Dollar sliding further

[Rondaben]

The dollar has slid even further, breaching the important 80 barrier and approaching the all time low of 78.33.

Kitco has it at a current value of 79.97.

I'm not an economist, don't play one on TV and didn't stay at a Holiday in express. I have a question for those of you who are better able to answer this question:

What happens when the dollar breaches the all time low? Will computerized trading programs snowball a panic sell? I know that the fundamentals of the dollar won't support it and that the world is about tired of propping it up any longer.

Thanks for comments!

[Cameron]

The falling dollar will drive down our trade defecit due to it's lesser
value. In addition, as the dollar slides, foreign economies will begin to look inward and invest in their own resources instead of purchasing treasuries from the U.S. It might actually be a moderating factor as foreign nations can now jiggle their own interest rates to help avoid the overheating of their booming economies.

Not all is bad this time. Its now a global playground and investing has to be seen through an international filter.

[Rondaben]

The falling dollar will drive down our trade defecit due to it's lesser
value. In addition, as the dollar slides, foreign economies will begin to look inward and invest in their own resources instead of purchasing treasuries from the U.S. It might actually be a moderating factor as foreign nations can now jiggle their own interest rates to help avoid the overheating of their booming economies.

Not all is bad this time. Its now a global playground and investing has to be seen through an international filter.

Thanks for your reply Cameron.

As the dollar value falls, won't this increase the likelyhood of inflation? If each dollar is worth less, it will take more of them for the same purchasing power in effect, right?

Your point about foreign governments divesting of US securities and purchasing resources with declining dollars will have the effect of further aggrivating inflationary pressures as those "dollars" come back to roost in the US. In addition, I understand that the US Govt must sell so many billiions in US treasuries to service existing debt obligations. What happens if countries like China and Japan decide that it is no longer in their interest to hold onto dollars because of there declining value and move to convert to a stronger reserve currency like the Euro?

I also understand that the other countries can adjust thier interest rates, but this also has a direct effect on the US (ala the Yen Carry trades). Overall what seems to be happening is the first movements of a massive credit contraction that will only worsen the sub-prime bubble bursing. It seems that the Fed is in between a rock and a hard place---lower interest rates and further depress the value of the dollar risking international flight or increase interest rates to protect the dollar and tank the economy which is leveraged with debt to its eyeballs and beyond.

What do you see happening?

[HeXp£Øi±]

The Dollar has been in a descending triple bottom breakdown pattern. Support was .80 and it has broken through that level. There is a very good probability that it will now seek out new support levels and find new lows.
Just a bad sign across the board for the $USD.
http://img505.imageshack.us/my.php?image=scwg3.jpg

[Cameron]

Hi Ronda....It will make for very interesting times indeed. As inflation kicks in comsumer spending will fall and there will be bargains to be had. The merchants won't let the merchandise sit on the shelves too long, and will have huge blow out sales.

I believe the dollar will come back, but from a prophetic standpoint, I believe this is leading to the mark of the beast. We will be gone by then, but things will likely get so bad that the world will have to unite behind a common currency. Thus metal and paper money will be eliminated and nations will go to electronic debits and credits. A mark, or chip implant, in the right hand or forehead, would take care of identity theft and allow one to buy and sell.....electronically, even for a soft drink.

Until then, you will see peaks and valleys, and it will take a long time for any foreign nation to surpass us in economic savvy and survivability. Foreign countries that are booming are doing so with our help. They buy our heavy machinery for construction, lure our retailers to their land, and buy ocean front estates along our coast line.

Its a game of chess. Even when the dollar sinks, American companies in foreign lands make more profits and the trade deficit falls, and if inflation kicks in, we pay off old debt with new inflated dollars. You can do that a time or two, but eventually you run out of trees with which to print money. Thus electronic cyber money to the rescue.

For the near future, if you have some money on hand, get ready to pick up a nice house for 80% of last year's value, and once gas goes to $4.00 a gallon you can buy a SUV for a song. Those with money get richer during these times. Those who don't prepare, get stuck.

Good policies for family finances are: Go to being a one car family, (yeah right!), start cooking at home instead of eating our several times a week,
don't drive three blocks to run an errand, walk and get the exercise and the savings, and any other ways you can think of to get back to the basics and live in a frugal manner. Not miserly, but frugal.

And most of all, don't panic. God has not given us a spirit of fear. It will be o.k.

[PlumBob]

Ronda, I would certainly echo much of what Cameron has said above.

I personally believe that the notion of the US dollar falling to nothing and our economy going to the dogs is not reality. Yes, there are terrorist states that would love to see us crash, but they are not in total control of all economic activity worldwide.

Other nations need - and depend on - our goods and especially our services and technology, so we have become a part of a great interconnected whole.

That's not to do away with Christian prophesy about the end times, but a stark realization of our (the US) place in the whole scenario.

Moral of the story - Stash Cash now, Spend it another day.

PB

[Issachar]

Cameron and PlumBob, I agree with much of what you're saying. Cameron, your comment on the "prophetic standpoint" is good, imho. I'm not sure what you intend by "take a long time" though. Would you care to guesstimate? No one's holding you to a guesstimate. :)

PlumBob, it is true, imho, that the dollar will not fall to "nothing", but I'm not sure what you mean by "the economy not going to the dogs". I mean, I understand the metaphor, but do you visualize "going to the dogs" to be?

Moral of the story - Stash Cash now, Spend it another day. Are you sure about that? Do you really mean "cash" as in FRN's? They are losing value fast ..... have been for quite some time. It's the central bankers way of getting the fruit of your labor. Remember, "cash" should not be used near an open flame where as, for example, gold becomes more purified when it gets hot. Any tangible that has value, at least to the holder, won't lose that value like "cash" will/is. Inflation, perpetrated by the central bank, is a destroyer of reserves set aside for the future by those that actually work for a living rather than spend their days conniving how to take "money" from your pocket and putting it into theirs.

Issachar

[PlumBob]

Is that you in the pix, Issachar? Hello!

I understand most of your feelings about the US and our present tenuous (at best) financial position. I do think, however, that we represent too important an economic force on the world stage to be ignored. To wit -

Just today I thumbed through the current news-stand issue of the Harvard Business Review. The lead article about - Toyota, the world-wide company. Is it in Toyota's best interest for our economy to tank to the point that we (for example PlumBob) can not buy a new Toyota sometime in the next 5 - 7 years? Of course not. Absolutely, Toyota does not set the economic or political milieu of Japan, but I can assure you that when Toyota speaks, the Japanese government listens. Bottom line, Japan will not intentionally engage in concerted actions that would sink our economy.

Similar lines of thought can be applied to at least the "moderate" Arab state of Saudi Arabia, for instance, as well as some of the UAE-ites. Although there is some indication that Airbus may sell a few A-380's as family airplanes in Arabia, they still do have a marked affinity for the 747 in that part of the world.

I am not suggesting that NOBODY would act to see our demise. Clearly, there are both rogue states and rogue groups who would, as one of their leaders so aptly said it (when referring to Israel, not us) - It would be worth it to sacrifice 1/3 of our population to wipe Israel off the map. For those rogues, it is simply a matter of kill or be killed, no matter which, and that applies to all peoples in all places - as long as the end would be to kill Israelis and Americans.

Nor am I suggesting that there are not some rather sophisticated states that would put up with the inconvenience of seeing the US decimated, thinking that the decreased consumption of their goods (because of our fall) would be taken up by some other world economy eventually. China for example.

But by and large, we ARE living in a (pardon the phrase) "New World Order" where none of us are any longer independent. I rather suspect that if you and I could step out of our present situation and look at our little globe as God does, we'd see that we are pretty much following the "normal evolutionary path" of worlds like ours - that is to say, nothing to look at here folks, move along, move along. Our country and its economy will blend into the mediocrity of other world economies, nothing more, nothing less.

And by and large, the other "industrialized" nations of the world would rather have access to both the US's consumption and the US's production - at any exchange rate - than not to have us as a player at all. (IMHO)

Which (finally) brings me to the real point. If one believes that we are indeed close - very close - to the rapture, then it seems logical that the present economic problems of the US will bring us simply to that point where we are unable to be a major world force. We will be unable to enforce our will on those who would try to attack Israel. Either our economy will not support it, or our politicians will not support it, or our populace will not support it (or two or all three of the above.)

Concerning our fiat currency - regrettably, I have yet to find an IRA that will let me hold my meager savings as gold coin, at home! If you know of one, will you please let me know?

Peace be to you, Issachar

[Issachar]

Is that you in the pix, Issachar? Hello! Yes, that is me. I was in the desert last June and that is a pic from there. Add a donkey into the pic and that's me. :) (A few times I've been convicted of being a Democrat for the donkey avatar in other realms. It has NOTHING to do with that. Not even close. It's just that I hate automobiles ... would walk everywhere and have a donkey to carry stuff for me if I could get by that way. It's my "need a simpler lifestyle" statement.)

I'm thinking that Toyota/Japan and others are not interested in "sinking the US". They are thoroughly enjoying the fact that we purchase from them big time. They don't want to change that. I think that those that DO want to sink the US economically are too small in number at this point, to matter. The FED; creating ever so much fiat money, in conjunction with the US consumer's willingness to .... well, consume that artificial ick, are doing enough damage to the dollar where it will, at some point, be economically reasonable (sound business) for Japan and others to dump the dollar and go with, likely, the euro. It's a matter of cost effectiveness. Also, the EU is a larger consumer block than the US.

Which (finally) brings me to the real point. If one believes that we are indeed close - very close - to the rapture, then it seems logical that the present economic problems of the US will bring us simply to that point where we are unable to be a major world force. We will be unable to enforce our will on those who would try to attack Israel. Either our economy will not support it, or our politicians will not support it, or our populace will not support it (or two or all three of the above.) Very true.

Concerning our fiat currency - regrettably, I have yet to find an IRA that will let me hold my meager savings as gold coin, at home! If you know of one, will you please let me know? Buy gold and take possession ... not paper. It's simple. :) Remember, paper comes and goes all the time throughout history ... old, old gold is still gold. Until the end you will be able to find someone, somewhere that will trade something for it. Try to do that with confederate bills. :)

Peace be to you, Issachar And to you brother.

Issachar