyone I know, dont bother with any other language we all better start learning Mandarin.
just my 3 cents,
oracle
12-04-2006, 08:01 PM
it is actually cyprus much more than greece holding turkey back.
as someone who travels overseas fairly often - south america, europe and china - to purchase materials, I do have some observations, no education in economics mind you but I will share what I have seen.
EU - has much potential and is relatively stable but struggles with rampant illegal immagration and centuries of bad blood. Italy, France and Germany are struggling like us with the influx of cheap goods from Poland and other eastern european countries. Turkey would help but Greece wont have it.
China - Think about this - they need to grow their economy at 11% a year just to keep up with population growth. There will be a great struggle between the haves and have nots, there is no middle class. NO regard for the enviroment, pollution is very apparent in almost all areas. on the other hand they unlike europe and the good ole usa have no built in restraint system - we until recently had the judeo christian society that celebrated all of our holidays, had blue laws on sundays etc... China has no natural restraint and if it takes 7 days a week 24 hours a day to suceed then thats what they will do. they will be the penultimate capitalist society.
As I tell everyone I know, dont bother with any other language we all better start learning Mandarin.
just my 3 cents,
rbtmcardle
12-04-2006, 08:13 PM
cyprus = greeks vs. turks - not that anyone living there would consider themselves a greek or a turk
BdaGhisallo
12-05-2006, 05:23 AM
Hey Ahneida,
The US is not alone in having a fiat currency. I don't believe any of the major global currencies are freely convertible to gold or any metal anymore. As for the money supply expanding, it has to. No economy in history has ever expanded without money supply growth and credit creation that accompanies it. You can get your money supply contraction if you want, but it will come with another Great Depression. Afterall the Great Depression wasn't really caused by the Wall St Crash. It was really caused by the Fed Reserve ( still finding its feet in the central banking milleu and with economic and money theory still in its infancy) raising interest rates and shrinking the money supply by over a third! They wanted to mop up all the excess liquidity produced by the sell off of financial assets, you see. They didn't want that excess liquidity to cause any inflation. It certainly was a textbook example of the Law of Unintended Consequences!!
As for the Dollar, the main impetus for the recent decline was the poor construction output and industrial production numbers that were released about ten days ago. The world is worried that the US is headed into recession and is concerned that the world's economic engine will shift down from fourth gear to neutral. Bernanke is on record as saying he doesn't know what is going on with the housing market and remarks like that make folks skittish. Uncertainty is the thing that investors fear most.
For some reason, since the creation of the Euro, investors the world over have looked for reasons to trash the Dollar. The US economy may have some issues but it is still the powerhouse of the world. Europe slumbers along with sub 2% gdp growth due to structural inefficiencies, from onerous and poorly thought out tax policies to labour forces that don't want to work as hard as americans but still want six weeks of paid vacation each year. Japan is still not back on its feet yet after almost fifteen years of recession. Sure China quotes gdp growth rates in double digits but who can trust those numbers and who can trust the foundation that economy is built on. How big is the bad loans problem for chinese banks? No one knows but the chinese government and they will not tell.
Most of the developed world would love to have the sluggish rates of growth the US is experiencing now.
Another reason for the fall in the Dollar is the desire of many central banks to diversify their foreign reserve holdings away from Dollars and gold. For a long time the Dollar was it. It was ( and still is) the reserve currency of the world and was the only choice as a stable store of value. Now with the creation of the Euro, there is an alternative, and many centrals are selling some of their Dollar reserves to put them into Euro. And many dollars that would have been bought in the past are now not being bought as the central banks go straight for Euros.
As an aside, one of the main reasons that the Euro was created was to try and muscle in on the seignorage earned by the US in its role as maker of the reserve currency. Seignorage is the term used to refer to the difference between the intrinsic and extrinsic values of a dollar bill. A dollar bill costs fractions of a cent to manufacture ( intrinsic value) but is accorded a full dollar's worth of value ( extrinsic value) by you and I and all others. Thus, when the US prints trillions of dollars, it is reaping a huge windfall, due to its preeminent position, when we hand over something valued at a full dollar in exchange for something that cost a tiny fraction of that to create! The europeans wanted some of that income and sought to get it by creating the Euro and doing all they could to encourage its adoption as a major reserve currency and hoped that it could displace the Dollar. It hasn't happened yet... and I can't see it ever happening in my lifetime.
sspielman
12-05-2006, 06:58 AM
Now that we have the new "counterfeit-proof" currency that bears a striking resemblance to monopoly money, one rarely sees older federal reserve notes from the 1950's and before. those earlier series of notes had a longer "note" on them...for example, today it reads "This note is legal tender for all debts, public and private"...One has to conclude that it became too embarassing to continue with the original full text which read "This note is legal tender for all debts, public and private and is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank"...When there were other lawful instruments around (silver certificates, gold certificates, United States Notes), the FRN did not seem so insidious. With their elimination the FRN has a monopoly on the creation of currency (and an unconstitutional one, I might add) People wonder why the debt spirals out of control, but it is no wonder when the creation of money (in excess especially) benefits a private corporation.
Jeremy
12-05-2006, 08:15 AM
http://www.lewrockwell.com/paul/paul354.html
At least one member of Congress is talking about it.
Jeremy
British
12-05-2006, 08:26 AM
If my memory is correct.
Wasn't the British Pound = to 5 dollars at one time?
Yes, but only in recent memory it was near parity to the dollar at 105 cents. Now almost twice as strong and still moving. I might be going for a custom Moots quite soon. The dream lives. Thank you to the Federal Reserve Board. Is Greenspan still there? I salute him :-)
stevep
12-05-2006, 08:38 AM
Yes, but only in recent memory it was near parity to the dollar at 105 cents. Now almost twice as strong and still moving. I might be going for a custom Moots quite soon. The dream lives. Thank you to the Federal Reserve Board. Is Greenspan still there? I salute him :-)
greenspan is irrationally exuberant somewhere else now...
like atmo
he retired a bit ago
Grant McLean
12-05-2006, 09:02 AM
Canadian/USA exchange
dollar - 2002 $1.57 cdn = $1 usd
dollar - 2006 $1.14 cdn = $1 usd
If I paid for a $3000 CT Yankee-built frame on the date of order in
2002 it would cost me $4710 cdn. When I payed for it on delivery in 2006,
it would cost me $3420. That's a $1290 difference!
g
davids
12-05-2006, 09:26 AM
Hey Ahneida,
The US is not alone in having a fiat currency. I don't believe any of the major global currencies are freely convertible to gold or any metal anymore. As for the money supply expanding, it has to. No economy in history has ever expanded without money supply growth and credit creation that accompanies it.
I tried providing another point of view once, and got nowhere. You either understand that "money" is a shared signifier of stored value, or you don't. You either understand the basics of marcroeconomics, or you don't. Western Polynesia used to use cowrie shells as currency. I don't believe that anyone's arguing that we should bring back the "cowrie standard," but there are a lot of folks who believe gold is intrinsically valuable.
It's like religion - You're not arguing facts here, you're arguing beliefs.
Grant, around the time we moved to Montreal from TO, right after the martial law/flq crap, the canadian dollar was around .98 cdn = 1.00 usd.
catulle
12-05-2006, 10:44 AM
"The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled." -Cicero. 106-43 B.C.
"The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled." -Cicero. 106-43 B.C.
The more things change, the more they stay the same.
Ahneida Ride
12-05-2006, 12:12 PM
What is money? Well here are the Characteristics that I believe money should
have. We must first define Money.
It must be a medium of exchange. ( easily accepted )
It must be a unit of measurement of market value. ( 1 Oz of gold ?)
It must store Value. ( Federal Reserve Notes ? )
Should be easily transportable. ( Cigarettes ? )
Should be easily be divided or aggregated. ( Cow ?)
Can’t easily be Counterfeited. ( Federal Reserve Notes ? )
Money can take many forms. Cigarettes were used in Germany after WWII,
Cows/animals were used, so were sea shells and notches on sticks.
Gold and silver have historically been preferred because precious metals intrinsically possess the above characteristics. Most importantly the last one,
Gold can't be counterfeited. Although alchemists have tried for centuries.
It takes work to create an oz of gold. Hence it can't be created outa thin air.
If we could all snap our fingers an create gold outa thin air, gold would not be worth very much. If a large gold asteroid landed in my back yard, I would spend it now at current price and those that were holding gold would loose some purchasing power thru dilution.
The problem with the frn is that it is created outa thin air in excess of
economic growth. Thus it fails two of requirements of the definition.
The frn does not store wealth/value/purchasing power because it is easily
counterfeited.
But it could be real money. We do not need to be a slave to gold.
Here how frn should work. First frn should be dollars issued by the US
Treasury as dollars used to be. Not a private bank. The fed reserve,
is about a federal as federal express and has no reserves. A better
name for the institution would be the Incredible Preserve since it is really a banking cartel.
Ok, so we now have have dollars issued by our government in concordance with our US constitution. Actually the Constitution states "Coin Money".
If prices increase, We have too many dollars in circulation. We tax ourselves
and remove these dollars from circulation. Thus making dollar more valuable.
Prices will then decrease.
If prices decrease, there are not sufficient dollars in circulation, so the
Treasury department (not a central bank) creates $ outa thin air and spends these dollars. By introducing more money into circulation prices will
decrease.
The problem is .. Who will determine when dollars are introduced and extracted from the economy? This is awesome power and historically
absolutely power like this corrupts absolutely. The fed was sold as being this
entity of stability. In it's almost 100 year tenure it has failed miserably.
The purchasing power of the 1913 dollar in now about 3 cents. This is not a belief, but an historical fact. The fact that most currency is fiat is a poor argument for its validity.
Gold is attractive because, while not perfect by any means, provides
homeostasis. If gold becomes too valuable, people will mine more. If gold
becomes cheap, people will stop mining it. We have no such safely device on the frn, we just keep manufacturing em outa thin air thru the fed and fractional reserve banking. Fractional reserve banking is better then cold nuclear fusion. I urge all to read up on it and understand how banks really work. Do a Google on Modern Money Mechanics and check out the chart on
about page 12 and see how banks "expand" 10K into 100K. Man, I sure wish
I could "expand" my frn supply like that.
The fed isn't our first central bank. The last one was the Bank of the United States and was finally defeated in the late 1830's by President Jackson after
a bitter confrontation with it's head Nelson Biddle. Jackson won in spite of Senate censure and an assassination attempt. Incidentally the last president to issue the release of dollars ( issued by our government thru the Treasury Dept.) was the Honorable John F. Kennedy.
...Man, I sure wish I could "expand" my frn supply like that..
Find some rich friends and start a bank. ;)
...The fed isn't our first central bank. The last one was the Bank of the United States and was finally defeated in the late 1830's by President Jackson after a bitter confrontation with it's head Nelson Biddle. Jackson won in spite of Senate censure and an assassination attempt. Incidentally the last president to issue the release of dollars ( issued by our government thru the Treasury Dept.) was the Honorable John F. Kennedy.
I've read "The Monster from Jekyl Island" too. Recommended by you, btw.
The best part was the "conspiracy" stuff. They rest seemed like a rant....every other paragraph moaned about creating money "out of thin air". Just left me feeling that the author didn't have anything else to say, and a major axe to grind.
Maybe the movie will be better.... :beer:
Grant McLean
12-05-2006, 06:40 PM
I'm all for using the gold standard as currency...
g
1centaur
12-06-2006, 08:13 AM
There was a currency discussion in one of our investment team meetings yesterday. As a matter of interest, the dollar has traded down in many of the early winter periods over the last decade and then traded up in January.
A lot of currency moves are based on technicals, because if currency traders had to wait for fundamentals to justify the moves they'd be sitting on their hands most of the time.
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