"Euros Accepted" signs pop up in New York City

Ignorant guess: because the US is selling more as they go into greater debt?

 

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I don't know about other countries, but the Indian Reserve Bank is buying dollars as fast as the businessmen in India are selling it, because a strong rupee against a weak dollar in the economy today would affect Indian markets. They are artificially holding up the dollar. As soon as we switch to euros or yen it won't matter, but the transition is slow.

They are however, trying to get rid of the dollar reserves too.

 

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Correct. If the rupee became equal to the dollar, the American consumer market for Indian products and services would dry up. It would be cheaper for American industralists to produce the products in America than to pay the additional international shipping costs. If the rupee got significantly stronger than the dollar, it would then be cheaper for Indians to buy imported American products rather than produce or grow them in India, the reverse of what is now happening.

They are manipulating the dollar to protect the Indian export market, much the same as China does to protect its export market. Such practices are good for your Indian workers, but bad for the American workers. The wealthy American importers like a weak rupee also because they can make large profits on the Indian (or Chinese) products they import.

How do you arrive at this conclusion? For India or China to have a thriving export market, the rupee has to be remain weak when compared to the currency of the importing market. To be fair, all currencies should have equal value so no country has an advantage. Each country could then concentrate on whatever product it is most suited to produce or grow economically. A comparitively weaker currency is an advantage to developing nations, not a disadvantage. The wealth leaves the richer nations to purchase products from the developing nations. The poorer developing nations gain wealth that would not have been there without the imported dollars for their products and services. Cheering for a falling dollar is against your own common peoples interests, SAM, not an advantage for them. The rich Indians that have considerable savings in their bank would gain more wealth, but it would hurt the average Indian that must work for a living, just as a high-valued dollar hurts the average American factory worker that loses his job due to foreign competition with a weak currency.

The biggest problem for most industralized nations is oil. If the country's currency is weak, it normally costs the citizens of that country a premium for imported gasoline and diesel fuel. As of now, your Indian citizens have a good deal going as your government sells its citizens fuel for a fraction of what it costs them. That is a tremendous help to your farmers and transportation industry as their fuel cost are much lower than American farmer's fuel costs. Yes, it is a form of price support for your farmers just as some American farmers have price supports. But as Indian families become more wealthy and each family has a car, will your government be able to afford to continue the practice? As much as I know it gripes you, if your nation continues to gain wealth, it will become more like the U.S. in the future. Oil will become the lifeblood of your economy and your government will do all it can to assure access to oil lest your economy fails and your citizens suffer. It is just a sad fact of life until some type of energy source is developed for vehicles that is not dependent on oil.

 

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By increasing our exports to China/Europe/ME . If the yen/euro is stronger than the rupee, the dollar does not matter.

 

If the rupee is stronger than the dollar, America can sell products to those countries cheaper than India. You would still lose your export market.

 

Uh no, not the things we sell to China.

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Americans are poor farmers.

As for the ME and Europe, well be interesting to see Americans working at Indian minimum wages.

 

What do you sell to China in large quantities that could not be produced in the U.S.? No, Americans are very good farmers, they produce much more per acrea than the world average. It is just that the comperatively higher value of the dollar makes their produce more expensive for consumers with the weaker currency. Even with the higher valued currency, they can still compete on the world market. A weaker dollar only affects the price of imported products and oil, not in-country produced goods except for higher energy costs. For example, if your rupee gains in value compared to world currency, your workers won't become more wealthy, they will have to pay less for imported goods, but not Indian-made products and food. And they could lose their jobs to cheaper foreign competition.

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Americans are very poor farmers. They are used to machines, artificial fertilisers and huge subsidies to keep their prices low, they lose topsoil every year and have no idea how to work with the soil. Losing natural water as they are, with oil so costly and subsidies off the table, a violent society that has no social support systems for hard times- pooh, they are no competition.

 

Or terminally depressing, depending on your perspective :scratchin:. So do you have any timetable?

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(plz say 2050...come on 2050!)

 

You do realise that will affect your social security payments?

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Besides, this is just mental masturbation. I for one hope the Americans can pull a rabbit out of their hats.

 

You're right, but as a self-preservationist, I like to keep track of theories on this matter. Hazard a guess!

 

Hmm it depends on the elections next year. If a Republican wins, as I think they will, the economy will tank within the decade, mostly because the rest of the world will refuse to commit economic suicide with the US. If, however, as I hope, the Democrats win, there may be a way to put it off another decade. Lets say 2020 at an average. That may give them time to discover an alternate fuel source and save themselves.

 

SAM,

I can just as easily make the statement that Indians are very poor farmers.

Yes, efficiency and increased yeild per manhour is what makes them very good farmers.

The American subsidies are low, but Indians farmers get their government subsidized fuel for almost a tenth of what American farmers have to pay.

More bullshit, American farmers invented crop rotation.

What exactly is that supposed to mean?

No, it is the Indian farmers that get the oil subsidies, remember?

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No, the Indian society is violent as they burn their wives if the dowry is not paid, they blow up their own trains and Mosques filled with innocents, etc. We in the US have occasional nut cases that kill students in schools and universities because they know the students are unarmed and can't fight back. Or, perhaps it is the nutcases in both societies that cause the violence?

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I think I'll just say wait and see.

And its not oil subsidies I was referring to.

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Just a hint: the US is four times the size of India, with a fifth of the population. And no domestic transport structure.

 

S.A.M. you are absolutely correct that the reason theyre doing it is to manage their currencies and keep the domestic currency relativly weak versus the dollar.

What I think you are missing is the massive accumulation of dollars these countries are building up and their ability to find an acceptable dollar exit strategy. China for example seems to be buying dollars in an increasing amount each month. So much so that the sterilization costs are causing the PBoC to loose money. They're overexposed to dollars. Any attempt to diversify at this point would lead to a run on the dollar as likely a $500 billion dollar capital loss on their reserves. Each month their total reserves grow and the costs of moving out of the dollar becomes more severe. This type of coupling with the US, as I'm sure you know, is not unique to China, but the entire emerging world.

What possible strategy do you think these countries to take to move away from the dollar and into the euro?

 

I think they should shift to sovereign funds, like the Middle East is and has been doing.

Also maybe you could explain this?

http://www.swfradar.com/past/2007/10/8/reserve_bank_of_india_governor/

Hmm India too. Yay!

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http://economictimes.indiatimes.com...or_India_Incs_MA_play/articleshow/2790658.cms

 

I've been running into various sources that point out the international drug trade is moving to Euros.

The latest symptom was a 40% increase in the price of high quality cocaine in the US, which was touted by the US government as evidence of successful drug interdiction - others have pointed out that such cocaine now fetches double the price per kilo in Europe, dealing in Euros, and that is siphoning supply.

That is also causing suppliers to demand payment in Euros, putting Euros in the pockets of dealers etc.

So street signs in New York welcoming Euros may have complex, not straight economic, implications.

 

The global free market is free to invest wherever it likes.

Currencies may shift about exchange-wise, but the foundation of the global free market will remain the US, for the foreseeable future.

Go ahead. Try to sell off your dollars.

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