The Shrinking Dollar

[TBOND]

Is it just me... or is the dollar almost equal value to the pesos... the way the dollar is shrinking that’s how it feels. It’s absolutely shocking to me. When I am in Colombia I feel like I am spending dollar for dollar… Just an out loud observation... Its just weird that you don’t have much media coverage on how bad the American dollar is doing…and it’s at an alarming rate to me!

[Tim413]

Yes the dollar is shrinking!!!

[El Capitan]

It's been shrinking ever since the Euro went wild in 2002-03. If I remember correctly, the Euro started at $1 = 0.89 Euro back then. It's selling at at least a 50 % premium to that today.

Yeah, it's broken.:mad:

[Charlie640]

Yes.... I was a bit shocked as well... it was 2200 to the dollar 3 months ago and now its 1900 to the dollar. Thats roughly a 15% drop in buying power. I was shopping in Exito for some luggage and I was in sticker shock. No deals to be had and I bought nothing.

Would be interesting to hear from some of the ex-pats who depend on their checks from the USA to make ends meet.

TBond -

No, it's not just you.

I am also concerned about the dollar as well and how it's affecting my travel plans and investment research abroad. It's a real bummer considering just a few years ago the dollar was 4 to 1 on the real and peso! Although I am a Bush supporter, I also realize that our current administration has to be blamed on why the dollar is so weak, also world terrorism, petroleum instability in the middle east and the Iraq war. Hopefully things will improve soon because I can't see the dollar dropping any more than it already has.

[Lostagain]

The only ones besides us who is really concerned about the dollar is the Chinese government. They are so heavily invested in U.S. Bonds that they can't afford to see the dollar drop much. The Euro is becoming the world currency now that it is the preferred form of payment for oil. Unfortunately, among the many forms of fallout from King George's reign is that we are going to find ourselves increasingly isolated and ineffective in our foreign policy and influence. As that influence wanes, so does the dollar. The real question is will there be anyone to balance out the Chinese.

[Cap'n Jib]

At the risk of embarrassing myself even more, these are the working assumptions of a group I belong to.

• The dollar, according to the treasury and other government agencies, needs to ‘fall’ another 40% from its’ current value. The reason is two fold. First, to make our ‘manufacturing companies’ more competitive. (Don’t see how that can happen as we really do not manufacture much inside the U.S. Goods manufactured overseas employs people in those countries NOT in the U.S.) Second, the government needs to continue printing more dollars (the ONLY correct definition of inflation). This is required in order to ‘pay’ government obligations with cheaper dollars. If everyone in the U.S. were to give ALL their income to the government, there would still not enough to pay our governments debts.

• Gasoline will cost $7.00 a gallon by the end of the year 2010. Huge economies such as India and China are JUST beginning to define there energy needs. Now that they have had a taste of the ‘good life’ I doubt that they will want to give it up…..and they do NOT have to because they are CREDITOR countries and not a DEBTOR one.

• Currency controls will be imposed on U.S. citizens somewhere between the years 2010-2013. It will not make any difference which party is ‘in charge’ because things are already out of control and can only get worse. If individuals, do not have monies overseas by then, it will be almost impossible to do so later.

• Today the U.S. Stock Markets are at a record high and almost everyone is celebrating. In real purchasing terms the money, currently in the market in record amounts, will buy less goods than the year 2001. In other words, the Stock Market today in real terms…the only one that counts, has less value than the one in 2001. Less can be purchased today than in the year 2001. You are getting screwed!

• Somewhere around the years 2010 and 2013 the U.S. dollar will be ‘merged’ with Canada and Mexico to be tentatively called the Amero. This will have the effect of ‘reducing’ both the U.S. labor costs as well as pegging a ‘new’ currency to compete with the Euro and the one to be formed by the Asian nations. http://en.wikipedia.org/wiki/Amero Yes closer and closer to a one world government.

• The new Transnational Corridor between Mexico, U.S. and Canada will be a reality. The proposal is in the neighborhood of 16 traffic lanes. http://www.borderplanning.fhwa.dot.gov/summary.asp#preferred The JWC U.S./Mexico Border Transportation Plan is a pig that no amount of lipstick will make it kissable.

Enough bed time stories

[Lostagain]

Well, Cap'n, I guess I'm going to have to work until I die. I had dreams of a retirement, albeit postponed a few years, but now it isn't looking so good.

A fall of 40% from its current value?? Yikes!! In what period of time? Do you think the Chinese will really want this to happen to one of their larger markets. Of course, unless they adopt the dollar, or maybe amero, as their currency, they may start demanding payment in euros in which case we'll really run into some complications with getting enough to pay for our trade balance habit. Ultimately, it seems to me the stronger currencies will be those in the world who have products and services in high demand. They will ultimately want to get paid in their own currency and what ever that is, it will be what everyone else needs to buy the stuff.

With a 40% devaluation, depending on the time frame of course, there will be a corresponding increase in prices. Now add the issue of scarcity of resources, and transport costs, and you will have an inflation rate that will rival countries like Argentina. Didn't our monetary god/tzar Alan Greenspan ever consider this, or is it just some good old fashioned castor oil we should be taking. Lord knows we've told the less enlightened countries of L.Am. to take their share.

Gas at $7 a gallon will be a bargain if there is a 40% devaluation. I think it may be more in the range of $12, if we have that kind of loss of value of the currency. Damn, why did I buy that nice 4x4 p.u. last year.

If we have a unified currency, such as the amaro, then currency restrictions would not be as ominous since it would be portable to Canada and México, from which one might escape with fists full of cash to launder in another country. Speaking of a unified currency, maybe we can all agree to use the Venosolano Bolivar as our currency. Since they have all the oil, and Hugo is starting a regional bank in lieu of the World Bank, maybe he'd help us out. In fact it might not be such a bad idea to try to develop a regional economic interest group in the Western Hemisphere along the idea of the E.U., but then we'd have to let the Méxicans come in when ever they wanted and what would the xenophobes think.

Which leads to the borders, why bother with them. If we had a Western Hemispheric Union, then who'd need the borders. I could move where it's warm without all the hassle of immigration papers. But then the way things are going, I could just stay where I am and wait for it to get warmer, which seems to be happening pretty quickly.

[TBOND]

Wow Cap sounds very much like new world order to me..

This is a little scary .. i hope we rebound soon but it does not appear to be the case. As Charlie640 mention earlier.. the dollar is less than two to one against the peso and the real.. hell i might want to get a job in Colombia and stay there! Maybe a farmer in the country =) or i can sell goods on the beach of San Andres.. =)

[LastLion]

I see that scenario of a combo currency for north america actually working, but as soon as we get BOZO out of office and get out of IRAQ, we can than work on making the dollar stronger. I would be fine with connecting with mexico and canada, I bet you would find a large amount of americans heading south, much faster than the mexicans are coming north!

Unfortunately we have the worst fricken President in HISTORY and some wussies in office. They are destroying our economy!!!! Sorry to take the political route, but although people think our economy is good. It is not, so save your money!! Are debt is atrocious and that is a direct result of our elected officials