10 replies to this topic

[zedor]

If they dont the dollar collapses - it is now with one foot in the grave below 80. If the dollar collapses there goes the US as the lone superpower. The consumer and the banks have to be sacrificed. The US must remain a superpower. This is not a debate. The murmurs I hear about the FED officials saying they are not there to help bail out investors should be a clue.

Edited by zedor, 12 September 2007 - 01:49 PM.

[endisnear]

If they dont the dollar collapses - it is now with one foot in the grave below 80.

If the dollar collapses there goes the US as the lone superpower.

The consumer and the banks have to be sacrificed. The US must remain a superpower. This is not a debate.
The murmurs I hear about the FED officials saying they are not there to help bail out investors should be a clue.

What makes you think they have any intention of keeping the dollar from crashing. Dollar crash lowers real value of our deficets. Besides, we'll be spending Ameros in a few years. Dollar's history.

[mike123]

Don't think the FED will be able to defend the $. If China decides to float Yuan then $ will really sink and we will have big inflation and our standard of living will drop considerably. It takes time for the factories to come back. May be 10 years.

[Tor]

raise rates and its game over IMO. If its game over then the dollar will collapse anyway due to debt burden/credit worries.

[denleo]

Zedor, before saying that rate cuts are bad for the US Dollar, I would recommend to take a look at the last two times the FED started cutting rates. 1995 and 2001. Both times were associated with an intermediate bottom of the US Dollar. Denleo

[DraggdOut]

Zedor, before saying that rate cuts are bad for the US Dollar, I would recommend to take a look at the last two times the FED started cutting rates. 1995 and 2001. Both times were associated with an intermediate bottom of the US Dollar.

Denleo

It's really a matter of degree. If we soft land, fed cuts by 75 bps, risk appetite increases, and money flow continues unabated into emerging markets (which is a large part of whats making the real, AUD, etc high betas right now in the FX world), I see the dollar continuing a slow decay because hedgers will be selling dollars like hotcakes and presto, synthetic carry trade. If [bleeeep] really hits the fan then the US's status as a defensive currency--although diminishing--will still prevail and we get an IT bottom in the dollar and JPY & CHF outperform the EM currencies short-term...

Edited by DraggdOut, 12 September 2007 - 02:58 PM.

[89S10]

Yes, if a rate cut leads the market to believe that U.S. growth will stabilize or improve, then that could be positive for the dollar. You never know which way circle goes with interest rates and currencies.

[DraggdOut]

Again, the more the globe ex-US decouples from us economically--or at the very least continues to be the destination of choice for speculative liquidity--the more trouble the dollar is in. That happens in a stabilization or a soft landing scenario unless we get considerable rate hikes. For the USD to really crank it into overdrive, bottom, and re-exert some primacy I think we need a domestic hard-landing and we need to do our damndest to bring everybody else down with us

[pdx5]

Don't think the FED will be able to defend the $. If China decides to float Yuan then $ will really sink and we will have big inflation and our standard of living will drop considerably. It takes time for the factories to come back. May be 10 years.

It is a given that American (USA) standard of living will keep declining. There are only 3 or 4
wealth creators, 1. Manufacturing 2. Mining & 3. Agriculture & animal/fish farmimg. The service
industry does not create any wealth (Lawyers, Doctors, Accountants, Retail, stock traders etc).
Since mining of oil & manufacturing are declining, the net worth of country is also declining in
real terms.

Actually I don't think the real danger is Yuan floating. Not so long as US consumers are necessary
to keep a billion Chinese employed. The Chinese rulers will do everything to keep the game going.
The real rot is internal, due to morphing of US economy from manufacturing juggernaut to service
industry.

[SandStorm]

It's game over anyway whether rates go up or down. Economies have cycles. Excessive consumption will naturally come to a stop and then production begins. Ben spoke of reversing the role emerging economies with that of the US, of the need to increase savings in this country while more spending for the BRICs. This simply means that US consumers and our governemnt must start spending less so that we will have enough savings to fund our own investments instead of relying much on foreign capital inflows. Here at TT ogm spoke of transforming our economy from net importer to net exporter which ultimately kicks production into high gear. And we can facilitate this with a trashed US dollar. Eventually, over the long-run, the cycle repeats itself, and then we can once again embark on our merry ways and spend like there is no tomorrow. But what's the consequence of this transition IN THE SHORT RUN, of the US passing through the peak of its economic cycle in relation to others? Declining standards of living, loss of reserve currrency status, and perhaps sense of humor since we'll all be working much more and play much less. Yeah, I know, it's a bitter pill but it's also a necessary medicine for us to become healthy once again. Throughout history great empires lasted but 300 years give or take a few decades.

Edited by SandStorm, 12 September 2007 - 08:41 PM.