Is the USD at a crossroads?

[myp]

With the Middle East unrest and investors seeking safety, the effects of the USD have been atypical. The currency actually showed weakness during the unrest with investors looking to commodities or smaller safe havens such as the Swiss Franc instead. This has many speculating that a decline in the USD over the next couple weeks could signify a major step towards the end of the USD as the reserve currency of the world. The ramifications of that are of course huge.

Are we finally at that point? Any guesses?

 

[DodgeFB]

Unlike some politicians I think our best is way behind us. I am not saying we can't have better days. But we have had a lot going for us since World War Two. Now the whole dang world has changed. As I have said before, I hate all this "global" crap.:unsure:

 

[myp]

It was interesting to see the WSJ run a piece on the USD losing reserve status yesterday followed with today's Utah House passing a bill that would make gold and silver legal tender within the state. Things certainly seem to be changing...

What do you mean when you say "global crap"? Globalization?

 

[DodgeFB]

It was interesting to see the WSJ run a piece on the USD losing reserve status yesterday followed with today's Utah House passing a bill that would make gold and silver legal tender within the state. Things certainly seem to be changing...

What do you mean when you say "global crap"? Globalization?

Yes sir! I mean "Globalization". I remember when anything we needed was made here. Like we always had Zenith TVs. Now ya Google Zenith and first thing pops up: "
Zenith Electronics Corporation is a brand of the South Korean company LG Electronics. The company was previously an American manufacturer of televisions and other consumer electronics,..."

Now we import everything that we could be making ourselves! Then complain about we have no jobs!

I am one of the old timers that never much cared what any other country thought of us. But over the years we tried buying friends. Now we are broke and have no real friends.

 

[RoccoR]

DodgeFB; et al,

I try not to get too involved in this topic, only because I don't like to be accused of being a fascist.

Yes sir! I mean "Globalization". I remember when anything we needed was made here. Like we always had Zenith TVs. Now ya Google Zenith and first thing pops up: "
Zenith Electronics Corporation is a brand of the South Korean company LG Electronics. The company was previously an American manufacturer of televisions and other consumer electronics,..."

Now we import everything that we could be making ourselves! Then complain about we have no jobs!

I am one of the old timers that never much cared what any other country thought of us. But over the years we tried buying friends. Now we are broke and have no real friends.

(COMMENT)

America drives home the point that economic, industrial and commercial decisions should not conflict with the basic premise: "maximize the wealth of the shareholder." This axiom or postulate is so power, that US Corporations will put hundreds (if not thousands) of US worker out of a job, to "maximize the wealth of the shareholder."

The Washington mantra, "small business is the backbone of the American economy" is true, only because there is no real "business left."

Washington will spend billions of dollars on rebuilding the economy of a foreign country, and get no return on the investment, yet not make a national effort in either science, industry or technology. We really need a to dump the current Washington Leadership and install a crop of leaders that want to build a nation: America.

Without a concerted and unified effort, where decisions are made to improve the industrial and busness friendly environment of America, we will continue to export our industry base, employment opportunities, commercial enterprises --- while allowing our national infrastructure to deteriorate (the national Power Grid, Highway System, Rail and Air transports) for the sake of the shareholder.

Just My Thought,
Respectfully,
R

 

[DodgeFB]

DodgeFB; et al,

I try not to get too involved in this topic, only because I don't like to be accused of being a fascist.(COMMENT)

America drives home the point that economic, industrial and commercial decisions should not conflict with the basic premise: "maximize the wealth of the shareholder." This axiom or postulate is so power, that US Corporations will put hundreds (if not thousands) of US worker out of a job, to "maximize the wealth of the shareholder."

The Washington mantra, "small business is the backbone of the American economy" is true, only because there is no real "business left."

Washington will spend billions of dollars on rebuilding the economy of a foreign country, and get no return on the investment, yet not make a national effort in either science, industry or technology. We really need a to dump the current Washington Leadership and install a crop of leaders that want to build a nation: America.

Without a concerted and unified effort, where decisions are made to improve the industrial and busness friendly environment of America, we will continue to export our industry base, employment opportunities, commercial enterprises --- while allowing our national infrastructure to deteriorate (the national Power Grid, Highway System, Rail and Air transports) for the sake of the shareholder.

Just My Thought,
Respectfully,
R

I agree as long as that "rail" is not a 250mph bullet train. We need to get "Amtrak" making some real money before we need high speed in my opinion.

 

[myp]

Yes sir! I mean "Globalization". I remember when anything we needed was made here. Like we always had Zenith TVs. Now ya Google Zenith and first thing pops up: "
Zenith Electronics Corporation is a brand of the South Korean company LG Electronics. The company was previously an American manufacturer of televisions and other consumer electronics,..."

Now we import everything that we could be making ourselves! Then complain about we have no jobs!

I am one of the old timers that never much cared what any other country thought of us. But over the years we tried buying friends. Now we are broke and have no real friends.

I strongly disagree with this point. Globalization allows each country and each region of the world to produce what it best produces. Specialization allows for greater production an generally better results for all nations involved.

You specifically mention electronics manufacturing, but that limits the picture as Japan, East Asia, etc. likely just have a comparative advantage than US firms. At the same time though, the US has comparative advantages in other sectors- even within the tech field- just look at Silicon Valley.

Trade helps people, isolation does not. Our trade deficit has nothing to do with globalization and more to do with government incentives for US firms driven by regulation and taxes as well as Americans generally trying to live beyond their means through credit.

 

[DodgeFB]

I strongly disagree with this point. Globalization allows each country and each region of the world to produce what it best produces. Specialization allows for greater production an generally better results for all nations involved.

You specifically mention electronics manufacturing, but that limits the picture as Japan, East Asia, etc. likely just have a comparative advantage than US firms. At the same time though, the US has comparative advantages in other sectors- even within the tech field- just look at Silicon Valley.

Trade helps people, isolation does not. Our trade deficit has nothing to do with globalization and more to do with government incentives for US firms driven by regulation and taxes as well as Americans generally trying to live beyond their means through credit.

All I know is how life was before "Globalization" and how it is now. I know because I lived it. Never read it in a book or watched it on TV. As far as our "tech" goes. The "global" market just steals it and sells it back to us.

Before the global crap came along people had jobs. I never quit a job in my life that I did not have another before I went home. We did not need 99+ weeks of unemployment. I have family members that worked from the age of 18 for General Electric until retirement. I also have a brother-in-law that did the same thing. He retired about 5 years ago. He has a new home paid for in Kentucky. And another in Fl. He earned what he has before global came along. I may be dumb. But I see the USA going downhill not getting better.

So I guess this is just one thing we will never agree on.

 

[myp]

All I know is how life was before "Globalization" and how it is now. I know because I lived it. Never read it in a book or watched it on TV. As far as our "tech" goes. The "global" market just steals it and sells it back to us.

Correlation does not prove causation though. In that regard, one could say something along the lines of there was no Internet back then, now there is, which is why the problems we have today exist (which is clearly is not true).

Before the global crap came along people had jobs. I never quit a job in my life that I did not have another before I went home. We did not need 99+ weeks of unemployment. I have family members that worked from the age of 18 for General Electric until retirement. I also have a brother-in-law that did the same thing. He retired about 5 years ago. He has a new home paid for in Kentucky. And another in Fl. He earned what he has before global came along. I may be dumb. But I see the USA going downhill not getting better.

So I guess this is just one thing we will never agree on.

The thing is that globalization was not the only thing that happened in those years. That said, you can't pinpoint the problems on globalization simply because it happened- there needs to be some stronger tie to suggest that.

I think looking at globalization historically really shows the benefits in a way that almost no one will argue. A few hundred years ago when there was no global trade at all, people could only dream of having chocolate, mangos, rice, wheat, milk, and all the other groceries we use on a daily basis all packed into one convenient store. Kings could not have that luxury, let alone the common man. Without international trade none of that is possible.

 

[DodgeFB]

Correlation does not prove causation though. In that regard, one could say something along the lines of there was no Internet back then, now there is, which is why the problems we have today exist (which is clearly is not true).


The thing is that globalization was not the only thing that happened in those years. That said, you can't pinpoint the problems on globalization simply because it happened- there needs to be some stronger tie to suggest that.

I think looking at globalization historically really shows the benefits in a way that almost no one will argue. A few hundred years ago when there was no global trade at all, people could only dream of having chocolate, mangos, rice, wheat, milk, and all the other groceries we use on a daily basis all packed into one convenient store. Kings could not have that luxury, let alone the common man. Without international trade none of that is possible.

See I would expect most people in college to see things the way you do. In my opinion that comes from so many of my generation,s hippys staying in school. They did that to stay out of the war. Then they became professors. And they have pushed their more European ways onto their students ever since.

Guess you can tell I don't believe in the European Union.

I just can't make myself think "European" enough to feel at home in the world I find myself trapped in. I have definitely out lived my expiration date.

 

[myp]

See I would expect most people in college to see things the way you do. In my opinion that comes from so many of my generation,s hippys staying in school. They did that to stay out of the war. Then they became professors. And they have pushed their more European ways onto their students ever since.

Guess you can tell I don't believe in the European Union.

I just can't make myself think "European" enough to feel at home in the world I find myself trapped in. I have definitely out lived my expiration date.

I am far from a believer in the European Union (I think it is unnecessary, wasteful and in its current state not sustainable). I am not really sure what you mean by European ways of thinking because what I am suggesting is not subject to one state or another, it is an idea. I do not believe in protectionism, I believe in markets and trade. This is not an idea that is new to America- let's not forget what Jefferson said on tariffs or the free market ideologies that helped pave and grow our nation in its early days. The exchange of ideas and goods is a very capitalist idea and as such, so is global trade.

What I am questioning in your reasoning is how you got to that conclusion. Simply because A happened while B happened, it does not mean A caused B. Surely you agree with that?

 

[DodgeFB]

I am far from a believer in the European Union (I think it is unnecessary, wasteful and in its current state not sustainable). I am not really sure what you mean by European ways of thinking because what I am suggesting is not subject to one state or another, it is an idea. I do not believe in protectionism, I believe in markets and trade. This is not an idea that is new to America- let's not forget what Jefferson said on tariffs or the free market ideologies that helped pave and grow our nation in its early days. The exchange of ideas and goods is a very capitalist idea and as such, so is global trade.

What I am questioning in your reasoning is how you got to that conclusion. Simply because A happened while B happened, it does not mean A caused B. Surely you agree with that?

One of my problems with all this European thinking is what seems to be giving up their "National" history and pride. (I have talked to some Europeans about this. Some agree some don't.) As for reason about A and B. If you hit me in the nose and my nose is broken. I may jump to the conclusion that you broke my nose. I will admit, maybe you didn't. But I will really think you did.

But to make it even more simple. I think we lose more than we gain with all the global stuff. Yes we have global "friends" as long as we can afford to buy them. Or when we don't need them. Back when we asked the global bunch to stand with us in the UN. We had one real global friend. Tony Blair. I watched all the nasty things "our European friends" have said about us for years. Maybe their thinking is just too left for me to get.


Last on the subject. " The exchange of ideas and goods is a very capitalist idea and as such, so is global trade." Yes it was. But that is if all things were equal. But we seem to be on the short end of the stick with our trade these days. We can't compete with nations that have no standards and no rules. Look at their labor cost. We have lost the edge forever on that.

 

[myp]

One of my problems with all this European thinking is what seems to be giving up their "National" history and pride. (I have talked to some Europeans about this. Some agree some don't.)

I for one am not extremely big on nationalism. Don't get me wrong, I love my country, but I will take the PEOPLE of my country over the flag any day because the flag is merely an inanimate symbol and the people are of course not.

But again, this isn't something that is necessarily "European". The reason you see less nationalism in some areas of Europe is pretty simple- Nazi Germany.

As for reason about A and B. If you hit me in the nose and my nose is broken. I may jump to the conclusion that you broke my nose. I will admit, maybe you didn't. But I will really think you did.

Okay, but that is a much stronger correlation than globalization vs. our problems. For example, had someone else sneezed at the same time I hit you, would you say the sneeze broke your nose?

But to make it even more simple. I think we lose more than we gain with all the global stuff. Yes we have global "friends" as long as we can afford to buy them. Or when we don't need them. Back when we asked the global bunch to stand with us in the UN. We had one real global friend. Tony Blair. I watched all the nasty things "our European friends" have said about us for years. Maybe their thinking is just too left for me to get.

The UN and global trade are not the same. I personally am against the UN as well. When it comes to trade most deals are done through the choices of each country's government, not through what the UN tells them to (and it should be that way).

There is always tension between nations- it is a great and constant power struggle. Sometimes they might say nasty things about us- who cares? We say it about them too.

Last on the subject. " The exchange of ideas and goods is a very capitalist idea and as such, so is global trade." Yes it was. But that is if all things were equal. But we seem to be on the short end of the stick with our trade these days. We can't compete with nations that have no standards and no rules. Look at their labor cost. We have lost the edge forever on that.

Who is "their" here? Many European nations have even higher costs than we do- it is Asia that is cheaper, but so what? To say we have not benefited from it is absurd- on the consumer end we absolutely have benefited from cheap goods. And when it comes to global trade, we have more choices as consumers now than ever before. Everyone has increased and grown with increased trade- the countries who were worse off before might have grown more, but that is just because they have more room to do so.

Had we not traded with these people, they would still have grown and still would have found buyers for their products- we would've lost the benefits of cheap goods while not really gaining anything from it.

 

[DodgeFB]

I for one am not extremely big on nationalism. Don't get me wrong, I love my country, but I will take the PEOPLE of my country over the flag any day because the flag is merely an inanimate symbol and the people are of course not.

But again, this isn't something that is necessarily "European". The reason you see less nationalism in some areas of Europe is pretty simple- Nazi Germany.

Okay, but that is a much stronger correlation than globalization vs. our problems. For example, had someone else sneezed at the same time I hit you, would you say the sneeze broke your nose?

The UN and global trade are not the same. I personally am against the UN as well. When it comes to trade most deals are done through the choices of each country's government, not through what the UN tells them to (and it should be that way).

There is always tension between nations- it is a great and constant power struggle. Sometimes they might say nasty things about us- who cares? We say it about them too.



Who is "their" here? Many European nations have even higher costs than we do- it is Asia that is cheaper, but so what? To say we have not benefited from it is absurd- on the consumer end we absolutely have benefited from cheap goods. And when it comes to global trade, we have more choices as consumers now than ever before. Everyone has increased and grown with increased trade- the countries who were worse off before might have grown more, but that is just because they have more room to do so.

Had we not traded with these people, they would still have grown and still would have found buyers for their products- we would've lost the benefits of cheap goods while not really gaining anything from it.

What good are "cheap goods" to people that don't have a job? I would be willing to pay more for some good old "made in the USA".

 

[myp]

What good are "cheap goods" to people that don't have a job? I would be willing to pay more for some good old "made in the USA".

What good are "made in the USA" products to people who still have no jobs?

Our current state of unemployment has a lot more to do with recent events and the housing bubble than foreign competition.

If you are referring to manufacturing jobs, then yes the decline is likely partly due to higher entries to barrier here. But how is that anyone's fault other than our own? Our government creates those barriers, not the Chinese or whoever. In some regards global trade might improve weaker countries at a greater rate than already developed nation since there is more room to grow. That isn't a bad thing for anyone.

I think it is important to not overlook the great choices we get out of global trade and that even if we were isolationist, it is impossible to shelter ourselves from the effects of global market prices- it has always been impossible, but with a smaller world thanks to technology, it is even harder now. It was because of competitive advantages vs. other countries in freedom and resources that we grew to where we did in the first place as well in the 1800s and early 1900s.

Now to really send it home think about all of the companies that have come here from abroad or do business here as trade has increased- from Toyota to fruit growers to oil companies, there are plenty. A lot of them also create jobs here when they sell their products- Toyota and Honda even have their own plants here.

 

[DodgeFB]

What good are "made in the USA" products to people who still have no jobs?

Our current state of unemployment has a lot more to do with recent events and the housing bubble than foreign competition.

If you are referring to manufacturing jobs, then yes the decline is likely partly due to higher entries to barrier here. But how is that anyone's fault other than our own? Our government creates those barriers, not the Chinese or whoever. In some regards global trade might improve weaker countries at a greater rate than already developed nation since there is more room to grow. That isn't a bad thing for anyone.

I think it is important to not overlook the great choices we get out of global trade and that even if we were isolationist, it is impossible to shelter ourselves from the effects of global market prices- it has always been impossible, but with a smaller world thanks to technology, it is even harder now. It was because of competitive advantages vs. other countries in freedom and resources that we grew to where we did in the first place as well in the 1800s and early 1900s.

Now to really send it home think about all of the companies that have come here from abroad or do business here as trade has increased- from Toyota to fruit growers to oil companies, there are plenty. A lot of them also create jobs here when they sell their products- Toyota and Honda even have their own plants here.

I know all about Toyota. My next door neighbor works there as well as the guy across the the road.

And as I said before, I know I have outlived my expiration date. I also know there is nothing I can do to change anything. And people your age will never understand why some of us feel as we do until another generation comes along and pulls the rug out from under your world and tells you how dumb you are for feeling as you do. But I am about ready to let the global crowd have what's left of my world. And just get the hell out of the way.

But I will hate the global crap with my last breath. It is in my DNA. And No one can change that.

 

[dave]

It was interesting to see the WSJ run a piece on the USD losing reserve status yesterday followed with today's Utah House passing a bill that would make gold and silver legal tender within the state. Things certainly seem to be changing...

What do you mean when you say "global crap"? Globalization?

I am coming to the conclusion that globalization is fine in moderation but potentially dangerous. Globalization means a nation becomes economically dependent upon other nations, but the dependence is not equal. Two nations can have a trading relationship but one of the nations might require the goods from the other nation, while the other nation does not require the goods from the first.

This is still a world of individual nations, and each nation has its own agenda and will do what needs to be done to implement that agenda. Just as we don't export capable weapons to our enemies, we should not "export" too many jobs to our economic rivals. Retaining some independence and self-sufficiency is prudent even if its not the most economically efficient.

 

[dave]

With the Middle East unrest and investors seeking safety, the effects of the USD have been atypical. The currency actually showed weakness during the unrest with investors looking to commodities or smaller safe havens such as the Swiss Franc instead. This has many speculating that a decline in the USD over the next couple weeks could signify a major step towards the end of the USD as the reserve currency of the world. The ramifications of that are of course huge.

Are we finally at that point? Any guesses?

As to the US$, the writing has been on the wall for a long time. Countries are moving away from the US$ and its only a matter of time - within this decade - before it is replaced as the world reserve currency. All of the major economic and political entities (the UN, the EU, the Gulf States led by Saudi Arabia, China, and various groups of nations) are actively pursueing a new world reserve. It will be difficult to come up with a replacement for the US$ because all of the major players want the replacement to maximize their individual standing in the world. But its just a matter of time, one nation will rise to the top and will win by default.

Historically oil has been priced and traded in US$, but that is changing as well. Russia, China, and Brazil are already making some oil trades outside of the US$, there are rumours that other Gulf states are trading outside the US$. Oil trading in US$ creates a demand for the US$ which helps prop up the value of the US$. Once oil is widely traded outside the US$, the value of the US$ will drop. There are economic reasons to price oil in US$'s (the US is the biggest buyer of oil, has the largest economy, and has a very stable and most respected currency) but those reasons are not as applicable as they once were.

Other commodities besides oil are priced in US$ and the same move away from the US$ is occurring in those markets.

The US$ as the world reserve is touted by many (Geitner and Bernanke, for example) as the bulwark against a collapse of the US economy. Other nations are afraid that replacing the US$ would lead to a collapse of the US economy which would ripple throughout the world. That fear is slowing the shift from the US$ but it is being overcome quickly as other nations develop trade relationships outside the US, and as other nations become economic super powers. I think the US debt and the entitlement and demographics problem are encouraging nations to drop the US$. My opinion is that the US$ will be dropped and the US is going to suffer economically. The pain can be mitigated if the federal and state governments get their acts togethor. I doubt the government will do what is required, and I find myself preparing for a major collapse of the US$ and a corresponding collapse of the US economy. I hope it doesn't happen, but it's a real possibility.

 

[myp]

I know all about Toyota. My next door neighbor works there as well as the guy across the the road.

And as I said before, I know I have outlived my expiration date. I also know there is nothing I can do to change anything. And people your age will never understand why some of us feel as we do until another generation comes along and pulls the rug out from under your world and tells you how dumb you are for feeling as you do. But I am about ready to let the global crowd have what's left of my world. And just get the hell out of the way.

But I will hate the global crap with my last breath. It is in my DNA. And No one can change that.

From your statements I don't see any legitimate reason for why you hate globalization other than you know you hate it. You say we will never understand your generation and in some areas I think no generation understands another, but when it comes to something like this I just don't see any valid point against globalization.

One of the points I have not mentioned yet that is also positive is the so-called theory of the golden arches, which describes how no 2 nations with a McDonald's have ever gone to war. Intertwined trade reduces the likelihood of war as the costs of war rise with it.

I am coming to the conclusion that globalization is fine in moderation but potentially dangerous. Globalization means a nation becomes economically dependent upon other nations, but the dependence is not equal. Two nations can have a trading relationship but one of the nations might require the goods from the other nation, while the other nation does not require the goods from the first.

But all nations use money and no nation has all of the resources/goods it wants within its borders. That allows for trade of goods for money and then the use of that money elsewhere.

This is still a world of individual nations, and each nation has its own agenda and will do what needs to be done to implement that agenda. Just as we don't export capable weapons to our enemies, we should not "export" too many jobs to our economic rivals. Retaining some independence and self-sufficiency is prudent even if its not the most economically efficient.

We don't intentionally export any jobs. Our policies just increase barriers to entry and costs here and that drives the jobs away. Even if we were fully isolationist, no corporation in todays age would be stopped from simply picking up and going elsewhere even if it meant leaving the US altogether in exchange for greater profits.

 

[DodgeFB]

From your statements I don't see any legitimate reason for why you hate globalization other than you know you hate it. You say we will never understand your generation and in some areas I think no generation understands another, but when it comes to something like this I just don't see any valid point against globalization.

One of the points I have not mentioned yet that is also positive is the so-called theory of the golden arches, which describes how no 2 nations with a McDonald's have ever gone to war. Intertwined trade reduces the likelihood of war as the costs of war rise with it.

But all nations use money and no nation has all of the resources/goods it wants within its borders. That allows for trade of goods for money and then the use of that money elsewhere.


We don't intentionally export any jobs. Our policies just increase barriers to entry and costs here and that drives the jobs away. Even if we were fully isolationist, no corporation in todays age would be stopped from simply picking up and going elsewhere even if it meant leaving the US altogether in exchange for greater profits.

And I don't see any legitimate reason for why you love globalization. We just see things differently. And yes they can pick up their ball and go make their crap somewhere else. But we can nail them when they want to ship it back in to sell here.

But I admit it does not make any difference what I think. Who am I to have an opinion about anything. My time has come and gone. So I really don't know why I care anyway. I need to work on not caring so much about stuff that is none of my business.

See I already feel like I am the alien in this country. So much so that I took my American flag down yesterday, pole and all including light. That thing has been up for years.