OnTheRocks Posted December 7, 2004 Share Posted December 7, 2004 I have been seeing the US dollar value drop drop drop against the Euro. What short and long term effects does this have on the US Economy, and what can US do to fight it? For some conspiracy therorists: Is this an attempt by the most powerful people in the world to push to a one world currency? Link to comment Share on other sites More sharing options...
GG Posted December 7, 2004 Share Posted December 7, 2004 A very good explanation was offered here David Wessel (WSJ subscription needed) Or you can donate $0.02 to my cause, and do a serach by this topic: "Behind Big Drop in Currency: Imbalance in Global Economy: U.S. Soaks Up Asia’s Output By Going Deep into Debt; Something Has to Give by David Wessel, Wall Street Journal, 2 December 2004, p. A1. There is no solid answer, as this is very complicated and involves a lot of moving pieces. Short answer is that low dollar is ok in the short term, because it makes our exports cheaper overseas. But, because we continue to buy foreign stuff, we are very reliant on foreigners buying dollars. At some point, they may get tired of holding dollars, which will lead to a further decline in the dollar and rising interest rates. That's the basic theory. But US doesn't want to take the first step in strengthening the dollar, because ot wants China to start cooling its heels and remove the direct peg its currency has against the dollar. It would also like to see continuing improvement in Euro economy. This doesn't even touch on the US savings rate, nor the commodity prices, etc. Basically, the world still sees the US$ as a safe harbor investment and continue to buy the $$. As to the last statement, don't get the tinfoil hat out of the closet, just yet. Link to comment Share on other sites More sharing options...
Mickey Posted December 7, 2004 Share Posted December 7, 2004 I have been seeing the US dollar value drop drop drop against the Euro. What short and long term effects does this have on the US Economy, and what can US do to fight it? For some conspiracy therorists: Is this an attempt by the most powerful people in the world to push to a one world currency? 150109[/snapback] Higher interest rates are the almost certain result. That means it will be harder and more expensive to borrow which means fewer purchases from new shoes to new homes. Higher interest rates act like kryptonite to an economy. My advice: shed yourself as much as possible of as much debt as you can as soon as you can. There are far more complex issues going on with potentially far more devastating problems than higher interest rates but for the average Joe, the higher rates are what is going to impact them the most. Link to comment Share on other sites More sharing options...
MattyT Posted December 7, 2004 Share Posted December 7, 2004 Here's a simple viewpoint....the US economy will strengthen because American's can't afford to vacation in most European countries and will spend their money here instead. Link to comment Share on other sites More sharing options...
blzrul Posted December 7, 2004 Share Posted December 7, 2004 Here's a simple viewpoint....the US economy will strengthen because American's can't afford to vacation in most European countries and will spend their money here instead. 150371[/snapback] Simplistic you mean not simple. Or perhaps for simpletons because it's NOT that simple. Our government is borrowing $1m A MINUTE ... mostly from Asia .... have you considered what that could mean if we don't slow it down and start to pay down some of that debt? "Vacationing at home" won't even be an option... Link to comment Share on other sites More sharing options...
MattyT Posted December 7, 2004 Share Posted December 7, 2004 Simplistic you mean not simple. Or perhaps for simpletons because it's NOT that simple. Our government is borrowing $1m A MINUTE ... mostly from Asia .... have you considered what that could mean if we don't slow it down and start to pay down some of that debt? "Vacationing at home" won't even be an option... 150824[/snapback] I was just trying to point out that its expensive to vacation in Europe. Sheesh! Link to comment Share on other sites More sharing options...
blzrul Posted December 7, 2004 Share Posted December 7, 2004 I was just trying to point out that its expensive to vacation in Europe. Sheesh! 150832[/snapback] I'm not attacking you but we were discussing the devaluing of the dollar and what it could mean. You are correct, it IS expensive to vacation in Europe. Link to comment Share on other sites More sharing options...
Kevbeau Posted December 7, 2004 Share Posted December 7, 2004 I'm not attacking you but we were discussing the devaluing of the dollar and what it could mean. You are correct, it IS expensive to vacation in Europe. 150835[/snapback] You aren't kidding. I was over there for Thanksgiving. Now I know how Canadians feel. Link to comment Share on other sites More sharing options...
blzrul Posted December 7, 2004 Share Posted December 7, 2004 You aren't kidding. I was over there for Thanksgiving. Now I know how Canadians feel. 150872[/snapback] Yeah my husband's on his way to London for a couple of weeks. It wasn't a planned trip, so his last-minute holiday shopping (that is, his normal routine) is now an issue. Because I told him if he bought ANYTHING over there that I could possibly get here (cheaper) I would annihilate him. And he knows I mean it. So, when he returns Christmas Eve he won't have time for jet lag, he's gonna go shopping! Link to comment Share on other sites More sharing options...
Rich in Ohio Posted December 8, 2004 Share Posted December 8, 2004 Higher interest rates are the almost certain result. That means it will be harder and more expensive to borrow which means fewer purchases from new shoes to new homes. Higher interest rates act like kryptonite to an economy. My advice: shed yourself as much as possible of as much debt as you can as soon as you can. There are far more complex issues going on with potentially far more devastating problems than higher interest rates but for the average Joe, the higher rates are what is going to impact them the most. 150303[/snapback] Who the hell borrows money to buy shoes??? Are you kidding me? Sheding yourself of as much debt as possible is always good advice mick, thats no different then saying "use an umbrella when it is raining out" Duh Link to comment Share on other sites More sharing options...
DC Tom Posted December 8, 2004 Share Posted December 8, 2004 Who the hell borrows money to buy shoes??? Are you kidding me? 151285[/snapback] You've got to be kidding me. You pay cash for everything? Link to comment Share on other sites More sharing options...
Rich in Ohio Posted December 8, 2004 Share Posted December 8, 2004 You've got to be kidding me. You pay cash for everything? 151295[/snapback] he he he .....not everything!!!!!! Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted December 8, 2004 Share Posted December 8, 2004 You've got to be kidding me. You pay cash for everything? 151295[/snapback] With the exception of major tickat purchases (cars, house), yes I do. Link to comment Share on other sites More sharing options...
nobody Posted December 8, 2004 Share Posted December 8, 2004 You aren't kidding. I was over there for Thanksgiving. Now I know how Canadians feel. 150872[/snapback] Luckily for Canadians their dollar is gaining strength as the US dollar falls. Link to comment Share on other sites More sharing options...
nobody Posted December 8, 2004 Share Posted December 8, 2004 I have been seeing the US dollar value drop drop drop against the Euro. What short and long term effects does this have on the US Economy, and what can US do to fight it? For some conspiracy therorists: Is this an attempt by the most powerful people in the world to push to a one world currency? 150109[/snapback] I don't think the Euro will ever be more of a 1-world currency then the dollar ever was. The devalued dollar is the result of US govt policy. They wanted this to occur. While it makes US goods more affordable in Europe it does little else. The asian countries (like china) continue to keep their currencies at a static level with the dollar which means it still is cheaper to import the asian goods into to US then to produce them here. That means the trade deficit continues to increase. Link to comment Share on other sites More sharing options...
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