That shows just how stupid they are. If they'd have held Euro's the last 7 years, they'd have doubled their money! They obviously have no sophistication in international currency markets. Well, I guess maybe they figured even Bush II couldn't do THAT much damage to the dollar in seven years, but they were wrong!
Chinese Yuan The Yuan was "pegged" to the dollar until late 2005. Even if the dollar fell in value, our exports were no more attractive in China, and there goods did not go up in cost in the US. China changed in late 2005, and they did not free float the currency and let the market set its price, but they modified floated the currency within ranges they set. At that time, 8.2 yuan bought a dollar, today 7.2 yuan buy a dollar, an appreciation of roughly 12% in 2 years. While the dollar has tanked since 2000, oil has gone up about triple, 30 to 90. Inflation in the US has not been bad the way the govt. measures it, which is pretty much a joke, IMO. But, manufactured goods went down in price, as we exported our manufacturing base to China and imported deflation by taking advantage of their labor price advantage. That party now looks over. In the future, there is no megatrend that I see that will deflate prices in the US (except housing, with the bursting of the unrealistic bubble bringing prices back to within reason in Ca., Miami, Las Vegas, Boston, etc.) like China did. Looks like the govt. will have a harder time masking inflation in the future, if manufactured goods start rising after a long time falling. Not good, to me. Only advantage for the US, our goods will be 12% cheaper in China. Good for exporters to China. Other observations: 1. They probably have enough cash on hand to buy yuan or dollars to keep their currency in the range they want. 2. They must think their economy is strong enough that they can allow international market forces to make their adjustments and keep on ticking. 3. They've developed pretty good financial expertise the last 30 years, since Reagan opened diplomatic relations. Probably at Harvard Business School and the like.
It actually shows how smart they are IMO and what currency they trust. You want real currency or when everything collapses one that isn't worth the paper it's printed on? The dollar is the still the currency that moves the world's economies....not euros. But if you like, transfer all your cash to euros and see what it buys you......not much in any place in the world except Europe. People with fruit markets in the jungle take dollars.....try passing one of those euros and see if that gets you a mango bub.
I invested some in gold and Canadian CD's about 4 years ago. Both have done very well, much better than a US CD (of which I also own a bunch, if ya live here ya gotta pay here). Now, with a pathetically low dollar and Bush the idiot leaving office, its would be hard to duplicate the destruction that fool and his band of grinning idiots foisted on America. It almost HAS to get better starting in 09. I won't be against the dollar in here, the odds don't favor success without much risk. Some think you can do it, I'm still holding gold just in case. It should still have a year to run, if not, my profit is so good, no way I can lose much on holding it. Care to explain how much you made betting the dollar against the Euro the last 7 years?
http://www.accountability-central.c...cy-fal/?tx_ttnews[backPid]=1&cHash=bbce7a5bfe In 2000, the dollar was strong and clearly the worlds reserve currency. Bush and the repub congress have done incredible damage to the dollar in only 7 years! The dollar is down 50% against the Euro in 7 years. And black market money changers in Bejing hotel lobbies won't take the dollar. That's truly pathetic. Cut taxes in 2001, vast majority of the cuts went to the wealthy, did not revive the economy. Cut taxes in 2003, cut capital gains taxes and taxes on dividends, did not jump start the economy. Federal Reserve cut interest rates to 1% Fed Funds rate, lowest in 40 years in order to keep Bush from losing the election, but it was very late so it had to be cut too deeply. Result, a housing bubble, which had help from lack of regulation and unscrupulous lenders and stupid borrowers. Start a war in Iraq that was not necessary, run up expenses while cutting taxes. HUGE DEFICITS, in trade and govt. budget. Dollar falls. Oil and gold shoot up. Oil goes from 30 to 90, and about half the increase is due to the pathetic dollar, which comes from fiscal irresponsibility of the republicans. Then there was the $600 Billion - 5 year Medicare prescription drug coverage, with no taxes to pay for it, just charge it, borrow the money, run up the deficit, drive down the dollar, and everyone will now pay the "indirect tax" at the gas pump, "but we didn't raise taxes"... Well, we didn't raise taxes in a straight forward way where people could actually tell what was happening, we sorta back doored it like cowards. It's conservative to cut taxes, so it must be good for them... Then they have the gall to try and tell their moronic minions that the deficits don't matter. Try to tell them that next time you tank up. Small deficits don't matter much, huge deficits matter. Bush's highest deficit is 2 times higher than the next highest deficit prior to his administration. That will kill you. Bush's final deficit will not be 1/2 of his highest deficit (which was around 600 Billion). It will probably be around 400 Billion, which will be higher than the record prior to his administration. That $160 Billion stimulus package will really kick it up. Bush is the worst president of my lifetime, moving Carter down to #2, and giving Johnson an honorable mention for starting the war in VN (and thus being a one term pres.). Then there's Nixon that couldn't make it to the finish line either.
I'm not as worried about China dumping its dollars as the authors are. It's not just a matter of fluctuating value. The dollar is held by more wealthy individual, corporation, and countries than the others because of the stability of the democracy and the economy here. The Euro will drop like a rock if Russia becomes a superpower aspirant again. America is not likely to return with another huge Cold-War army to protect them, collectively Europe has as many people, as much money, and a bigger military than the US. They can defend themselves in the next war. We'll ally with them, of course, but they will have to shoulder the bulk of the load next time. When the true costs of defending themselves against a former and a future superpower on their own land mass are figured in, the Euro is less valuable. When the prospects for completely stable governments in a loose alliance like the European Union or even NATO are not great, the currency is less desirable. In the long run the dollar is still the best buy and hold currency. China may play with the market when selling dollars is favorable, but they won't dump their all their holdings for Euros and certainly not for Yen.
Dumping the dollar would not benefit the Chinese. A weak dollar means we can't buy as much from them.
http://www.foxnews.com/story/0,2933,297250,00.html Greenspan knows who's fiscally responsible, and who's NOT. Clinton was much better in his stewarship of the economy.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7Yh8jULL1W8&refer=worldwide From a record low against the Euro in Feb, we lose another 8% against the Euro in the last 2 months! When is it gonna stop? This looks like a banana republic currency to me, architected by Bush and Greenspan. Just pathetic. No wonder oil has gone higher to $111 a barrel. US fiscal and monetary policy have been poor for the last 7 years, and now its time to pay the piper. Edit: I read that many of the major nations have been growing their money supply faster than their economy, like the US, in an attempt at "competitive devaluation" of their currency so they can still export goods at competitive prices. Like playing "Chicken" with your currency. Inflation is the result. Check the price on homes in Ireland, England, Australia; all doing like the US the last 5 years. It is not often we get a "worldwide economic slowdown" and when we do, usually it is a bad thing. Nobody can pull their partners up.
