THE US Economy Thread (merged)

by **nth** » Mon 28 Mar 2005, 14:52:11

damn, i want a $65k house.
heck, i can pay in cash.

by **nth** » Mon 28 Mar 2005, 15:02:12

marko,

One thing about your scenario of the currency market that puzzles me is how does USD fall and no one gain from it?

I was taught that currency values depreciate against another currency. So if USD is weaken, then another currency must be strengthen as people sell USD, they have to buy another currency.

On another point, I always assumed Euro will be the other choice. If Euro is the other choice, then how is it not in their best interest to lend that money back to US to save their pre-existing investment and their pension and insurance business?
I mean they have a few trillion dollars invested in US. Are you saying they are willing to abandon all that money? Are you also saying that a few trillion dollars are going to leave US?

I cannot imagine the G7 finance ministers allowing this to happen. I think they just shutdown the market like what Malaysia did in the 90's and institute a fixed exchange with allotted quantities.

by **cube** » Mon 28 Mar 2005, 15:15:17

I remember not too long ago, about 2 years agao, during the run up to the invasion of Iraq it was quite fashionable to speak of the US as not just a super power but a hyper power...a power that is beyond super power. This was all over the news and op-ed articles in just about every newspaper you can shake a stick at.

Today, I know of no sane person who would make the same claim today. My what a difference 2 years can make. I wonder where the US will be in another 2 years?

by **RiverRat** » Mon 28 Mar 2005, 17:20:04

$this->bbcode_second_pass_quote('nth', 'd')amn, i want a $65k house.
heck, i can pay in cash.

by **RdSnt** » Mon 28 Mar 2005, 23:47:20

$this->bbcode_second_pass_quote('nth', 'm')arko,

One thing about your scenario of the currency market that puzzles me is how does USD fall and no one gain from it?

I was taught that currency values depreciate against another currency. So if USD is weaken, then another currency must be strengthen as people sell USD, they have to buy another currency.

On another point, I always assumed Euro will be the other choice. If Euro is the other choice, then how is it not in their best interest to lend that money back to US to save their pre-existing investment and their pension and insurance business?
I mean they have a few trillion dollars invested in US. Are you saying they are willing to abandon all that money? Are you also saying that a few trillion dollars are going to leave US?

I cannot imagine the G7 finance ministers allowing this to happen. I think they just shutdown the market like what Malaysia did in the 90's and institute a fixed exchange with allotted quantities.

by **threadbear** » Mon 28 Mar 2005, 23:50:21

Rdsnt, I like your take on things. When and how did you start to get interested in the American economy, if you don't mind me asking?

by **RdSnt** » Tue 29 Mar 2005, 10:57:48

$this->bbcode_second_pass_quote('threadbear', 'R')dsnt, I like your take on things. When and how did you start to get interested in the American economy, if you don't mind me asking?

by **nth** » Tue 29 Mar 2005, 11:11:18

$this->bbcode_second_pass_quote('cube', 'T')oday, I know of no sane person who would make the same claim today. My what a difference 2 years can make.

by **nth** » Tue 29 Mar 2005, 13:16:48

$this->bbcode_second_pass_quote('RdSnt', 'I')f you don't mind my attempt at an explaination.

by **marko** » Tue 29 Mar 2005, 23:35:38

$this->bbcode_second_pass_quote('nth', 'O')ne thing about your scenario of the currency market that puzzles me is how does USD fall and no one gain from it?

I was taught that currency values depreciate against another currency. So if USD is weaken, then another currency must be strengthen as people sell USD, they have to buy another currency.

by **threadbear** » Wed 30 Mar 2005, 01:43:36

Rdsnt, Thanks for the reply. It was really heart felt and well written. I think many people feel the way you do. The death of Kennedy was a blow to the collective American soul. Do you mind if I ask where you are in Canada? I'm in Canada too, and damned worried about what this country might become.

Marko, That was a great summary. I'm going to reread it tomorrow. I've been reading analyses of this nature for a few years now, and this ranks in the top ten.

by **RdSnt** » Wed 30 Mar 2005, 09:53:48

$this->bbcode_second_pass_quote('threadbear', 'R')dsnt, Thanks for the reply. It was really heart felt and well written. I think many people feel the way you do. The death of Kennedy was a blow to the collective American soul. Do you mind if I ask where you are in Canada? I'm in Canada too, and damned worried about what this country might become.

Marko, That was a great summary. I'm going to reread it tomorrow. I've been reading analyses of this nature for a few years now, and this ranks in the top ten.

by **nth** » Wed 30 Mar 2005, 11:37:49

$this->bbcode_second_pass_quote('marko', '
')Yes, they will sell US dollars for another currency, which will rise relative to the dollar, though probably not very much relative to real things like oil or other commodities, which will also be rising in dollar terms. The euro may hold its value in terms of buying power while the US dollar drops.

by **RdSnt** » Wed 30 Mar 2005, 14:20:11

Nth,

I think you need to read this:

http://www.financialsense.com/series4/part1.html

by **nth** » Wed 30 Mar 2005, 14:37:06

$this->bbcode_second_pass_quote('RdSnt', 'N')th,

I think you need to read this:

http://www.financialsense.com/series4/part1.html

by **nth** » Wed 30 Mar 2005, 14:57:46

$this->bbcode_second_pass_quote('RdSnt', 'N')th,

I think you need to read this:

http://www.financialsense.com/series4/part1.html

by **chris-h** » Wed 30 Mar 2005, 15:07:44

$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('RdSnt', 'N')th,

I think you need to read this:

http://www.financialsense.com/series4/part1.html

by **nth** » Wed 30 Mar 2005, 16:30:05

chris-h,

I am not sure what you are trying to say.

James' predictions are different than what Marko's envisioning.

If Marko is saying the same, that is fine, but that is not what he posted.

James' prediction is world currency devalueing based on commodities. As I said in my posts, Marko needs to clarify how all the world's currencies just get devalued. Also, Marko claims the world won't have enough money to save US. That is far from what James is saying. James is saying there is too much in this world.

They are saying very different things.

by **threadbear** » Wed 30 Mar 2005, 17:23:26

"Inflation will be checked by recession as consumers lose income, purchasing power drops, so more supply will be in the market and pricing power will drop, so inflation will drop".--Nth

Nth--Really? How do you figure? Without govt. price controls, it's not going to happen. The market dynamics are differrent this time, as natural resources, oil etc...do NOT have the built in flexibility, (built on the assumption of infinite supply) that traditional economic theory rests on. Asset bubbles will deflate, but that's different.

The dollar could drop a further 50% in relation to the Euro, if things proceed as they are now. It won't be hyperinflationary, as some people think-- That would be good news for those with debt, but it will be gawdawfully inflationary. The dollar will retain just enough worth and utility to be maintained as a currency and a national burden and shame. The dollar sign of the future will have all the symbolic panache of a swastika.

Corporations don't have a lot of pricing power at the present time. So forget prices dropping to meet what Joe 6Pack can afford. There will be waves of consolidation and merger creating super oligarchy/monopolies, a perfect breeding ground for price fixing; not price reductions.

The prices will be set to accomodate the lucky 10 to 20% who manage to avoid the train wreck. This is classic Marx theory of what eventually happens to a Capitalist system, past it's best before date.
Subtle market "signals" to retailers to drop prices, like hungry hordes of the indebted waving placards and baseball bats will be met with armed cops in tanks, not lower prices..

I read in the New York times a few years back about a group of economists who attended a meeting, the conclusion of which was that Marx had been stunningly accurate at prediction. They certainly weren't communists, but had to admit his analysis of the ultimate fate of capitalist laissez faire economies was correct.

Greider, in "One World, Ready or Not", describing globalization's various pitfalls and ideological fantasies, concluded in his final paragraph, that ultimately, free marketeers would be stopped in their tracks by the finite nature of the earth itself. This was remarkably accurate, given what we know about peak oil, now. He wrote the book about 6 or 7 years ago, I think.

RdSnt--Interesting post, will respond more about it later, or send you a pm

by **nth** » Wed 30 Mar 2005, 18:06:06

threadbear,

Yes, inflation and recession normally play against each other. Of course, it doesn't have to be like that. I never said it has to be. I was giving the classical case. If it is different, then it needs to be explained why it is deviates from the norm.

Yes, I agree under your scenario of high prices due to scarcity of oil and commodities will maintain inflation even when recession hits. Stagflation is the result. I stated it already. Let me copy and paste it.

$this->bbcode_second_pass_quote('', '
')The only time that is not true is when we have stagflation. This will require recession and yet supplies remain scarce.

THE US Economy Thread (merged)

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