The euro continues to gain value against the dollar. This is due in part to increased deficit on the part of the US, in addition to the percieved
absense of official care in the matter. Many believe this trend will not end anytime soon, and investors are worried that there seems to be no
official plan to lower its deficit and to save the dollar from falling any furher. As a result there is little interest from international investors
for the dollar in bonds and the like.
All told, the euro rose 7% this year against the dollar. Experts are concerned that this will only increase next year, and are worried that the US
will have to increase dollar production to lessen its debts. This could mean inflation, and a lower, even weaker dollar. The US released some data
on Thursday which included the personal consumption expenditures price index. This index held ground at 1.5 this year, meaning that the Federal
Reserve has no real desire to raise interest rates. if it were lower the Fed might do something.
"Momentum is once again against the dollar and the fundamental concerns about the U.S. deficits remain," said Chris Gothard, currency strategist at
Harriman in London.
"This is going to be an issue which hurts the dollar in the new year also. Technically there's also pressure on the dollar and in a thin market there
isn't much support for it."
Among other U.S. figures released Thursday, U.S. durable goods orders showed a strong overall reading in November, but much of the gain was in the
volatile transportation industry and the data failed to give the dollar a boost.
Although traders said that thin trade ahead of Christmas likely exaggerated price movements, the latest round of U.S. data seemed to vindicate the
belief of dollar bears that the currency's decline would continue well into next year.
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Well, as far as economics goes, it is a science. Like all sciences there are definite causes and effects. Every action shall have an equal, but
opposite reaction. What this means is that an economy can be predicted and also manipulated by the the powers that be, those that have abilities to
affect it, and know what to do to get the desired results. Those include the government, large national and multinational corporations, and banks. So
when our ecomony is in the ruts like it is now, one must conclude it's because people are allowing it to happen. If you ask me the whole thing stinks
of collusion. That fact that a strategist from Brown Brothers Harriman, where Prescott Bush, the grandfather of G. W. Bush, worked on the board of
directors, said that the dollar will most likely continue to fall also reeks of something awful.
Inflation is when the dollar loses value. The dollar loses value when more bills are printed. Its just like gold, if gold were plentiful and you could
go to the liquor store on the corner and buy some, and it would be pretty cheap. But since there is a percieved rarity, or scarceness it has a higher
value, based on the supply at hand. The same is true for cash. More cash = lower cash value. Thus causing prices to go up, and what once cost a few
dollars, now costs a few more. This is one way the government bails itself out out debt. Another is by raising interest rates and taxes. These are
only some of the reasons why the euro trades so high to the dollar. Another is our huge trade deficit.
Due to all this, foreign investors are less likely to invest in various commodities, which puts less money in our systems. Add to that the grim
investment outlook percieved by these said investors due to our government's lack of apparent effort to rectify the situation any time soon. Put it
all together in a bucket and you have not so much money coming our way in the near future. So these investors will look elsewhere to spend their
moneys, a lot may turn to the ever rising economy of the EU and its currency the euro.
If the dollar is allowed to fall too far, if could mean a depression, or if you want, a recession. Usually the US is always in a state of recession
before it goes to war,as was the case before Pearl Harbor & WW2 and it was true before 9/11 and the War on "Terror". Which brings me another way the
US likes to bail it self out of dept: Going to war!
You might say: "But we're already at war." And you would be right, although one that is growing more and more unsuccessful everyday, and is doing
apparently little for our sagging economy. So does this portend of some upcoming attack in the US or abroad? I don't know, but anything's possible
and if does happen it's because someone wants it to happen. I do know many experts believe that the situation for the US will only get worse, even
those at Brown Brothers Harriman. All I can say is watch for the market to fall, and see what happens.