[mattduke]

$this->bbcode_second_pass_quote('', 'T')he rest of Washington -- and every presidential contender -- needs to start paying attention to the declining dollar before it develops into a full-blown currency crisis with damaging geopolitical consequences. What happens if major oil-producing nations decide to abandon the dollar for measuring the value of their most important export? What if they set up their own monetary union to serve as an alternative to a currency that is no longer a reliable store of value?

[heroineworshipper]

It makes it very hard to innovate when prices rise as fast as they are. Maxamps.com & sparkfun.com R 2 cases where electronics jumped 20% last year. U have to buy stuff without knowing if U need it & U don't know if you'll have any money next year for version 2.

[mattduke]

A certain gentleman Mr Ron Paul wrote a letter to WSJ regarding this article:

$this->bbcode_second_pass_quote('', '
') I was delighted to read in Judy Shelton’s op-ed, “Security and the Falling Dollar” (Feb. 15), that at long last the security implications of the dollar’s collapse have made their way into the mainstream media. The dollar’s strength (or lack thereof) has been of paramount concern to me, and the subject of many of my statements over the past several years. Decades of manipulation by the Federal Reserve have benefited the government and certain politically-connected firms, while gradually destroying the purchasing power of middle-class Americans. Despite numerous warnings in the past, it is only now at a point of acute crisis that Washington insiders are beginning to awaken to the reality of the end of dollar hegemony.

While I desire reform of our current monetary system, my own proposals have not been as all-encompassing as Ms. Shelton’s suggestion to return to a Bretton Woods-style system. Her recommendation, though, that gold backing should make up a component of a future monetary system, is one that we would all do well to heed. My own legislative proposals focus around eliminating the taxes and laws that dissuade individuals and institutions from using gold as currency or as a backing for currency. By allowing market processes to determine the issuance of currency, we can allow individuals to decide for themselves what currency they wish to use. This would lead to a gradual reintroduction of sound money and avoid the market shocks that occur when monetary decisions are mandated by government fiat.

Rep. Ron Paul (R., Texas)
Washington

[MrBill]

It is a very poorly written article and not well researched. Basically, oil producers and Asian manufacturers are preserving an informal Bretton Woods II agreement by exporting goods AND capital. They can simply demand payment in any currency they wish. But they should then expect to export and earn less. If they are willing to accept that eventuality then no problem.

The cause of US dollar weakness stems directly from America's trade and budget deficits, and exporting wealth to the rest of the world year after year. However, the US dollar is weak against other undervalued currencies that are kept artificially weak by central bank intervention.

Russia is growing its foreign exchange reserves specifically because it is sterlizing export earnings by buying them in the Interbank market and paying for them by printing rubles. That is why money supply growth in Russia is up 50-percent year on year.



If Russia has so much wealth and power then why is the ruble 24 to one US dollar instead of 6 to one as back in 1998? A loss in purchasing power of 75-percent? Against a weak US dollar! And why would they need Japanese investment to develop its eastern regions?

America's debts and deficits are the source of its vulnerability. Not its exports or its manufacturing both of which are very large by global standards. Reduce those deficits and the US dollar will strengthen. Stop exporting wealth! ; - )

[manu]

$this->bbcode_second_pass_quote('MrBill', 'I')t is a very poorly written article and not well researched. Basically, oil producers and Asian manufacturers are preserving an informal Bretton Woods II agreement by exporting goods AND capital. They can simply demand payment in any currency they wish. But they should then expect to export and earn less. If they are willing to accept that eventuality then no problem.

The cause of US dollar weakness stems directly from America's trade and budget deficits, and exporting wealth to the rest of the world year after year. However, the US dollar is weak against other undervalued currencies that are kept artificially weak by central bank intervention.

Russia is growing its foreign exchange reserves specifically because it is sterlizing export earnings by buying them in the Interbank market and paying for them by printing rubles. That is why money supply growth in Russia is up 50-percent year on year.



If Russia has so much wealth and power then why is the ruble 24 to one US dollar instead of 6 to one as back in 1998? A loss in purchasing power of 75-percent? Against a weak US dollar! And why would they need Japanese investment to develop its eastern regions?

America's debts and deficits are the source of its vulnerability. Not its exports or its manufacturing both of which are very large by global standards. Reduce those deficits and the US dollar will strengthen. Stop exporting wealth! ; - )

[MrBill]

I recently read that 67% of disposable income in America goes towards food, energy, housing and healthcare. That percentage has been rising, so it cuts into all other discretionary spending. Because the USA is a net importer running a trade and budget deficit they import both goods and capital. So that is a wealth transfer generated in the domestic economy that goes to the exporters of oil as well as the capital needed to fill the current account deficit.

A trillion here and a few hundred billion there starts to add up to some serious money after a few years. If it was capital imported to pay for infrastructure and fund innovation then it might generate future returns. However, if it is imported solely to fund consumption or worse to wage foreign wars then it is a net drain on current wealth as well as future wealth creation.

Has anyone had a chance to read J. Stiglitz's Three Trillion Dollar War, yet? Any comments on it?

$this->bbcode_second_pass_quote('', ' ') The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.

The cost of direct US military operations - not even including long-term costs such as taking care of wounded veterans - already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.

[efarmer]

I had a bunch of Canadian dollars I needed to exchange, so I went to the currency exchange window at the local bank. Short line… just one lady in front of me, an Asian lady who was trying to exchange yen for dollars and she was a little irritated . . ..


She asked the teller, "Why it change?? Yesterday, I get two hunat dolla fo yen. Today I get hunat eighty?? Why it change?"


The teller shrugged his shoulders and said, "Fluctuations".

The Asian lady repied, "Fluc you bankels, too!"

*This story was emailed to me and is not my own.