the value of a dollar

Discussion in 'Business & Economics' started by chaos1956, Sep 10, 2010.

  1. Pinwheel Banned Banned

    You've always said the Republicans caused a lot of this mess, wouldn't you rather they had a chance to clean it up themselves?
  2. Google AdSense Guest Advertisement

    to hide all adverts.
  3. joepistole Deacon Blues Valued Senior Member

    We are talking about two differnt issues Pinwheel. The market collapse of 2008 can be squarely laid at the feet of Republicans...though Democrat President Clinton deserves his share of the blame. He signed the bill that repealed Glass-Stegal.

    And then there is another issue, a long term issue of currency devaluation. Globalization of manufacturing gives developing countries like China, India, Russia, and Brazil competive advantages that are not available to them in the United States. For example, in the countries I just mentioned there is little if any cost associated with labor and environmental protection or healthcare.

    In India and China, sweat shops are not illegal. Child labor is not illegal. There are virtually no restrictions on pollution. And if you should have a disaster like Bopal, it does not bankrupt your company as it would in the US.

    So what happens, industry and jobs leave The United States for destinations like India and China. That lowers the value of US currency making US exports cheaper and giving the US a trade advantage. That is why Europe wants a stronger US dollar. The US becomes too competitive for them and their exports suffer. And it is a particularly acute problem for them because countries like Germany are very export dependent.

    What has happened is China has said no, we don't like that. We want to keep our currency, the Yuan, cheap and retain our competitive advantage..keeping our exports cheap. So China manipulates their currency... tying the value of the Yuan to the value of the dollar. That is called cheating. But they get away with it because no one has the balls to stand up to them...especially now. The time to stand up to China was a decade ago...not now. The US is too weak at present to make that stand.

    So there are two problems being addressed here Pinwheel. Americans need to ask themselves, do they want to have third world labor market in order to compete with developing countries or do they want to devalue their currency.

    There is a third alternative, but I don't want to get into it now. It is likely to never happen, especially if Republicans regain power. The Republican solution is to create a 3rd world labor market in the US.
  4. Google AdSense Guest Advertisement

    to hide all adverts.
  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    If that is directed towards me, Yes I would as that is impossible.

    I said long ago that GWB's wars, tax relief for the rich who made modern factories in China, like Buffett's BYD motors, creating only 4 million net new jobs in 8 years (when 22 million are need to just to stay even with the growing labor supply), and the lowering of Joe American's salary's purchasing power in a Nation whose economy was 2/3 Joe's buying made the coming depression inevitable. -"Inevitable" means the Republicans also will not be able to avoid it, but probably do more of what GWB did and thus cause it to occur sooner.
  6. Google AdSense Guest Advertisement

    to hide all adverts.
  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Not accurate for Brazil:

    "... Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — they're growing like crazy," {Hillary} Clinton said. "And the rich are getting richer, but they're pulling people out of poverty." From: Where there is a video of her saying this and making the argument that the rich are not taxed enough in USA.

    I searched Google for "tax rates by country" and got lots of hits. Some with 30 or more countries compared, but not one included Brazil, the world's tenth largest economy!

    The Brazilian tax rates are high as medical services (not always of the highest quality) are free. Environmental laws are very tough - 5 to 10 years of delay to build a new dam, etc. You can go to jail for cutting down a native tree, without getting permission first. A simple man stripped some bark off of one to make a tea for his sick wife and did go to jail a few years ago. The newspaper story and public outrage, soon got him set free.

    When I had a cattle farm, one of my cows died after eating some leaves a storm blew off a tree. I wanted to cut it down - but could not. My hired man knew what to do - he cut a ring around the tree so it would die. (Airplanes fly over every few month taking photos which computers process to note any changes, even a single tree, but dead trees can be removed.)

    Labor unions are well protected. In fact one of the largest was founded by the current President of Brazil, Lula. I had to pay more into various retirement and unemployed funds more than I paid my field worker on the farm. That more than 100% overhead is typical. When you sell the farm, the workers get a month's pay for every year they worked for you, plus a fixed severance bonus. Once my field man asked me to officially* fire him and then rehire him 6 months later, but he continued to work as then he got his salary** plus 6 months of unemployment too. He was sad when I sold the farm to realized that he only got a few years of monthly severance pay - he had officially only worked the recent years. He had forgotten he had already collected the serverance months pay for the earlier years.

    Hell if you fire a worker "without just cause" and he takes you to court he collects a small fortune. I fired a part time worker when he did not cut some grass from where I told him too to cover over an erosion exposed plastic pipe. He cut the grass needed much closer to the exposed pipe and cut the same pipe too, but that was not "just cause" according to the court. - There are special labor only courts and 99% of the time the worker wins his case as happen to me. In the end I had to pay him more than two years of full time minimum wage (and make two years contribution to his retirement funds also! in part because he worked three days/week and I was supposed to have recorded him as a full time employee.)

    There is also a 13th salary by law, half paid in November and half in December, plus 150% of salary during the month of his vacation. But the wages are very low.

    * Each worker has his own government issued "work record book" that records salary (and change of it) when hired and when fired and by whom. It is used when he retires to compute his benefits. I knew he would not take me to court for firing him as he wanted to keep working for me - I paid more than anyone else in the valley and we liked and trusted each other. He was stronger than me and once a dangerous job over the side of a cliff needed doing. I had a body harness from my days as an ocean sailer so I when over the cliff with him holding the rope wrapped around a tree so he could ease me down, walking horizontally. I knew he would pull me up - only time in my life I put my life literally in another's hands.

    ** I also benefited during those 6 months as I did not pay into his retirement, etc. (a total more than his salary)
    Last edited by a moderator: Oct 24, 2010
  8. joepistole Deacon Blues Valued Senior Member

    Brazil is doing a lot of things right. There is a lot of good happening in Brazil for workers and investors that is not happening in the other countries I mentioned. Brazil certianly has a good story to tell and is certianly a good place to invest money. But wages and GDP per capita are still pretty low by US standards.

    The average GDP per capita in Brazil is something like 10k versus 46k in the US.
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    All true. One important reason wages are low is many adults were "educated" more than a decade ago. I.e. now they lack many basics skills for a modern society. Many industries have their own training programs and there is a real shortage of skilled labor. Brazil has every resource it needs, except skilled human resources.
  10. Me-Ki-Gal Banned Banned

    The government owns the land in the U.S. if you own property read your deed ... The fine print and you will see by the act of paying taxes you don't own it. You actually sign away your rights by signing the deed. This is common real estate knowledge and if you don't believe that try not paying your property taxes and see what happens. Now there is a way out of it if you buy it with gold and you don't have a deed of trust, but have some other means of transfer. After all you really don't have to legally have a deed of trust. It is not a law that you have one, but it is a great tool for government to keep track of there land.
  11. Me-Ki-Gal Banned Banned

    100% correct on who controls the rules for if you can change the rules you can change them for the benefit of the benefactor. Like right now laws are being changed by the E.P.A. to benefit specific groups of niche businesses. It's all a game of musical chairs when the rules change except the winners have some type of advantage by the nature of the change. Even playing fields are nonexistent
  12. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    In some sense this is the case. I.e., in the long run, increases in the average prices of real estate are equivalent to inflation, and vice-versa.
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... China’s Dagong Global Credit Rating Co. cut its credit rating for the U.S. to A+ from AA because of a Federal Reserve plan to purchase bonds to spur growth and inflation, according to Xinhua News Agency. The credit outlook for the U.S. is negative amid deteriorating debt repayment capability and a “drastic” drop in the government’s intention to repay debt, Dagong said, as cited by the state-controlled news agency. The Fed’s quantitative easing policy will erode the value of the dollar and is against the interests of creditors, the company said*. ..."


    Billy T comment: at least one rating company is being nearly honest. (IMHO, A- is more correct, but US will never default so long as the FED's electronic printing press functions.)

    *I have argued elsewhere, that QE2 will also hurt the US economy. Most of the funds will either go back to the treasury, as in QE1, or even worse will flood into countries** growing several times faster. As the dollar falls, some of the current savings, even simple bank accounts, will leave also instead of stay collecting essentially zero interest. Thus net effect of QE2 will be to LOWER the amount of money in the US but corporation and banks already are stuffed with funds they don't put to work in the US so that some more drain out of the US will not directly be too important.

    At the very least, QE2 will fan the flames of the US started "currency war" and assure that this week's G-20 in S. Korea is a total failure, not even possible to "Paper Over" with pledges of unity.

    ** I.e. build more factories in Asia (or even Brazil) that via cheaper prices close more US factories as happened with GWB's tax relief for the already wealthy.
    Last edited by a moderator: Nov 9, 2010
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    China’s production of goods and services to surpass the US in 2012!
    Reported by Barrons and Economic Conference Board – both very respected organizations

    GDP in PPP adjusted US millions of dollars:
    Year… USA………......China
    2012…14,848,532…15,286,673 Note in term of PPP (sort of goods and services produced) China is larger than US in 2012*

    *In 2012, China is still far behind US in dollar GDP. This “greater than US in 2012” is due to much lower dollar cost of production in China. Following examples give quick understanding of PPP:

    For example the dollar value of new homes / apartments, built in China is much lower but their square feet etc. is greater in China. Or in the service area: A km long taxi ride in Beijing costs (in dollars) only 10% of same ride in NYC. It is in goods and services produced, not dollar value, that China beats the US in only two years.

    Another way to look at this is that the dollar needs to drop in value to about 1/3 of the current value so goods X and service Y in the two countries have the same currency value. Alternatively the Yuan needs to triple in purchasing power (but don't hold your breath waiting for that to happen - a run on the dollar then depression in US could drop the dollar to 1/3 current value and that may happen.)
    Last edited by a moderator: Nov 21, 2010
  15. Me-Ki-Gal Banned Banned

    Thanks for exposing the truth my man, Life is strange. Is it just Me or what. I got an Idea why don't we through away the bad product. Yeah like Paul Krugman said. Through the bad product on the ground and keep the goods that make sense. What pray tell is the bad product though. It all can't be bad product. We know we need air water food and shelter and all the supporting Items of the modern world. I don't think we all want to go back to living in caves and live in a hunting and gathering society. That is not sustainable with all the people in the world. You know things are going to get worse. As more robots are invented , robotics will replace more and more of human productivity and that means less and less jobs for human activity as we know it now. Think about old John Henry with his hammer and how that all work out. To Me goods should go where goods are needed. I am pretty good at seeing the future and I don't mean it in an arrogant way. It's not that difficult to see it if you consider the effects of events unfolding. Baby boomers retiring and then the beginning of the mass dieing from our aged population, not enough productivity to support any of us still living. I am sorry for the death and gloom. I got an idea. Why don't we get rid of the bad product. The one that makes lots of grief in our world. It is sold, bundled, financed, amortized, idolized , worshiped, and thought to give you power , happiness. We think it diminishes stress, gives us stability, personal sovereignty, rest , security. Does it really do all these things? What is the product you ask? Money

Share This Page