Perhaps the "YED" will, but probably not as the YED was invented by Billy T. One YED has value of (0.01 Yen+1 Euro+1 Dollars)/3 = 1.1868$* at close of busness Monday 21Oct07. (The YED's symbol is $*.) Thus, a dollar buys about 0.84$* now and Oil costs approximately 75$*/ barrel now. No government can print YED so it is not as prone to run-away inflation as its components are. In fact, printed YEDs do not exist. The YED is only an accounting tool, intended to make life hell for big drug dealers and bank robbers etc, as all YED transactions leave records for the police. YEDs can not stolen with guns, etc. Thus no one will be killed in a liquor store holdup if its customers pay on their YED card account. etc. However, for a long time some Dollars, Euros and Yen still circulate, but ever more rarely as the safer YED use spreads and cash registers are replaced by YED card swipe terminals in stores etc. Some store may keep an old cash register in the back for occasional use, but that invites robbers so few will do so eventually. No government needs to do anything to make the switch to YEDs. (Which is good as they are generally only able to screw things up. Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! ) Note $* can be pronounced "dollar star" (or "star dollar" depending on relative positon of adjactive and noun in your native language) or one can say "YED," which rhymes with "Bed." Also *$, star dollar, is an acceptible symbol for the YED. English (and adjective first languages in general) may prefer that. Also note the "YED card swipe machine" is just the regular charge card swipe machine, with some slight conversion software added somewhere in the data stream. Banks may charge slight fee to convert your charge card to both dollar and YEDs, but I doubt they will. (Competive advantage to the ones that do not is too big.) If you prefer you can transfer dollars to YED accounts whenever you want some protection against the continued drop in the value of the dollar. (Not as good as buying ADRs, but better than nothing.) Banks may limit the number of free dollar to YED and YED to dollar transactions each month to limit excessive speculative activity. Any bank chosing to offer a YED account can do so now. (No fee to the YED inventor.) I would like to open one now for my US children's protection against dollar falling more as almost all think will certainly be the case. Any comments on my idea / invention? Dollar falls to six-week low after G7 meeting By Steve Goldstein "... LONDON (MarketWatch) -- The U.S. dollar fell to a six-week low on Monday vs. the Japanese yen as investors continued to shun equities and as a meeting of leading industrialized nations failed to rally support for the greenback. The dollar fell to as low as 113.23 yen and in European trading was at 113.91 yen vs. 115.10 yen on Friday. The euro hit a new high of $1.4348 against the dollar, and was up to $1.4310 from $1.4281 late Friday. The Group of Seven leading industrialized nations over the weekend called for China to accelerate the pace of the yuan's appreciation, ... The G7 statement does not mention the weak dollar or the strong euro, dashing the hopes held by some in Europe that the group would say something to stop the slide in the dollar against the euro. ... The analysts suggested this was a "green light" to push the dollar lower. Risk aversion was also a theme after Friday's big fall in U.S. stocks carried over to Asia and Europe on Monday, with declines in stock markets in Tokyo, Hong Kong, London and Frankfurt. Risk aversion tends to help the Japanese yen, as traders cancel so-called carry trades in which they borrow the low-yielding yen to reinvest elsewhere. ..." FROM: MarketWatch, 4:37 AM ET Oct 22, 2007
Why do you believe the sliding dollar is catastrophic for the US, Billy T? The US is letting the dollar fall intentionally because it has been too strong, leading to the huge US trade imbalances. The primary concern is China's undervalued yuan, which gives them a huge advantage in international exports. China has refused to increase the value of the yuan, pegging it to the dollar. A squeeze-play is going on, to force China to revalue its yuan. Most other currencies of the world are also dropping as this unfolds, including the Brazilian Real. http://www.bloomberg.com/apps/news?pid=20602081&sid=aKKpWmmV9LS0&refer=benchmark_currency_rates
If it remains only a slow slide down, that will help the US economy (boost some exports, cut some imports, even perhaps keep a few jobs from being "outsourced"); however as you well know nothing in economics is isolated from many other facts. A very ugly fact is that most, if not all, holders of US Treasury paper gained nothing in recent years. - In fact, lost about 5 or 6% of their purchasing power as measured by the number of dollars required to buy their local currency. (They would have been better off to have sold dollars than to have bought them buy far.)* For example, in Brazil's case averaged over the last three years The dollar has bought about 15% fewer Real EVERY YEAR for three years and the Treasury interest paid has been less than 6%. Few have been losing 9% a year as Brazilians holding US Treasury paper ("matress dollars" included) have, but eveyone (with Turkey as current possible exception because a probable civil war does make even a dropping dollar look good) has lost significantly on their holdings of Treasury paper. Even the dumbest (except possibly Brazil's) central banks are setting up "sovern funds" to buy real assets instead of US Treasury paper. (Brazil and 6 other South American nations are setting up the "Bank of the South" which will invest in productive developments linited to South America - much like a multi -national sovern fund. Noone really likes US paper long term now, except a few insurance companies with matching long term obbligations in dollars. - why the yield curve keeps "going flat.") Yet, US is going deeper into debt every year and at least on average, for a long time, more Treasury paper will mature every year. Some of it will not "roll" now. The percentage of the maturing Treasury paper that must be paid off is growing. Thus in some sense, the Treasury must finance not only the current deficits, but also some of the old debt that will not role, at current interest rates. You know the two choices the US has as well as I do. (1)Raise interest rates. or (2) Run the mints presses more to print the money required. Neither choice is very attractive. (1) will just slow the economy more. (2) will rapidly increase the drop in dollar's value and the "unrollable percentage" of Treasury paper maturing. Probably some combination of (1)&(2) will be used and "stagflation" will be the result. At some point the possibly benfical slide of the dollar becomes a run to get out. That is why I thought it imperative to more than zero both of the "twin deficits" (as Clinton did, at least their total!) - Show US has the guts to take a little economic pain, but unfortunately, under GWB it does not. - US now prefers to invent causes for making wars where there is oil not being sold to the US or at least only sold for US dollars. I know and understand that strickly and logically speaking one does not need to even balance the budget or zero the current accounts/ trade deficits, but their is a lot more to economics than rationality. (You seem to forget that.) Rationally the US housing stock is worth more today than it was a year ago. - that is just one current example of why I pay no attention to you telling me that eveything will be ok if the twin deficits are growing more slowly than the GDP. I.e. Economics is not rational. A depresion is coming to US. Recession first, probably starting in first half of 2008. My long standing prediction is that the run on the dollar will occur in the 6 years between Oct2008 and Oct2014 and currently as things are going, I think there is more than a 50% chance it will be in the first three years of that "window." I also note that the GDP is now growing slower on average every year for the last few years, (In part because many of the higher paid jobs have been / are being outsourced and the population bulge, called "baby boomers," is less productive every year.) To remain competive with rest of the world, US needs to invest at least at half the rate it is, but US is "negatively investing" as it sells the productive assets to foreigners to pay its current living expenses. Dropping dollar just makes it easier for the foreigners to buy up the US faster. Hell, for the first time in history, even Brazil's foreign investsments exceeded foreign investments in Brazil - this despite "half the world" trying to buy up sugar cane producing land and build or buy alcohol refineries! - The very strong Real is why. I am really sad that it is now so easy to answer your question. I tried to change this future years ago, when it was still possible. (Warnings here, my book etc.) ---------------------- *To use myself as an example; I sold dollars and got slightly more that 4R$ for each about 3 years ago (I forget just when, but am sure you know or can find out.) This was done on the very tollerated "grey market,"** not the official rate. Now I can buy all those dollars back (if I were crazy) 2.3 times over! Many others are learning that buying dollars in any form (including Treasury paper) has been and still is STUPID. ("Materess dollars" are even coming out of the matresses where some have been for 40+years and being dumped now for very small values compared to what they were worth when they went into the matress for protection against rampent local inflation back then.) **Every newspaper gives the rates and most have adds tellingthe locations of the "Cambios," which are all very public on the main business streets and even usually have police stationed near by to discourage robberies. From my home I can walk to 4 different ones in five minutes! - Brazil is strange, interesting place to live. Laws are are many, but few are enforced. The "constitution" is a book. One section prohibits interest rates above 12%, but that has never been the case. A few years ago, when infaltion was about 12%, the official rate. (corresponding to the FED's 4.75% discount rate) was 29%! Until just a month or so ago Brazil had the highest real rates in the world, but Turkey does now.
Billy T Looking ahead 10-20 years, aside from stocks and shares, where and in which location would you put your cash right now? Currencies: Land: houses: Precious metals (gold): Banks: Collectables (artworks, antiques etc):
None of the things you named, especially not the last, which appreciates only in "good times;" but "well chosen land" is OK if you can hold it long term, but make sure it is a "farm" at least for tax purposes. (I raised bees, to do that - Almost never actually sold any honey, but did some years file schedule F and even paid a few dollars on my claimed larger sales - I have always wondered that is illegal; Pay taxes you do not really owe. - Probably it is. I never claimed a loss, but could have legally.) Unless you are on the wrong side of 40, best investment is always in your self. I am very big on education, especially any that has commercial value, but all has great personnal value IMHO. - Noting better than education to spend your money on and probably that even includes health until quite old, I.e. if you know what to eat, how to live, etc - and have no inherent problems you will not have much need of doctors etc. I took one course of anti-bioitic in last 30 or 40 years, but do get annual PSA now and general check up roughly every year. I swim laps several times each week, and am slowly building a house all by my self - good exercise especially as I too frugal to pay a gym to work out in.
Billy T, Oh, I know there is a lot more to economics than rationality. I was mildly invested in the stock market when the 'dot.com' bubble burst. There was too much speculation in the stock market, driving up the price of stocks for no good reason. There has been much investor speculation in the housing market, driving up prices in certain areas to much beyond their true value. The US dollar has been valued too highly vs. many other world currencies. All those things lead to eventual 're-adjustments' in value, just like the stock market 'correcting' itself. I have not told you 'everything will be ok'. I do believe the US is heading into 3-4 years of recession, during which time there will be many individuals and businesses that will have to do a lot of 'belt-tightening'. Some businesses will not survive, especially those that derive most all their income through imports. I just do not believe that the US population will be affected to the extent that you do, and I do not believe that a depression is imminent, only a recession. The falling dollar will hurt international holders of the dollar much more than it affects the US itself. If I were you, I would invest in the yuan as it is sure to increase in value as the US and most of the rest of the world puts the pressure on China to re-value their currency. Or is it possible to for you to buy and hold the yuan?
I would love too. I do not know how. Despite my interest in stocks, currencies etc. I am just a long term "buy and hold" invester. Very ignorant of a lot of things more active traders know. There are ways to buy stocks in Chinese companies, and I think I could do that as some even trade on the NYSE, but I do not turst China long term. I would not be the least surprized to wake up one day in the next decade or so and read that China has ceased all foreign assets. They will not do that until they do not need extenal FDI, but that day will come as the Chinese save like crazy. (At present by choice, I think, but when needed the CP will make if by law, if they need to.) Thus, I only invest it two of the bricks. (Don't trust Russia either. They are already confiscation energy company investment under the pretense of "enviromental rules.") India and Brazil are never going to do that in the foeseeable future, but both will (India is) limit the flux of dollars into them. This will just make the ADRs I have more valuable. - You must pay bigger premiums for those that are already out in US markets. (I do not know much about India's new limits on the "participation units" but this I think is a step in the direction of limiting the dollar influx.) IMHO Brazil is destine to be an "economic colony" of China (Perhaps even India too, if we are thinking several decdes into the future.) If you know how I can buy Yuan, please tell, but as I like "postive sum games" I would be reluctant to just stuff my materess with them. (Also if I can buy any in the local Cambio - I would not know if they are real or fake.)
No, I hate "dead assets." For at a couple of years I have been tell all who woud listen to buy ADRs, especially in India and Brazil. (That is selfserving as I did so five or more years ago, but if you had done when I first told you to your would have at least doubled you dollars by now.) Not all stocks, even Brazilian and Indian ADRs are equal. (Some are "more equal than others"- to steal from Animal Farm) I liked commodity based companies back then, but think they will not prosper as much as they have already. The current high prices are causing new mines to open, fields to be opened and pastures planted in cash crops, everything is more heavily fertalized etc. so supply is growing like demand now in most things, perhaps even oil soon as more reasonable cars replace SUVs etc. Now the drive is to "non-dollar earners." - Safe havens from at least the dollar slide, if Quad POV is correct, from dollar collapse if mine is. For example a water or electric company in Brazil sell zero to US. - earns no dollars (except perhaps on some investments.) Incomes are rising in Brazil and India rapidly. - Their people will be buying things to improve their living standards. - You buy who is selling to them. I do not give specifics - too self serving if I did and makes people mad when I am wrong, like last time back in 1947. Please Register or Log in to view the hidden image!
The Dollar is still over-valued, but the Euro also is over-valued. There is a demand for a stable liquid currency for the purposes of foreign reserves, foreign exchange, and a currency in which wealth can be reliably stored. The older wealthy people of the Second and Third World's don't have confidence in the future stability of their economies and currencies because they have seen so much instability and therefore they seek the stability of currencies like the Euro and the Dollar. Unfortunately the market demand for stable currencies drives the value of stable currencies to high and thereby creates unsustainable economies and will eventually turn the stable currencies into unstable currencies. The Third World currencies are undervalued. This overvaluing of First World currencies and undervaluing of Second and Third World currencies will eventually cause the next great depression. Americans using borrowed money to buy stuff that they don't pay for can't go on forever. As the Euro is pushed too high, the European Unuion will either have to increase their trade barriers or go down the same dead end path that the USA is on. It would be better for world economic stability if some stable global currency that was not used as a local currency anywhere existed.
not to butt in but I am very happy to see the AUD go up against the dollar. I hope it keeps going up and up. maybe someday I will return to the USA and buy a house - now that they are going down in price - they are still going down in price right???
Agreed, currencies should not be traded like commodities by every Tom, Dick and Harry Speculator/Hedge Fund Manipulator. However, I don't know what would happen if they weren't.
I don't have a problem with currency values being market driven. Normally there is nothing better than an informed free market for setting correct values. The problem with the currency valuations is not being caused by Hedge funds and speculators. The problem is that for David Ricardo's "theory of comparative advantage" to work as advertised the exchange rates must rise and fall based on imports and exports changing the supply and demand for currencies. These massive flows of investment dollars are causing currency valuations to be set at levels that make no sense and are destructive to healthy balances of trade and stable global economics. These massive flows of investment dollars were not anticipated by Davis Ricardo. Currency manipulation like that which is done by the governments of Japan and China was not anticipated by David Ricardo. David Ricardo never anticipated wealthy Third World oligarchs who keep large portions of their wealth in First World investments because they have no faith in their own Nation's people's willingness to tolerate wealthy oligarchs and because they have no faith in the long term stability of their own nation's currency. Something should be done. Perhaps foreign investment should be taxed. Perhaps the UN or the World Bank should be authorized create a currency with valuations tied to commodity futures. I won't be holding my breath while waiting for the world leaders to do the right things. If the USA can't do something simple and obvious like adopting the metric system then it is highly unlikely that that a less cohesive groups like the world's nations and global power elites would be able to lead the world into doing anything intelligent on any subject.
Good discussion of Dollar by C.Schwab's leading analysist. Short audio file at: http://www.schwab.com/public/schwab..._strategies&lvl2=market_insight&locNum=locOne Some of the main points (Much of what I predicted couple of years ago would happen): "Dollar now at all time low against standard basket of 6 major currenecies." "Global investors are spurining dollar. - Now have net sales of US bonds (by foreigners, including redemptions instead of "rolling")*." "China is preparing to invest more out side of China (A major fund just allowed to do so.)" {Billy T comment: - Schwab's lead analysist states that this will help increase the demand for dollars in China. Thus, making Yuan weaker / dollar stronger, as US wants, but I think that true only if Chinese buying in US exceeds the net influx dollars. (A postive trade bilateral trade balance for US!) Until then, China can just "turn around" the dollar stream coming in. I.e. IMHO, Schwab's POV is a false note of optimism or too much trust in conventional economics, when it does not apply.) "Dollar / oil correlation < 1992 was strongly. Now is strongly negative, due to OPEC nations now buying three times a much from EU as from US. Before 1992, they bought mainly from US." {Billy T comment: - So much for the "growth of exports" to them from US a "dropping dollar" will produce. - About a year ago, I noted that the hatred for US has increased so much under GWB that many now refuse to "Buy US" as a form of protest. I illustrated this with case of my wife's refusal to even drink free coke parties. (I like coke, but don't buy it to bring home. "Dolly" a Brazilian "rip-off" of coke, is not as good, but I drink it for domestic peace.) Thus, falling US sale to Arabs with falling dollar appears to be reflecting this hatred for US caused by Iraq etc. I.e. contrary to conventional economic "wisdom" dollar and exports can fall together, if foreigners hate you enough.} "Seveal OPEC nations peg their currency to the dollar. Thus as dollar falls, their currency loses value also. Several, including Sadi Arabia, are according to wide spread rumors, planning to cut the tie to the dollar." {Billy T comment: - Dollar not only dropping, but becoming less of a global standard. Not that it was a "big deal" but about a year ago, I mentioned that Brazil and Argentina agreed to stop using dollar in contracts with future delivery. - just one more straw on the back of the dollar camel leading to its complete collapse in afew years.} If Saudi Arabia does cut tie to dollar this: "Risks settting off a stampeed across the middle East to get our of dollars." Schwab analysist seemed surprised that the weak dollar has not "negatively impacted the stock market, with DOW now back over 14,000" {Schwab should read my thread of almost two years ago called: "DOW not at all time high - Dollar dropping" to understand this is exactly what one should expect. - (I started that thread because "Sandy" was telling how great the US economy was as DOW surged above ~12,000 to new high.)} ------------ *Added by Billy T as for every sale there is a buyer. So this alone must balance out. Also this might mean that the sales by US TREASURY ARE NOW LESS THAN BY HOLDERS?
Please name a few of the under valued ones. Probably true of China, but who else? On depression's cause, I think you wrong here and correct in following. Are you agruing with yourself? or just confused? or I am not following you?
Do you even read this stuff before posting? As you point out in the second quoted sentence, the currencies for most OPEC countries are pegged to the dollar, and so THERE HAS BEEN NO CHANGE IN THE EXCHANGE RATES. Thus, trade between the United States and OPEC countries can't be used to test the correlation between a weaker dollar and stronger exports. The dollar hasn't gotten any weaker with respect to the currencies in question. Moreover, OPEC members don't account for a particularly impressive portion of America's exports anyway, so I'm not sure why you're so alarmed about it. In addition to buying lots of stuff from Europe, OPEC states (other than Venezuela) also sell most of their oil to Europe. If you're interested in knowing what's actually going on, you need to look at countries whose exchange rate with the United States IS changing and, moreover, they should also be countries that do lots of trade with America in the first place. Canada, Mexico, China and Europe, for example. If you look up the overall trade statistics for the United States, you'll find that the trade deficit has indeed been decreasing in recent months.
All currencies are on a "float" against the American dollar. When the dollar was strong everyone never said much about it but now that its weak everyone wants a piece of the action. I'd think leaving everything the way it is for at least another 5 years would be a prudent idea.
No I could not read it, because as my post clearly states it is an AUDIO file - not my ideas, but a report of the main points of Charles Schwab's principle analysist. You obviously did not go to the link and listen to what she had to say. Please do that and then you post what you thought were the main points. I did insert my comments and clearly labeled them in all cases as my comment. You are of course free to do the same. DO NOT CRITIZED ME FOR WHAT CHARLES SCHWAB'S ANALYSIS IS STATING. I did make the observation that US exports do not necessarily increase as the dollar drops because there are other factors in addition price. You are of course correct that for one earning their income only in a currency linked to the dollar, there is no drop of one WRT to the other, but tacit in this is your assumption that they do not also earn in, for example, euros. Most of the gulf states are not only buying much more from Europe than they did a few years ago, but earning much more Euros also. Whole new "finger cities" (every house with access to the gulf for their yacht) are being built on the Gulf in several countries. The only "seven star" hotel in the world is there (room rents start at $1000/night and it is not just for arabs.) Whole new airlines are now flying from Eurpope to the Mid-East oil kingdoms. etc. They know their oil is finite. They are building a future on the European tourist etc. SUMMARY: Your tacit assumption is wrong.
Please you allow me a few minutes to finish. - I usually need to see my post in format other than I type it (helps my dislexica) and to see it against the post addressed from memory. In the "first edition" I was mainly trying to get your to realize that I was only reporting C. Schwab and adding a few comments. Since you askd if I had read it -it was clear you did not listen to the audio file. In second almost imediate (two minutes later) first correction I saw you might be speaking of one of my comments (or putting two together, I think) We both know that rigidly dollar linked currency goes up and down with the dollar. Hope you read the extension I made while you were posting the essence of which is that even with dollar link, there is more to the story depending on your income sources. If your currency is going down because of a dollar link, then Euros buy more products and services - that is why, in part, Euros are flowing into those dollar linked states so much more rapidly now, invalidating your point. Also you should read or hear the link before commenting on someone's post which is reporting it. As I gave up the hope of being able to help avoid the comming depression at least six months ago, most of my post for last six months (AS I SAID I WOULD when announcing that it was now "unavoidable") have been just to "chronical" the steps along the way. I said I would mainly chronical these steps back then. I do insert clearly labeled comments., especially when it is fulling my earily projection of how it would all progress.
