THIS IS BAD FOLKS...

THE FED IS TRYING TO KILL THE VALUE OF THE US DOLLAR....


If foreign investors fear holding U.S. dollars and U.S. investments which are tied to the dollar there could be a major dumping of U.S. currency and securities by those investors. If this happens... everything will suffer a tremendous devaluation.

If the dollar collapses then a) our economy will suffer a MAJOR hit if not a complete collapse the U.S. financial leadership in the world will end c) other currencies will become the world standard (probably the Euro) d) The cost of everything that we import will go through the roof e) Other bad things we can't even begin to realize will happen.

So...What the hell is Greenspan trying to do. His statements could very well begin a downward spiral that could crash the dollar. He is the main voice for U.S. fiscal matters and monetary policy... when he says things markets move. His statements (below) are inexplicable... and to me irresponsible.

I have feared that we are on the verge of economic collapse and here we have the head of the Fed telling the world, in effect, to not support U.S. dollars.

WHAT THE HELL IS WITH THIS ???

(Thanks PainInTheArse for the quote re: fecal matter... rotary blade device)

Sorry... meant to post to General Discussion... BUT... please read this anyway... this
IS VERY IMPORTANT

There is only one good thing about the dollar crashing, in that, those who voted for Bush, will have to come to the conclusion that they made an exceedingly bad choice as their President. Other than that, however, it will be a disaster.

Hey, you stole my subject line!!!! I want royalties!!!

LOL

I couldn't steal it... I HAD to give you credit for it (did you see). It's a classic.

How much is your royalty rate ??? I may go broke but please don't sue me. :D

I was blinded with rage and did not see the credit. NP. Time for shades.

On a related note........

If there is a conservative / neocon counter to this arguement, I would like to see it.

=================================================

http://www.counterpunch.org/roberts11162004.html
November 16, 2004


The Coming Currency Shock
Declining Superpower Act
By PAUL CRAIG ROBERTS

http://www.counterpunch.org/roberts11162004.html

China's currency peg to the US dollar prevents correction of the US
trade imbalace and imperils the US dollar's role as reserve currency.

In the post World War II period, the dollar took over the reserve
currency role from the British pound, because the supremacy of US
manufacturing guaranteed US trade surpluses. The British pound lost its
role due to debts of two world wars, loss of empire, a run down
industrial base, and socialist attack on UK business.

The reserve currency conveys unique advantages on the favored country.
As the reserve currency, the US dollar is guaranteed a high level of
demand. Foreign central banks hold their reserves in dollars, and
countries are billed in dollars for their oil imports, which requires
other countries to buy dollars with their currencies.

As a reserve currency fulfills world needs in addition to the functions
of a domestic currency, the favored country can hemorrhage debt for a
protracted period on a scale that would promptly wreck any other
country's currency.

This advantage is a two-edged sword, because it permits the reserve
country to behave irresponsibly by running large trade and budget
deficits. When the tide turns against the reserve currency, its exchange
value collapses.

The reason for the collapse is the huge stock of reserve currency held
by foreigners. When other countries conclude that their hoards of
dollars represent claims that the US cannot meet, dollar dumping begins.
Financing for US debt dries up; interest rates rise; imported goods
become unaffordable and living standards fall.

Flight from the dollar is already underway. During the past two years,
the US dollar has declined 52% against the new European currency, the
Euro. This decline is striking in view of the sluggish European economy
and the fact that many analysts regard the Euro as merely a political
currency.

Indeed, the dollar is declining against all currencies that have any
international standing: the British pound, the Canadian dollar, the
Australian dollar, and even against the Japanese yen despite Tokyo's
intervention to support the dollar.

Overcome by hubris and superpower delusion, US policymakers are unaware
of America's peril. Economists and pundits are equally in the dark.

Economists believe that decline in the dollar's exchange value will
correct the US trade deficit by reducing imports and increasing exports.
Once upon a time a case could be argued for this logic. But that was a
time before US corporations took to outsourcing jobs and locating
production for US markets offshore.

US imports of goods and services rise each time a US factory moves
offshore or a US job is outsourced. Goods and services produced offshore
by US corporations for US customers count as imports and worsen the
trade deficit. The US cannot reduce its trade deficit by increasing
sales to China of goods made by US firms in China. As Charles McMillion,
president of MBG Information Services, concisely summarizes:
"Outsourcing is export substitution."

It is amazing that US policymakers and economists do not understand that
dollar devaluation is meaningless as long as China keeps its currency
pegged to the dollar.

America's greatest trade imbalance is with China. In 2000 the US
merchandise trade deficit with China became larger than the chronic US
trade deficit with Japan. By 2003 the US trade deficit with China was
almost twice as large as the US deficit with Japan: $124 billion versus
$66 billion. This year the US trade deficit with China is expected to be
$160, a 29% increase from last year.

This imbalance cannot be corrected as long as China maintains the peg.
As the dollar falls against the Euro and other currencies, the Chinese
currency falls with it, thus maintaining China's advantage over US goods
in world markets.

Both the Clinton and Bush administrations are guilty of permitting China
to maintain a grossly undervalued currency that sucks productive
capacity out of the US. The combination of cheap Chinese labor and an
undervalued currency are destroying US middle class living standards.

As America's industrial base erodes, so does its competitiveness and
ability to close its trade deficit through exports.

Currency markets cannot correct the undervalued Chinese currency,
because China does not permit its currency to be traded and there are
insufficient stocks of Chinese currency in foreign hands with which to
form a currency market.

Sooner or later the peg will come to an end--perhaps when China fulfills
its WTO obligation to let its currency float. When the peg ends, it will
deliver a severe shock to US living standards. Suddenly, Chinese
manufactured goods--including advanced technology products--on which the
US is now dependent will cost much more. Overnight, shopping at Wal-Mart
will be like shopping in high-end department stores.

China accounts for a quarter of the US trade deficit and for one-third
of the US deficit in manufactured goods, is the second largest source of
US imports after Canada, and is America's third largest trading partner
as conventionally measured. Despite these facts, the US government does
not publish full current account data for China, instead lumping China
in with "Other Countries in Asia and Africa." This keeps the magnitude
of the problem out of sight.

Canada and Mexico rank as the US's two largest "trading partners"
because of double counting in the measure of imports and exports. For
example, the full value of auto bodies shipped across the borders to
Canada and Mexico for assembly operations are counted as "exports" when
they leave the US and as "imports" when they return.

In contrast US "trade" with China involves almost no double counting of
component parts.

Recently, Goodyear Tire and Rubber Company declared its intention to
close all US plants and to manufacture offshore for US markets. Each
time the US loses an industry, America's export potential declines and
America's imports rise. This scenario guarantees a rising trade deficit
and the end of the dollar's reserve currency role.
Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for
Economic Policy during 1981-82.

I enjoyed sharing the news on this with my neocons at my office today

I will point out every single failure of this administration until this administration is ousted! Every day. Day in and day out. I will make sure they understand how stupid their decision was.

Also like the "The fecal matter hitting the oscillating device" subject line!

More to hit the fan



http://www.miami.com/mld/miamiherald/news/...10219750.htm?1c

:o

FINALLY. He should have said this before the election. I get
the feeling that noone thought Bush could possibly win after
all his screwups, so they rested on their laurels.

This thread is about monitary policy and the dollar vs Chinese currency. What does Cronkite have do with this?

Please start new thread.

I though it was about fecal matter hitting the fan. Sorry I won't post in here again.

Niteowl "I've quoted your lovely phrase "fecal matter .....blade device several times since you first psted it in a thread (at least I think it was you!)

the USA begins to be a Banana Republic (except we have no bananas to sell or anything for that matter)

To give credit where credit is due... the quote was courtesy of PainInTheArse who coined that phrase some time ago. I laughed so hard when I read it that I decided that it was too good to languish in an unread thread somewhere. I decided to use it (and credited PITA in the first post) so everyone could enjoy it. PITA has posted to the thread and I'm sending a royalty check (jus' kiddin'), but PITA deserves the credit.

BTW PITA.. any more great lines like that ? We can all use a good laugh now and then.

GET your royalties in EURO'S

"..And that's the way it was>." W.C.

God, I miss him...

... and ANOTHER THING.... Bush is raising the debt ceiling 800B this brings it to 8.2 trillion!!! Interest rates are rasing... dollars dropping... W went for another record in the debt. Where are we going adn why am I in this handbasket?

I have been worried about the collapse of the dollar for some time. Several questions come to my mind over this. If you were an ordinary citizen like myself with modest retirement accounts, what would you do to prepare for something like this. Is there anything that can be done now to cushion the eventual blow?

There are actually several things you can do that will, at least, lessen the blow.

First, you can open an account overseas in Euros, for example.

Second, you should take some of your investments, if you can, and move them to overseas markets.

But, IMHO, this is something that everyone should consider doing anyway.

The only things that have proven their value over time is precious metals. Throughout history they have been cushions against economic upheavals. Buy gold or silver. Silver is much better, and has a much better chance at appreciation. Plus, it is much cheaper at $7.60 per ounce. Try to get actual metal, not certificates. I knew that the dollar was going to collapse several years ago. Not only have I beaten inflation and devaluation of the dollar, but I have made much more. It is not too late to invest in these, especially silver, it is highly undervalued.

Not sound smug, but I predicted this a long time ago. What I was wrong about was how quickly it would take. I thought the dollar would experience a brief upswing for a couple of months, then crash.

No upswing. Immediate crash.

Ooh. I actually have to disagree there.

Gold peaked about 15 years ago at over $600 per ounce. Since then, it has hovered in the $350 to $400 range. However, it can be rather volatile and makes a horrible investment. For example, if you buy $4000 worth at $400 and it drops to even $380, you lost $200 that quick. The dollar would be just about as safe.

As for silver, it has very little chance at appreciation. It has been in the $7 range for a very long time. However, it tends to be a lot less volatile than gold so it would be a safer place to put money as long as you are not looking for any return.

Precious metals can be rather dangerous as investments.

I was told the exact same thing by so-called investment professionals not to buy silver, it is a bad investment. I purchased it anyway, and I have made much more money than they have. Experts will always tell people not to buy metals, because they want to dump their worthless paper on to the suckers, so they can buy precious metals. When I purchased my silver, it was 4.00 an ounce, and gold was about $270, whereas in the same time, the stock market hasn't done very much. So who was right, them or me? I'll stick to my silver, thank you, and anyone that has any sense, will do the same. What good will currency do you if it collapses? One can always use gold or silver to buy things, history proves me right. Under normal circumstances, I would agree with you, but these are NOT normal times.

Thanks to all of you!

what to do. Well, this guy knows alot about what is going on. And gold and silver will both rise dramatically when the dollar drops lower and the stock market turns sour like is happening now. Gold is more of a security though. here is his site.

http://www.mcalvany.com/

He stressed that its time to get out of the stock market, which he said he was propped up because of the election. Stocks are still "massively overpriced," he commented, and they will begin a steady decline by the first or second quarter of 2005, eventually losing perhaps 70% of their current value.

The real estate market is also headed towards a downtick, McAlvany warned, saying that in most areas there will be a 10-40% drop in prices. Millions of people that are heavily leveraged are going to be badly hurt in this new economic cycle, he predicted.

Among his survival tips: Eliminate credit card debt, build savings, reduce real estate to 25% of assets and check the financial strength of your banking institution. His suggested breakdown of investments is as follows:
35%-- gold and silver coins
15%--high quality gold stocks (defense stocks also a possibility)
25%-- short term US treasury bills
25%-- foreign government bonds


I switched to foreign bonds. German mostly. You should talk to your stock broker and tell him how your feeling. My stock brocker was not surprised when we called and asked to pull everything out of US funds that we could without taking a penalty. Good luck to everyone on this.

No question... precious metals are the way to protect your assets. They are not really an investment per se as they have little intrinsic appreciation potential. Commercial uses are not creating sufficient demand to cause steady price increases.

What they ARE is a hedge. When people see paper money becoming devalued because there is nothing backing it they cast off dollars in return for the safety of precious metals. It has always been this way. China has been quietly been accumulating reserves of gold for some time now and that is quite telling. In times when paper money has little or no value, gold, and to a lesser extent silver, will be king.

Those who hedge their losses from currency devaluation by buying precious metals will offset those losses and come out well ahead of most people. At worst you may lose some money on your precious metals if the dollar rebounds strongly. But, in these times when deciding whether to bet on precious metals or dollars, I have little doubt as to which is the safer investment. I'm not going to bet on any strong rebound in the value of our currency. There are too many problems and even if we turn things around it is not going to happen overnight.

Well done PITA!
LOL!