Are We At the Point Where the Fed Cannot Print Anymore $ Without Killing the Dollar?

[Blackhatjack]

If the Canadien dollar is worth more than the USD, and the Euro is worth 1.4 USD, it should be clear to even those of us who are not economists that the Dollar Supply cannot be diluted any further without killing the value of the Dollar.

So what tools are left to manage the 'wonderful economy' provided to us by the Bush Administration, along with their tax cuts for the wealthy and out of sight borrowing to pay for the Iraq War?

[MethuenProgressive]

1. The dollar is dead. Take your pay in Euros. Move to Singapore.

Sell your stock, if you can.

[htuttle]

2. I think the next step is 'austerity measures'....

...at least that's what we used to call them when we'd impose them on developing nations.

[keep_it_real]

3. Bush and Co want a World Wide Economic Catastrophe

So they can institute a One World Currency.

[1932]

7. One world currency? Hmm. OK. They obviously want catastrophe because a few people can make a lot of

$$$ off hugely disruptive swings if they're buddies are in control of the government and, therefore, the timing of the swings.

[JDPriestly]

16. Yes. Read Naomi Klein's The Shock Doctrine.

According to her an economic catastrophe shocks society into a regressive state in which the society cannot resist rapid privatization of essential services and infrastructure and the imposition of and extreme "free market." Once the "free market" has replaced government services and infrastructure, ordinary people of limited means have very little influence or say about the structure and investment in infrastructure, education and other services including water and energy, etc. by the government. The Chicago School of economics advocates privatization. Naomi Klein states that the Chicago School also advocates the use of catastrophes to create a situation in which extreme "free market" economic policies can be imposed.

Examples of the use of the shock doctrine according to Naomi Klein are the Pinochet regime in Chile, the Argentine junta, the privatization in China, and also the South African economic policies that were cleverly negotiated at the end of apartheid. I am not an economist and cannot do Ms. Klein's theories and book justice. (Especially since I have not finished reading it.)

[MADem]

4. Nope.

There's always a delay, but what goes down, must go up, and vice versa. I lived in Japan when the Yen was 230 to the dollar, and sometimes went as high as 280. Look it up now!

Stuff is CHEAP here. Stand by for a lot of foreign tourists...!

We may feel some pain, but we'll survive.

[kimmerspixelated]

5. It's all a big game that has everyone fooled.

The Federal Reserve is not part of the government at all. It consists of the head bankers of the world. They decide everything monetarily(with a domino effect) and truly our dollars are and have been for quite some time barely more worthy than monopoly play money. Not since the 70's have there been any kind of gold standards for exchange. The money you have in your account is just an agreement of certain numbers you have with your bank. Money, the dollar, is as elusive as thin air. More about this later.

[1932]

6. The only thing we really can do is to give working people as many resources as possible

so that they can invest in America's future. We have to educate people, help people start businesses, shift a lot of the concentrated wealth down to the people, get the yolks of debt and lack of an education off our backs, and pull this economy forward. That's how we got out of the great depression. If Republicans and complicit Dems hadn't been allowed their 35 year assaullt on the middle and working class, which has almost completely undone the New Deal in every respect (from Wall St accountability to labor protections), we wouldn't be in this position (and wealth wouldn't be as polarized as it is). We've gotten out of this once before, so we can do it again, but there's obviously something deeply wrong with American democracy if the corporatocracy's unchecked greed was so easily able to drag us down a second time in less then four score.

[mudesi]

8. Actually, they'd have to choke the supply and raise interest rates

But raising interest rates might send the economy into a recession.

It's a damned if you do and damned if you don't kind of situation.

[Blackhatjack]

10. Doesn't that mean that Housing Prices Will Crash Also....

The supply of homes available way outpaces demand right now. If the interest rates are raised, it will further depress pricing across the board as even more potential buyers are unable to afford a loan. To find a buyer desperate sellers will sell at huge discounts, and as those discounted sales prices are integrated into the appraisal figures we are looking at huge devaluation of ALL HOMES whether for sale or not.

Tie that to a dollar which is tanking and you have all the makings for even more foreclosures, defaults on credit card debt, and eventually job layoffs as consumer spending grinds to a halt.

[DemReadingDU]

9. It is worrisome about the American dollar

I feel fortunate that my house is paid for and have no credit card debt. But this being America, we use dollars to buy groceries and gas. What are average Americans going to do when the dollar becomes worthless? Most Americans can't move to another country, we can't convert our meager savings to Euros or gold. We need dollars to buy the necessities. How are average Americans going to survive? Maybe we will need to return to using the barter system.

[sendero]

11. The won't become worthless..

... it will only be worth less.

What is really going to happen is:

1) Everyone's standard of living (except for the truly rich) is going to drop. Not to third world levels, but not unoticably either.

2) Imported goods are going to rise in price, and we are going to buy less of them

3) The immutable laws of nature (i.e. money supply) are going to force their will on us and we are get over the idea that living on debt is sensible or even responsible or even possible over the long term.

4) Use of the dollar as the world's reserve currency is no longer a guaranteed fact.

and finally, a silver lining:

5) All but the stupidest Americans are finally going to realize that all of the Republican talk of being the true economic stewards is a damned lie, and the outlook for the Republican party will be hurt more by the coming economic troubles than even their pointless war.

[amandabeech]

12. Imports from countries that float their currencies will become more expensive.

China pegs its currency to the dollar. Informally so do many East Asian countries.

When they decide to move up against the dollar (perhaps because oil prices in dollars are high), then we might get some higher-priced consumer goods.

[sendero]

15. China will soon have..

... no choice but to change the valuation. They are already making noises about it.

They won't move to "parity" of a couple years ago, but they will move.

[amandabeech]

17. Yes, I think that they'll move, but slowly.

I recall reading something about 10% a year.

Many of the raw materials that they need are priced in dollars. Oil is one of them, of course, but there are others, including, I think grains.

If they tie themselves to a declining dollar their imports will be more expensive.

I think that will do more to get them going than any jawboning from us, the Canadians, the Europeans and the Japanese (who seem to be letting their currency drift downwards at bit--109-110 range).

[Snarkoleptic]

13. Already crossed the rubicon.

[Wednesdays]

14. Hey! Maybe there's a solution to the fuel crisis after all...