doddster98 wrote:
] ] ] I think the reason that our currency is falling is for two
]
] ] ] very important reasons, and THEY'RE the reasons to get
] ] ] concerned and worried about. One is our national debt,
] which
] ]
] ] ] is skyrocketing faster than anyone can fathom. That is
] ] putting
] ] ] pressure on currency because it's a direct effect of
] loading
] ]
] ] ] up on too much debt. Dollars are losing value because they
]
] ] ] will be less liquid in the future. Two is obviously our
] ] ] foreign policy.
]
] The national debt is certainly a major driver, but foreign
] policy is much less of a factor. The primary driver, and the
] reason the dollar began to fall in the first place, is low
] interest rates. As you know, the Fed lowered interest rates
] to stimulate a weakening economy. The paradox is that this
] action also weakens the dollar as well. If interest rates
] remain low and the economy doesn’t respond, then I believe we
] will begin to see signs of stagflation as early as 6 months
] from now.

Good point and for some reason, that eluded me when I was composing my reply. My point around foreign policy as being a factor is that it's a prime driver of the national debt. Unless we repeal our little imperial escapades, we won't be able to continue funding this course of action, and that's a foreign policy decision. One begats the other.

It's interesting to note though that the market has done well in the last 18 months, which is why I think rates will rise and that might stabilize things a bit. But who knows. If you look at where the rubber hits the road, businesses are still cautious about major capital expense, and credit is still fairly difficult to come by despite low rates and liquidity. There's still a ton of cash sitting on the sidelines looking for something to happen. None of this is good news.

] In terms of OPEC moving to the Euro, this would indeed be
] disastrous for the US economy. The fact that such a move would
] be so disastrous is the very reason why the US would not allow
] that to occur IMHO.

Perhaps. I still think that the US's only concern here is in the currency market that it generates. It doesn't participate in the capital lending and finance activities of the Middle East to the extent that the Euros do. And as long as China and Japan are driving the cart, I think it'll stay USD. Surely, the US has other currency opportunities outside petro-dollars.

Selfishly, I wish it would change, because I think it would be an indicator of moving towards a new paradigm, which would hopefully be sustainable energy.

] Someone mentioned earlier that the reason for going into Iraq
] was based on keeping them using dollars rather than Euros. I
] actually read a really good report on this that made a pretty
] strong case for this hypothesis. You can find it here
] http://www.ratical.org/ratville/CAH/RRiraqWar.html

There's no question that invading Iraq has numerous strategic advantages (provided, it gets executed effectively). I just wish that the administration would've been forthright with that explanation. Instead they lied, which has damaged our credibility worldwide. Not that if they posed it with the truth that anyone in their right might would've agreed to the agenda, but at least you're damned for what you really are trying to accomplish, instead of being damned for lieing AND killing.

RE: Yahoo! News - Dollar Hits New Low, Gold at 16-Yr High