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POLITICS: The Decline of the U.S. Dollar

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posted on Nov, 8 2004 @ 11:40 AM
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The greenback is set to fall further. The dollar has fallen to another record low against the euro, amid mounting worries over the US' tightly-stretched public finances. What is going on with the U.S. economy? How low will the dollar go? The euro hit $1.2985, against Friday's previous record low of $1.2973.
 



news.bbc.co.uk
The decline reflects market speculation that US public spending will continue to outstrip government revenues under President Bush's second administration. The dollar is expected to fall further, denting European and Asian exports.

"The euro-dollar's break of $1.30 is only a matter of time," said Naomi Fink, currency strategist at BNP Paribas. "It's just a question of momentum." The dollar stood at $1.2953 per euro by 1533 GMT. Against the yen it was trading at 105.42 yen, having earlier fallen to 105.30 yen - its lowest level since April.

The US currency has been weakening for much of the past year, pressured by worries over the US' record $427bn budget deficit.


Please visit the link provided for the complete story.


The pace of the dollar's decline has picked up since President George W Bush - whose heavy spending has pushed the US finances into the red - was elected to a second term in office last week.



The weaker dollar will make European and Asian exports more expensive, and hence less competitive, in the US.

The euro is now up by 57% from its all-time low of $0.82, recorded in October 2000.

What is to come of the U.S. dollar? How will this effect that Canadian economy?


[edit on 12-11-2004 by Banshee]




posted on Nov, 8 2004 @ 11:45 AM
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As well as eventually massive job gains as the price of american made goods goes down. But in the mean time it might be hard for people to buy a gallon of milk.



posted on Nov, 8 2004 @ 11:47 AM
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Interesting topic. Moments before you posted this, I was talking to some of my friends from Spain and Portugal. Because the dollar is so low, they are buying an insane amount of products from Ebay.

The US Dollar is getting to be Monopoly money.



posted on Nov, 8 2004 @ 11:52 AM
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acording to Ft.com China is selling its reserves:
news.ft.com...
I know also from my private sources that this happens in Russia, many former rusian states as well as in East Europe



posted on Nov, 8 2004 @ 12:20 PM
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I'm starting to think it is about time for me to get in the forex market. Hmm.



posted on Nov, 8 2004 @ 12:25 PM
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I knew I should have gotten into the currency market when the Euro came out!

But, on the other hand, with demand for U.S. products, at a cheaper price, U.S. production could rise. Dollar decreases= export increases. The items we import will become more expensive though.



posted on Nov, 8 2004 @ 12:29 PM
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I am not wise in the ways of international finance. How would a decline in the dollar cause problems? If the value of the dollare overseas declines, then people would not be able to purchase as much with it right? But on the other side of things, wouldn't they be able to buy more of our goods with their own currency? How is that bad for us?

-P

Edit: erm . . . Sorry, by "us" I do mean folks in the US and "them" refers to folks who's primary currency is the Euro. Sorry about that.

[edit on 8-11-2004 by postings]



posted on Nov, 8 2004 @ 12:36 PM
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IMHO The U.S. dollar has been too high for too long. Weve got incredible trade deficits and higher that normal unemployment because of this. I agree with the earlier poster that there will be some pain in this transition while manufacturing jobs return to the US but in the end it is better that the dollar is even with all other currencies than the current situation.

Of course, we will have to tackle the debt, which is Americas biggest issue right now. Im thinking the devaluation of the dollar and a re-scheduling of the debt will probably keep things from getting too much out of control.

The last thing anyone needs right now is a collapse in the dollar. China would face enormous problems and wed probably default on all those bonds and have to issue a new currency to boot.



posted on Nov, 8 2004 @ 12:39 PM
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China's been keeping the currency low on purpose and it doesnot seem o be doing them much harm.

MrNice unemployment rates are not any higher then they have been in the past infact I think they are lower then the clintons years. You could argue the jobs dont pay as much though.



posted on Nov, 8 2004 @ 12:43 PM
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MrNice unemployment rates are not any higher then they have been in the past infact I think they are lower then the clintons years. You could argue the jobs dont pay as much though.


The umemployment rate only counts people WHO ARE LOOKING FOR WORK. It is NOT an accurate barometer of TOTAL UNEMPLOYMENT.



posted on Nov, 8 2004 @ 12:48 PM
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Wow, I thought it would take at least a few WEEKS before we could say "I told you so..."....not DAYS...
Well, we voted for it, time to reap what we sow...



posted on Nov, 8 2004 @ 01:06 PM
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Originally posted by ShadowXIX
MrNice unemployment rates are not any higher then they have been in the past infact I think they are lower then the clintons years. You could argue the jobs dont pay as much though.


Yea...that was my point. We have a lot of service sector jobs but fewer production jobs, which drives down wages. In the end a lot of "Made in China" labels are going to be replaces with "Made in USA" labels.



posted on Nov, 8 2004 @ 01:06 PM
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The power of a nation is in its currency, this trend clearly indicates that the US is quickly losing its superpower status.



posted on Nov, 8 2004 @ 01:12 PM
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EUR/USD -> 1.32
USD/JPY -> 103

A lower dollar is not bad for the USA at all in fact it is a much needed adjustment. There will be no significant inflation in the US as Greenspan will raise rates long before inflation can take a hold. This increase in rates keeps the foreign investors lending money so we can continue to cover our trade deficits. At the same time a higher eur/usd helps keep the lid on inflation in europe that is worrisome to eurozone officials. Even China hiked rates which in effect will help let the dollar depreciate.

Looking ahead for the medium term anything above 1.30 is a very good price to buy dollars against the euro. Likewise anything below 105 is as good as money in the bank to sell yen. Just MO.



posted on Nov, 8 2004 @ 01:34 PM
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just the other day I was talking to some american friends of mine, telling them about the death of the us dollar and the perhaps the coming of the gold dinar( to be used by arabic countries) and the rise of the euro. and man tthey balked at me, I said the us can't sustain the level of spending as it did in the first bush term. and it already tops the 7 trillion debt mark. How long will ppl hold the dollar.? this is the signs of economic turmoil.(damn there goes the war on terror!)



posted on Nov, 8 2004 @ 02:20 PM
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Originally posted by lockheed
The power of a nation is in its currency, this trend clearly indicates that the US is quickly losing its superpower status.



It's true that some nations manipulate their currency's value to maintain market position - but Lockheed is right, the US traditionally holds superpower status by having the most valuable currency. ...and that's going, going....


You might be interested in an op-ed piece I posted in October: War Games, Big Money and the Plummeting USD

"The US war on terrorism is a big ticket item about to hit $225 billion for the years fiascos in Iraq and Afghanistan, with another $5.6 billion committed to develop vaccines for diseases that do not exist. Much of the war money goes to pay heavily inflated costs for goods and services to corporations like Halliburton leaving soldiers without adequate armor or support, and forcing them into suicide missions. As a result, the US deficit is already in the trillions, and the world is dumping US dollars. "

www.abovetopsecret.com...


Good work MacKiller



posted on Nov, 8 2004 @ 05:35 PM
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Who profits from a declining dollar and inflation?....oh yeah! Corporations and big business all-together. Wow, I remember that from High School Economics class. We're kinda living in a time when peasants are distracted by entertainment while their government crumbles beneath much like the history of Roman Empire, the people were distracted purposely. (History Class)



posted on Nov, 8 2004 @ 09:31 PM
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1.The US owes lots of money.

2. The lower the US dollar falls the les this debt is worth.

3. Will China for example begin to abandon investments in US dollars and accelerate the decline?

Perhaps so. See this article
by Jiang Ruiping, director of international economics at the China Foreign Affairs University.


Many international institutions and renowned scholars have recently warned that the possibility of a US dollar slump is increasing and may even lead to a new round of "US dollar crisis."
Since China holds huge amounts of US-dollar-denominated foreign exchange reserves, the authorities should consider taking prompt measures to ward off possible risks.

It is still too early to conclude if the US dollar is heading towards a crisis. But it is an indisputable fact that it has gone down continually. Its rate against the euro, for example, has dropped by 40 per cent since its peak period and it lost 20 per cent of its value against the euro last year alone.

It is becoming more and more evident that the possibility of a further slump of the US dollar is increasing.



posted on Nov, 9 2004 @ 02:09 PM
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This devaluing of the dollar is going to bring bad times to many folks. I really worry. As I see commodities on the rise every day, and the dollar slumps and slumps.

Recovery in sight? I don't think so; hope I'm wrong though.


On a side note, I'm glad to see this issue getting decent coverage. Makes me so glad I joined ATS. Maybe we could get an in-depth analysis of just how bad this could be?

Also, does ATS/ATSNN take donations or something? Want me to click on some ads? I mean a lot of the stuff on here is great coverage, stuff not found on mainstream news outlets, and covered more clearly than you'd find on most short-wave programs...

Anyways, thanks ATS/ATSNN and contributors, great work.

X



posted on Nov, 9 2004 @ 02:27 PM
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hard times are coming, believe it or not, and according to the book of revelation we may well be on the brink of that one of the 4 horsemen of the apocalypse. get ready to stock up, and you know with all the hollywood celebs spending money like it will not go out of style, I wonder how many will d o this when reality sinks in.




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