Falling dollar.. Good or bad?

[wez]

For me personally, I'm quite pissed the fed again steps in and lowers rates to throw a bone to all those great folks who feel it's their God given right to spend more than they make.

 

I've been a saver my entire adult life and have got nothing for my efforts but rapidly decreasing value of my dollars.

 

Despite earning 9%, I can't even tread water.. Eventually the piper must be paid and I don't feel putting it off and selling the youth of our country into slavery so I can pretend I'm rich til I die is necessarily the best choice even though the guv seems to think so.

 

You paid 10x more than your house is worth in relation to wages? "We'll lower interest rates, trash the dollar, and not care because we'll delay the consequences of our actions til we die. Screw kids, we owe them nothing but the problems we create." << seems to be the current, onging policy that aint gonna change anytime soon.. Seems saving money is for suckers.. I shoulda blew it all on weed and booze when it was still worth something..

 

Eventually, the dollar must be strengthened.. or it will become a joke, along with our entire country.. I thought our government was there to BENIFIT it's citizens, not sell them into indentured servitude for the duration of their life..Not that indentured servitude is'nt a reality for most Americans already.. just gonna get a lot worse before if and when it gets better.. Prolly not in my lifetime.. Baby boomers are gonna retire and I get to pay! Yay me.

 

Falling $$ = price of oil rises.. Coincidence that our entire administration are/were oil men? I'm sure they'll be kind and generous when they own all of us.. no need to worry.

 

What's funny.. long term interest rates have actually risen since they lowered the fed funds rate the other day... Costs more to get a mortgage today than yesterday. Also costs more to buy a barrel of oil... Way to go Bernanke! What an idiot... gonna be funny to watch him take the rap when the bottom falls out of his bullcrap and people scream bloody murder that they can't sell their rambler for 1.2 mil. no matter what he does.. I'm sure business owners will love their employees telling them, "I need a raise, I can't survive on ramen and I can't borrow any more money to live beyond my means".

 

How do you guys feel about the current state of the economy? Make enough in wages to pay the obligations and save for a time when the body wont let you work but still needs to be housed and fed? Glad I aint a kid... Kids who aint even born yet have been sold out.. Sad. I'm pissed..

 

 

Hey eddo.. remember that post I did at TJ about the commercial for centerpoint threatening deadbeats? I saw yesterday that 160,000 Minnesota households are in arrears on their bills and owe more than 55 mil.. Now I see why it's feasable to pay tens of thousands for a blanket commercial.. That's a hell of a lot of stamps.. And a lot of households for a state with a population of only 4 - 5 million individuals. I also saw Britain had a good old fashioned bank run the other day ala The Great Depression.. Nice.

[timesjoke]

Obviously the USD is weaker for more reasons than an adjustment to the rates.

 

Most of the financial buzz I have been listening to have been predicting the fall of the USD as soon as the standard for oil prices switches to the EURO, a thing that has been in the works for a long time now.

 

America has driven away most of our industry and we are now just one big service industry Country, like a big tourist resort.

 

I rarely keep more then a few thousand dollars liquid at one time because like you said, there is no real incentive to save money, you need to invest it to get it to truly grow.

 

That is why I like the fair tax idea, it would again make saving money desirable, IMHO.

[wez]

Obviously the USD is weaker for more reasons than an adjustment to the rates.

 

Most of the financial buzz I have been listening to have been predicting the fall of the USD as soon as the standard for oil prices switches to the EURO, a thing that has been in the works for a long time now.

 

America has driven away most of our industry and we are now just one big service industry Country, like a big tourist resort.

 

I rarely keep more then a few thousand dollars liquid at one time because like you said, there is no real incentive to save money, you need to invest it to get it to truly grow.

 

That is why I like the fair tax idea, it would again make saving money desirable, IMHO.

 

 

You make some excellent points.. I think oil pegged to the greenback is soon going to switch too.. After rates were lowered, Saudi Arabia, whose currency is pegged to the dollar, did not follow suit. Seems they may change that like Kuwait did not long ago. Why our government doesn't care is what I can't figure out.. I know why, but it's time to bite the bullet and actually work and produce things for our money like normal people instead of selling them our debt and ripping them off. Not the best way to make friends and people only stay scared so long. I'm gonna vote Tony Soprano next year... Good lord

 

 

What else is funny is you see these guys in suits blather about how poor the saving rate is in America like it's actually a choice for most people... Why the hell would anyone save? I guess I'm just stupid to actually think our government may one day make it worthwhile for people to save money. But then again, slavery is so much better.. Assholes. We vote for these bastards? You know though, I'd rather save at a loss then go so far into debt that I can't see straight, like they want me to.. Screw them.

[Guest DougT]

I also saw Britain had a good old fashioned bank run the other day ala The Great Depression.. Nice.

 

Yup, that was interesting. I'm no expert in Financial matters but it went something like:

 

Northern Rock (the Bank in question) announced a Profits Warning and a shortfall of Cash. With nothing better to do, the Editors of the Press decided that this was headline material.(although I for one had never even heard of the Bank)

 

Investors paniced and queues formed outside the Bank's branches. The Bank of England stepped in with some number of millions GBP to bail the Bank out, the Chancellor of the Exchequer appeared on TV to tell everyone not to panic, the Bank was safe, it had billions of GBP in assets and it's all under control. (failing to mention that the "billions in assets" were unpaid mortgage loans issued by the Bank) The Press decided it was getting a bit boring so they started to 'ask questions' about other Banks' liquidity. Again the Bank of England stepped in and said "that's why we're here - to bail out any failing Bank, don't worry everything is OK" (my interpretation).

 

Investors in Northern Rock continued to panic. Finally they (the Bank of England) put 10 billion GBP (of taxpayer's money, of course) into the Financial Market to 'steady' things up. The Press were really bored now, after all there were more important stories, like the Cricket, Football, Rugby, and that 20 (yes, as many as twenty) people had complained about an advertisment which claimed a certain Chocolate spread was good as part of a balanced diet for kids at Breakfast time. (See the tripe we have to put up with this side of the Pond )

 

However, the Government decided that they needed someone to blame and the Governer of the Bank of England and his Deputy seemed like suitable targets. They were summoned before a Parlimentary Committee to explain why they hadn't acted swifter and why the Deputy had the ordacity to be on 2 weeks holiday whilst all this was going on.

 

The response was quite amusing, apparently when this sort of thing has happened in the past, the Bank of England have bailed out Banks in a clandestine fashion - putting the money into the Bank but not telling the investors - so no one except they and the Bank in question knew. Hence no panic, everythig nicely swept under the Carpet.

 

Unfortunately, the current Government had changed the Law so that such clandestine activities are now illegal, hence the Governer of the Bank of England had his hands tied by the exact same people that were now holding him responsible. (Anyone seen anything like that before in Politics ? )

 

Everything now has gone very quiet. I suspect the Press have been 'requested' to shut up about it - probably under the "Prevension of Terrorism Act" which seems to give the Government the power to do anything it likes without reference - but in reality, so that the fragility of our Financial Institutions doesn't actually come to light.

 

Oh, and by the way, it was all the fault of the American Financial Markets in the first place, so we're told :D

[wez]

Hahahahaha.. it's always our fault.. But then again, we're you... We just ran away from home 300 years ago, wiped out an entire race of people and called it home..

 

But, it wasn't genocide. It was "freedom".

[Old Salt]

Old Bernanke gave the economy an enema and the USD shat all over itself. As a US expat living on a fixed income, it is really affecting my lifestyle. The way things are going, it won't be a matter of a month or two that the USD will be on parity with the New Turkish Lira (YTL). I DO think it will be good for the US economy, though. Cost of imports will be up (except for China) and exports will be more competitive (IMHO). Hopefully things will be back to normal in a year or so.

[wez]

True, I went to the bank and withdrew some toilet paper today..

 

I think the main reason, is it lowers our debt.. paying it back with worthless dollars is good.

 

Having to pay back debt with more valuable dollars is bad, really bad.

 

So in conclusion.. I shoulda went so far into debt that I couldn't see straight and I'm pissed at myself for being stupid and saving money in my 20's...

[snafu]

True, I went to the bank and withdrew some toilet paper today..

 

I think the main reason, is it lowers our debt.. paying it back with worthless dollars is good.

 

Having to pay back debt with more valuable dollars is bad, really bad.

 

So in conclusion.. I shoulda went so far into debt that I couldn't see straight and I'm pissed at myself for being stupid and saving money in my 20's...

 

save shmave. Invest man!

[wez]

save shmave. Invest man!

 

I'll just wait to invest when the baby boomers have to sell to buy their bread... At that point, they will demand their Social Secutity dollar goes up to provide them with a comfy retirement as stocks, houses and the like plummet because my generation and the one behind me, for the most part, doesn't have the numbers or the worthless money to pay their inflated prices for their assets.

[wez]

Well, looks like my trust in our guv has been spit in my face once again. How wrong I was.. It seems the guv will continue to trash the dollar til it's worthless and the rest of the world laughs in our face and leaves us to wallow in our own filth. All the while telling us how great everything is/was/always will be so we don't charge their mansions with pitchforks and torches before they die.

 

Recession? Hahahaha.. Gonna make the the Great Depression look like heaven... prepare yourselves... How? Who the hell knows... Perhaps buy as much food as you can now and dig a hole... gonna get ugly with a capital U. As if it's not already for tens of millions of Americans just trying to freakin' live.. Unreal.

[wez]

Oh no!! The "free" market dropped over 300 pts. Better hold an emergency meeting and cut rates so your buddies can get a boost for another week, morons.

[wez]

I got it!!! Just print more money!! Jackasses...

[Old Salt]

I got it!!! Just print more money!! Jackasses...

That's all reducing the cost of credit is - printing more money.

[Old Salt]

If anything bad is going to happen to the US economy, October is the month for it. 19 Oct 87 - Black Monday; 29 Oct 29 - Black Tuesday (the start of the Great Depression).

[hugo]

Never, in world history, has an economy been as stable and affluent as the US economy has been for the last quarter of a century. I ain't worried about my job.

[Old Salt]

I'm glad you're not worried. But a lot of people are. Worry causes uncertainty, uncertainty causes falling markets. The USD is at record lows against almost every currency and setting new records almost every day. This helps US exports, but makes imported goods more expensive and the US seems to import the majority of its consumer goods - even though those goods are manufactured by US companies (overseas). One good thing may be that it makes moving jobs out of the US to overseas locations more expensive.

[wez]

Never, in world history, has an economy been as stable and affluent as the US economy has been for the last quarter of a century. I ain't worried about my job.

 

I don't know if I'd use the word stable.. The thing is, it's getting worse, not better. Looks are deceiving. Even if one has a nice house and a fancy car, what are those folks gonna do when no one will borrow them any more money? I think we're about to find out... check the stats on forclosures and bankruptcies.. Debt is not wealth.

 

Back when I was young, a guy could quit school, get a job at a gas station and provide a modest but comfortable life for his family. 30 years later, things have surely improved, right? Yeah, right... Now, that same guy can't pay for a piece of crap apartment and rust bucket car on that gas station salary, which are the very types of jobs being created in this so called economy..

 

Things were much more realistic in the past. Things cost what they should in relation to the wages people earned. Now things cost what they do in relation to how many payments and how much money someone is willing to borrow you for the rest of your natural life.. then the credit stops, and people crumble. Things should be really interesting a few years after the last babyboomers retire... s hit will hit the fan...

[hugo]

Let me explain some basic economics. A falling dollar is good for the American worker. It makes American products cheaper in comparison to foreign products. It also means we are paying foreign debtors less in real dollars. The only fear is inflation which ain't too likely during a recession. The Fed learned a few things from the stagflation of the late 70's.

 

http://www.epinet.org/issueguides/minwage/figure5.pdf Real wages are higher than they were thirty years ago. Sorry, to place a ray of sunshine amaong the naggling nabobs of negativism.

[wez]

Let me explain some basic economics. A falling dollar is good for the American worker. It makes American products cheaper in comparison to foreign products. It also means we are paying foreign debtors less in real dollars. The only fear is inflation which ain't too likely during a recession. The Fed learned a few things from the stagflation of the late 70's.

 

http://www.epinet.org/issueguides/minwage/figure5.pdf Real wages are higher than they were thirty years ago. Sorry, to place a ray of sunshine amaong the naggling nabobs of negativism.

 

Here's some more basic economics. A falling dollar makes imports cost more, and since we import damn near everything and those products cost more, it's bad.

 

The dollar falls, oil increases accordingly. Everyone and their brother use oil for damn near everything we make and do, so that's bad. Matter of fact, when I get a job, I think I'll ask to be paid in barrels of crude.

 

Yes, it's good to pay debt back with declining, inflationary currency. Now, if you're an idiot, such as myself, and actually have no debt and accumulate dollars and borrow it to someone else at a 9% interest rate, you take it up the ass.

 

And if wages have increased over the last 30 years, why do so many people need dual incomes? Perhaps the increase is due to 2 workers, instead of one? Stats of "household income" can get quite scewed when one has watched the change from mainly single earner household, carrying no debt, to dual earner households, drowning in debt. Debt is not wealth, it's the opposite of wealth. How can that be if things have improved so much in 30 years? Do you think most people today have a choice to raise a family in a single earner household like the highschool dropout gas station workers did in the 70's?

 

Although teach, I did buy 100 shares of Range Resources, an oil company, several years back for $5.10 per which then split 1 for 2 a while ago, giving me 150 shares, that closed at 43.89 Friday, so that's good.. I guess. But for the most part, I don't own stocks except in the mutual fund IRA's. Cash is king, if you're an idiot, like me. Hahahaha 9%, compounded hasn't even kept up with inflation over the last 10 years, so, obviously the exclusion of food, housing, and energy from the inflation data makes things look a bit prettier than they otherwise would if things EVERYONE DEPENDS ON FOR LIFE were included. There may be a run on the White House if they did...

[hugo]

Strange, my family lives on one income. I live in a modest size home that is completely paid for. I drive a 10 year old Toyota Tacoma. I save 20% of my modest income. I paid may own way through college while working a blue collar job. No aid, no college loan. Most people with children need to seriously consider if it is economically and family wise to send your kids to childcare instead of one spouse staying home. Two incomes are needed because people spend more than they used to. The average home was 1200 square feet in the 50's and people had more kids. Now, it is nearly twice that size. Everyone has a cell phone, a big screen TV, sattelite or cable and that computer in front of you. The basics,; food, clothing and shelter; can be easily met on one modest income. I think you know that. I see "poor" people having $3 coffees every day. If you want to live like grandpa and grandma did you can live quite cheaply. Inflation will continue to be low due to the expansion of liberalized trade. There are ways to hedge your investments if inflation is a great concern; it should not be.

 

The only real concern is the health care crisis which will effect the entire Western world, Japan and China as the population ages. The retiring baby boomers will mean more jobs for the young, but higher taxes.

 

INFLATION HAS BEEN LESS THAN 5% FOR MANY YEARS, WEZ.

[wez]

Strange, my family lives on one income. I live in a modest size home that is completely paid for. I drive a 10 year old Toyota Tacoma. I save 20% of my modest income. I paid may own way through college while working a blue collar job. No aid, no college loan. Most people with children need to seriously consider if it is economically and family wise to send your kids to childcare instead of one spouse staying home. Two incomes are needed because people spend more than they used to. The average home was 1200 square feet in the 50's and people had more kids. Now, it is nearly twice that size. Everyone has a cell phone, a big screen TV, sattelite or cable and that computer in front of you. The basics,; food, clothing and shelter; can be easily met on one modest income. I think you know that. I see "poor" people having $3 coffees every day. If you want to live like grandpa and grandma did you can live quite cheaply. Inflation will continue to be low due to the expansion of liberalized trade. There are ways to hedge your investments if inflation is a great concern; it should not be.

 

The only real concern is the health care crisis which will effect the entire Western world, Japan and China as the population ages. The retiring baby boomers will mean more jobs for the young, but higher taxes.

 

INFLATION HAS BEEN LESS THAN 5% FOR MANY YEARS, WEZ.

 

Teach, how old are you? You came from the old school.. Inflation for 100% of things? How about those houses? Food? Energy, Tuition? How would you like to be 20 right now and just starting your life?

 

You're totally correct though.. not long ago people didn't have those cell phone bills, ISP service, digital cable.. on and on.. houses were more modest.. people like to pretend they're rich and borrow crap to prove it. Doesn't mean our guv has to print more money and screw people who live responsibly to accomodate them with a financial house of cards.

 

Another thing, my grandpa and grandma lived much, much better than I do.. and paid cash for everything.. My grandpa had some good advice.. if you don't have the money, you can't afford it.

 

Don't get me wrong.. I made the choices I did for a reason. The only thing I care to buy in this life for the most part is my freedom. Time.. the most precious resource of them all.. I don't see anyone offering credit for that..

 

And the stock market?? When a company like K mart can declare bankruptcy, wipe out the value of their stock, then turn around and reissue it to new investors, seems a bit tainted to me.. I'm not buddies with E.F. Hutton and Martha Stewert.. I'd be the idiot owning the common stock..

[timesjoke]

I love this post, I will bold the parts that I feel are the most profound:

 

Strange, my family lives on one income. I live in a modest size home that is completely paid for. I drive a 10 year old Toyota Tacoma. I save 20% of my modest income. I paid may own way through college while working a blue collar job. No aid, no college loan. Most people with children need to seriously consider if it is economically and family wise to send your kids to childcare instead of one spouse staying home. Two incomes are needed because people spend more than they used to. The average home was 1200 square feet in the 50's and people had more kids. Now, it is nearly twice that size. Everyone has a cell phone, a big screen TV, sattelite or cable and that computer in front of you. The basics,; food, clothing and shelter; can be easily met on one modest income. I think you know that. I see "poor" people having $3 coffees every day. If you want to live like grandpa and grandma did you can live quite cheaply. Inflation will continue to be low due to the expansion of liberalized trade. There are ways to hedge your investments if inflation is a great concern; it should not be.

 

The only real concern is the health care crisis which will effect the entire Western world, Japan and China as the population ages. The retiring baby boomers will mean more jobs for the young, but higher taxes.

 

INFLATION HAS BEEN LESS THAN 5% FOR MANY YEARS, WEZ.

 

 

I loved your post because you said a huge amount in a few words.

 

To put it short, stop trying to live above your means and you will do fine.

 

Lower your expectations for "stuff". Why buy the new car if the old one is still working? Why buy the new house if the old one is still livable? Why spend money if you don't have to?

 

Life was never intended to be easy, but there are ways to make it more difficult.

[wez]

Oil hit $93 and some change today.. Dollar musta took a fat dump in advance of the fed meeting tomorrow as rates are expected to be cut once again.. cool, way to go guys... Your buddies can make their Jaguar payment this month..

[Old Salt]

Oil hit $93 and some change today.. Dollar musta took a fat dump in advance of the fed meeting tomorrow as rates are expected to be cut once again.. cool, way to go guys... Your buddies can make their Jaguar payment this month..

But when they go to trade that Jag in, it's gonna be WAY expensive. The dollar was $2.06 to the British Pound today. It's sneaking up on $1.50 to the Euro.

[atlantic]

Strange, my family lives on one income. I live in a modest size home that is completely paid for. I drive a 10 year old Toyota Tacoma. I save 20% of my modest income. I paid may own way through college while working a blue collar job. No aid, no college loan. Most people with children need to seriously consider if it is economically and family wise to send your kids to childcare instead of one spouse staying home. Two incomes are needed because people spend more than they used to. The average home was 1200 square feet in the 50's and people had more kids. Now, it is nearly twice that size. Everyone has a cell phone, a big screen TV, sattelite or cable and that computer in front of you. The basics,; food, clothing and shelter; can be easily met on one modest income. I think you know that. I see "poor" people having $3 coffees every day. If you want to live like grandpa and grandma did you can live quite cheaply. Inflation will continue to be low due to the expansion of liberalized trade. There are ways to hedge your investments if inflation is a great concern; it should not be.

 

The only real concern is the health care crisis which will effect the entire Western world, Japan and China as the population ages. The retiring baby boomers will mean more jobs for the young, but higher taxes.

 

INFLATION HAS BEEN LESS THAN 5% FOR MANY YEARS, WEZ.

 

Hugo has a good point here. I left my job and my $65,000.00 salary to stay home with my child 3 years ago, my plan was to be a stay at home mom til my son was at least 6-7 and in school full days. Since daycare proved to be unreliable and pretty costly and my son was not happy there. Now I notice at the bus stop all the other mom's complaining about money - one is filing for bankruptcy and she earned $120,000. last year (all because she decided to dump her house), the other mom does whatever she can to keep her 2 kids in daycare to not be bothered with them, and they complain all the time about money. They also go shopping every other day. Buy expensive cars. (they actually look down on my toyota camry because they are "Not sporty enough" according to them. They take expensive vacations. They don't understand how I get by. Well, I keep it simple. I budget really well, and I have absolutely no extravagances in my life right now. I do work part-time too. The only difference I notice right now, is I can't make the coffee runs I used to or go out to eat, I always cook in now, I can't save at the moment, but it is only temporary until my son is in school full time. Then I resume saving and invest again. I currently live off of half of what I was earning 3 years ago and I'm way happier than those idiots at the bus stop.