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Decline of the US Dollar

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Old
10-09-2009, 12:12 AM
  #51
Dado
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With so many amateur speculators not only betting on the USD demise, but trumpeting their "investment" winnings, the one safe prediction in all this is that the USD is close to a bottom.

Been in this game a long long time - nothing ever changes.

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10-09-2009, 12:28 AM
  #52
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Canadas economy won't fare well at a par dollar. From everything I've read its best at around 80 cents.

Our dollar will likely hit par around November/December and stay there until the US can start to unwind itself, and the treasury can improve its balance sheet.

At a conference I was at they had the projection for Canadas interest rates to start to rise late Q3, Early Q4 2010, and the US to follow likely mid Q1 2011.

Another thing that may help facilitate a move to Canada is the looser credit we have here right now(not in regulation, just our credit markets are a little looser). The regional banks in the states are going to continue to see some struggles for awhile, and if US unemployment gets past 10.5% or 11% there is going to be another large round of bank failures or writedowns.

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10-09-2009, 12:29 AM
  #53
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also

Just on the China issue, they are hte large driver of gold prices right now. They have something like 700 billion in US cash on hand, and are wanting to slowly(and methodically) buy into gold.

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10-09-2009, 01:08 AM
  #54
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Quote:
Originally Posted by allin4466 View Post
Just on the China issue, they are hte large driver of gold prices right now. They have something like 700 billion in US cash on hand, and are wanting to slowly(and methodically) buy into gold.
Isn't gold pretty high right now?

Perhaps they started too late because that's a hell of a lot of currency to convert. They'll have to spread out what they're buying into simply due to being such a large player. Any move they make drives the market.

The US should want a lower currency. It puts pressure on anyone who pegs to the USD, favors exports and slows imports. That should be a good thing given the current state of the trade imbalance.

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10-09-2009, 01:36 AM
  #55
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Quote:
Originally Posted by Fugu View Post
Isn't gold pretty high right now?

Perhaps they started too late because that's a hell of a lot of currency to convert. They'll have to spread out what they're buying into simply due to being such a large player. Any move they make drives the market.

The US should want a lower currency. It puts pressure on anyone who pegs to the USD, favors exports and slows imports. That should be a good thing given the current state of the trade imbalance.
They are what started the drive.

They've more than doubled their gold holdings in the relative short term. Any time there is a dip in gold prices, they are buying in to prop the price up

As for the US$ being devalued, it is good for their exports, not so much for their cost of living becuase they are a large importer(obviously).

I remember as recent as a year or two ago, people talking about creating a NA currency..

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10-09-2009, 01:54 AM
  #56
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CAD closes over 95 cents USD; parity likely

Loonie should reach parity according to economist. The article linked below also mentions negative factors for the Canadian economy with a high dollar:


Quote:
OTTAWA - The Canadian dollar rose to a new one-year high on Thursday even as the Bank of Canada warned once again that a strong loonie will undermine economic growth.


But with the world recovery from the so-called Great Recession picking up steam and supporting commodities that Canada has in abundance, the loonie appears to be headed for parity, and sooner than expected, economists say.


Douglas Porter of BMO Capital Markets said his bank's official forecast is for the loonie to reach parity with the U.S. dollar on a sustained basis by middle of next year, but he conceded it could be sooner.


"Once markets focus on a target, they sometimes act like a dog with a bone," Porter said.


The loonie has been gathering momentum for more than a week and had another strong day Thursday, gaining 0.91 cents to close at 95.04 U.S., the best showing since Sept. 29, 2008. It hit an intraday high of 95.18.


CIBC currency analyst Shane Enright said the mood of markets is similar to the updraft in the first half of 2007 that saw the loonie soar to US$1.10.
http://ca.news.yahoo.com/s/capress/0...dollar_economy

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10-09-2009, 02:04 AM
  #57
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Quote:
Originally Posted by GHOSTofMAROONSroad View Post
Loonie should reach parity according to economist. The article linked below also mentions negative factors for the Canadian economy with a high dollar:




http://ca.news.yahoo.com/s/capress/0...dollar_economy

GHOST
Our economy can't sustain a dollar that high. Short term, awesome for my post RRSP season trip down south.

Long term - Sorry CN workers that just got brought back

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10-09-2009, 02:16 AM
  #58
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Quote:
Originally Posted by allin4466 View Post
Our economy can't sustain a dollar that high. Short term, awesome for my post RRSP season trip down south.

Long term - Sorry CN workers that just got brought back
The USD is going down due to excessive supply of USDs worldwide and a move away from the USD as the world's reserve currency. There are positives and negatives to a high Canadian dollar (or rather low USD): the commodity based West will do better I suspect, for example, than the manufacturing central Canada. If people examine the history of the USD/CAD exchange rate they will note that the CAD has been above the USD for extended periods of time in the last century. Things change, people will just need to adjust.

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10-09-2009, 10:51 AM
  #59
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Quote:
Originally Posted by GHOSTofMAROONSroad View Post
The USD is going down due to excessive supply of USDs worldwide and a move away from the USD as the world's reserve currency. There are positives and negatives to a high Canadian dollar (or rather low USD): the commodity based West will do better I suspect, for example, than the manufacturing central Canada. If people examine the history of the USD/CAD exchange rate they will note that the CAD has been above the USD for extended periods of time in the last century. Things change, people will just need to adjust.

GHOST
Undoubtedly we would need to adjust, but its unfortunate those adjustments would result in lost jobs(manufacturing, transport).

Commodities would be hit as well to some degree

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10-09-2009, 12:30 PM
  #60
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Quote:
Originally Posted by Dado View Post
With so many amateur speculators not only betting on the USD demise, but trumpeting their "investment" winnings, the one safe prediction in all this is that the USD is close to a bottom.

Been in this game a long long time - nothing ever changes.
Excellent and perceptive observation.

Quote:
Originally Posted by GHOSTofMAROONSroad View Post
The USD is going down due to excessive supply of USDs worldwide and a move away from the USD as the world's reserve currency. There are positives and negatives to a high Canadian dollar (or rather low USD): the commodity based West will do better I suspect, for example, than the manufacturing central Canada. If people examine the history of the USD/CAD exchange rate they will note that the CAD has been above the USD for extended periods of time in the last century. Things change, people will just need to adjust.

GHOST
You keep telling yourself that. Read the other post cited above for good advice to the contrary.

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10-09-2009, 12:37 PM
  #61
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Originally Posted by bleed_oil View Post
Dear god man, do you do any research before you say something... heres a trend on the Vanguard Global Energy Sector ETF.
http://www.google.ca/finance?q=NYSE%3AIXC
Up 16% since October 2008.....

mod:delete
[To restore a post that was inadvertently deleted by accident]

Some consistent methodology would be appreciated. See above recitation of short term fluctuations (and yes, since Oct 08 is short term), and then read your statement a few short posts and minutes previous:

Quote:
Short term trends dont interest me and cannot be predicted.
Ahem.

BTW, How is Vanguard doing since May 23, 2008? Or even September 19, 2008? Or even April 21, 2006?

Research indeed. For the citation of such carefully calibrated "trends", i have no doubt that your time frames are based on extremely careful and discerning research.

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10-09-2009, 02:04 PM
  #62
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Quote:
Originally Posted by GSC2k2 View Post
[To restore a post that was inadvertently deleted by accident]

Some consistent methodology would be appreciated. See above recitation of short term fluctuations (and yes, since Oct 08 is short term), and then read your statement a few short posts and minutes previous:



Ahem.

BTW, How is Vanguard doing since May 23, 2008? Or even September 19, 2008? Or even April 21, 2006?

Research indeed. For the citation of such carefully calibrated "trends", i have no doubt that your time frames are based on extremely careful and discerning research.
You have no idea what you're talking about.

Look at the time period given. Who asked for a 1 year period?
Was it me?

Do you have something to rebut the original article? I would suppose from your argument (do you have one or are you just on here to agitate) that you are long the US dollar. Do you have a reason for this position?
I recall you coming on here last year and gloating about the decline in oil and commodity prices, how much money would you have made on your stance from then till now?
Be honest.
We both know you were wrong...

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10-09-2009, 02:06 PM
  #63
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Quote:
Originally Posted by Dado View Post
With so many amateur speculators not only betting on the USD demise, but trumpeting their "investment" winnings, the one safe prediction in all this is that the USD is close to a bottom.

Been in this game a long long time - nothing ever changes.
While your folksy logic is charming (and the USD's decrease will not be immediate or as dramatic as the original article suggested) why don't you provide us with your reasoning on why the US dollar will continue its dominance indefinitely. Additionally why dont you explain how existing trade imbalances, relative debt levels and currency ratios can be sustained long term.

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10-09-2009, 02:16 PM
  #64
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Originally Posted by The Falconer View Post
I would have incurred huge losses in October of 2008, using January of 2009 is a nice attempt to ignore this fact.

I noticed that you stopped posting back in Octorber when your predictions blew up. So I guess your posting varies with the exchange rate.

I'm still waiting for your reponse.
Was it oil you were talking about? Currency?
Maybe it was pork bellies or the orange juice market?
Where were these "huge losses" you would have incurred from October of 2008?

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10-09-2009, 02:31 PM
  #65
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It isnt just a factor. It is THE factor. On an even to even basis, do you think Winnipeg\Quebec City would have left the league if the $CDN was par or greater than par.
Extremely unlikely I would say.
they still had no corporate support, outdated arenas and nonody willing to build new ones. The currency difference was merely one factor, and among those 3, the least important.

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10-09-2009, 02:50 PM
  #66
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Originally Posted by Fish on The Sand View Post
they still had no corporate support, outdated arenas and nonody willing to build new ones. The currency difference was merely one factor, and among those 3, the least important.
That may be true. I wont bother trying to pretend like I had a keen insight on the economics of small market Canadian teams in the 90's... I will say that a 30-35% discount on incoming funds made them a non-starter.

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10-09-2009, 09:16 PM
  #67
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Quote:
Originally Posted by GSC2k2 View Post
Excellent and perceptive observation.



You keep telling yourself that. Read the other post cited above for good advice to the contrary.

You mean to say that your entire reason for being long the US dollar is limited to that individuals whimsical advise about "amateur speculators" making money? Astounding.
So in that case you would have also missed every other economic super cycle in history. I'm sure someone in 1985 was saying the same thing about computers.
Also how does that advise about "amateur speculators" hold up when many of the worlds largest hedge funds and notable investors are betting against the USD. John Paulson, George Soros, M. El Arian, Jim Rogers,,,, meh "amateur speculators"

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10-10-2009, 01:37 AM
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Quote:
Originally Posted by GSC2k2 View Post
Excellent and perceptive observation.



You keep telling yourself that. Read the other post cited above for good advice to the contrary.
Just look at economies things have drastically changed look into personal bankruptcy files in both countries [can-USA] its continuing to grow in staggering numbers and dollar values will adjust to world economy ratings the Euro has more power and more trade ability in larger population center in europe USD decline is predictable.
In how it affects NHL i still say not close to the difference in dollars 10-15 years ago did because it will not go that low and that is all we are talking about in this thread i thought.

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10-10-2009, 03:28 AM
  #69
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In response to GSC's comment above, I am humble enough to admit that I don't claim to be able to predict the short/long term future or fluxtuation in currency prices. And I have worked in the finance industry in derivatives, securitization, credit default, currency swaps, etc.

But, contrary to his statement, there are a whole lot of experts, some of whose reasoning appears sound to me, that provide plausible reasons as to why the various major actors in the world's economy are moving away from the USD as a world reserve currency. The US economy is now a debtor economy financed in part by the rest of the world -- chiefly East Asia (consumer products) and the Middle East (oil) --and the debt amount is now looking gigantic relative to other developed economies -- some 13 trillion in Federal debt alone, not accounting for local gov't or individual debt.

Jim Rogers, founder of the Quantum Fund with George Soros, is someone that has a good record on such matters. Here's what he's said recently:

http://www.youtube.com/watch?v=RGlm9Bi_Few

There are several other videos at youtube discussing the same type of issues which may be of interest.

GHOST

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10-10-2009, 03:30 AM
  #70
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BTW, the Canadian dollar hit a 52 week high on Friday: over 96 cents USD at the close.

http://ca.news.finance.yahoo.com/s/0...evel-year.html

GHOST

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10-10-2009, 03:39 AM
  #71
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Quote:
Originally Posted by Fugu View Post
I think the problem is that the parties who hold the most US dollars (China, Oil Producing States) are the most vulnerable to fluctuations (namely losses).

They don't want to hold as many USD's as they do, but if they try to dump them, they're shooting themselves in the foot. I do believe that over the long haul, there will be a movement away from the USD, barring some action that makes the Euro less stable...... long shot really.

That's what will continue to drive the USD down, the expectation that the largest stakeholders will want less of a stake.
That's true. Those countries may have a lot of USD reserves which they need to manage carefully. But here's the key point: they won't want to take on that many more, yet the US gov't is spending like a drunken sailor, issuing treasury notes/bills/bond and operating the printing press 24/7 for new dollars. That's what fundamentally changed. That, plus, China, Japan, Europe and the middle east don't want to finance America's aggressive wars with cheap funds any further.

GHOST

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10-10-2009, 05:19 AM
  #72
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Quote:
Originally Posted by GHOSTofMAROONSroad View Post
The USD is sinking big time just as we predicted. You can only print so much of it, but there is nothing to back it up except a lot of debt.

GHOST
The more you print -- the more it goes down. You know, supply and demand. High supply...

Seriously, this thread is a mess. Guys please read these small fundamental points any you will understand this better.

Somethings needs to be straighten out.

1. A low USD is not negative for the USA.

A completly collapsed USD would create financial turmoil and mega inflation in the US -- and thats of course not good. But I wouldn't call a 50% drop for the USD -- over say 3-5 years -- a collapse.

Just to be clear -- why is a low USD not negative for the USA? The US buys (alot) more gods then they sell. That means more money goes out of the country then the sum that comes in. If thats anyones personal wallet -- does it sounds like a good idea that more money goes out of it then comes into to it?

With a low USD, it will be cheaper for everyone else to buy US gods. It will be more expensive for a american to buy a Japanese car.

That will help the american production industry. More people get jobs and the industry grows but the avg Joe needs to pay more for his Datsun.

2. If anyone wants the USD to be strong at this point its China. Period.

China is right now supporting the USD and the US gov wants it to drop.

The USD had a very unnatural gain during the crisis -- it gained in value just because it was the biggest currency -- it had nothing to do with the US market. When it storms -- sit in the biggest boat. The USD was the biggest "boat".

The normal thing for a currency in a country with a financial crash is to go down -- of course. And thats very valuable. In the past many country's had a fixed currency. That gave a lot of advantages. Companys could plan ahead a lot better et c. But the fixed currency systems was to a large extent abandoned for that very reason.

One country that more or less have a fixed currency is China. When China in the early 00's started exporting a ton of gods to the USA they of course got paid in USD's. And they didn't nearly buy as much gods from the USA as they sold. If their currency had been floating -- like the USD, loonie, euro, Swedish krona and most other currencys -- that would have ment that their own currency would have become stronger, which would have resulted in that they could have bought more from the US and it would have been more expensive for China to buy from the US. But now a ton of money was brought into their country. But because their currency was fixed -- it stayed very low and they could keep exporting gods at a very cheap price. The result is that China now is sitting on a multi trillion stash of valupaper in USD's.

China is very concerned about that stash loosing value by the USD going down.

3. The USD undoubtedly will go down in the future. Its the only option for all partys. China have realized it now too. For example if anyone remember their boss of their nationalbank pledged to the world to create a new world bank with a new currency and financial reserve. The only interpretation of that pledge is that they now have given up on the option to hold the US hostage with a high USD and a tremendous trade-surplus.

This does not mean that the USD will collapse. Everyone, and I really mean everyone -- besides Al Qaida maybe -- benefits from a stable US market. In Sweden we export 30% of our gods to the USA. Our economy is a very export heavy economy. A unstable US market is directly a disaster for Sweden. And thats how it is for all country's basically. Nobody will support a war on the dollar. Definitely not China. China is the USD's biggest supporter. But not the Arabic world. Not Russia for sure. Not India. Nobody have anything to gain in a crashed US economy.

The talk about OPEC (oil country's) to abandon the USD when it trades with oil is originated from a conspiracy theory. That in reality is pushed for by Iran and Venezuela. But it just doesn't have a big effect in reality from what I can understand. Like the currency used in a oil deal is just the face value. First of all, the oil producing countrys won't get more money if they charge the buyer in Euros instead of USD's. Why would they?

The other aspect is that the OPEC countrys sit on huge reserves in dollar. These two aspects are mixed up constantly. Well the USD will go down so its only 100% natural for them to try to diversify their assets into other currencys. Thats the natural thing to do. When they do that, the USD will go down, and soon be undervalued instead and it will be 100% natrual to invest in USD's instead of abandoning it. If everyone sold at the same time -- everyone would have to have a buyer and who would that be? Its natural reactions on the market.

The bottomline: 1. The USD will go down. 2. There is no war on the USD. Definitely on China's part. 3. The USD will not collapse completely.

4. The USD gooing down will have a big positive effect on the cap. Even if the US economy is slow -- over the course of the comming years the loonie ought to gain on the USD -- which will result in bigger HRR's.


Last edited by Ola: 10-10-2009 at 05:24 AM.
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Old
10-10-2009, 05:31 AM
  #73
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^^^I think I said something like that earlier, Ola, only I condensed it into a couple of sentences....


Quote:
Originally Posted by Fugu View Post
Isn't gold pretty high right now?

Perhaps they started too late because that's a hell of a lot of currency to convert. They'll have to spread out what they're buying into simply due to being such a large player. Any move they make drives the market.

The US should want a lower currency. It puts pressure on anyone who pegs to the USD, favors exports and slows imports. That should be a good thing given the current state of the trade imbalance.

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10-10-2009, 05:05 PM
  #74
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Quote:
Originally Posted by Ola View Post
The more you print -- the more it goes down. You know, supply and demand. High supply...

Seriously, this thread is a mess. Guys please read these small fundamental points any you will understand this better.

Somethings needs to be straighten out.

1. A low USD is not negative for the USA.

A completly collapsed USD would create financial turmoil and mega inflation in the US -- and thats of course not good. But I wouldn't call a 50% drop for the USD -- over say 3-5 years -- a collapse.

Just to be clear -- why is a low USD not negative for the USA? The US buys (alot) more gods then they sell. That means more money goes out of the country then the sum that comes in. If thats anyones personal wallet -- does it sounds like a good idea that more money goes out of it then comes into to it?

With a low USD, it will be cheaper for everyone else to buy US gods. It will be more expensive for a american to buy a Japanese car.

That will help the american production industry. More people get jobs and the industry grows but the avg Joe needs to pay more for his Datsun.

2. If anyone wants the USD to be strong at this point its China. Period.

China is right now supporting the USD and the US gov wants it to drop.

The USD had a very unnatural gain during the crisis -- it gained in value just because it was the biggest currency -- it had nothing to do with the US market. When it storms -- sit in the biggest boat. The USD was the biggest "boat".

The normal thing for a currency in a country with a financial crash is to go down -- of course. And thats very valuable. In the past many country's had a fixed currency. That gave a lot of advantages. Companys could plan ahead a lot better et c. But the fixed currency systems was to a large extent abandoned for that very reason.

One country that more or less have a fixed currency is China. When China in the early 00's started exporting a ton of gods to the USA they of course got paid in USD's. And they didn't nearly buy as much gods from the USA as they sold. If their currency had been floating -- like the USD, loonie, euro, Swedish krona and most other currencys -- that would have ment that their own currency would have become stronger, which would have resulted in that they could have bought more from the US and it would have been more expensive for China to buy from the US. But now a ton of money was brought into their country. But because their currency was fixed -- it stayed very low and they could keep exporting gods at a very cheap price. The result is that China now is sitting on a multi trillion stash of valupaper in USD's.

China is very concerned about that stash loosing value by the USD going down.

3. The USD undoubtedly will go down in the future. Its the only option for all partys. China have realized it now too. For example if anyone remember their boss of their nationalbank pledged to the world to create a new world bank with a new currency and financial reserve. The only interpretation of that pledge is that they now have given up on the option to hold the US hostage with a high USD and a tremendous trade-surplus.

This does not mean that the USD will collapse. Everyone, and I really mean everyone -- besides Al Qaida maybe -- benefits from a stable US market. In Sweden we export 30% of our gods to the USA. Our economy is a very export heavy economy. A unstable US market is directly a disaster for Sweden. And thats how it is for all country's basically. Nobody will support a war on the dollar. Definitely not China. China is the USD's biggest supporter. But not the Arabic world. Not Russia for sure. Not India. Nobody have anything to gain in a crashed US economy.

The talk about OPEC (oil country's) to abandon the USD when it trades with oil is originated from a conspiracy theory. That in reality is pushed for by Iran and Venezuela. But it just doesn't have a big effect in reality from what I can understand. Like the currency used in a oil deal is just the face value. First of all, the oil producing countrys won't get more money if they charge the buyer in Euros instead of USD's. Why would they?

The other aspect is that the OPEC countrys sit on huge reserves in dollar. These two aspects are mixed up constantly. Well the USD will go down so its only 100% natural for them to try to diversify their assets into other currencys. Thats the natural thing to do. When they do that, the USD will go down, and soon be undervalued instead and it will be 100% natrual to invest in USD's instead of abandoning it. If everyone sold at the same time -- everyone would have to have a buyer and who would that be? Its natural reactions on the market.

The bottomline: 1. The USD will go down. 2. There is no war on the USD. Definitely on China's part. 3. The USD will not collapse completely.

4. The USD gooing down will have a big positive effect on the cap. Even if the US economy is slow -- over the course of the comming years the loonie ought to gain on the USD -- which will result in bigger HRR's.
Excellent analysis.... yes a devalued US dollar is pretty much inevitable.
Theres one fact or issue that you are over looking though... demographics. With respect to the issue of American production and continued dominance of global economics, the biggest future barrier will be demographics. Fundamental demographics and population structures favor the developing world. Consumption is a function of population structure. When demographics skew towards retirement a nation is forced to become export oriented - look at the case study of Japan for an example. Domestic consumption is spurred young people borrowing money, raising families, buying things and so forth... Older demographics are more favorable towards savings and fixed income investments.
Another issue we haven't touched on is that of household and personal debt levels...

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10-10-2009, 05:24 PM
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Originally Posted by GHOSTofMAROONSroad View Post
In response to GSC's comment above, I am humble enough to admit that I don't claim to be able to predict the short/long term future or fluxtuation in currency prices. And I have worked in the finance industry in derivatives, securitization, credit default, currency swaps, etc.

But, contrary to his statement, there are a whole lot of experts, some of whose reasoning appears sound to me, that provide plausible reasons as to why the various major actors in the world's economy are moving away from the USD as a world reserve currency. The US economy is now a debtor economy financed in part by the rest of the world -- chiefly East Asia (consumer products) and the Middle East (oil) --and the debt amount is now looking gigantic relative to other developed economies -- some 13 trillion in Federal debt alone, not accounting for local gov't or individual debt.

Jim Rogers, founder of the Quantum Fund with George Soros, is someone that has a good record on such matters. Here's what he's said recently:

http://www.youtube.com/watch?v=RGlm9Bi_Few

There are several other videos at youtube discussing the same type of issues which may be of interest.

GHOST
Ghost... Of course quite literally no one can predict future events with a high degree of accuracy. We weigh the different factors for or against an argument and make an educated guess at what we believe will happen. This is the very reason for bothering with something like a message board. There are reasons why the US dollar will continue to lose value with time, we have presented many of the reasons here - BUT there are also reasons (and good ones at that) why the US dollar will remain the worlds dominant currency and will appreciate in value. At this point in time, when weighing both arguments, I would hypothesize that the argument against the dollar is most prominent.
I fail to see why someone can be offended by a point of view or opinion yet refuse to discuss the rational content of the discussion...

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