Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.

On 2007-11-17, azotic wrote:
Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116


Some in America already partially diversify into other currency (your
humble servant since 2003). The Chinese TV's advice is a few years
late.

i

"Ignoramus11967" wrote in message
...
On 2007-11-17, azotic wrote:
Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116


Some in America already partially diversify into other currency (your
humble servant since 2003). The Chinese TV's advice is a few years
late.

But the advice for Chinese investors is based on an entirely different
dynamic. Their basic problem is that the control regime of the Yuan is
coming to an end, and simultaneously, against their trade interests as well
as their investment interests, the US dollar is dropping in value.

If they could still control the Yuan as they did in the past their response
would be to buy *more* US dollars, not fewer. That's what all the
export-driven Asian central banks have done for the past 30 years, whenever
the dollar started to fall. But the game is up; currency control regimes are
getting harder to sustain; and the US shows little interest in doing
anything on its own to prop up the dollar. If the Chinese government or
Chinese citizens tried to buy dollars in order to sustain their currency
advantage for trade, they'd just wind up holding the bag.

It's not an altogether bad thing for the US either way.

--
Ed Huntress

On 2007-11-17, Ed Huntress wrote:
But the advice for Chinese investors is based on an entirely different
dynamic. Their basic problem is that the control regime of the Yuan is
coming to an end, and simultaneously, against their trade interests as well
as their investment interests, the US dollar is dropping in value.

If they could still control the Yuan as they did in the past their response
would be to buy *more* US dollars, not fewer. That's what all the
export-driven Asian central banks have done for the past 30 years, whenever
the dollar started to fall. But the game is up; currency control regimes are
getting harder to sustain; and the US shows little interest in doing
anything on its own to prop up the dollar. If the Chinese government or
Chinese citizens tried to buy dollars in order to sustain their currency
advantage for trade, they'd just wind up holding the bag.

It's not an altogether bad thing for the US either way.


I am also of the opinion that fall of the dollar's price is not a bad
thing to happen, and is fully justified economically. That was why I
bought euros. The deficits and low interest rates and high dollar,
could not last forever.

i

Ed Huntress wrote:

It's not an altogether bad thing for the US either way.

I've never taken a course in economics. Can you elaborate on
this a bit, in layman terms?


Jon

"Jon Anderson" wrote in message
. ..
Ed Huntress wrote:

It's not an altogether bad thing for the US either way.

I've never taken a course in economics. Can you elaborate on this a bit,
in layman terms?

I may be getting into something bigger than I want to bite off here...

Ok, the short version: Assume the US dollar is valued right but the currency
of some big trading partner, like China, is undervalued. Our trade balance
is going to go negative because their goods are cheap for us, and ours are
expensive for them. This is not too bad because, all else being equal, the
value of their currency will rise because of the foreign cash they
accumulate, which will drive the value of their currency up. We'll get some
cheap goods for a while and then everything will balance out.

Now, say the US dollar is overvalued (it is), and the Chinese Yuan is
intentionally way undervalued (it is). Then the system may not balance. They
keep piling up cash and our current accounts go real far south. Then we got
trouble. And we do.

Then let's say the Chinese start buying up US treasury bonds like there's no
tomorrow (they have been). They do this *not* because US bonds are such a
great investment (they've been Ok, but the Chinese could do better), but
because they have to get rid of their foreign cash to keep the value of
their own currency down, and they want to prop up the value of the US dollar
even further by creating demand for our treasury bonds (they have). Now they
sort of have us by the balls because we *need* them to keep buying our
bonds, or our bond interest rate will go through the roof if the demand for
US bonds falls. And then we'll have big-time inflation.

But we have each other by the balls. They need to keep the value of their
currency down so they can maintain a big positive balance of trade with us.
If their currency rises, we won't buy so many of their goods and they won't
have the cash they need to keep buying our bonds. Their currency will rise
further; ours will drop in value. Our interest rates will go up; their
exports will go down; we're in a spiral that hurts both of us. If the
Chinese don't get off of this merry-go-'round, their entire economy could
spin out of control, with a sharp falloff in exports and no way to recover,
and we could have at least a major recession.

So it's a good idea for each of us to let go of the other's gonads. The
Chinese should diversify a bit and the US dollar should fall a bit, to help
our exports recover. All of this has to go gently or there will be hell to
pay, because the whole structure is pretty delicate.

A cheaper dollar is going to hurt, no doubt about it. The cost of imports
will go up and interest rates will rise. We could have some trouble
controlling inflation. But the cost of trying to sustain the dollar at such
high levels is an accumulating likelihood of a train wreck. We don't want
the whole thing to collapse, or we're certainly in for a sudden and violent
recession.

That's all grossly simplified but it gives the general idea. BTW, most of
Asia runs this kind of currency-control regime. It was a big part of Japan's
rise to prominence, as well. But Japan is a lot smaller than China. The
danger for us with China, in playing this game, is a result of their
freaking enormous size.

--
Ed Huntress

On Nov 17, 12:22 am, "Ed Huntress" wrote:
"Jon Anderson" wrote in message

. ..

Ed Huntress wrote:

It's not an altogether bad thing for the US either way.

I've never taken a course in economics. Can you elaborate on this a bit,
in layman terms?

I may be getting into something bigger than I want to bite off here...

Ok, the short version: Assume the US dollar is valued right but the currency
of some big trading partner, like China, is undervalued. Our trade balance
is going to go negative because their goods are cheap for us, and ours are
expensive for them. This is not too bad because, all else being equal, the
value of their currency will rise because of the foreign cash they
accumulate, which will drive the value of their currency up. We'll get some
cheap goods for a while and then everything will balance out.

Now, say the US dollar is overvalued (it is), and the Chinese Yuan is
intentionally way undervalued (it is). Then the system may not balance. They
keep piling up cash and our current accounts go real far south. Then we got
trouble. And we do.

Then let's say the Chinese start buying up US treasury bonds like there's no
tomorrow (they have been). They do this *not* because US bonds are such a
great investment (they've been Ok, but the Chinese could do better), but
because they have to get rid of their foreign cash to keep the value of
their own currency down, and they want to prop up the value of the US dollar
even further by creating demand for our treasury bonds (they have). Now they
sort of have us by the balls because we *need* them to keep buying our
bonds, or our bond interest rate will go through the roof if the demand for
US bonds falls. And then we'll have big-time inflation.

But we have each other by the balls. They need to keep the value of their
currency down so they can maintain a big positive balance of trade with us.
If their currency rises, we won't buy so many of their goods and they won't
have the cash they need to keep buying our bonds. Their currency will rise
further; ours will drop in value. Our interest rates will go up; their
exports will go down; we're in a spiral that hurts both of us. If the
Chinese don't get off of this merry-go-'round, their entire economy could
spin out of control, with a sharp falloff in exports and no way to recover,
and we could have at least a major recession.

So it's a good idea for each of us to let go of the other's gonads. The
Chinese should diversify a bit and the US dollar should fall a bit, to help
our exports recover. All of this has to go gently or there will be hell to
pay, because the whole structure is pretty delicate.

A cheaper dollar is going to hurt, no doubt about it. The cost of imports
will go up and interest rates will rise. We could have some trouble
controlling inflation. But the cost of trying to sustain the dollar at such
high levels is an accumulating likelihood of a train wreck. We don't want
the whole thing to collapse, or we're certainly in for a sudden and violent
recession.

That's all grossly simplified but it gives the general idea. BTW, most of
Asia runs this kind of currency-control regime. It was a big part of Japan's
rise to prominence, as well. But Japan is a lot smaller than China. The
danger for us with China, in playing this game, is a result of their
freaking enormous size.

--
Ed Huntress

And the cheap Chinese tools will not be cheap much longer....nor will
be any of your imports from China....which is most of what you buy.

And the oil that you need to survive will get no cheaper.

Get ready for some wicked inflation complements of Bush and the
Republicans.

And someone will be paying that 2.4 trillion dollar bill for
Iraq...and their children will...and their grandchildren will.

Meanwhile your Social Security for the future is hanging in the
balance.

TMT

Too_Many_Tools wrote in article
...


And someone will be paying that 2.4 trillion dollar bill for
Iraq...and their children will...and their grandchildren will.



I seem to remember reading that about our bill for the Vietnam War, yet
Presidents Hillary and Bill Clinton claimed to have cleared that all up and
balanced the budget well within the lifetime of my generation.

How did THAT happen?

On Sat, 17 Nov 2007 04:09:09 -0600, the renowned "*"
wrote:



Too_Many_Tools wrote in article
...


And someone will be paying that 2.4 trillion dollar bill for
Iraq...and their children will...and their grandchildren will.



I seem to remember reading that about our bill for the Vietnam War, yet
Presidents Hillary and Bill Clinton claimed to have cleared that all up and
balanced the budget well within the lifetime of my generation.

How did THAT happen?


You don't remember? The time is almost ripe for a Jimmy Carter
financial funride experience ag'in.

On Fri, 16 Nov 2007 23:16:08 -0600, the renowned Ignoramus11967
wrote:

On 2007-11-17, Ed Huntress wrote:
But the advice for Chinese investors is based on an entirely different
dynamic. Their basic problem is that the control regime of the Yuan is
coming to an end, and simultaneously, against their trade interests as well
as their investment interests, the US dollar is dropping in value.

If they could still control the Yuan as they did in the past their response
would be to buy *more* US dollars, not fewer. That's what all the
export-driven Asian central banks have done for the past 30 years, whenever
the dollar started to fall. But the game is up; currency control regimes are
getting harder to sustain; and the US shows little interest in doing
anything on its own to prop up the dollar. If the Chinese government or
Chinese citizens tried to buy dollars in order to sustain their currency
advantage for trade, they'd just wind up holding the bag.

It's not an altogether bad thing for the US either way.


I am also of the opinion that fall of the dollar's price is not a bad
thing to happen, and is fully justified economically. That was why I
bought euros. The deficits and low interest rates and high dollar,
could not last forever.

i

It probably portends a lower standard of living the future, and a
higher standard of living in China (almost a given). I do wonder if
they've thought things through here. If you give every Chinese a 20%
raise (by currency appreciation) they'll probably outbid US-dollar
based buyers on commodities and other stuff (eg. energy, metals).
They're not really into conservation (much like the US and Canada) so
they're not going to tax themselves to death like the Japanese or
Europeans. Same with India (rupee valuation). Since the US, while
still a big factor, is down to 20% of world GDP and dropping, it no
longer calls the shots on pricing. Essentially, in the before-time, by
making yourself a bit poorer you could force world prices down on
commodities and jump start the economy while simulataneously hurting
your competitors. That's no longer true-- you may end just making
yourself poorer and less powerful, in a spiral downwards. The US, for
all it buys, is now only about 20% of all Chinese exports (according
to Forbes), which in turn are 20% of their GDP. The US is starting to
look rather dispensable as a market. Even if it dropped to half (which
would be a total disaster in the US) they'd be back at the same level
within a single quarter at current growth rates.

Anyway, I don't buy the total gloom and doom, things will sort
themselves out, and they'll do so faster and with less pain if
governments keep their hands out of it other than minding their own
business domestically.

"*" wrote in message
news:01c82900$edb28e60$5c92c3d8@race...


Too_Many_Tools wrote in article
...


And someone will be paying that 2.4 trillion dollar bill for
Iraq...and their children will...and their grandchildren will.



I seem to remember reading that about our bill for the Vietnam War, yet
Presidents Hillary and Bill Clinton claimed to have cleared that all up
and
balanced the budget well within the lifetime of my generation.

How did THAT happen?

Look up "national debt" and "deficit spending," which you seem to have
conflated and confused.

--
Ed Huntress

On 2007-11-17, Spehro Pefhany wrote:
On Fri, 16 Nov 2007 23:16:08 -0600, the renowned Ignoramus11967
wrote:

On 2007-11-17, Ed Huntress wrote:
But the advice for Chinese investors is based on an entirely different
dynamic. Their basic problem is that the control regime of the Yuan is
coming to an end, and simultaneously, against their trade interests as well
as their investment interests, the US dollar is dropping in value.

If they could still control the Yuan as they did in the past their response
would be to buy *more* US dollars, not fewer. That's what all the
export-driven Asian central banks have done for the past 30 years, whenever
the dollar started to fall. But the game is up; currency control regimes are
getting harder to sustain; and the US shows little interest in doing
anything on its own to prop up the dollar. If the Chinese government or
Chinese citizens tried to buy dollars in order to sustain their currency
advantage for trade, they'd just wind up holding the bag.

It's not an altogether bad thing for the US either way.


I am also of the opinion that fall of the dollar's price is not a bad
thing to happen, and is fully justified economically. That was why I
bought euros. The deficits and low interest rates and high dollar,
could not last forever.

i

It probably portends a lower standard of living the future, and a
higher standard of living in China (almost a given).

Let's say I make $10,000 per month, but I spend $13,000 per month due
to borrowing money. That is a "higher standard of living" than I would
have if I spend $10,000 per month, right? But if we keep in mind that
the higher standard of living needs to be repaid one day, then it is
not really a higher standard of living, it means consuming more now
but less in the future.

The sale is with the US standard of living, enabled by trade
deficits.

i


I do wonder if
they've thought things through here. If you give every Chinese a 20%
raise (by currency appreciation) they'll probably outbid US-dollar
based buyers on commodities and other stuff (eg. energy, metals).
They're not really into conservation (much like the US and Canada) so
they're not going to tax themselves to death like the Japanese or
Europeans. Same with India (rupee valuation). Since the US, while
still a big factor, is down to 20% of world GDP and dropping, it no
longer calls the shots on pricing. Essentially, in the before-time, by
making yourself a bit poorer you could force world prices down on
commodities and jump start the economy while simulataneously hurting
your competitors. That's no longer true-- you may end just making
yourself poorer and less powerful, in a spiral downwards. The US, for
all it buys, is now only about 20% of all Chinese exports (according
to Forbes), which in turn are 20% of their GDP. The US is starting to
look rather dispensable as a market. Even if it dropped to half (which
would be a total disaster in the US) they'd be back at the same level
within a single quarter at current growth rates.

Anyway, I don't buy the total gloom and doom, things will sort
themselves out, and they'll do so faster and with less pain if
governments keep their hands out of it other than minding their own
business domestically.

On Sat, 17 Nov 2007 09:25:51 -0600, Ignoramus16741
wrote:

It probably portends a lower standard of living the future, and a
higher standard of living in China (almost a given).

Let's say I make $10,000 per month, but I spend $13,000 per month due
to borrowing money. That is a "higher standard of living" than I would
have if I spend $10,000 per month, right? But if we keep in mind that
the higher standard of living needs to be repaid one day, then it is
not really a higher standard of living, it means consuming more now
but less in the future.

The sale is with the US standard of living, enabled by trade
deficits.

i
===================
It all depends whose credit card I am using. If I steal your
credit card and "live large," you are stuck with the bill.

As for the Chinese, they appear to be operating on Will Rogers
old axiom:

The return of my investment
is more important
than the return on my investment.

In [their] living memory they [the Chinese] have been through
several currency "reforms" and periods of hyper inflation, thus
are much more sensitive to asset depreciation [inflation] than we
in the US.

The depreciation of their currency has done in a number of
empires. Ron Paul is frequently criticized for wanting to return
to or at least extensively examine the gold standard, but this
[or a silver standard] where a countries paper currency is backed
by a fixed amount of precious metal, possibly with some
multiplier, seems to have been the only way to attain stability
and make money a reliable "measure and store of value" in
addition to a medium of exchange. ['assignats'/'mandats' anyone?
click on
http://www.cix.co.uk/~archaeology/ci...revolution.htm
http://www.gold-eagle.com/editorials...eck091505.html


Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.

On Sat, 17 Nov 2007 01:22:59 -0500, "Ed Huntress"
wrote:


"Jon Anderson" wrote in message
...
Ed Huntress wrote:

It's not an altogether bad thing for the US either way.

I've never taken a course in economics. Can you elaborate on this a bit,
in layman terms?

I may be getting into something bigger than I want to bite off here...

Ok, the short version: Assume the US dollar is valued right but the currency
of some big trading partner, like China, is undervalued. Our trade balance
is going to go negative because their goods are cheap for us, and ours are
expensive for them. This is not too bad because, all else being equal, the
value of their currency will rise because of the foreign cash they
accumulate, which will drive the value of their currency up. We'll get some
cheap goods for a while and then everything will balance out.

Now, say the US dollar is overvalued (it is), and the Chinese Yuan is
intentionally way undervalued (it is). Then the system may not balance. They
keep piling up cash and our current accounts go real far south. Then we got
trouble. And we do.

Then let's say the Chinese start buying up US treasury bonds like there's no
tomorrow (they have been). They do this *not* because US bonds are such a
great investment (they've been Ok, but the Chinese could do better), but
because they have to get rid of their foreign cash to keep the value of
their own currency down, and they want to prop up the value of the US dollar
even further by creating demand for our treasury bonds (they have). Now they
sort of have us by the balls because we *need* them to keep buying our
bonds, or our bond interest rate will go through the roof if the demand for
US bonds falls. And then we'll have big-time inflation.

But we have each other by the balls. They need to keep the value of their
currency down so they can maintain a big positive balance of trade with us.
If their currency rises, we won't buy so many of their goods and they won't
have the cash they need to keep buying our bonds. Their currency will rise
further; ours will drop in value. Our interest rates will go up; their
exports will go down; we're in a spiral that hurts both of us. If the
Chinese don't get off of this merry-go-'round, their entire economy could
spin out of control, with a sharp falloff in exports and no way to recover,
and we could have at least a major recession.

So it's a good idea for each of us to let go of the other's gonads. The
Chinese should diversify a bit and the US dollar should fall a bit, to help
our exports recover. All of this has to go gently or there will be hell to
pay, because the whole structure is pretty delicate.

A cheaper dollar is going to hurt, no doubt about it. The cost of imports
will go up and interest rates will rise. We could have some trouble
controlling inflation. But the cost of trying to sustain the dollar at such
high levels is an accumulating likelihood of a train wreck. We don't want
the whole thing to collapse, or we're certainly in for a sudden and violent
recession.

That's all grossly simplified but it gives the general idea. BTW, most of
Asia runs this kind of currency-control regime. It was a big part of Japan's
rise to prominence, as well. But Japan is a lot smaller than China. The
danger for us with China, in playing this game, is a result of their
freaking enormous size.
======================
Very good free market explication.

The problem is that this assumes honesty and transparency,
neither of which have been demonstrated by the governments
involved, their central banks or their financial institutions.

For example, how much money has the Federal Reserve created [at
10 FR dollars per 1 $ of US governmental debt] and then how much
money have the banks created through the traditional fractional
banking process, aided, abetted and amplified by 'conduits' and
'SIV's?

This "creation' appears to have been exceptional high in the
non-bank "banks." If you and I do this the old fashioned way,
with ink and paper, it is called counterfeiting and we will be
put in jail.

The PRC appears to have replaced the US in many sectors as the
"workshop of the world," and has used/invested much of their
economic surplus to establish both secure their supplies of raw
materials and markets in the Mid-East and especially Africa.
Thus the US 'needs' the PRC more than the PRC 'needs' the US, and
this is only in the economic sphere.

A major concern should be that not everything [and in many
societies not even most things] is determined by 'economics' and
the US has set itself up for a major "squeeze play." The other
players have many other objectives besides making a short term
profit (and that for their few/elite). These include revenge,
hegemony, and national prestige.

Asymmetric financial warfare is now an established fact, a
financial 9/11 is well within the realm of possibility, and it
would be hundreds to thousands of times more disruptive, in the
sense that the financial buildings the debt aircraft would crash
into are huge, built [too] close together, constructed of wood,
and filled with propane tanks and gasoline in plastic drums.

Unfortunatly these financial towers also contain most of the
national liquid assets such as pension funds, IRAs, institutional
and personal savings, etc.

May you live in interesting times....


Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.

"F. George McDuffee" wrote in message
...

snip

======================
Very good free market explication.

The problem is that this assumes honesty and transparency,
neither of which have been demonstrated by the governments
involved, their central banks or their financial institutions.

For example, how much money has the Federal Reserve created [at
10 FR dollars per 1 $ of US governmental debt] and then how much
money have the banks created through the traditional fractional
banking process, aided, abetted and amplified by 'conduits' and
'SIV's?

This "creation' appears to have been exceptional high in the
non-bank "banks." If you and I do this the old fashioned way,
with ink and paper, it is called counterfeiting and we will be
put in jail.

The PRC appears to have replaced the US in many sectors as the
"workshop of the world," and has used/invested much of their
economic surplus to establish both secure their supplies of raw
materials and markets in the Mid-East and especially Africa.
Thus the US 'needs' the PRC more than the PRC 'needs' the US, and
this is only in the economic sphere.

A major concern should be that not everything [and in many
societies not even most things] is determined by 'economics' and
the US has set itself up for a major "squeeze play." The other
players have many other objectives besides making a short term
profit (and that for their few/elite). These include revenge,
hegemony, and national prestige.

Asymmetric financial warfare is now an established fact, a
financial 9/11 is well within the realm of possibility, and it
would be hundreds to thousands of times more disruptive, in the
sense that the financial buildings the debt aircraft would crash
into are huge, built [too] close together, constructed of wood,
and filled with propane tanks and gasoline in plastic drums.

Unfortunatly these financial towers also contain most of the
national liquid assets such as pension funds, IRAs, institutional
and personal savings, etc.

May you live in interesting times....


Unka' George [George McDuffee]

I don't think that money supply will be a big factor, George, unless we have
a serious contraction of our economy. And we've been through that before, in
a worse case, when Volker wrung out the economy in the late '70s and early
'80s. That's very painful but it's also manageable.

As for financial interdependence, that's now an established fact. Every
significant economy is now locked into that mutual dependence. The ones who
might want to play by non-rational rules aren't big enough to cause much
trouble.

A lot of what's going on today is a case of plowing new economic ground,
although the theories have been in place for decades. I don't think we're
really that vulnerable to a big crash. We are, however, facing a variety of
factors that could lead to a slowdown of the US economy, and that could
happen.

But the US's economic engine is the strongest one in the world, and I don't
think we'll fare worse than anyone else. As you know, China probably has the
most vulnerable economy in the world. They're the ones who would really
suffer if there was a worldwide depression.

--
Ed Huntress

On Sat, 17 Nov 2007 11:24:16 -0600, F. George McDuffee
wrote:

On Sat, 17 Nov 2007 01:22:59 -0500, "Ed Huntress"
wrote:


"Jon Anderson" wrote in message
m...
Ed Huntress wrote:

It's not an altogether bad thing for the US either way.

I've never taken a course in economics. Can you elaborate on this a bit,
in layman terms?

I may be getting into something bigger than I want to bite off here...

Ok, the short version: Assume the US dollar is valued right but the currency
of some big trading partner, like China, is undervalued. Our trade balance
is going to go negative because their goods are cheap for us, and ours are
expensive for them. This is not too bad because, all else being equal, the
value of their currency will rise because of the foreign cash they
accumulate, which will drive the value of their currency up. We'll get some
cheap goods for a while and then everything will balance out.

Now, say the US dollar is overvalued (it is), and the Chinese Yuan is
intentionally way undervalued (it is). Then the system may not balance. They
keep piling up cash and our current accounts go real far south. Then we got
trouble. And we do.

Then let's say the Chinese start buying up US treasury bonds like there's no
tomorrow (they have been). They do this *not* because US bonds are such a
great investment (they've been Ok, but the Chinese could do better), but
because they have to get rid of their foreign cash to keep the value of
their own currency down, and they want to prop up the value of the US dollar
even further by creating demand for our treasury bonds (they have). Now they
sort of have us by the balls because we *need* them to keep buying our
bonds, or our bond interest rate will go through the roof if the demand for
US bonds falls. And then we'll have big-time inflation.

But we have each other by the balls. They need to keep the value of their
currency down so they can maintain a big positive balance of trade with us.
If their currency rises, we won't buy so many of their goods and they won't
have the cash they need to keep buying our bonds. Their currency will rise
further; ours will drop in value. Our interest rates will go up; their
exports will go down; we're in a spiral that hurts both of us. If the
Chinese don't get off of this merry-go-'round, their entire economy could
spin out of control, with a sharp falloff in exports and no way to recover,
and we could have at least a major recession.

So it's a good idea for each of us to let go of the other's gonads. The
Chinese should diversify a bit and the US dollar should fall a bit, to help
our exports recover. All of this has to go gently or there will be hell to
pay, because the whole structure is pretty delicate.

A cheaper dollar is going to hurt, no doubt about it. The cost of imports
will go up and interest rates will rise. We could have some trouble
controlling inflation. But the cost of trying to sustain the dollar at such
high levels is an accumulating likelihood of a train wreck. We don't want
the whole thing to collapse, or we're certainly in for a sudden and violent
recession.

That's all grossly simplified but it gives the general idea. BTW, most of
Asia runs this kind of currency-control regime. It was a big part of Japan's
rise to prominence, as well. But Japan is a lot smaller than China. The
danger for us with China, in playing this game, is a result of their
freaking enormous size.
======================
Very good free market explication.

The problem is that this assumes honesty and transparency,
neither of which have been demonstrated by the governments
involved, their central banks or their financial institutions.

For example, how much money has the Federal Reserve created [at
10 FR dollars per 1 $ of US governmental debt] and then how much
money have the banks created through the traditional fractional
banking process, aided, abetted and amplified by 'conduits' and
'SIV's?

This "creation' appears to have been exceptional high in the
non-bank "banks." If you and I do this the old fashioned way,
with ink and paper, it is called counterfeiting and we will be
put in jail.

The PRC appears to have replaced the US in many sectors as the
"workshop of the world," and has used/invested much of their
economic surplus to establish both secure their supplies of raw
materials and markets in the Mid-East and especially Africa.
Thus the US 'needs' the PRC more than the PRC 'needs' the US, and
this is only in the economic sphere.

A major concern should be that not everything [and in many
societies not even most things] is determined by 'economics' and
the US has set itself up for a major "squeeze play." The other
players have many other objectives besides making a short term
profit (and that for their few/elite). These include revenge,
hegemony, and national prestige.

Asymmetric financial warfare is now an established fact, a
financial 9/11 is well within the realm of possibility, and it
would be hundreds to thousands of times more disruptive, in the
sense that the financial buildings the debt aircraft would crash
into are huge, built [too] close together, constructed of wood,
and filled with propane tanks and gasoline in plastic drums.

Unfortunatly these financial towers also contain most of the
national liquid assets such as pension funds, IRAs, institutional
and personal savings, etc.

May you live in interesting times....


Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.
================
Wow -- an almost real time email on this one.

One article suggests:

"LONDON (Reuters) - The impact of the U.S. mortgage market crisis
on the underlying economy could be "dramatic" as leveraged
investors may need to scale back lending by up to $2 trillion,
according to investment bank Goldman Sachs (GS.N).
snip
For the rest of the article click on
http://news.yahoo.com/s/nm/20071116/...LdfT1Eey BhIF

Other articles have suggested up to 4 trillion [with a T] and the
guy with the green eye shade is still adding...


Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.

Thanks for that explanation, helps a bit. Being self
employed, I'm watching news on the economy with great
interest even if I don't understand what's going on and why.

Jon

"Jon Anderson" wrote in message
. ..
Thanks for that explanation, helps a bit. Being self employed, I'm
watching news on the economy with great interest even if I don't
understand what's going on and why.

It's a pretty obscure business if you don't study it for a while. And if you
do, all you can see is the broad moves. A lot of it goes on in shadows.

There's no mystery, however, to what's going on between China and its big
trading partners. How it will all pan out is anybody's guess. A lot depends
on seemingly small decisions made by people who control the policy at the
major central banks.

Just don't make the mistake of thinking that it's like household budgeting.
We can't "create" money at home by adjusting the reserve requirements of
member banks. People who say that the national debt is like personal debt
just don't understand how it really works.

--
Ed Huntress

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip
Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.

On 2007-11-18, F George McDuffee wrote:
Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."

He first bought currency in 2003. I am proud that I did the same, and
without knowing that he did the same thing, and before he announced
his currency position.

i

On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.



Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

"Spehro Pefhany" wrote in message
...
On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.



Best regards,
Spehro Pefhany

The first misconception that most people have is that the Federal Reserve
Bank is a branch of the US government.

http://www.geocities.com/northstarzone/FED.html

Does this mean the US Government will send creditors to the fed when the
bill comes due ?

Best Regards
Tom.

"Spehro Pefhany" wrote in message
...
On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.

How do you know it's "non-fiat"? They printed quite a lot of paper currency,
and they *claim* it's backed up by silver. Have you ever seen the silver?
Have you tried to cash any in?

Of course, that's beside the point that you can't print or mint currency. If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are many problems with such "currency." It's always been the case, and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

--
Ed Huntress

On Nov 17, 8:45 pm, "Ed Huntress" wrote:
"Spehro Pefhany" wrote in message

...





On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.

===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.

How do you know it's "non-fiat"? They printed quite a lot of paper currency,
and they *claim* it's backed up by silver. Have you ever seen the silver?
Have you tried to cash any in?

Of course, that's beside the point that you can't print or mint currency. If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are many problems with such "currency." It's always been the case, and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

"Distrust in currency can wreck an economy."

Correct...and that is exactly what is happening now to the US dollar.

Now you might understand why I have a BIG problem with Bush and his
fiscal policy.

Got enough beans to last your lifetime?

And your children's lifetimes?

TMT

On Nov 17, 11:55 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in messagenews:3s8uj3du2m4toohk18nan32ju08qu3q41b@4ax .com...

snip





======================
Very good free market explication.

The problem is that this assumes honesty and transparency,
neither of which have been demonstrated by the governments
involved, their central banks or their financial institutions.

For example, how much money has the Federal Reserve created [at
10 FR dollars per 1 $ of US governmental debt] and then how much
money have the banks created through the traditional fractional
banking process, aided, abetted and amplified by 'conduits' and
'SIV's?

This "creation' appears to have been exceptional high in the
non-bank "banks." If you and I do this the old fashioned way,
with ink and paper, it is called counterfeiting and we will be
put in jail.

The PRC appears to have replaced the US in many sectors as the
"workshop of the world," and has used/invested much of their
economic surplus to establish both secure their supplies of raw
materials and markets in the Mid-East and especially Africa.
Thus the US 'needs' the PRC more than the PRC 'needs' the US, and
this is only in the economic sphere.

A major concern should be that not everything [and in many
societies not even most things] is determined by 'economics' and
the US has set itself up for a major "squeeze play." The other
players have many other objectives besides making a short term
profit (and that for their few/elite). These include revenge,
hegemony, and national prestige.

Asymmetric financial warfare is now an established fact, a
financial 9/11 is well within the realm of possibility, and it
would be hundreds to thousands of times more disruptive, in the
sense that the financial buildings the debt aircraft would crash
into are huge, built [too] close together, constructed of wood,
and filled with propane tanks and gasoline in plastic drums.

Unfortunatly these financial towers also contain most of the
national liquid assets such as pension funds, IRAs, institutional
and personal savings, etc.

May you live in interesting times....

Unka' George [George McDuffee]

I don't think that money supply will be a big factor, George, unless we have
a serious contraction of our economy. And we've been through that before, in
a worse case, when Volker wrung out the economy in the late '70s and early
'80s. That's very painful but it's also manageable.

As for financial interdependence, that's now an established fact. Every
significant economy is now locked into that mutual dependence. The ones who
might want to play by non-rational rules aren't big enough to cause much
trouble.

A lot of what's going on today is a case of plowing new economic ground,
although the theories have been in place for decades. I don't think we're
really that vulnerable to a big crash. We are, however, facing a variety of
factors that could lead to a slowdown of the US economy, and that could
happen.

But the US's economic engine is the strongest one in the world, and I don't
think we'll fare worse than anyone else. As you know, China probably has the
most vulnerable economy in the world. They're the ones who would really
suffer if there was a worldwide depression.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

You need to review the history surrounding the Great Depression.

And then you need to consider the current subpar housing/credit
disaster still forming....and remember that those who thought they
knew the system thought this was impossible.

You and I could easily lose everything we have....time will tell if we
will.

TMT

On Sat, 17 Nov 2007 21:45:54 -0500, the renowned "Ed Huntress"
wrote:


"Spehro Pefhany" wrote in message
.. .
On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.

How do you know it's "non-fiat"? They printed quite a lot of paper currency,
and they *claim* it's backed up by silver. Have you ever seen the silver?
Have you tried to cash any in?

What business is it of the government if it is or isn't? I might
decide to take that risk, compared to the demonstrated risk of dealing
with their paper backed by nothing of value. Or maybe I'd pick some
other alternative currency-- Bruce Springfield dollars or something.

Of course, that's beside the point that you can't print or mint currency. If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are plenty of third parties who perform audits and certify and
even insure things if market conditions (eg. their customers) demand
it. One does not need to involve the government, let alone give the
government a perpetual monopoly and hence the sole right to foist a
shoddy product which quickly becomes worthless on the public (the
current unfortunate state of the US dollar). That's part of why the
Eastern bloc fell apart- their state-run monopolies debased valuable
raw materials into mountains of worthless crap.

There are many problems with such "currency." It's always been the case, and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

That's the excuse for every government intervention.. to "protect"
their subjects who are assumed to be unable to make complicated
decisions on their own.

http://www.libertydollar.org/
http://www.courierpress.com/news/200...office-raided/


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

On Sun, 18 Nov 2007 07:46:15 -0500, Spehro Pefhany
wrote:

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip
===========
Also see
http://news.yahoo.com/s/uc/20071116/..._puBBSqWX9wxIF

Note that sources are cited.


Unka' George [George McDuffee]
============
Merchants have no country.
The mere spot they stand on
does not constitute so strong an attachment
as that from which they draw their gains.

Thomas Jefferson (1743-1826),
U.S. president. Letter, 17 March 1814.

On Sun, 18 Nov 2007 07:46:15 -0500, the Spehro Pefhany
wrote:

What business is it of the government if it is or isn't? I might
decide to take that risk, compared to the demonstrated risk of dealing
with their paper backed by nothing of value. Or maybe I'd pick some
other alternative currency-- Bruce Springfield dollars or something.
^^^^^^^^^^
Springsteen, of course

That'll learn me not to post before hockey practice (and copious
quantities of strong coffee).


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

"Too_Many_Tools" wrote in message
...
On Nov 17, 8:45 pm, "Ed Huntress" wrote:

snip
- Show quoted text -

"Distrust in currency can wreck an economy."

Correct...and that is exactly what is happening now to the US dollar.

Now you might understand why I have a BIG problem with Bush and his
fiscal policy.

Got enough beans to last your lifetime?

And your children's lifetimes?

================================================== =

It's not the same thing. The distrust I'm talking about is the kind that
results when no one will accept the currency. That happens with a debased
specie-based currency, or a fiat currency that isn't controlled by an
independent central bank. Or, one in which the central bank goes to hell, as
has happened in several South American countries in decades past.

Nothing like that is likely to happen to the US dollar. The dollar will
continue to decline in value until it hits some new equilibrium. But people,
particularly the paranoid gold bugs, have been predicting the collapse of
the dollar since the 1930s. They ran wild in 1972, when we went off the gold
standard. Those who backed up their paranoia by buying gold generally lost
their shirts.

--
Ed Huntress

"Too_Many_Tools" wrote in message
...
On Nov 17, 11:55 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:3s8uj3du2m4toohk18nan32ju08qu3q41b@4ax .com...

snip





======================
Very good free market explication.

The problem is that this assumes honesty and transparency,
neither of which have been demonstrated by the governments
involved, their central banks or their financial institutions.

For example, how much money has the Federal Reserve created [at
10 FR dollars per 1 $ of US governmental debt] and then how much
money have the banks created through the traditional fractional
banking process, aided, abetted and amplified by 'conduits' and
'SIV's?

This "creation' appears to have been exceptional high in the
non-bank "banks." If you and I do this the old fashioned way,
with ink and paper, it is called counterfeiting and we will be
put in jail.

The PRC appears to have replaced the US in many sectors as the
"workshop of the world," and has used/invested much of their
economic surplus to establish both secure their supplies of raw
materials and markets in the Mid-East and especially Africa.
Thus the US 'needs' the PRC more than the PRC 'needs' the US, and
this is only in the economic sphere.

A major concern should be that not everything [and in many
societies not even most things] is determined by 'economics' and
the US has set itself up for a major "squeeze play." The other
players have many other objectives besides making a short term
profit (and that for their few/elite). These include revenge,
hegemony, and national prestige.

Asymmetric financial warfare is now an established fact, a
financial 9/11 is well within the realm of possibility, and it
would be hundreds to thousands of times more disruptive, in the
sense that the financial buildings the debt aircraft would crash
into are huge, built [too] close together, constructed of wood,
and filled with propane tanks and gasoline in plastic drums.

Unfortunatly these financial towers also contain most of the
national liquid assets such as pension funds, IRAs, institutional
and personal savings, etc.

May you live in interesting times....

Unka' George [George McDuffee]

I don't think that money supply will be a big factor, George, unless we
have
a serious contraction of our economy. And we've been through that before,
in
a worse case, when Volker wrung out the economy in the late '70s and
early
'80s. That's very painful but it's also manageable.

As for financial interdependence, that's now an established fact. Every
significant economy is now locked into that mutual dependence. The ones
who
might want to play by non-rational rules aren't big enough to cause much
trouble.

A lot of what's going on today is a case of plowing new economic ground,
although the theories have been in place for decades. I don't think we're
really that vulnerable to a big crash. We are, however, facing a variety
of
factors that could lead to a slowdown of the US economy, and that could
happen.

But the US's economic engine is the strongest one in the world, and I
don't
think we'll fare worse than anyone else. As you know, China probably has
the
most vulnerable economy in the world. They're the ones who would really
suffer if there was a worldwide depression.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

You need to review the history surrounding the Great Depression.

I have.


And then you need to consider the current subpar housing/credit
disaster still forming....and remember that those who thought they
knew the system thought this was impossible.

You and I could easily lose everything we have....time will tell if we
will.

That's unlikely. What's more likely is a recession next year. _The
Economist_ is predicting one, and they claim that the US is the most
vulnerable in that regard. I don't doubt that. What I do doubt is that we'll
"lose everything we have." Unless you're leveraged out and vulnerable
yourself, I wouldn't bet on it.

--
Ed Huntress

"Spehro Pefhany" wrote in message
...
On Sat, 17 Nov 2007 21:45:54 -0500, the renowned "Ed Huntress"
wrote:


"Spehro Pefhany" wrote in message
. ..
On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.

How do you know it's "non-fiat"? They printed quite a lot of paper
currency,
and they *claim* it's backed up by silver. Have you ever seen the silver?
Have you tried to cash any in?

What business is it of the government if it is or isn't?

Several thousand years of experience with money makes it the government's
business.

I might
decide to take that risk, compared to the demonstrated risk of dealing
with their paper backed by nothing of value.

Sorry, you don't get to do that. Because when your personal finances
collapse (and they will, if you base them on self-annointed "currencies" --
they always do), you'll drag the rest of us down with you. That isn't going
to be allowed to happen.

Or maybe I'd pick some
other alternative currency-- Bruce Springfield dollars or something.

Of course, that's beside the point that you can't print or mint currency.
If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are plenty of third parties who perform audits and certify and
even insure things if market conditions (eg. their customers) demand
it.

Like...hmm...Enron?

One does not need to involve the government, let alone give the
government a perpetual monopoly and hence the sole right to foist a
shoddy product which quickly becomes worthless on the public (the
current unfortunate state of the US dollar).

The dollar is not worthless. I can buy about the same amount of goods with
an hour of work, denominated in current dollars, as I could 30 years ago.

That's part of why the
Eastern bloc fell apart- their state-run monopolies debased valuable
raw materials into mountains of worthless crap.

If you're planning to do economics as a sideline, hang on to your day job,
Spehro. The US is not the Eastern bloc.


There are many problems with such "currency." It's always been the case,
and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

That's the excuse for every government intervention.. to "protect"
their subjects who are assumed to be unable to make complicated
decisions on their own.

http://www.libertydollar.org/
http://www.courierpress.com/news/200...office-raided/

Quit reading that nonsense and take out a subscription to _The Economist_
and the _Wall Street Journal_.

--
Ed Huntress

On Sun, 18 Nov 2007 12:26:19 -0500, the renowned "Ed Huntress"
wrote:

That's unlikely. What's more likely is a recession next year. _The
Economist_ is predicting one, and they claim that the US is the most
vulnerable in that regard. I don't doubt that. What I do doubt is that we'll
"lose everything we have." Unless you're leveraged out and vulnerable
yourself, I wouldn't bet on it.

Even if the dollar dropped to zero, you wouldn't lose everything
unless all you had was dollars. Most people have a bit of cash or cash
equivalent, but the bulk of their wealth is in real estate, stocks,
property and so on. A dropping dollar value rewards the highly
leveraged at the expense of the cautious who keep money in term
deposits and such like... and, of course, it rewards governments with
taxes on the fake increase in dollar value of everything.


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

"Spehro Pefhany" wrote in message
...
On Sun, 18 Nov 2007 12:26:19 -0500, the renowned "Ed Huntress"
wrote:

That's unlikely. What's more likely is a recession next year. _The
Economist_ is predicting one, and they claim that the US is the most
vulnerable in that regard. I don't doubt that. What I do doubt is that
we'll
"lose everything we have." Unless you're leveraged out and vulnerable
yourself, I wouldn't bet on it.

Even if the dollar dropped to zero, you wouldn't lose everything
unless all you had was dollars. Most people have a bit of cash or cash
equivalent, but the bulk of their wealth is in real estate, stocks,
property and so on. A dropping dollar value rewards the highly
leveraged at the expense of the cautious who keep money in term
deposits and such like...

And how does that work, Spehro? If you're leveraged on, say, a 30% margin,
and the dollar drops 20%, and the value of your dollar-denominated
investments drops with them, you've lost 66% of your worth. People who
aren't leveraged lose 20%.

and, of course, it rewards governments with
taxes on the fake increase in dollar value of everything.

Maybe, depending on the rate of inflation. If the economy is collapsing as
you suggest, that won't happen because wages won't increase and taxes won't
increase. The government actually will get less because of the devalued
dollar.

--
Ed Huntress

On Sun, 18 Nov 2007 12:37:20 -0500, the renowned "Ed Huntress"
wrote:


"Spehro Pefhany" wrote in message
.. .
On Sat, 17 Nov 2007 21:45:54 -0500, the renowned "Ed Huntress"
wrote:


"Spehro Pefhany" wrote in message
...
On Sat, 17 Nov 2007 18:25:12 -0600, the renowned F. George McDuffee
wrote:

On Fri, 16 Nov 2007 19:28:31 -0800, "azotic"
wrote:

Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv...16889720071116

Best Regards
Tom.


===========
for entire article click on
http://news.independent.co.uk/world/...cle3169638.ece

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007
snip
The warning was reinforced by a Chinese central bank
vice-director, Xu Jian, who said the dollar was "losing its
status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has
only to decide to slow its accumulation of dollars to weaken the
currency further. Last month, in a humiliating turn of events,
the central bank in Iraq, four years after the United States
invaded, stated that it wished to diversify reserves from a
reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in
the local currency and take precautions against the weakened
dollar, and == three of the world's big oil exporters, Iran,
Venezuela, and Russia, are demanding payment in euros rather than
dollars. Iran insisted that Japan should make all its payments
for oil in yen, rather than dollars.== [emphasis added]

Warren Buffet, who is reputedly the richest man in the world, was
asked on the US network CNBC last month what he thought was the
best currency in the world to own now. He answered: "Not the US
dollar."
snip

Wow, this is REALLY shocking:

http://ap.google.com/article/ALeqM5j...run3AD8SV1B5O2

I guess they really DON'T like competition from non-fiat currency.

How do you know it's "non-fiat"? They printed quite a lot of paper
currency,
and they *claim* it's backed up by silver. Have you ever seen the silver?
Have you tried to cash any in?

What business is it of the government if it is or isn't?

Several thousand years of experience with money makes it the government's
business.

I might
decide to take that risk, compared to the demonstrated risk of dealing
with their paper backed by nothing of value.

Sorry, you don't get to do that. Because when your personal finances
collapse (and they will, if you base them on self-annointed "currencies" --
they always do), you'll drag the rest of us down with you. That isn't going
to be allowed to happen.

Or maybe I'd pick some
other alternative currency-- Bruce Springfield dollars or something.

Of course, that's beside the point that you can't print or mint currency.
If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are plenty of third parties who perform audits and certify and
even insure things if market conditions (eg. their customers) demand
it.

Like...hmm...Enron?

And all that wonderful hawk-eyed government SEC oversight that went on
there.

One does not need to involve the government, let alone give the
government a perpetual monopoly and hence the sole right to foist a
shoddy product which quickly becomes worthless on the public (the
current unfortunate state of the US dollar).

The dollar is not worthless. I can buy about the same amount of goods with
an hour of work, denominated in current dollars, as I could 30 years ago.

That just means *your* work is not worthless, right? The dollar has
lost maybe 60% of its value or more in that period of time. More in
terms of a barrel of oil. Much more. That's why they give you a lot
more dollars for each hour than they did 30 years ago (and doubtless,
in addition, your work is more valuable with more experience). $100 US
bought 5 barrels of oil not many years ago, now it barely buys one.
The dollar has lost 80% of its value in terms of oil in a few short
years.

That's part of why the
Eastern bloc fell apart- their state-run monopolies debased valuable
raw materials into mountains of worthless crap.

If you're planning to do economics as a sideline, hang on to your day job,
Spehro. The US is not the Eastern bloc.

Oh, of course not, but there are interesting parallels that may not be
as visible from within. Countries such as Czechoslovakia and Bulgaria
looked pretty stable and relatively affluent just a few short years
before the breakdown. It took very little time for the Soviets to go
from supposedly an all-powerful competitor to nothing and back again
to at least a mid power, and the same with Japan.

I don't actually expect any great crisis, I think everyone will do
their d*mndest to keep it from happening, but it's certainly not
unthinkable, and knowledgable people have been discussing the
possibility of a severe dollar crisis for some time (eg. in Foreign
Affairs journal). So far it's been a relatively orderly (and probably
needed) decline rather than the feared free-fall. It might have
further to go at this time.

There are many problems with such "currency." It's always been the case,
and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

That's the excuse for every government intervention.. to "protect"
their subjects who are assumed to be unable to make complicated
decisions on their own.

http://www.libertydollar.org/
http://www.courierpress.com/news/200...office-raided/

Quit reading that nonsense and take out a subscription to _The Economist_
and the _Wall Street Journal_.

I do read the former and I'll avoid the latter, thank you, in favor of
the London Financial Times. They are quite reliable sources of
financial and political information. Anything else you'd like to add
to my reading list? ;-) I have several linear feet of trade
publications backed up. 8-( Sucks to have so much stuff on the go.


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

On Sun, 18 Nov 2007 13:08:27 -0500, the renowned "Ed Huntress"
wrote:


"Spehro Pefhany" wrote in message
.. .
On Sun, 18 Nov 2007 12:26:19 -0500, the renowned "Ed Huntress"
wrote:

That's unlikely. What's more likely is a recession next year. _The
Economist_ is predicting one, and they claim that the US is the most
vulnerable in that regard. I don't doubt that. What I do doubt is that
we'll
"lose everything we have." Unless you're leveraged out and vulnerable
yourself, I wouldn't bet on it.

Even if the dollar dropped to zero, you wouldn't lose everything
unless all you had was dollars. Most people have a bit of cash or cash
equivalent, but the bulk of their wealth is in real estate, stocks,
property and so on. A dropping dollar value rewards the highly
leveraged at the expense of the cautious who keep money in term
deposits and such like...

And how does that work, Spehro? If you're leveraged on, say, a 30% margin,
and the dollar drops 20%, and the value of your dollar-denominated
investments drops with them, you've lost 66% of your worth.

Dollar denominated investments that have real value will quickly get
bid up, so you will see a fake stock market boom (since the indexes
are measured in dollars) regardless of how well the real economy is
doing.

People who
aren't leveraged lose 20%.

If I buy a $500K house and the value of the dollar drops to half, my
house will be bid up to $1M from $500K and my income will go up,
probably to double if I and the economy are doing well, in short
order. I get to pay back the loan with inflated dollars. If I own the
house outright, I at least hang onto the real value. If I put my $500K
in the bank at 5% interest, almost half the real value of my equity is
wiped out even though I have a few more dollars.

This has already happened in most places even though the core rate of
inflation is supposedly benign, so this is historic, not prediction.

and, of course, it rewards governments with
taxes on the fake increase in dollar value of everything.

Maybe, depending on the rate of inflation. If the economy is collapsing as
you suggest, that won't happen because wages won't increase and taxes won't
increase. The government actually will get less because of the devalued
dollar.

Hey, I never said the economy would collapse. That's a separate issue.
I sure wouldn't bet against the US economy in the long term. I would
bet against governments taking necessary but politically difficult
actions. I do expect the US economy to represent an ever-shrinking
portion of the global economy (from 50% at the end of WWII, to 25%
five years ago (?) to 20% now to maybe 10% in the future), but mostly
because others are doing better rather than some enormous collapse.
OTOH, things seldom go in straight lines and if I could predict these
things accurately I'd have a lot more $$.


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

On Nov 18, 12:01 pm, Spehro Pefhany
wrote:
On Sun, 18 Nov 2007 12:26:19 -0500, the renowned "Ed Huntress"

wrote:
That's unlikely. What's more likely is a recession next year. _The
Economist_ is predicting one, and they claim that the US is the most
vulnerable in that regard. I don't doubt that. What I do doubt is that we'll
"lose everything we have." Unless you're leveraged out and vulnerable
yourself, I wouldn't bet on it.

Even if the dollar dropped to zero, you wouldn't lose everything
unless all you had was dollars. Most people have a bit of cash or cash
equivalent, but the bulk of their wealth is in real estate, stocks,
property and so on. A dropping dollar value rewards the highly
leveraged at the expense of the cautious who keep money in term
deposits and such like... and, of course, it rewards governments with
taxes on the fake increase in dollar value of everything.

Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
Info for manufacturers:http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com

No disrespect intended buy you have apparently never been through a
significant devaluation of currency.

Watching from afar is much different than living through it.

Yes...you CAN lose all your stuff.

While it is true that you may still hold the assets that are paid
for...for awhile...you still need to have cash in the currency to live
day to day.

If you own a house, what do you think the taxes are paid in...beans?

And those continuing costs to survive never are adjusted in the same
downward rate that your currency is.

Has fuel, taxes, food and medical costs gone down? No...they have gone
up...way up....while the dollar has gone down.

As a currency suffers a significant devaluation, the cost of almost
everything goes up in comparison.

Inflation or deflation...the names are different but the end result is
the same...your dollar gets less stuff than it did before.

Wanna guess what the holiday season sales will be like this year?

The American people are in for a heck of a big surprise.

TMT

"Spehro Pefhany" wrote in message
...
On Sun, 18 Nov 2007 12:37:20 -0500, the renowned "Ed Huntress"
wrote:

snip


Of course, that's beside the point that you can't print or mint
currency.
If
you mint gold coins, who is certifying that it's the purity that you
specify? Or the weight?

There are plenty of third parties who perform audits and certify and
even insure things if market conditions (eg. their customers) demand
it.

Like...hmm...Enron?

And all that wonderful hawk-eyed government SEC oversight that went on
there.

It's a good thing that Treasury is more vigilant than the SEC, particularly
after Bush has done his best to strangle its investigative powers, eh?


One does not need to involve the government, let alone give the
government a perpetual monopoly and hence the sole right to foist a
shoddy product which quickly becomes worthless on the public (the
current unfortunate state of the US dollar).

The dollar is not worthless. I can buy about the same amount of goods with
an hour of work, denominated in current dollars, as I could 30 years ago.

That just means *your* work is not worthless, right? The dollar has
lost maybe 60% of its value or more in that period of time. More in
terms of a barrel of oil. Much more. That's why they give you a lot
more dollars for each hour than they did 30 years ago (and doubtless,
in addition, your work is more valuable with more experience). $100 US
bought 5 barrels of oil not many years ago, now it barely buys one.
The dollar has lost 80% of its value in terms of oil in a few short
years.

So what? If your income is increasing as fast as dollar inflation (overall,
it's about a wash for the middle class), what difference does it make?

If you're worried about your investments, you have to subtract inflation
from your nominal interest rates. That's your real income from investments.
Plan around that.


That's part of why the
Eastern bloc fell apart- their state-run monopolies debased valuable
raw materials into mountains of worthless crap.

If you're planning to do economics as a sideline, hang on to your day job,
Spehro. The US is not the Eastern bloc.

Oh, of course not, but there are interesting parallels that may not be
as visible from within. Countries such as Czechoslovakia and Bulgaria
looked pretty stable and relatively affluent just a few short years
before the breakdown. It took very little time for the Soviets to go
from supposedly an all-powerful competitor to nothing and back again
to at least a mid power, and the same with Japan.

Them's the breaks. I wouldn't have bought any stock in any of them, anyway.
Their economies are too unstable and have been since people started keeping
track.


I don't actually expect any great crisis, I think everyone will do
their d*mndest to keep it from happening, but it's certainly not
unthinkable, and knowledgable people have been discussing the
possibility of a severe dollar crisis for some time (eg. in Foreign
Affairs journal). So far it's been a relatively orderly (and probably
needed) decline rather than the feared free-fall. It might have
further to go at this time.

It all depends on what you call "severe." The US dollar has an underlying
weakness that started when Reagan began piling up those enormous deficits
and stoking up the national debt. It's been made radically more vulnerable
by the second wave of tax cuts under Bush. And the weakness is that the
whole system depends on continued foreign demand for dollar-denominated
bonds and other investments. We've inherited some theories from the
free-traders and tax-cutters that work OK on paper, but which haven't worked
out very well in practice.

Fortunately the other strengths of the US economy have partly compensated
for that. Or they've just delayed the day of reckoning, depending upon your
perspective.

My take on it is that the strengths are enough to prevent a radical crisis,
but not enough to prevent a reckoning on foreign debt (which will drive up
interest rates) that will in turn lead to a recession. I wouldn't profess to
guess when that will be but there is a growing opinion from authoritative
sources that say a slowdown will begin in the first quarter of next year.

There are many problems with such "currency." It's always been the case,
and
it's why governments don't allow it. Distrust in currency can wreck an
economy.

That's the excuse for every government intervention.. to "protect"
their subjects who are assumed to be unable to make complicated
decisions on their own.

http://www.libertydollar.org/
http://www.courierpress.com/news/200...office-raided/

Quit reading that nonsense and take out a subscription to _The Economist_
and the _Wall Street Journal_.

I do read the former...

Then look at this week's (Nov. 17th - 23rd) cover article, "America's
Vulnerable Economy." And then read the big roundup, "Briefing: America's
Economy, Getting Worried Downtown" that begins on page 80. It will remind
you of Truman's comment about wanting a one-armed economist, because they're
always saying "on the one hand, but then on the other hand."

_The Economist_ has been chastened a bit by excessively predicting downturns
in the past. It's clear that the economy today is breaking lots of old
rules, and that there are some unknowns that make predictions even more
dicey than usual. But they emphasize that both the weaknesses and the
strengths of our economy are large, and that nobody knows what will happen.
Note that our exports are 'way up and imports are down -- enough to mask the
drag from decreased housing construction, for example. That's the direct
result of a weaker dollar. It bodes fairly well for manufacturing if the
rest of the economy doesn't drag it down.

...and I'll avoid the latter, thank you, in favor of
the London Financial Times. They are quite reliable sources of
financial and political information.

Each to his own. The _Financial Times_ is a little too cocksure for my
tastes.

I'd like to see, however, where the _Financial Times_ comes out in favor of
homemade currency. That sounds more like the libretardians. The FT do run
some freakish editorials but that's because they like to be provocative,
like the WSJ in *its* editorials.

Anything else you'd like to add
to my reading list? ;-) I have several linear feet of trade
publications backed up. 8-( Sucks to have so much stuff on the go.

Dump the trade publications. d8-)

If you're reading those financial and economic sources, you know what to
keep your eye on: housing, interest rates, trade, the credit crunch, and the
effects of oil prices. What the Economist article doesn't address is the
opaque tangle of hedge instruments, which are so complex now that the
authoritative sources say that no one knows how the mobile will shake. It is
completely unpredictable.

But the biggest deal is that consumer spending is 70% of our GDP. If people
can get their hands on credit and if they *want* things to get better, they
probably will. So the ultimate gauge will be consumer buying patterns.

--
Ed Huntress

What business is it of the government if it is or isn't? I might
decide to take that risk, compared to the demonstrated risk of dealing
with their paper backed by nothing of value. Or maybe I'd pick some
other alternative currency-- Bruce Springfield dollars or something.

Actually, Andrew Jackson tried this (eliminating the Federal Reserve Bank)
during his presidency (1829-1836) and it led directly to the depression of
1837. Politicians, economists, and businessmen since have all agreed a
Federal Reserve Bank is a necessary evil.
http://en.wikipedia.org/wiki/Andrew_..._National_Bank



That's the excuse for every government intervention.. to "protect"
their subjects who are assumed to be unable to make complicated
decisions on their own.

http://www.libertydollar.org/
http://www.courierpress.com/news/200...office-raided/

That doesn't mean they are wrong. Don't forget that, at least in the US,
you and I ARE the government.

Kelly

"Spehro Pefhany" wrote in message
news
On Sun, 18 Nov 2007 13:08:27 -0500, the renowned "Ed Huntress"
wrote:

uh-oh, we're in for a battle of the theories here g

snip


And how does that work, Spehro? If you're leveraged on, say, a 30% margin,
and the dollar drops 20%, and the value of your dollar-denominated
investments drops with them, you've lost 66% of your worth.

Dollar denominated investments that have real value will quickly get
bid up, so you will see a fake stock market boom (since the indexes
are measured in dollars) regardless of how well the real economy is
doing.

Has that ever happened? Or is this Spehro's Economic Theory Number 7? g

I think what happens is that the investments drop in value, too. Maybe if
they're denominated in some stronger foreign currency, but that's why I said
"dollar denominated." That phrase "real value" is a wild card. It generally
means "not dollar-denominated." Like precious metals, or oil. They have
value in all currencies. That doesn't make their value any more "real," but
it makes them convertible.


People who
aren't leveraged lose 20%.

If I buy a $500K house and the value of the dollar drops to half, my
house will be bid up to $1M from $500K and my income will go up...

I don't think so. I think your house just loses half its value. The thing
that drives up house values is availability of credit at low rates.
Inflation in house prices has *far* outstripped inflation in the overall
value of a dollar in recent years.

...probably to double if I and the economy are doing well, in short
order. I get to pay back the loan with inflated dollars. If I own the
house outright, I at least hang onto the real value. If I put my $500K
in the bank at 5% interest, almost half the real value of my equity is
wiped out even though I have a few more dollars.

True enough. The moral is, don't put your money into banks at 5% interest.


This has already happened in most places even though the core rate of
inflation is supposedly benign, so this is historic, not prediction.

What's happened is that housing costs have gone up, but I don't think the
mechanism is the one you describe. If supply and demand are held constant,
credit is the determinant. If credit gets easier, housing demand exceeds
supply, and prices go up for that reason.

I think it's fairly accurate to say that the value of a house is based on
what a certain percentage of eligible buyers can afford, on a monthly basis.
Most people try to buy a house at or near (or often over) the monthly
payment a bank or mortgage company will qualify them for. As US credit
markets have gotten more "sophisticated," as _The Economist_ puts it, or
deeper, or looser, if you prefer, the value of a house that a particular
income will qualify one for keeps going up. So, that's what the market will
bear. That's what people will pay.

The current subpar credit crunch is causing a big rollback in that
income/qualification ratio, at least at the bottom end of creditworthiness,
and consequently throughout the housing market via a domino effect. Thus,
expect prices to keep rolling back. It won't be because of general
deflation.


and, of course, it rewards governments with
taxes on the fake increase in dollar value of everything.

Maybe, depending on the rate of inflation. If the economy is collapsing as
you suggest, that won't happen because wages won't increase and taxes
won't
increase. The government actually will get less because of the devalued
dollar.

Hey, I never said the economy would collapse. That's a separate issue.
I sure wouldn't bet against the US economy in the long term. I would
bet against governments taking necessary but politically difficult
actions. I do expect the US economy to represent an ever-shrinking
portion of the global economy (from 50% at the end of WWII, to 25%
five years ago (?) to 20% now to maybe 10% in the future), but mostly
because others are doing better rather than some enormous collapse.
OTOH, things seldom go in straight lines and if I could predict these
things accurately I'd have a lot more $$.

It's nice to finish on a note of complete agreement. d8-)

--
Ed Huntress