- Joined
- Dec 14, 2006
- Messages
- 7,588
- Reaction score
- 468
- Location
- Western Europe
- Gender
- Male
- Political Leaning
- Other
Economic conditions and sentiment in the US is very bad, and I think all of you will agree with me when I say this is the fault of the current US administration.
Maximus Zeebra said:What he should do:
1. Remove the troops from Iraq, which will slice away 100 billion in spending annually.
Maximus Zeebra said:3. Use that money to pay down trade debt, which will stabilize the situation slightly.
Maximus Zeebra said:4. Work his *** of to make trade deficit non existent without crushing the dollar while doing so. This means slicing imports and increasing exports, the difference is around 850 billion annually, so it will take awhile..
That will only worsen the situation. I'm assuming you meant the federal debt, because the trade deficit cannot be "paid" in that gait. If the US government reduces spending and actually have a surplus, it will only alleviate the crowding effect, increasing the supply of US dollars in the international market and exacerbating the deprecation of the dollar.Maximus Zeebra said:3. Use that money to pay down trade debt, which will stabilize the situation slightly.
That will only worsen the situation. I'm assuming you meant the federal debt, because the trade deficit cannot be "paid" in that gait. If the US government reduces spending and actually have a surplus, it will only alleviate the crowding effect, increasing the supply of US dollars in the international market and exacerbating the deprecation of the dollar.
Obviously you have very little understanding of economics. The decline in value of the dollar doesn't automatically translate into a decline in the economy.
Not really. The president has very little control over the economy in the short term. He can make changes that will have long-term consequences on the overall state of the economy, but he isn't responsible for individual recessions and booms.
True, but it has nothing at all to do with the value of the dollar.
Umm the government can't just choose to "pay down" the trade deficit. The trade deficit is what it is; only private businesses and individuals exporting more and/or importing less would reduce it.
Who exactly would the government write the check to, if they were going to pay down the trade deficit?
Ya, because the amount of goods/services that people export and import is really something that the president can control. :roll:
The ONLY tool he has at his disposal to deal with the trade balance is the value of the dollar. So this suggestion doesn't make any sense.
"The almighty dolla, aint what it used to be. Hobos used to ask you fo a dolla now the motha****as ask ya for three. The almighty dolla, well that's what they used to say. One dolla used to be a whole lot but it's hardly worth **** today."
--Devin the Dude
Yes it does, in the US it does.. How do you expect to sync export and imports without the falling dollar? The dollar falls, make everything the US imports more expensive and everything from the US cheaper for others.
Maximus Zeebra said:Now, your imports will probably have to meet exports somewhere around 1.3 trillion. This means US imports will have to fall 500 billion. Is that not a decline? Consumers? Consumer prices? Etc etc...
Maximus Zeebra said:Not really, he have good control of the economy.. How come Clinton managed to have a great economy behind him, while Bush have a broken it?
Maximus Zeebra said:Bush and his administration have choosen to spend 250 billion € annually extra on war since he became president. This money could have been used way better to stimulate US businesses and increase exports.
Maximus Zeebra said:Yes, he can.. Money spent differently could make a huge difference.
Maximus Zeebra said:Just look at Germany for example.. Despite a far higher value of the Euro, German export is exploding, growing fast.
Maximus Zeebra said:Yes, let the interest rates stand and let the dollar fall quicker.
1.50-1.75 against the € and 2.25-2.5 against the Brit pound is the REAL value of the dollar.. By then the EU economy will be 16-19 trillion $ large, and we will have a higher Per capita GDP..
Just to twist it around a bit..
The US economy is around 10.5 trillion € and will then have fallen to around 8-9 trillion €.
So all in all, the artificial US economy will be valued at its correct value when the dollar hit its REAL value when the export/imports are the same.
No kidding. Why is that necessarily a bad thing?
No, it's not a decline. It's not that people will go without the products that they would've imported, they'll just buy them somewhere domestically. And the increase in exports will create more domestic jobs, which would be a net plus to the economy to cancel any net minus from the loss of imports.
Clinton certainly helped it by favoring an explosion of free trade, but in the end it was mostly just luck. Clinton was president when communism had just collapsed and the internet was becoming prominent.
The idea that the President can control the short-term state of the economy is just silly. What exactly do you think he can do?
1. 250 billion is chump change compared to the size of the US economy. Of course it can be put to better use; that doesn't mean that the amount of money spent has the slightest impact on the US economy.
2. Corporate welfare is a stupid economic policy. Why in the world should the government "stimulate US businesses"?
3. The government can't just write a check to increase exports, as I've already mentioned.
Fair enough, but the president shouldt have asked congress for so much extra on war and military.Congress controls the budget here, not the President.
The value of the euro doesn't matter, it's the change in the value of the euro. Has it appreciated relative to all other currencies?
I hereby award you a BS in Statistics. :roll:
If you measure every GDP in the world in terms of your home currency, you'll get a distorted view of the actual purchasing power of various countries. By this logic, if the US dollar depreciated by 10% against the Euro in a single year (not unusual), it would mean that the US economy had shrunk by 10%! Currency exchange rates are very volatile. Developed economies, for the most part, are not.
This is the bad thing.. Its actually a good thing, but it will feel like a bad thing when US inflation is at an exceptional high level.
Maximus Zeebra said:Luck, yeah sure.. Thats why everything started looking good a time after Clinton entered office, and imrpoved as long as he was there..
Then Bush came to office and lowered taxes and introduced economical madness and neglect. Everytihing pointed downwards and the relative US economy has gone backwards during the Bush term. EXCEPT Gdp per capita that has just slowed down, but not decreased.
Maximus Zeebra said:I dont know, he can have a responsible fiscal policy, spend things on healthy issues instead of wars for example.. Since 2000, the US have spent about 200 billion a year extra in everage on war and the military. Now this over say 6 years since we exclude 2000, is about 1.2 trillion$ that could have been spent better.. Now that is half a US government spending.
Maximus Zeebra said:Us government spending for your information is around 2.5 trillion$ annually. The US GDP is over 10 trillion, yes..
Now, dont you think a president have some power over the economy?
Maximus Zeebra said:1. No its not, its 1/10th of government budget/spending. Imagine if that money was spent on social issues instead, the US would look completely different today. Imagine if that money was spent to subsidise renewable energy or environmental friendly technology.. Things would be completely different..
Maximus Zeebra said:Not corporate welfare, corporate insentives.. Imagine GM getting paid to switch from fossil to environmental friendly energy in their cars..just one example there of possibly millions. Now, what could 250 billion do in R&D?
Maximus Zeebra said:Basically, yes it has.. But mostly it has apreciated against the dollar which is our main export market. Of course the Euro value matters greatly.. Any given thing now bought from the US is about 50% cheaper than it was at the low point of the Euro. Big difference between 1€ being worth 1.35$ and one that is only worth 0.8$ which it was at the lowest point.
Maximus Zeebra said:What you have to understand is that the world is now a two(big) currency market, not 1 like it has been since the 1970s.
Maximus Zeebra said:This is a HUGE difference. GDP and numbers have always been compared in USD, they still are. And when the Euro fluctuate against the dollar, this doesnt mean that nothing happens like you wish. It means an appreciation of the whole European economy, and a decline of the US economy.
Maximus Zeebra said:Remember those 850 billion$ annually the US is strugelling with? The relationship between that, the value of the dollar and the value of the Euro and the Euro area difference is all related.
The REAL value of the dollar is shown when the dollar reach that level that will even out imports and export. That is the REAL/Natural value of the dollar against other currencies.
Maximus Zeebra said:The two currency market has brought huge changes to the whole world economy that it makes this MUCH more obvious and visible, before the US could basically maniupate the dollar like they wanted. Now they cannot anymore, and it means the US economy will be valued in REAL terms against other economies when the dollar hits its natural value.
Maximus Zeebra said:The Euro is at natural value, because Eurozone imports and exports have a difference of about 0 annually. +- a few billions.
The Pound is overvalued the same way the dollar is.
Maximus Zeebra said:Lets theoretically say that the REAL value of the dollar is 1.65$ = 1€.. The real value again is when Imports and exports in the US have no difference in value, thats when the dollar is "correctly" valued.. Now.. The EU economy was 10.9 trillion € after Romania and Bulgaria joined, which was start of 2007. The dollar VS the €uro at the time was something like 1.25. That means the EU economy was worth 13.625 trillion $, this is because for comparison economists use the dollar(i could also use the € to demonstrate the exact same thing). With a value that is 1.65 dollars for 1 Euro, the EU economy would be valued at 18 trillion $.. So in reality, the dollar was just overvalued the whole time, and the European economy if measured in the REAL dollar value is something like 18 trillion$..
Now, here is the clue why this is so... Im not saying production in the EU all of the sudden raised 5 trillion. I am just saying that the valuation of that production has changed, and thats very important in a market with two large currencies that have to fit imports and exports of the representative countries.
But the Eurozone is not the whole EU economy, it only represent about 90% of it.. But anyways, the numbers are pretty accurate. And the case would be the same, just -10%.
Maximus Zeebra said:But, I guess, you Americans just want to keep measuring everyting in 2000 value dollars.. :lol:
I see no reason to expect inflation will grow to an exceptionally high level as a result of this. Just the usual increase in inflation that accompanies a decrease in unemployment.
Clinton's policies were better for the economy in the long term, but crediting anything he did with the state of the economy in the 1990s is absolutely absurd. I know that you became an expert on the American political system in your six months living here, but you seem to forget that this isn't a socialist economy and the government has minimal control over the short-term state of the economy.
Why are you comparing wasteful spending over 6 years to total spending over 1 year? Never mind, I already know the answer. :roll:
No. He's not the controller of the federal budget, and even if he was, his impact on the economy would still be very small.
Of course those would be better uses of the money. That doesn't change the fact that they would still make absolutely no difference to the short-term state of the economy.
Just keep repeating the numbers that I haven't disputed, rather than explaining why it's a bad thing for the US economy. :roll:
No, there are MANY currencies. The fact that two of them are bigger than the others doesn't make it a "two currency market." That is just nonsense.
No it doesn't. There's no reason that depreciation against the euro would destroy the US economy, in fact it would bring in a lot more cash from the EU.
No, the real value of the dollar is whatever the market is willing to pay for it. What you're suggesting doesn't even make sense, because there's no way that every currency in the world could be trading at the exact value where it's imports/exports are balanced.
If you know the value of various currencies better than the free market does, then I suggest you short-sell pounds and dollars. You'll become rich overnight. :roll:
You're still suggesting that a depreciation of one currency relative to another spells an economic collapse for that currency. Suppose I want to measure the dollar relative to the Mexican peso. It's been appreciating for over a decade. Does that mean that the US economy has grown by double-digit percentages every year? If not, what makes the Euro so special?
I prefer to let the free market decide the value of currencies, as I am not an authoritarian statist.
Its not certain, but when demand will remain, prices hike and supply dry out, the demand will follow, or the US economy have to compensate somehow.. This would probably be to produce more of that stuff you need back home instead, but that isnt done overnight.. So then your dollar keeps falling, prices for your imports go up, and you have to pay more for the same.. Now, how is that not going to affect inflation?
Maximus Zeebra said:You have this wonderful tendency to ignore what I am REALLY saying and misunderstand my messages.. Of course Clinton was single handedly responsible for the US 1990s economic miracle.. No one else was, just and ONLY Clinton did that alone.. He wouldnt even need a US population or companies, he could do all that alone.
Maximus Zeebra said:Because wasteful spending is wasteful spending, and you have absolutely no understanding of how much have been wasted during the Bush term.. So someone have to tell you..
Maximus Zeebra said:I didnt say it was a bad thing for the US economy.. I said it was the right thing for the US economy. Maybe you should actually start reading my posts??
:2wave:
Maximus Zeebra said:Of course there are, but there are only two major ones, just 10 years ago there was only 1 major currency.. There are two major ones and five important ones.. The major ones are the dollar and the Euro, the important ones besides those are the Yen, the Pound and the Swizz Franc.
But its still a two currency market, before it was a one currency market.
Maximus Zeebra said:Im not saying the Euro will destroy the US economy.. I am just saying its great for US and that our economy just will be so much more appreciated, and correctly appreciated against the US economy when the US dollar hits its REAL value.
Maximus Zeebra said:No its not, the REAL value of the currency is when export and imports are about equal.. What you are talking about is market value..
Dont come here and tell me that the real value of google who have a revenue of 5 billion is 400 billion just because the stock market says so.. Thats the market value, not the real value.. In the end, the market value will ALWAYS become more and more the same as the REAL value.
Maximus Zeebra said:In the US, the market tends to overvalue things, while in Europe its valued pretty REAL. In China its undervalued just like their currency.
Maximus Zeebra said:The REAL value of the Chinese ramibi like the dollar is when exports and imports in China is about equal. So currently the Chinese currency is undervalued while the dollar is overvalued. US trade deficit with Europe is about 90 billion€ every year, this means that the US have to adjust the dollar to make that around 0.. And then China have to adjust their currency to reduce European trade deficit(and at the same time US trade deficit)..
So actually the best thing would be if both China and US changed their currencies around the Euro, as this would be the easiest way to reach the REAL value..
Maximus Zeebra said:Do you btw understand the concept of GDP ppp and GDP? and how this is related to currencies?
Maximus Zeebra said:The Chinese if they revalue their currency to a REAL value their economy is an 8 trillion $ economy and not a 2 trillion dollar economy like it is now.. Are you saying that such a change is irrelevant and that it should always be measured in 2000 value dollars?
Maximus Zeebra said:I just know that if I was American I would surely put some of my savings in other currencies as well, especially the Euro and the Swizz Franc. Setting them in the Chinese currency is a risk, but could potentially double your money twice if the Chinese currency is correctly revalued.
Maximus Zeebra said:Every economy in the world is now appreciating in comparison to the US.
Maximus Zeebra said:Think of it as a slowly bursting dot-com bubble. Its not that the Euro is appreciating the most that is the point. The point here is that the US economy is depreciated.. Its difficult to see the big picture in this, especially for a US patriot, but your economy is undergoing a HUGE decline as we speak.
Maximus Zeebra said:Yeah, I prefer that too, but you know the funny thing, usually the market will always realize the REAL value of things, like they are doing now with the US economy..
Maximus Zeebra said:Ps. If you have any stocks in google I would suggest slowly selling them off now, before the market realize the real value of it and burst it like the dot-com market.
Hay Maximus the U.S. has alot of sway in OPEC through the Saudi's oil is tied to the $ and nobody is going to put faith in a petro-euro because Europe doesn't have the military to defend it, and anyways the FED. is intentionally undervaluing U.S. currency which the Chinese have adequately proven is a trading and economic benefit.
Get over it and stop pretending to care about what America does. This individual need to compete with America for everything (mirroring French diplomacy) is a psychological personal break down.
:2funny:
The dollar isnt undervalued, its still way overvalued. You can see that by the differences in exports and imports.
China have an undervalued currency, and you can also see that in exports and imports differences.
In dollar terms the Chinese economy is still just 2 trillion, while the real value is about 8 trillion.
Now, this means the Chinese economy is seriously undervalued while the US economy is overvalued. So in reality, when the dollar and the Ramibi hits the right values, it will be like this.
US economy 13.5 trillion $
Chinese economy 8 trillion $
Eurozone economy 16 trillion $
EU economy 19 trillion $
Thats when the euro hits 1.65 against the dollar.. Thats about the time US exports and imports should approximately equal.
Well, the petro age is over.
Yeah, you guys in the US are too ***** to handle any real competition, so you let the value of the dollar fall and make the US economy smaller and smaller compared to the Euro economy.
The US economy is shrinking against almost all economies..
I have never seen someone get owned in a thread this bad, and still continue on....You are either very stubborn, or you got alot of heart Maximus......
I have never seen someone get owned in a thread this bad, and still continue on....You are either very stubborn, or you got alot of heart Maximus......
Umm you have no idea what you're talking about the U.S. increased the money supply which decreased the value and our interest rates.
What effect does the trade deficit have on the value of currency exactly?
Where are you getting this stuff from?
Your grasp of the economy is starteling, tell me have you ever heard of the service industry? The U.S. is a service based economy, and the trade deficit has nothing to do with the value of currency, the U.S. has intentionally decreased the value of its currency by increasing the money supply in order to lower interest rates. Infact as Friedman would have it a large trade deficit is actually a signal that the currency of a nation is strong and desirable infact a trade deficit is a good thing in that it implies that consumers have an opportunity to buy more goods at lower prices that otherwise they would not get to consume, and inversely a trade surplus implies that a country is exporting goods its own citizens did not get while paying higher prices for goods that they actually did receive.
I have never seen someone get owned in a thread this bad, and still continue on....You are either very stubborn, or you got alot of heart Maximus......
Maybe its time to do some more economic research? Perhaps you should take some kind of course in basic economics.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?