Re: Paying for Katrina, another view

"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:jdkqk1ln6efrobqpsoefhd63dgoc5t1kgp@xxxxxxxxxx
> On Wed, 12 Oct 2005 10:33:10 -0700, "The Trucker" <mikcob@xxxxxxxxxxx>
> wrote:
>
>>"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
>
> <snip>
>>> Politicians who advocate the elimination of tax cuts and/or cutting
>>> other federal spending mistakenly believe that a smaller federal
>>> deficit will somehow "pay for Katrina." We need our leaders to get "in
>>> paradigm" now.
>>
>>Let's be sure we understand this: Katrina along with Iraq and
>>tax cuts _SHOULD_ decrease the value of the US dollar.
>>As gold is currently $470 per ounce where the price just 3
>>months ago was $426 we can see that the dollar has lost
>>value. There is no big secret that the dollar has been
>>declining in value ever since the latest incarnation of
>>tax cut and spend Republicans came to town. We might
>>argue as to whether that is good or bad, but I see no argument
>>over the truth of the statement concerning the "value" of
>>the dollar.
>
> Don't confuse the market value of a single commodity like gold with
> the value of the dollar.
>
> There are two distinct measures of the value of the dollar, (1) its
> purchasing power in goods and services, and (2) its purchasing power
> in foreign currencies.

There is also a third measure and that is the _real_ assets
that can be bought with the dollar. Goods and services are
not assets. Foreign currency or US currency are assets
but they are not _real_ assets.

> During the Bush administration, the nominal broad dollar index in
> foreign exchange has gone from 123 to 112, a drop of about 9%. That
> is actually working in favor of the US regarding the cost of foreign
> goods. During that same period, the CPI climbed from 175 to 195, an
> increase of about 11% in 4 1/2 years, equivalent to an annualized
> inflation rate of 2.4%. I don't see much to get excited about in
> regard to the "value of the dollar."

In Jan 2001 gold was $310 per ounce. Now it is $475 per
ounce. That is a 53% decrease in the value of the dollar.
It says that ALL fiat currencies are losing value. Nobody
wants that crap. All of the central banks are trying to
devalue their currency so as to improve their trade
balances. The CPI is an indirect measure of wages.
Slave labor in China has held down the CPI. The
labor that can be purcased with a dollar really has
not declined much at all if any. Labor is cheap, cheap,
cheap. But land and gold are not.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org


.

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