Wednesday, January 02, 2008

Worthless Dollar?

Well quick post about the worthlessness of the US dollar. Here is an article where the Iran president called the US dollar worthless. The worse part is that as Americans we can't really argue about it. We're in severe trouble with the housing market. Our national debt is $9 trillion dollars, a far cry from our surplus of the 90s.

This national debt causes the devaluation of our currency. And our interest rates do not encourage outside investing, although our goods are supposed to be cheaper now for people to buy, but we're not seeing the benefit.

Where can we go from here?

12 comments:

Anonymous said...

You're quoting a terrorist? Do we do anything with the economy of Iran? Do we trade with them?
The American dollar is not worthless. It's only worthless to them. Or at least that's the propaganda they are spewing. Don't fall for it.
Why are economists constantly telling us the dollar's worth vs. the euro (or yen, etc.)????? Can the Europeans buy more stuff with their euros at home? Are they getting more value? No. Only if they come HERE are their euros worth MORE.
If they captured Saddam Hussein today would that briefcase he was packing be holding dollars or euros?

Currency is only as valuable as the confidence people have in it. Tear down the confidence and you devalue their worth. That's what I think is in play here.

If they start quoting Osama Bin Laden next.......well.......

Anonymous said...

Anon 12:09, I disagree with you. If our dollar can't buy a cup of coffee overseas, then yes, it's worthless.

Living Almost Large said...

Hmm..I had no idea everyone non-american and from the middle east was a terrorist. Sorry for assuming they aren't. I guess they are! :p

Actually I personally find the US dollar right now quite worthless. It's hard to want to travel abroad because of the weakness of the dollar.

And yes we have a lot of financial issue at home which is why the US dollar is in trouble. The debt our nation is in devalues the currency. This is not an assumption, but a fact. Why? Because we're printing more currency to stay afloat and borrow. This devalues our dollar.

It's been true for almost 100 years that the larger the debt, the more the US prints. The more we print, the more the value of the dollar drops.

How we got into debt is a totally different and irrelevant issue. The only issue is that yes the dollar is becoming worthless.

Anonymous said...

We're not talking about every non-american from the middle east. Yo specifically quoted the President of Iran, Ahmadinejad regarding the US American Dollar. Ahmadinejad is a known terrorist, claims that the Holocaust never happened (which is the same as saying Hiroshima never happened), wants israel 'wiped off the map', will use nuclear weapons against the US, curtails woman's rights (jail if not wearing a hijab-cover/veil) and was laughed out of Columbia University when he proclaimed there are no homosexuals in his country of Iran. Yeah, right.
No one should give a rats ass what Ahmadinejad has to say nor should he ever be quoted.
As to buying a cup of coffee overseas, how many American actually do such a thing? We can still buy a cup of joe here in the states for a buck and basically, that's all that matters. The coffee we're drinking comes from overseas anyway, does it not?
Currency is nothing more than wampum. It gets it's value from what people perceive it's value to be. Every time you utter the words that the buck is worthless, you are shooting yourself in the wallet.

Living Almost Large said...

My wallet anonymous, is hurting. And I've got a lot of investments outside the US.

Anonymous why not post your name and explain why you feel this man is a terrorist? Yes he has ideas which you don't agree with, but labelling him a terrorist seems unfair. What about all people who think that evolution doesn't exist? Or homosexuality is wrong? Unless proven, I thought people were innocent until proven guilty. Do I agree with his positions? No, however, I do agree the US dollar is worthless.

So if you want to keep juding so harshly someone's ideas put it on another blog. This is a finance blog, let's talk US dollar.

How much has it dropped? Why has it dropped? What has caused the devaluation of our dollar?

And you argue our dollar isn't devalued? Then why is the rate of the euro 1.5 instead of 1.2 of a few years ago?

Have you ever seen anywhere but the US? Have you experienced how much more expensive it is to go outside of the US?

How many Americans buy coffee outside? Tons. How many Americans, including Warren Buffet has invested heavily in stocks/currency outside of the US. A few years ago Buffet even said the US dollar is going down, so he made a strong play outside the US.

So let's discuss why the US dollar is weak?

Anonymous said...

I am discussing why the dollar is perceived to be weak but you are not hearing me. I'll try again.

Once upon a time the US buck was backed by actual bars of gold which the US kept in Fort Knox. Then in the late 1970's the then president, Nixon decided to change the money standard from gold to currency. This caused an immediate drop in the value of the dollar. I know this because I got stranded in Europe at the time and no one would exchange my bucks.
The currency is based now on the good faith of the government. Destroy the government and you devalue it's money. GET IT????

The Iranian president has been responsible for many of the killing of US Soldiers in Iraq and the constant bombings. He is a terrorist. He wants to destroy America. The terrorists know if they upset American currency value they weaken America. And you are falling for it like a ton of bricks.

Think World trade Center. The terrorists thought if they took down the biggest symbol of American financials, America would crumble. Well, it didn't. And it ain't going to crush now either.

Why does the media constantly compare dollars to euros? Because each time they do it weakens America. Why don't they compare the buck to Zumbabwe or some jungle in the tropics? Everytime you say the American dollar is worthless, it is as if you are putting nails into your own coffin. It is not worthless. America is still the strongest country in the world but sadly everyone is jumping on the bandwagon to destroy us. You included.

When they captured Hussein, he had over $100,000 in American dollars. he wasn't packing euros. The terrorists do not use euros to fund their reign of terror. They use american dollars. Why? because it is the only thing of value.

You should be happy the dollar is falling. More europeans are coming here in droves and shopping, buying , manufacturing, etc. etc. The fact that we can't go over there right now is just too bad, isn't it? It's about time THEY come here instead of us going THERE.

If you are going to quote someone discussing the US dollar, find someone who is not considered a crazy by the world. How about Paulsen?

The American dollar is only worth what people PERCEIVE it to be. Everytime you compare it to the euro or whatever, you lessen it's value and yes, you shoot yourself in the wallet. SHUT UP!

It's a good thing the dollar has lost a bit of it's glamour right now. Americans will finally learn the value of that buck, lay off mounds of credit and things will finally get back to normalacy. Low interest/mortgage rates pushed house values to the ceiling.

The fact that most people didn't shop as much this Christmas is also a very good thing.

STOP CALLING THE DOLLAR WORTHLESS. You fuel the terrorists flames when you do.

Do you understand a bit better?

Living Almost Large said...

Anonymous, I will allow your post of "shut up" because everyone's allowed an opinion.

But your ramming opinions down people's throats is not the way to go.

Now, the US dollar is based on perception. Why not read why Warren Buffet bought foreign currency because he believed the dollar would fall and it did.

Now just because you don't like the opinion that the dollar is weak, doesn't mean that 6 billion other people are wrong. That everyone foreigner who thinks it's weak is wrong. http://www.ajc.com/business/content/business/stories/2008/01/03/India_NoDollars_0103.html

And the US dollar has dropped in comparison to the Euro, Yen, Peso, Canadian dollar, rupees, even the chinese Yuan is trying to fluctuate instead of staying fixed.

I'm not going to argue politics here because you won't agree with me. I never believed in the war, nor should we have ever intervened. So I can't say the President of Iran is wrong. Heck he's not the bomber, most are people trying to fix their own country.

Actually more Foreigners are buying US companies to outsource. Hm, so what will happen to your job when it's outsoured? And bought by the Chinese? Have you not seen the reports that Chinese have tons of US dollars and want to buy US companies.

Lemony said...

Technically, what anonymous is saying is true - the American dollar is only as valuable as we percieve it to be. However, when 6 billion other humans percieve it to be crap, there isn't much we can do for it.

I just finished traveling to Canada and felt the pinch. America is becoming Canada's Mexico now. It's disturbing that what I thought was a "high" income is actually crap compared to the rest of the world. My wallet is hurting, too. I hope 2008 brings better fortune for all of us.

Anonymous said...

The falling dollar makes Americans attractive to foreign investors. That is a very good thing. We have suffered enough with trade imbalances long enough. Finally foreigners will be coming to our shores, buying our products, staying in our hotels, eating in our restaurants and paying fees to visit our parks and museums. They can buy all of the real estate and companies they want. They can't take the homes back to Europe with them. For the first time American workers will be attractive to foreign countries. They will be hiring us in droves.
As long as Americans remain on American shores, the rising dollar will not mean anything. Everyone on the globe is paying more for food and gas whether it be in euros or dollars. Do you think europeans are able to buy more because their euro is worth more? Of course not. Americans will be forced to buy american cars because imported cars will be too expensive. Thank the Lord! Finally! Americans will be buying american cheeses rather than expensive french ones.
You people are just not looking at this correctly. The falling dollar will put us on sale and guess what? Everyone will be coming here and buying!
If I owned a store or business, what do I care who comes in. As long as they are buying and I am making american dollars, I'd be happy.
China and japan play games with their money and do not permit it to fluctuate. They don't play fair. Currency is a commodity that is manipulated by all governments.

Our jobs will not be outsourced anymore. Who would an employer hire right now? Someone he has to pay in euros or dollars. The employer will choose the american dollar. They think they are getting cheaper labor, but to us americans, we'll still be making $25-50 an hour or whatever.

Sorry about saying shut up. I meant-keep quiet. It's a good thing that our dollar is perceived to be going down. Let Iran and whomever say what they want. The dollar is going down because our government keeps borrowing and borrowing and borrowing. Well, guess what? They can't borrow anymore.
Let America be on sale. We need the business.
It is better to make a little money than no money at all.

We'll have to learn to stay home for a while. And perhaps get re-aquainted with ourselves. We should smarten up, realize we can make lemonaide out of lemons and listen to the sound of our ringing cash registers.

Don't listen to the media hype. Don't feel depressed or discouraged because we think our dollar is worthless. It is not.

We can still go to our local coffee shop and buy ourselves a cup of coffee for a buck, or $1.25 or $1.50 sans Starbucks.

Europeans pay between 50 to 60% of their income to taxes. They are only left with 40% to spend. They are begging to come here and spend that money. The government of France only allows shopkeepers to put there wares on sale for 2 weeks in January.

As long as we stay on our own shores, we'll be fine. This is not the first time our dollar devalued. We'll have to wait it out. Our saving grace is that foreigners want to come here and shop, buy and invest. Let them come!

Living Almost Large said...

American jobs are not being outsourced to Europe, it's being outsourced to China and India. Have even seen the building plans for american companies? Even with the falling dollar it's cheaper to pay people there half price.

Um, Chinese are buying up companies, they aren't buying goods. They are buying stocks and companies. Why? Because they aren't into materialism, they want to make money. Much like Japanese buying up American companies. More and more companies are becoming foreign run.

You are misinformed. The Yen (Japanese currency) fluctuated. In the 80s it was 360 yen to 1 dollar. Now it's 107 yen to 1 US dollar. What happened?

Second the Yuan (Chinese) currency is 7.8 to 1 US dollar it doesn't fluctuate. Howver the Hong Kong Dollar does.

The US government is preventing China from fluctuating it's currency, but it will happen likely in the next 2 years and it will screw Americans. Many of our goods is made in China and if the currency changes it will affect our abilities to purchase them.

Now why should we buy American Cars if they suck? If the quality was the same, maybe. But why should people pay money for an inferior product?

Um, obviously you don't live in CA or Northeast and pay a ton in taxes? You aren't in the 33% federal bracket, don't pay 9-10% state income taxes, very high property taxes, and you aren't phased out of tax breaks. Try paying like a American who pays that much? It's close to the same as Europe and Asia.

Foreigners don't want to come to shop, they want to own the business PERIOD. Second, you need to learn currencies about which ones fluctuate and which ones don't. Also you need to look at more historical values, like the rupee and peso. Not just the Euro.

The truth is that the US dollar has fallen into heavy disfavor. And it's worthless. It's not good.

And US buying more cheese? Um, hate to break it to you, but Americans salaries are not rising with inflation. So our purchasing power is going down. You have to examine the inflation index.

Please tell us where you live, about what you make, and what you industry you are in. It sounds like you are pro-american for being pro-american.

You aren't supporting the facts that the US dollar is worthless. Or that it's not a good situation for investing in US stocks versus foreign stocks. Also you are saying buy US goods, but are they equal in quality? Why waste money buying poor quality?

I am fine with living here, but I realize our country is in trouble. Think I'm alone? I hope Boomie from the Wastrel Show thinks hard times are coming.

So how is a weaker dollar good for the US? It's worrying economist about stagflation. It's making our purchasing power less. It's making it harder to just live.

johnstonteam said...

I've read though the give and take of the comments on this article.

First, the US dollar isn't worthless. While a little beaten at this point, it is still a well respected currency.

But, while the Iranian president isn't someone we should be taking daily economic classes from, what he said does have some morsels of truth. We shouldn't automatically dismiss him because he's a despotic crackpot. What I'm saying is even a kook, like a broken clock, can still be right a couple of times a day. And let's face facts, he is correct that the US dollar is not considered at peak performance at this time.

The US dollar is, while as noted above respected, weakened. There have been news stories about it possibly no longer being the yardstick currency that benchmarks our world exchange of money and commerce. The Euro is seen as possibly being that standard and in certain instances, now is. Even the once weakened Canadian dollar is now riding near parity in terms of value with the US dollar (although in the past couple of days, it too has lost value due to concerns of a recession in the US).

What is not so well understood by us laymen is the fundamentals underlying the US dollar. What of the those fundamentals remains strong and what of those fundamentals is showing signs of weakness? And are any of those fundamentals beyond repair?

The reason we laymen don't have a great grasp of the above is that even the experts disagree on much of what the true fundamentals are and the relative value of each.

I don't think professional currency traders and those whose efforts determine the closing dollar amount at the end of the trading will take to heart what Ahmadinejad says. Their confidence in the US dollar and that of their clients is more rooted in their confidence in the underlying fundamentals. It won't be based on a rabble rousing middle eastern president.

I'm a layman with regard to understanding the fundamentals of the value of the US dollar. Based on my limited knowledge, I do have some concerns about the ability the dollar to return to more normal levels.

As I understand it now, the Chinese currency tracks the US dollar, do our cost of so many of our imported goods and yes even services have seen minimal impact to this point. It is also my understanding that some time in the not so distant future that will change. That, if the dollar remains weak, could fuel inflationary pressures.

Many believe when the currencies no longer trade in a mirrored image path, it could mark the return of manufacturing to the US. It could, but so much of our production capacity has not only been idled, but dismantled. Are companies who invested in Chinese and other developing country factories and equipment going to create additional capacity with an investment in the US?

And what will be the Chinese reaction to the above? My guess is no matter what happens, they need us economically viable to continue the trade relationship as it exists today. They need us buying their stuff.

minimum wage said...

I will gladly accept any unwanted worthless dollars.