Is the dollar about to lose its value?

[Opivy1980]

Judging by what economists are predicting and the fact that the euro is becoming the world currency, is the dollar about to go the way of the ruble, or escudo? I am seriously considering investing in the euro just so my money doesn't become worthless. Any economists out there who can tell me if this is just propaganda or is the dollar about to crash and burn?

[thod]

It would be better to enter in an economics discussion than ask for investment advice. I can rant on about the subject but its all theory, correlations, opinion etc. When it comes down to interpretation and deciding what will happen thats got to be for you to decide.

[ShaiGar]

the dollar loses its value every day. It's been steadily losing ground against the Euro ever since there was a Euro.

[Jgib5328]

The dollar has lost signigicant ground on the other currencies, because the economy is shitty and the interest rates are low. Once we come out of recession, it will rise again. Yes, investing in the Euro is a good idea, but there are better investments out there. Euro isn't the world currency either, the dollar still is, and will be for a very long time.

[thod]

Euro isn't the world currency either, the dollar still is, and will be for a very long time.

Can you elaborate on why the dollar will retain its position? Does it matter?

If something rises in value with respect to something else you still make a profit. A small oil company may double in price making you a tidy profit. The fact that it is not an oil major doesn't effect your gain.

If the Euro were to rise against the dollar for 6 months then drop back then ideally you would hold Euros for 6 months then sell and hold dollars. I am not a fan of holding dollars for patriotic reasons etc when I can freely convert to dollars again and end up with a lot more dollars.

[SmileyMan]

The dollar has lost signigicant ground on the other currencies, because the economy is shitty and the interest rates are low. Once we come out of recession, it will rise again. Yes, investing in the Euro is a good idea, but there are better investments out there. Euro isn't the world currency either, the dollar still is, and will be for a very long time.

The Euro conquering more space on the oil markets, and exchange-booths all over Europe are rejecting the dollar because it is bad business for them.

[Jgib5328]

Can you elaborate on why the dollar will retain its position? Does it matter?

If something rises in value with respect to something else you still make a profit. A small oil company may double in price making you a tidy profit. The fact that it is not an oil major doesn't effect your gain.

If the Euro were to rise against the dollar for 6 months then drop back then ideally you would hold Euros for 6 months then sell and hold dollars. I am not a fan of holding dollars for patriotic reasons etc when I can freely convert to dollars again and end up with a lot more dollars.

The reason why the dollar will be the world currency is because it will be a big pain in the ass to make commodities denominated in another currency, plus the dollar will still be strong for awhile. That's the only reason why I said that, the unfortunately the Euro has surpassed the dollar in desirability, but oh well we are one country and they are many. Plus we have the Saudis on our side, so as long as they stick with us, they will vote for dollar denominated crude oil prices.

[thod]

There is an infinite amount of dollars. The fed can just print them. If it does so the number of dollars in circulation rises and the dollar falls. Now the fed has decided to do just that. The hundreds of billions the fed is pumping into the financial system have come from nowhere. This means that holders of dollars, your savings account, is reduced in value.

When the Chinese ship unload a ship full of training shoes at the US port you pay them in dollars which they take home. This keeps happening, you print more dollars, until in the end they say "we don't want more dollars give us something of value". Having a magical printing press will only work so long as the people believe that the paper it produces has a value.

The world had been shipping its products to the US for a long time and receiving paper. The whole world has vast numbers of dollars and is reluctant to accept any more. When that Chinese company want to trade with Europe they find the Europeans have lots of dollars. The Europeans don't want any more so they insist on more dollars in exchange the product. The dollar price of goods is reduced and hence the value of the dollar relative to other stores of value.

Now the Fed could raise its interest rates. This means it is selling bonds to suck dollars out of the market and thus increase their rarity and value. Instead the Fed is reducing interest rates, printing more dollars. This raises the price of everything the US imports leading to inflation. Nobody wants to hold a 5% bond when inflation is at 10% since that is a 5% a year loss in value. This leads to further decline in the dollar since holding a dollar means less purchasing power next year. Since most dollars are not held by Americans but by foreigners the Fed thinks its mostly those foreigners that lose.

This is the advantage of commodities like gold. You cannot make more and an ounce of gold retains its value no matter how much money you print, it simply becomes worth more dollars. Part of the problem is the Feds mandate to ensure full employment and economic growth. It is trying to stimulate the economy and accepting inflation. It will of course manipulate the inflation numbers to mask the true value. The large finance houses are not so easily fooled as the public though. The public can see gas prices rise and grocery bills rise yet still accept there is 4% inflation because they don't understand the concepts.

By contract the ECB has one goal, to preserve the value of the Euro. That a Euro next year will buy the same as it does this year. It is not concerned with employment and economic growth but with preserving the Euro as store of value.

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[Theodoric]

It depends, historically the Euro has gained against the dollar (except for the period of 1999 - 2002, where the Euro steadily decreased against all other world currencies).

What we have yet to see is if a major recession hits the EU what will happen to the Euro. Should this occur, the Euro would theoretically drop. Currently, the only reason that the Euro is gaining against the dollar is because the US Federal Reserve is decreasing interest rates in an effort to free up credit and stimulate economic growth to combat the recession. Meaning, that the Euro is gaining only due to current US economic policy. Should US policy change (which may happen in less than a year, there are many talks of clamping down on financial institutions with regulations) the Euro will start to fall again.

During the entire time that the Euro was gaining on the US dollar the US was going through minor recession after recession. These being fueled by the poor economic policies of Clinton and Greenspan along with the misguided and mismanaged wars in Iraq and Afghanistan.

There has been little real economic growth in the EU. The EU stock markets have been falling just like the US markets, there has been little foreign investment in the EU, and the EU could be headed for its own recession due to its aging population and loss of production. The EU currently depends on services to fuel its economy, having little exports and almost no agricultural production. The currently rising price of food could have the potential to hit the EU hard, whereas in the US it will not be felt nearly as much since the US has one of the largest agricultural industries in the world.

The US dollar is still pegged by 21 different worldwide currencies, including the Omani rial,
Qatari riyal, Saudi riyal, and the United Arab Emirates dirham, all major petroleum exporting countries. These countries have a keen interest in keeping the dollar relatively high since their currencies depend upon it. Very few currencies are pegged to the Euro, only 10, and all of these are owned by countries that have little to no economic impact in world matters.

My conclusion is that the Euro may stay steadily gaining for the next half year to a year but may soon peak. There are little gains to be had by it at present since there is no current indication that it will sharply rise in the near future and may actually start to decline. Your better bet would be to invest in a high interest CD at this point or in some US stocks that are starting to bottom out. The Euro is high right now, so its a bad time to buy since there is little potential for returns. Stocks however are quite low, so once the US recession ends they should rise and the potential for gains are enormous.

It really comes down to the most basic economic policy. Buy low, sell high.

[thod]

The EU currently depends on services to fuel its economy, having little exports and almost no agricultural production.

I was surprised that you say Europe, which is a mild climate with ample rainfall and good soils produces so little food. It doesn't have the great expanses of the great plains its true. But then the great plains are not that fertile, the rocky mountains and deserts not at all.

Here is a link of world grain production. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

You will have to explain how some of the EU countries are running trade surpluses if they don't export anything. An economy based on services is normal for an advanced economy. As industrial and agricultural production takes less labor they move to services.

I am sure all the flag flying, which means also downplaying the rest appeals to the sense of being a winner. But you have to back up your claims. The western European countries are highly advanced, the newly joined east not so. There is huge potential for development in the east boosting the region. The EU is not in debt and so has the funds to invest there. When I look at the US i see no such opportunity and a debt mountain that prohibits investment. The US assets are being sold off overseas to pay the debt rather than internal investment. This seems negative to the dollar to me.

[Jgib5328]

Thod, you've just described monetary policy. Right now the fed is spewing out dollars, but when the economy gets back on its feet they are going to take money out of circulation and raise interest rates, thus the dollar will start to rise against the other currencies. Whenever we get out of Iraq, our economy will be even better, but that could be many years from now, but it will still raise the dollar even further.

[SeaCzar]

Current USD problems will not last indefinitely. US exports will rise as a result. Interest rates only tell part of the story. The JPY is very strong, despite years of negative interest rates. I think the time to buy EUR as an investment was about three years ago. Same for the GBP and CHF.

No one really knows the answer to this. Hence, risk.

[eternaltriangle]

Thod, you've just described monetary policy. Right now the fed is spewing out dollars, but when the economy gets back on its feet they are going to take money out of circulation and raise interest rates, thus the dollar will start to rise against the other currencies. Whenever we get out of Iraq, our economy will be even better, but that could be many years from now, but it will still raise the dollar even further.

1. The devaluation of the US dollar ALREADY REFLECTS the drop in interest rates that will happen, and the expectation that some further drop will occur. For the dollar to drop further, it would require a deeper than expected drop in interest rates by the fed.

2. A US recession has global implications, because most other countries export heavily to the US. Guess what will happen to their interest rates (both because devaluation makes US exports more competitive, and because other economies are going to start sinking, other countries will cut interest rates).

3. Adopting the Euro as an international currency (or pegging to the Euro) would be a mistake for most countries. Far more trade goes on between the US and the rest of the world and the Eurozone and the rest of the world (one of the advantages of a peg is that it reduces the uncertainty about currency values with major trading partners). Secondly, the bundesbank is incredibly anal about inflation. This makes a peg with Europe very hard to maintain, if say, global economic conditions are bad. Finally, why on earth would anybody think the economic future lies with Europe, which has high unemployment and terrible economic growth rates.

[SeaCzar]

Finally, why on earth would anybody think the economic future lies with Europe, which has high unemployment and terrible economic growth rates.

This is becoming true of only parts of the Euro zone. The newly admitted countries of the European Union that are not part of the Euro have had fairly solid growth rates since joining.

[Jgib5328]

This is becoming true of only parts of the Euro zone. The newly admitted countries of the European Union that are not part of the Euro have had fairly solid growth rates since joining.

Most countries with weaker economies have solid growth rates and economic growth potential, the big ones have slower ones. K/L ratios are a lot higher in smaller economies with growth potential.

[thod]

Thod, you've just described monetary policy. Right now the fed is spewing out dollars, but when the economy gets back on its feet they are going to take money out of circulation and raise interest rates, thus the dollar will start to rise against the other currencies.

Good plan if you intend to strengthen the dollar. However recent experience has shown the feds only interest is economic growth, not value preservation. It could have raised interest rates to prevent the overheating. It didn't do so because it wanted the high consumption and growth not stability. So now it raises debt levels, it becomes harder to raise interest rates again. As soon as they do they will decried. There is no reason they have to either, you could continue to raise debt levels and lower interest rates to match as they are doing atm. People have bigger mortgages but pay the same each month. I simply don't have confidence the fed has the balls to bankrupt businesses and repossess houses to strengthen the dollar. Instead they will keep interest rates low and the dollar will remain weak. They will continue raising debt levels until everyone owns a billion dollar mortgage and interest rates are 0.01%.

What do you do in the US position. You have an overseas debt mountain and you are going into recession. Well if you decide you want to spend your way out you need more overseas money, since there are no savings at home. This would need you to raise interest rates. Then you need to increase government spending since this is the only way it goes to US companies. The consumers are paying interest so cant buy foreign goods, the companies do more government business to keep going. Now what we do see happening, they lower interest rates to make people spend and they give cash rebates for people to spend. This goes straight on Chinese goods and out of the country. Meanwhile the Fed is hoping the Chinese will buy lots of government bonds to get the cash back. Yet the dollar is slipping and inflation is rising. They decide to stop buying US bonds and buy Euro bonds instead, the whole house comes falling down.

1. The devaluation of the US dollar ALREADY REFLECTS the drop in interest rates that will happen, and the expectation that some further drop will occur. For the dollar to drop further, it would require a deeper than expected drop in interest rates by the fed.


Its so close to zero already that it gets tough after that. Inflation concerns and preservation of value are far more important than bond yields.

2. A US recession has global implications, because most other countries export heavily to the US. Guess what will happen to their interest rates (both because devaluation makes US exports more competitive, and because other economies are going to start sinking, other countries will cut interest rates)

Yes the US consumes a lot with borrowed money. But the other countries could export to Africa where this far greater demand. Its just that the Africans have no money to buy the stuff. Nobody is going to want to give their stuff away free just to keep the factories running. There are plenty of consumers for free stuff.

Interest rates are not going down elsewhere. Inflation is the major concern through the middle east and China. They are raising interest rates not dropping them.

3. Adopting the Euro as an international currency (or pegging to the Euro) would be a mistake for most countries. Far more trade goes on between the US and the rest of the world and the Eurozone and the rest of the world (one of the advantages of a peg is that it reduces the uncertainty about currency values with major trading partners). Secondly, the bundesbank is incredibly anal about inflation. This makes a peg with Europe very hard to maintain, if say, global economic conditions are bad. Finally, why on earth would anybody think the economic future lies with Europe, which has high unemployment and terrible economic growth rates.

The US and who? Certainly China does far more business with the EU than the US. Most countries with a dollar currency peg are reconsidering it. They see the value of pegging to a basket of currencies instead. Pegging to the dollar hurts them when the US does not consider them in its actions.

I am happy that the ECB is anal about inflation. It gives the Euro similar properties to gold. I can be sure my Euros will buy the same next year.

Europe is very diverse some parts have high unemployment some have lower growth. The advanced economies always have lower growth than the developing. Its very hard to measure the US unemployment numbers. I read of someone applying the current method to the great depression and coming up with there was never more than 7% unemployment during that period.

[Jgib5328]

Good plan if you intend to strengthen the dollar. However recent experience has shown the feds only interest is economic growth, not value preservation. It could have raised interest rates to prevent the overheating. It didn't do so because it wanted the high consumption and growth not stability. So now it raises debt levels, it becomes harder to raise interest rates again. As soon as they do they will decried. There is no reason they have to either, you could continue to raise debt levels and lower interest rates to match as they are doing atm. People have bigger mortgages but pay the same each month. I simply don't have confidence the fed has the balls to bankrupt businesses and repossess houses to strengthen the dollar. Instead they will keep interest rates low and the dollar will remain weak. They will continue raising debt levels until everyone owns a billion dollar mortgage and interest rates are 0.01%.

What do you do in the US position. You have an overseas debt mountain and you are going into recession. Well if you decide you want to spend your way out you need more overseas money, since there are no savings at home. This would need you to raise interest rates. Then you need to increase government spending since this is the only way it goes to US companies. The consumers are paying interest so cant buy foreign goods, the companies do more government business to keep going. Now what we do see happening, they lower interest rates to make people spend and they give cash rebates for people to spend. This goes straight on Chinese goods and out of the country. Meanwhile the Fed is hoping the Chinese will buy lots of government bonds to get the cash back. Yet the dollar is slipping and inflation is rising. They decide to stop buying US bonds and buy Euro bonds instead, the whole house comes falling down.



The only reason they want to economic growth right now, is to ease the recession. By increasing the numbers of dollars in circulation, they should in theory increase liquidity and ease up credit. When the economy turns around, they will stop this. The only reason they are doing this now, is to hedge against the recession. Right before our economy started hitting shit, the rate was 5.25, which is relatively high. If we were to have a high interest rate right now, the economy would be in an even worse state than it already is.

[thod]

Perhaps they should think about raising taxes to clear the government debt. A fiat currency depends on its ability to raise tax. 5.25% is not high, it depends on inflation. I see Iceland just raised to 15%. That has got to hurt their homeowners.

[eternaltriangle]

"Interest rates are not going down elsewhere. Inflation is the major concern through the middle east and China. They are raising interest rates not dropping them."

You think that China (or almost any developing country, for that matter), in the midst of a major drop in exports to the US due to recession, would raise interest rates (not only reducing domestic investment, but also revaluing their currency even more, harming exports)? Politically, whether you are a dictatorship or a democracy, there is hell to pay whenever you have large-scale unemployment.

"The US and who? Certainly China does far more business with the EU than the US. Most countries with a dollar currency peg are reconsidering it. They see the value of pegging to a basket of currencies instead. Pegging to the dollar hurts them when the US does not consider them in its actions."

Top 5 export destinations of China: US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (source: CIA world factbook)

The US is a far more important trading partner for China than Europe.

"I am happy that the ECB is anal about inflation. It gives the Euro similar properties to gold. I can be sure my Euros will buy the same next year."

Firstly gold prices move around a great deal, but that is neither here nor there. The problem is that any international currency needs to be both somewhat stable (the Euro wins there) but also able to handle the volume of international commerce. The gold standard clearly wasn't, and the Euro isn't because of the anal retentive qualities of the European central bank. The other thing is that the monetary policy of whoever has the reserve currency resonates throughout the world. I would argue that slow-growing Europe is in a position mirrored by few countries around the world.

"Europe is very diverse some parts have high unemployment some have lower growth. The advanced economies always have lower growth than the developing."

Then why is less-developed Japan, France, the UK and Germany not outpacing US growth (or why isn't sub-Saharan Africa an economic rocket)? This is the outdated convergence argument of Abromowitz all over. Convergence only happens if you are talking about economies with the same conditions. Eurosclerosis is rooted in conservative central banks which, coupled with overly generous welfare policies have created perpetual long-term unemployment and de-incentivized entrepreneurship and enterprise.

Sure, I will grant that the Eurozone countries are growing, but that is only a function of their incredible backwardness. Despite the inclusion of "New Europe" the US outgrew the EU in 11/13 years from 1993-2005 (and I picked those years to exclude the huge drop in Eastern European GDP's after the end of communism, so it just includes the upturn). Similarly, the UK average beat the EU average on 12/13 years (one was a tie) - the UK is not on the point - take them out and the EU does even worse.
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"Its very hard to measure the US unemployment numbers. I read of someone applying the current method to the great depression and coming up with there was never more than 7% unemployment during that period."

Why would it be any harder to measure unemployment in the US and Europe?

[thod]

You think that China (or almost any developing country, for that matter), in the midst of a major drop in exports to the US due to recession, would raise interest rates (not only reducing domestic investment, but also revaluing their currency even more, harming exports)? Politically, whether you are a dictatorship or a democracy, there is hell to pay whenever you have large-scale unemployment.

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China is currently raising interest rates since inflation is over 8%. Of course I have no idea if they will continue to do so. The issue of food prices rising is of far more political concern than macro economics.

Top 5 export destinations of China: US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (source: CIA world factbook)


Which doesn't mention the EU.

China's largest trading partner is the EU.

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Japans largest trading partner is China.

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The US is a big trading partner for everyone. So if it declines it will hurt. But dont overestimate it. The world trades amongt itself too and that trade is far larger than with any single country.

Firstly gold prices move around a great deal, but that is neither here nor there. The problem is that any international currency needs to be both somewhat stable (the Euro wins there) but also able to handle the volume of international commerce. The gold standard clearly wasn't, and the Euro isn't because of the anal retentive qualities of the European central bank. The other thing is that the monetary policy of whoever has the reserve currency resonates throughout the world. I would argue that slow-growing Europe is in a position mirrored by few countries around the world.


Preservation of value not returns are what are important to me at the moment. I like gold because you cant print more. The recent price rises are simply because people are worried about paper losing value.

As the worlds largest economy, the Euro can certainly handle the volume of commerce. Since London and New York are neck and neck for the worlds premier financial capital, everything is in place.

Having the reserve currency provides a huge income to the US. The US knows this and is desperate to hold that position.

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I would rather have slow growth than the boom and bust that comes from setting interest rates according to elections.

Then why is less-developed Japan, France, the UK and Germany not outpacing US growth (or why isn't sub-Saharan Africa an economic rocket)?

Less developed? have you ever been to any of these places. I have, even lived in them, and visited the US. The US is not some nirvana, its infrastructure is underdeveloped and run down due to no public investment.

Guess what the people in these places don't make a living by lifting things either. They have advanced degrees, educuation levels in the US are poor. Travel the world and see it. They have roads and shops there too some of them have even learned to drive cars.

Eurosclerosis is rooted in conservative central banks which, coupled with overly generous welfare policies have created perpetual long-term unemployment and de-incentivized entrepreneurship and enterprise.


Yet they still seem to be doing very well. More opportunity for growth there with just policy shift, where is that same boost going to come from in the US?

Sure, I will grant that the Eurozone countries are growing, but that is only a function of their incredible backwardness.

Yea i spend too long having to collect the firewood to make my evening meal. Then i have to ride the bicycle to power the villages sole TV set.

Why would it be any harder to measure unemployment in the US and Europe?

It hard to measure it anyplace. Simply saying you are unemployed is not enough. You cant stay on the unemployment roles so cant collect benefit. They send you on a compulsory 'education' course picking litter of the street then you become a student etc. Unemployment numbers look bad so they all manipulate how you measure it to get it down. This is done everywhere US, Europe and rest of world.

[eternaltriangle]

"China is currently raising interest rates since inflation is over 8%. Of course I have no idea if they will continue to do so. The issue of food prices rising is of far more political concern than macro economics."

Unemployment is low (4%) and growth is still strong. If those numbers change, do you really think China will continue to raise interest rates?

"Which doesn't mention the EU.

China's largest trading partner is the EU."

The EU includes Britain and others that are not on the euro.

Lets find some numbers...
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Scroll down to the appendix (table A5). Chinese trade with the Eu-15 is about 240 billion (210 billion without the UK, which is not on the Euro). Trade with the US is 280 billion. So trade with the US is 33% greater (and also greater than the 180 billion in trade with Japan).

This is a report to congress, and the statistics are taken from the IMF (so > Forbes).

"The US is a big trading partner for everyone. So if it declines it will hurt. But dont overestimate it. The world trades amongt itself too and that trade is far larger than with any single country."

The US in 2005 comprised 21% of all imports in the OECD (plus the big developing economies) and 11% of all exports. The EU gets inflated because most of its trade is between other EU countries (the US would have a lot of trade too if you considered Indiana and California separate countries).

"Preservation of value not returns are what are important to me at the moment. I like gold because you cant print more. The recent price rises are
simply because people are worried about paper losing value."

Firstly gold is TERRIBLE - do you really want monetary policy to reflect whether or not there was a big find in Indonesia (look up Bre-X)? Paper money is great precisely because you can print more of it, enabling governments to soften the blow of economic cycles. If exchange rate stability was so important than how come trade has grown so immensely since the 1970's, when most of the world's economies started to float after Nixon ended the Bretton-Woods system? You need to be able to counteract recessions, so as to prevent bank failures and the kind of economic collapses of the 1930's.

"As the worlds largest economy, the Euro can certainly handle the volume of commerce. Since London and New York are neck and neck for the worlds premier financial capital, everything is in place."

If the ECB isn't printing enough to suit the needs of its own tanking economic, what makes you think it can do so for the world?

"I would rather have slow growth than the boom and bust that comes from setting interest rates according to elections."

The US has an independent central bank that does not set interest rates according to elections, and hasn't for years. Alan Greenspan and Ben Bernanke get to do whatever they want.

"Less developed? have you ever been to any of these places. I have, even lived in them, and visited the US. The US is not some nirvana, its infrastructure is underdeveloped and run down due to no public investment.

Guess what the people in these places don't make a living by lifting things either. They have advanced degrees, educuation levels in the US are poor. Travel the world and see it. They have roads and shops there too some of them have even learned to drive cars."

Firstly, I am not American. Secondly, I am saying that the US is more developed economically, not that Europe is living in the stone age. Yes the US has crappy public services - this is partly because it has opted to trade off good public services for economic growth - the same tradeoff the desperately poor in the developing world are making presently. You are getting off topic here - we are discussing whether the US IS likely to lose its status as the international reserve currency, not whether it should. I'll leave the normative discussions for the priests.

On almost any indicator you can pick, the US has stronger fundamentals and greater potential than Europe as the main world economy (that may change in the future, but I'd bank on the Rupee or Yuan before I would the Euro).

US gdp per capita: 41,000
EU-15 GDP per capita: 30,000
(source: OECD
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and click on the table picture for cross-national comparisons)

Unemployment
US: 5%
EU-15: 8%

Patents produced (2003)
US: 19,000
EU-15: 15,900

Researchers per thousand people
US: 9
EU-15: 6

GDP
US: 12.4 trillion
EU-15: 11.8 billion

% of people with tertiary (university) education
US: 39%
Germany: 25%
France: 24%
UK: 29%
Italy: 11%
Spain: 26%

"It hard to measure it anyplace. Simply saying you are unemployed is not enough. You cant stay on the unemployment roles so cant collect benefit. They send you on a compulsory 'education' course picking litter of the street then you become a student etc. Unemployment numbers look bad so they all manipulate how you measure it to get it down. This is done everywhere US, Europe and rest of world."

Firstly, garbage collection is not done by unemployed people in the US (you may be mixing this up with community service, which is a punishment for petty crimes). Given that the EU includes eastern European countries which still contain a high degree of underemployment, and worse data collection, I would think that if anything, European numbers are overestimated.





eternaltriangle added to this post, 3 minutes and 50 seconds later...

I don't mean to say "ra ra America". The US has problems, and that's no understatement. However, for the time being the US is the strongest economy in the world. Moreover, this notion that Europe somehow represents a kinder and gentler model than the US doesn't hold water. The European model of big government (even though Europe chronically underspends on defence), excessive liesure, and obsession with macroeconomic stability over growth is a recipe for malaise (of course there are European countries that have avoided it with different policies - like Ireland, the UK and Norway).

[prometheus]

The dollar has lost 11.25ish points I'll guess this to be about 15% THIS year alone.

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Anyone that is saying the dollar will stay strong has better drugs than I have, considering it's been in free fall for quite a time now.





prometheus added to this post, 4 minutes and 30 seconds later...

This doesn't take into account the fact most central banks are holding dollars to stabilize their currency and buy global commodities, which equates to a drop in their currency value when the dollar falls. So the real percentage is beyond the current mathematic skills I can remember.

[Jgib5328]

The dollar has lost 11.25ish points I'll guess this to be about 15% THIS year alone.

The only reason the dollar has been falling is because of the influx of dollars in the economy and the decline in the interest rate. If interest rates were to go up and money was taken out of circulation, then the dollar would rise again. You are just focusing on the short term.

[prometheus]

Here is the historical "long term" I don't see this changing at all. Nor do I see a reduction in the M3, which they refuse to even report anymore.

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[Jgib5328]

Here is the historical "long term" I don't see this changing at all. Nor do I see a reduction in the M3, which they refuse to even report anymore.

They'll eventually have to reduce M3, inflation would go crazy if they didn't. Currently the fed just isn't too worried about inflation right now and are more focused on increasing the liquidity. But I mean the dollar has been decreasing for awhile since the Euro has been rising, but once the interest rates are back up, it will slow it down, and eventually Europe will have a recession again too.