Thread: Dubya The Devaluer

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Dubya the devaluer
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Posted: October 5, 2007
1:00 a.m. Eastern



When it comes to our personal finances, we understand how and why a poor credit rating and history influence the way we're treated in the marketplace. Max out your credit card and businesses, and banks will turn you away. But when a government runs up the sort of tab that plunges a country's currency into a crisis, economists take to talking in tongues.

"It's driven by the fact that U.S. data is continuing to deteriorate," one expert prattled, according to WND. Others habitually frame effects as causes: The housing bubble is to blame. Financial reporter Diane Francis of the neoconservative National Post has concocted a currency conspiracy. "There is a Currency Cold War being waged by Russia, Iran and various allies such as Venezuela," she fulminated.

Back on terra firma dollars are being dumped. Consumers generally dump stuff they don't want. The global currency market isn't exempt from the immutable laws of supply and demand. Another immutable economic truism is that, if profitable, people will do business with those they dislike. Markets, money markets too, reflect a bias toward profit. If the dollar were good for it, it would still be king of all currencies, irrespective of how the world feels about the U.S.


For the first time since 1976, the Canadian dollar is worth more than the U.S. dollar. The Australia dollar is predicted to soon reach parity with ours. And the euro is at an impressive $1.4283. According to His Holiness Alan Greenspan, a third of all foreign exchange reserves are now held in euros.

Foreigners – governments and individuals – simply don't have faith in the American currency. Back-to-front thinking ignores that the dollar's depreciation preceded its dumping.

The devaluation of the dollar is Dubya's doing. The slide began in early 2002, confirms the Cato Institute's James A. Dorn, commensurate with the debt Bush began to amass, when 9/11 fell into his lap. The national debt – the total amount of money owed by the government – is now well over $9 trillion. It increases on average by $1.5 billion per day, by the Debt Clock's math. Every American (bar politicians, illegal immigrants and other tax consumers) is on the hook to the tune of $29,893.82.

When they're not borrowing to feed their appetite for our assets, Bush and his brigands press the Federal Reserve and the printing press into service. Day and night they flood the market with paper money unbacked by gold or real assets. (You gotta "fund" those unwinnable wars, the laptop bombardiers scold.) This increase in the money supply is inflation.

Republican Party partisans swell the chorus – and state the obvious – by warning us that Democrats will raise taxes. As horrible as a tax hike would be, it is nothing compared to what Dubya's dilution of the dollar has done to American assets.

Inflation is a hidden tax. We're being taxed surreptitiously in lieu of the debt. More fiat paper money in the system means that every unit depreciates. "Any substantial increase in the quantity of money," explained Henry Hazlitt, in "Economics in One Lesson," "will reduce the purchasing power of each individual monetary unit – in other words, that will lead to an increase in commodity prices."

Depreciation of the dollar spells higher prices and hardship for those of us who are removed from power and from the new money.

Unlike present-day Republican Party boosters, Ronald Reagan understood this: "The truth is that inflation is caused by government," he observed. "It's caused by government spending more than it takes in, and it will go away just as soon as government stops doing that."

The fate of the dollar is in the grubby paws of the parasitic class, not Russia, Iran, Venezuela, or even China. The much-maligned Chinese act as our creditors by funding our debt. But rather than indict the real currency culprits – and compel them to stop stealing America's future – Americans make China a repository of their anger. Consequently, a Demopublican contingent of protectionists (and vote procurers) demanded not long ago that Bush muscle China to change its monetary policy.

Again, that'll hurt ordinary Americans, not politicians or parties to the Military-Media-Industrial-Congressional-Complex. (Economist Robert Higgs has pegged all "defense-related" spending alone at "approximately $1 trillion per year.") China's artificial devaluation of the yuan benefits the American consumer, who, consequently, enjoys cheap goods. Uncompetitive American rent-seekers (and a few rabid pet owners) are the only ones complaining about cheap Chinese goods.

Given the debasing of the greenback, hastened by Ben Bernanke's lowering of the interest rates, dollar-denominated assets are no longer as attractive to our foreign creditors. Their yields are declining as well. Hording dollars could very well contribute to inflation in China, forcing it to act out of national self-interest and discard dollars.

The upside? China will get both barrels for what Dubya has done to the dollar.




http://wnd.com/news/article.asp?ARTICLE_ID=57991

That is related to the answer to the question, 'who is left holding the bag in the housing debacle.' The owner-occupants, that's who. Even the ones who didn't borrow against their homes, if they bought in the last 5-6 years are probably upside down because of what the market has done. Between the builders selling at firesale prices, and the banks giving away the homes that they foreclosed, the owner-occupants are now high and dry.

I wouldn't agree that Dubya is the primary cause behind the US Dollar's decline. When the major Wall Street scandals broke news a few years ago the greenback suffered a very quick and sharp decline of easily twenty five percent---worldwide, investors in US stocks were freaked! This, however, was the result of a trend of fudging and dishonesty and greed that had been building for many years.

I think the "Reagan Revolution" had something to do with it----futhermore, even Spiritual Leaders who preach unfailing honesty in everything jumped into the fray with their share of financial scandals. But how could one expect businessmen to be honest when there was widespread dishonesty, cheating, lying, bullying, etc, among the Peasants, too? Or were you living on Mars when the Baby Boomers were finally coming of age? This has all been a part of a downward slide in American ethics.

Dubya is just making it worse by running the US Budget severely in the Red. Now the Dems are adding fuel to the fire with their Earmarks. I'm sad because I have been hoping to perhaps get out of this madhouse--but the overseas bargains I saw a few years back are vanishing quickly.

We have become a nation of consumers not a nation of manufacturing ect. This is due to NAFTA. We have sent our goods overseas and have given jobs to other countries for the almighty buck. There is nothing good coming out of America anymore. What we need to do is get back into the manufacturing game and bring our companies home.

I totally agree. The rest of the world has come to count on our wallets. We are a global job fair and flea market. Nobody thinks, asks, or cares where we are supposed to go on getting money to spend, so we are being looted.

What we need to do is get back into the manufacturing game and bring our companies home.


Manufacture what? I think the US was able to keep abreast of European exports in the last few decades because American products were simpler and more reliable. Even if something like German engineering might have more appeal the affordability of American manufactured items might have given us an edge.

But if China can make reasonable facsimiles (though not nearly as good as the original) and sell them for a FRACTION, we might have much more serious competiton. I am seeing so many products these days that are designed in the USA but produced in China. I buy a lot of construction tools that are made in China. I know they don't last---but are they ever cheap!!!

Microsoft and the personal computer revolution gave the US exportable products all through the '90's; but what are our new exports going to be? This has me puzzled.

This used to be the technical empire of the world too. Now it is going to India and China. Do we not develop technology? If it was developed in America it should stay in America. We need our jobs and we need to sell to the world. We no longer do this. Everything we buy now goes to other economy's. It does not go into ours anymore. Who is buying from us?