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What's with the US dollar?!

  • #21
  • Apr 2, 2011 10:41am Apr 2, 2011 10:41am
No complaints here I agree with everything you've said but I still hold to what I was saying.. Its not always as simple as people investing in a currency for profit I guess that's what I'm saying,,

yes currencies can be considered an asset I guess but this isn't the foreign exchanges only use for it. In fact the majority of the 4 trillion plus volume traded everyday is simply from the banks clearing inventory balances, and that's just one example...

I'm finding it hard to convey what I mean but I know what I'm trying to say. Example... Lets say the hottest shit on the market right bnow was some start up company in Africa... USD EURO AUD JPY all flow in in exchange for whatever African currency is needed to trade in his country.. These flows (demand for African denominated currency) aren't because the African dollar is fundermentally strong... Its just a necessary in order to achieve the desired investment interest...

Those was a bad example but I hope you get my point.

Further if the African fundamentals diminish will these flows to that African company reverse? Not necessarily.. If the expected returns are greater to keep it in the company than exchanging it back into the other currencies then these flows will stay put.

Now you combine or replace this with the massive Bond and treasuries markets and you can sort of see that the FOREX market was simply the middle man for foreign investors in all these transactions...

Am I making any sense?

Maybe I'm on drugs
Time hides Nothing
  • #22
  • Apr 2, 2011 10:47am Apr 2, 2011 10:47am
Quoting gspajon
So why does an improving ecconomy (arguably the strongest in the world) result in a steadily declining value in its currency?
The Fed created the bubble in EVERYTHING in the first place. Boom bust cycles are absolutely NOT normal, they are created by the abuse of free floating currencies. What was the inflation deflation cycle like in the USA before 1913, answer...... infla...what? defla...who?

The Fed inflates the crap out of the economy, and then sucks the wind out of it. In the mean time while prices crash through the floor, it and it's member banks scoop up the real assets at pennies on the dollar and average Joe's can't borrow a buck to keep their business going, which the banks get again at pennies on the dollar.

The Fed sows the seeds of prosperity in order to REAP everyone's wealth when it blossoms.

The debt issued by the Fed can never be paid back, because it is issued AT interest in the first place. If the USA gave the Fed back every dollar they borrowed, the debt would still be unpaid... because where the hell is the INTEREST on all those dollars going to come from if the Fed doesn't print it? and if they print it, they do so at charge.... so there you go, welcome to your debt slavery. Their in resides the reigns of power. It the reason why U.S. presidents simply cannot stop themselves from dropping bombs on people no matter who gets in.. and the ones that try to go against the Fed promptly get shot.

If a shmuck like me can figure it out, and read a history book to see how this all ended in the past.... then I am sure billion dollar investment firms have a clue as well.
  • #23
  • Edited 11:11am Apr 2, 2011 10:50am | Edited 11:11am
Quoting SerpentDove
The Fed created the bubble in EVERYTHING in the first place. Boom bust cycles are absolutely NOT normal, they are created by the abuse of free floating currencies. What was the inflation deflation cycle like in the USA before 1913, answer...... infla...what? defla...who?
l.
Oh man are you one of those conspiracy nuts?

I'm no expert but aside from cash I'm thinking the US have an asset or two, people forget this...

On bubbles... They are a natural phenomenon that is created when people have the power to value something... Nothing more... They've been around since markets were first created and before currencies were traded freely. In fact they happen everyday but on such a small scale they're not in the news casue they aren't the type that crash entire economies...

There's a lot of fear mongering going around but I feel this is just a product of the extreme globalized environment that is still so new... The world gets smaller by the web page and the playing field gets more complicated but still so unexplored and new. Its inevitable that critical errors will be made..

i dunno just what I think... I don't like to believe the so called brightest (yes I know this is debatable) financial minds in the world are just out to fk everyone. Forgive me for having faith and by "conspiracy nut" I meant no offense... You may be right! What the fk would I know
Time hides Nothing
  • #24
  • Apr 2, 2011 11:04am Apr 2, 2011 11:04am
Money is not a commodity, unless you are talking about gold and silver (which are both money and commodity). Money is a medium of exchange.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #25
  • Apr 2, 2011 11:09am Apr 2, 2011 11:09am
Quoting CindyXXXX
No complaints here I agree with everything you've said but I still hold to what I was saying.. Its not always as simple as people investing in a currency for profit I guess that's what I'm saying,,

yes currencies can be considered an asset I guess but this isn't the foreign exchanges only use for it. In fact the majority of the 4 trillion plus volume traded everyday is simply from the banks clearing inventory balances, and that's just one example...

I'm finding it hard to convey what I mean but I know what I'm trying to say. Example... Lets say...
hm, well, I see what you mean. Yes, it is a middle-man, and yes it is still a commodity in my point of view.
Cause essentially when people exchange money to buy shares of companies, they are actually saying - a part of the economy is rising. The more companies you have that are really good, the more the economy is rising. People see opportunities in the companies, and then inflows start from investors seeking superior returns. That makes the currency appreciate. Cause there is more demand for the currency, since they wanna invest in companies.
The value of typical commodities like gold, crops, oil and so on is maybe easier to identify, but money is just a more complex commodity, which is also in the end governed by supply and demand.
In the end, money is just linked to investors seeking opportunities in the country they are investing in. Those are the ones defining the value of a currency due to their inflows and outflows.

And now to your point about fundamentals and inflows/outflows:
The higher the inflows, the more fundamentally strong the currency is. Because investors are obviously seeking superior returns in companies of that country, that means the economy is apparently getting stronger.

If there are large outflows, it means that investors found other companies outside that country that produce better returns, or that the returns decline. So the fundamentals are relatively weaker than in other countries.

Hope I make sense here.
  • #26
  • Apr 2, 2011 11:10am Apr 2, 2011 11:10am
Quoting CindyXXXX
Oh man are you one of those conspiracy nuts?

I'm no expert but aside from cash I'm thinking the US have an asset or two, people forget this...
I'm probably a raving lunatic, but no conspiracy nut. That's how it works. Step one for a real recovery is rebuilding a manufacturing base, step two is to give back the right to issue money to the congress interest free and get it the hell away from the private for profit Federal Reserve Bank who's very existence is anathema under the constitution of the United States of America.

Article 1 - The Legislative Branch
Section 8 - Powers of Congress

......"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;......

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;"......
  • #27
  • Apr 2, 2011 11:15am Apr 2, 2011 11:15am
There is actually an economic theory that fiscal and monetary policies are the ones creating the bubbles and busts, that the economy would work without bubbles and busts, if these things were set by the market itself.

But I don't know, just for your information.

Quoting CindyXXXX
Oh man are you one of those conspiracy nuts?

I'm no expert but aside from cash I'm thinking the US have an asset or two, people forget this...

On bubbles... They are a natural phenomenon that is created when people have the power to value something... Nothing more... They've been around since markets were first created and before currencies were traded freely. In fact they happen everyday but on such a small scale they're not in the news casue they aren't the type that crash entire economies...

There's a lot of fear mongering going around but...
  • #28
  • Apr 2, 2011 11:16am Apr 2, 2011 11:16am
Quoting SerpentDove

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;"......
Well there it is I guess... Its simply unconstitutional!

Thanks for not taking offense to my post!
Time hides Nothing
  • #29
  • Apr 2, 2011 11:23am Apr 2, 2011 11:23am
Quoting Custos
There is actually an economic theory that fiscal and monetary policies are the ones creating the bubbles and busts, that the economy would work without bubbles and busts, if these things were set by the market itself.

But I don't know, just for your information.
Oh ok I haven't heard of that... I watched an interesting story the other day...

It was about Spain in the 1300's (?) who discovered a massive hill in their country CHOCKERS full of silver... Of course they mined it and at first rose quickly to the wealthiest nation in the world but as they kept mining and mining, just as quickly as they rose to wealth they fell from glory as so much silver was now in existence that it was basically worthless. BOOM and BUST at its best.

I guess they invented inflation.!
Time hides Nothing
  • #30
  • Apr 2, 2011 11:24am Apr 2, 2011 11:24am
Quoting nasir.khan
Whats the price of money (not the currency pair on MT4 but the 100$ note in your wallet)?
It cost 3 cents to print a dollar, whether it say $5, $10, $100, whatever it costs 3 cents. So the price of money is 3 cents about the worth of the cotton and ink. It may actually cost more these days since the price of cotton is going up, but hey! LOL
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #31
  • Apr 2, 2011 11:26am Apr 2, 2011 11:26am
Quoting CindyXXXX
I'm no expert but aside from cash I'm thinking the US have an asset or two, people forget this...
I'm no fundies expert, far from it. But from what I have been reading lately, the US have been printing way way more notes than they are good for in terms of assets. As far as I see it, free trading of currencies have allowed the dollar to stay at levels that are not realistic when considering their current debt and how they weasel thier way out of it. Sooner or later this should all come crashing down. As your signiture states, the bigger they are the harder they fall and I think the US could be a big boy that falls really hard. As I have stated though, I am am a long way from a fundamental expert and could be way off track here.
  • #32
  • Apr 2, 2011 11:42am Apr 2, 2011 11:42am
It all comes down to interest rate differentials.

The "market" is looking for the ECB to show whether they truly are going to raise rates very shortly ............. and/or whether the FED will truly raise rates before the end of the year.

Also to a lesser extent if the Fed is not going to raise rates if they will have a QE3 program or not. Doubtful, I think.
  • #33
  • Apr 2, 2011 11:49am Apr 2, 2011 11:49am
Quoting CindyXXXX
Yeah its hard to make a call when your not educated enough in this arena (guilty!) but I'm just gonna go and say it,,

Who's gonna fk with the US? really? i mean the biggest asset they have is their military. When it gets to the business end the US simply have the power to change the rules of the game.

If money is the problem (little paper notes) then they will simply redo the whole system cause "if the US can't do it then no one can!"

This might be my optimism kicking in but all this talk of China and war makes me very nervous...War is...
I am guessing you are American. From what I have experienced you guys have been bombarded with so much pro American media that you think you are the be all and end all of the world. So far from the truth. Sorry, really no offense intended here.

I don't think it is about anyONE fking with the US. It is the market that currently dictates the value of the dollar. If they want to change the entire system then they have to get the rest of the world to go along with them, and in this day and age I cannot see this happening.
  • #34
  • Apr 2, 2011 11:56am Apr 2, 2011 11:56am
Quoting Agro
I don't think it is about anyONE fking with the US. It is the market that currently dictates the value of the dollar. If they want to change the entire system then they have to get the rest of the world to go along with them, and in this day and age I cannot see this happening.
The world is slowly moving away from the U.S. dollar as the world's reserve currency, so the writing is pretty much on the wall. The wars to control strategic world resources are pretty much the dying last gasps of an empire in collapse.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #35
  • Apr 2, 2011 12:07pm Apr 2, 2011 12:07pm
The duty of government is to leave commerce to its own capital and credit as well as all other branches of business, protecting all in their legal pursuits, granting exclusive privileges to none.
Andrew Jackson

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
Thomas Jefferson

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford

And of course... the "prophesy"

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -- Thomas Jefferson -- The Debate Over The Recharter Of The Bank Bill, (1809)

Gosh people were smart back then.
  • #36
  • Apr 2, 2011 12:21pm Apr 2, 2011 12:21pm
yea...

I guess a simple question by gspjon has turned into a deep discussion of the world as we know it..


All I have to say on the above is:
1) Without the fractional reserve system we would all be living in tents, and fighting over the last steak with wooden clubs.... Its a double edged sword.. with all that negativity that people seem to focus on we have actually benefited greatly from it. (not just the banks)

and

2) What's the alternative? How else would you divide the scarce resources and prosperity of the world? A system was put in place to do this and has evolved to where we are today. Sure its not perfect but in times of uncertainty it's too easy to play the blame game and start pointing fingers.
Time hides Nothing
  • #37
  • Apr 2, 2011 12:27pm Apr 2, 2011 12:27pm
Quoting CindyXXXX
Nah I'm Aussie like you m8 and I can tell you are with that Agro Avatar (what happened to agro lol)
A sad loss to the children of Aus. He is sorely missed
  • #38
  • Apr 2, 2011 12:28pm Apr 2, 2011 12:28pm
I'm actually really curious how the world would be if we would let go of ALL the money and currencies and ONLY trade in commodities. Unable to "print more".. there just IS a certain amount of gold/silver/diamonds/oil etc. in the world and that's it.

What would our world look like if we just ONLY traded these? Buy a new car? pay with diamonds.. buy a piece of steak? pay with silver etc.

Just let go of all the BS that comes along with all the abilities that currencies come with.

Anyone have a view on this? I'm not an expert (yet!? lol) but I'm just curious..
  • #39
  • Apr 2, 2011 12:36pm Apr 2, 2011 12:36pm
Quoting CindyXXXX
yea...

I guess a simple question by gspjon has turned into a deep discussion of the world we know it..


All I have to say on the above is:
1) Without the fractional reserve system we would all be living in tents, and fighting over the last steak with wooden clubs.... Its a double edged sword.. with all that negativity that people seem to focus on we have actually benefited greatly from it. (not just the banks)

and

2) What's the alternative? How else would you divide the scarce resources and prosperity of the world? A system was put in place...
Why would be be living in tents and fighting with wooden clubs because banks were required to only lend money that they actually have, ie actually putting their own asses on the line when they make a loan instead of the taxpayer? Why on earth should they profit from money they don't have on risks they didn't take? See, it's this complete lack of fear and responsibility that pumped up the stupid mortgage bubble in the first place. What we exactly need to be doing and have not done from day one is to exactly play the blame game and pointing fingers until those responsible for the gross fraud are put behind bars.

The alternative is a gold standard or equivalent. What a different world we would be in if the Government had to send it's citizens a $45,000 dollar bill BEFORE going to war.

OH Bloody hell, isn't the scam obvious when there's no money to fix infrastructure, schools lack teachers and enough text books, half the states are bankrupt, but there are instantly out of nowhere TRILLIONS to guarantee the banks profits and to go to war?!?!?!?
  • #40
  • Apr 2, 2011 12:41pm Apr 2, 2011 12:41pm
Considering the U.S. dollar was backed by gold/silver until the 1970's, people were better off. How did the U.S. survive from 1776 until 1970 on gold backed currency if it's so bad?

Please. In 60's 1 U.S. dollar = 1 oz Silver Dollar. Gasoline cost 25 cents per gallon. 1 dollar or 1oz of silver bought you 4 gallons of gasoline.

Fast forward to today and the station near me gasoline is 3.75 / gallon. It costs $15 dollars for 4 gallons of gasoline. 1 oz of silver today will buy around 10 gallons of gasoline. So what does that tell you? Gasoline is cheaper today that it was in 1960. haha!

So much for fiat dollars.
Don't wish it were easier, wish you were better. ~ Jim Rohn
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