The Falling Dollar
By Alan Stewart Carl | Related entries in EconomyIf you like to start your week off with something to worry about, read today’s Wall Street Journal editorial on the weakness of the dollar. It’s one of those pieces you need to read in full, so I won’t excerpt. The gist? The declining value of the dollar is the real monetary crisis but the Fed’s moves are exacerbating the problem and could plunge us into a deep recession.
The real threat to us commoners: inflation. On a level we haven’t seen in a long time.
This entry was posted on Monday, March 17th, 2008 and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 17th, 2008 at 11:23 am
Yup. That’s why I featured and posted on “bring back king dollar” a week or so ago over at CF. The weak dollar is croaking many of us.
March 17th, 2008 at 11:51 am
Didn’t one of the Republican candidates warn about the collapse of the dollar and the Fed’s complicity?
March 17th, 2008 at 12:01 pm
There really are no words to describe what a sink hole of a mess we are in right now thanks to this administrations decisions. And all this bad news has yet to even accommodate the idiocy that we saw last week as the Fed pledged a $200 billion bad bond bailout and God knows how much more to keep the investment banking house of Bear Stearns afloat.
This is sheer insanity. From the deliberate aim to lower the value of the dollar by the administration, to its grossly negligent spending for the past 8 years, to its unrepentent borrowing for an insane war, to its choices for the federal reserve board of governors the Bush administration has been so horrifically inept as to almost defy the odds.
Yes, let’s be clear here before some right-wing twit comes in and blames everything on the Federal Reserve. The board of governors for the Fed is made up of 7-people selected by the President and appointed by the confirmed by the senate. The terms are supposed to be staggered with each appointment lasting 14 years. At present, there are 5 sitting board members who through bad luck were all appointed by Bush. And all confirmed by the Republican controlled senate between 2002 and 2006. There are two vacancies that Bush has thus far opted not to fill because he does not have control of the Senate to get his people in.
Even those two people who resigned were appointed by Bush. How does a staggered system with 14-year terms end up with all of its members being filled by one administration?
I’ll leave that to the conspiracy theorists, but if you thought stacking the supreme court deck with right-leaning judges was the only decisions with a huge impact this administration leaves that will long outlive its term, you are sadly mistaken.
All of the members of the board of governors have demonstrated a complete lack of competency, insight and vision. They adhere to the Bush administration insane economic philosophies and they are desperately harming this country’s long term viability.
The next time says it doesn’t matter who you vote for for president, don’t you believe it.
People should be very upset about this, but no one even pays attention. Insanity. It’s just insanity.
March 17th, 2008 at 12:14 pm
Freightening actually! As the need for petroleum increases so does the chance that the oil producing nations will finally decide to be paid in Euro’s because they are losing too much money on the dollar……….we become a third world nation over night.
The South American drug lords are now targeting Euro nations for their products because they are losing too much money trying to launder dollars. Wouldn’t it be ironic when our government say’s they are finally winning the war on drugs in 2007 and 2008 and 2009 not because of decreasing demand or better interdiction methods, but because the Drug Lords found a better paying customer.
How much longer will creditor nations like China buy our bonds (so we can pay for our wars and offense costs) with an increasingly worthless currency? As the value of China’s investments fall through the floor - they’ll demand changes here, or start selling bonds……..Thank you Mr Bush and the lackey Congress for handing our national sovereignty to the Communists. I swear, it appears that the communist nations actually won the cold war when you look at the economies of those countries now versus our’s.
March 17th, 2008 at 1:39 pm
Well, I think it’s a really big problem, but I sure don’t think it’s a partisan issue. Blaming Republicans or Bush solves precisely nothing.
Ultimately, the problem lies with our unsustainable addiction to low interest rates as a way to finance our determined spending WELL beyond our means. And that goes both for government spending and most folks’ personal spending.
The route to fixing the problems of the weak dollar goes right through downtown we-have-seen-the-enemy-and-he-is-us-ville. To suggest that either of these long and deeply ingrained spending habits is the more the fault of one party than the other is just moronic.
It makes democratic partisans feel righteous, but it makes me have little confidence that democrats know how to do any better. Now that more nations’ standards of living are catching up to American standards, we’ll need to take our medicine and learn to live closer to within our resources. That means higher interest rates to choke out inflation, NOT flooding the domestic economy with freshly printed devalued dollars. We’re not going to just borrow and spend our way out of this one. Not with a weak dollar and darkening inflation prospects.
I just paid $3.81 per gallon for heating oil, which is almost double a year ago. And don’t think that you folks outside the northeast who use natural gas can afford to ignore that. Gasoline is headed for $4 per gallon as speculators desert real estate and head for the next bubble, commodities.
Will McCain, Clinton, or Obama dare breach the subject of such bad news? I doubt it, but whoever does so first has the inside track on my vote. Whoever talks about keeping old tax cuts or giving new ones to the middle class or handing out more borrowed money or adding job training programs or other new programs targeted at any given sympathetic big demographic gets a giant raspberry from me.
99% of the rest of us don’t want to hear the bad news that there’s nasty medicine for all of us to swallow, which probably includes watching the inflated values of our retirement assets plummet another 10 or 20% unless they are in gold or foreign assets. So I’m going to go ahead and predict it gets much worse before reality clobbers everyone over the head.
The low-interest rates without inflation party is over. Over. It was a nice run, but the spell’s been broken. OVER. Get it? Over. It started to get sick when folks started to discover that their house wasn’t a bottomless ATM. And now it’s dead. D-E-D dead.
March 17th, 2008 at 2:51 pm
Well, Kritter, in some ways you are correct–this is not a partisan issue. It is, however, a leadership issue.
I try to temper my frustration with the current administration and the Republican leadership of the last almost 18 years, but sometimes that frustration gets the better of me.
You say that blaming the people who are largely responsible for this mess solves nothing and you are correct, but how about getting rid of the people who have so terribly botched things and making sure that in the future people who consider themselves “conservative” aren’t taken in by this group ever again?
For the better part of two decades a lot of conservatives have been voting for people who do not have their best interests at heart. Instead, the leadership of the Republican Party has been about power and retaining it–not about conservative principles like small government and individual freedoms.
In fact, the current crop of leadership in the Republican Party has been persuing the exact opposite of that.
So, I am sorry if “partisan” talk upsets you, but conservatives of all stripes need to wake up and smell the freakin’ coffee. Truthfully, I am not too crazy about the Democratic Party nominees and I would be perfectly happy to vote for anyone whose primary goal isn’t enriching corporation to the detriment of everyone else (and please note, I have no problem with corporations or anyone else making boat loads of money provided others are not harmed).
And are you really willing to vote for someone who is frank with the American people? The last president who tried that was Jimmy Carter; how well did that work out for him?
March 17th, 2008 at 2:55 pm
The only response appropriate here is a quote from Nelson: “Haha!”.
We the people were asleep at the wheel, now the chickens come home to roost and you’re up the creek without a paddle while the sticky brown stuff has hit the fan.
And the thing is: the US has made it a point to make as absolutely many enemies in the world as it possibly could and they will all be gloating as the average american takes refuge in the only thing he can still afford: a tent next to the off-ramp. Nelson was right…
March 17th, 2008 at 9:37 pm
Well Gerry, I just don’t think that republicans caused this. My take is that both parties successively conspired to give us what we the people wanted: high times financed by cheap debt.
I’ll agree with you that Republicans failed miserably to live up to the sort of fiscal policy sanity that they promised before they took over. And that’s their bad. No doubt. But even though Clinton managed to get much of the credit for balancing the budget (in large part due to a great economy he had nothing to do with), it wasn’t the democrats’ idea. Not at all. The democrats were NEVER interested in fiscal policy until they lost congress. I’ll agree with you that they need to wake up to the sorts of principles they only give lip service to now. Even though I myself am not a conservative. maybe on fiscal policy, but that’s about it.
Yeah, I AM willing to vote for someone who’s got the guts to tell Americans what they need to hear instead of what they’d like to. But I have no illusions that it’s going to happen. I only brought it up as a way to explain why I think things will keep getting worse for until at least next summer–that reason being that our putative leaders lack guts.
I’m willing to grant that Jimmy Carter was a guy who had some willingness to speak frankly about the obvious malaise we were in when he took office. But I don’t think his presidency was such an abject failure because of this frankness. I think there were lots of other reasons.
The only other thing I want to add is that while I’m pessimistic about our current economic prospects, I’m not one to forecast folks living in boxes and dust bowls and total collapse and so on and so forth. It’s true that other nations are having more economic success these days, and that globalization means our comparative economic stature will probably be somewhat diminished. But if our economy goes into a deep recession, Earth’s entire economy will suffer badly. If Americans stop buying cartloads of cheap knicknacks from Christmas Tree Shop, China will crap the bed for example.
For whatever reason, some folks leap to the conclusion that the rest of the world can just let us collapse and go merrily on its way without we the greedy dirty Americans. That’s not going to happen, even though some folks would love to see it so, sadly even some Americans who think we deserve it as payback for our many sins.
But when it comes to economics, deserve’s got nothing to do with it.
March 18th, 2008 at 8:26 am
“For the better part of two decades a lot of conservatives have been voting for people who do not have their best interests at heart. Instead, the leadership of the Republican Party has been about power and retaining it–not about conservative principles like small government and individual freedoms.”
So-called conservatives cared more about gay marriage, Mexicans and campaign contributions than about the things they should care about: fiscal restraint and small government.