Re: Who is buying dollars, or is the US economyt coming to a grinding halt ?

On Mon, 13 Oct 2008 18:32:24 +1100, Rod Speed VIRUS Invaded me stuff:

And inserted lots of meaningless crap. The stuff I wrote still stands
and is quite valid in spite of the virus.

I have, however, used the virus as a means to amplify on my original
comments where such amplification is appropriate.

Michael Coburn <mikcob@xxxxxxxxxxx> wrote
Rod Speed wrote
Michael Coburn <mikcob@xxxxxxxxxxx> wrote
Rob Dekker wrote

I'm new here, so forgive my ignorance. Why is the dollar getting so
strong ?

I can only say that in a worldwide panic (and that is what we have)
people seek safe harbor. The housing bubble came and went, the
oil/commodity bubble the same. All the players are putting their
franks and euros and pesos and yen into dollars because they have no
safer harbor. The dollar stinks, but it stinks less.

Mindlessly silly. If that was what was happening, they'd be putting
their money in the countrys that havent seen any banks imploding,
and they clearly arent doing that.

You're just another fool that can spout the economic jargon, but
doesnt have a fucking clue about the basics.

This is really stupid.

We'll see...

The moron believes that the currency is actually tied to the bank.

Wrong, as always.

The dollars are held in ALL THE BANKS.

Irrelevant to which country's banks they'd be putting their money in if
they wanted safety.

Where the dollars are stored is not related to their exchange value.
This is indicative of the brainlessness of a virus.

The oil is still traded in DOLLARS.

Doesnt explain the big sag in the USD and the current improvement in its
value.

I was not actually attempting to explain the sag in the value of the
dollar caused by imperialism and the recent gains in value caused by the
knowledge that the *@()#$#^@& imperialism is going to stop. The gains
are also being caused by the lunatics in other countries trying to save
their slave economies that have been dependent on American consumption.
The notion of "leisure" seems to be some sort of Satanic thing that
simply cannot be accepted by the masses. The fact that the producing
countries can just kick back and relax is just not religiously possible
for them to contemplate. The same disease seems to infect America.

If and when there is a different "reserve currency" and if and when oil
is traded in something other than dollars on a world wide basis, then
you might have some sort of leg to stand on as you criticize my
understanding of the fundamentals.

Never ever could bull*** its way out of a wet paper bag.

There will be a much larger commodity bubble.

There in no commodity bubble.

The reason commodity prices have dropped significantly is because
there is quite a bit of evidence that the credit/liquidity crunch will
produce at least a world wide recession and maybe even a full
depression.

The oil price as measured in dollars has produced a destabilization in
the real world economy.

Doesnt explain the big runnup in commodity prices and then the drop in
those.

Money was created in the big "trade in" of homes that resulted from the
1997 Republican tax giveaways and the adjustments that rewarded
speculation and monopolization as opposed to production (decrease in
capital gains taxes). That money was immediately used to blow a tech
stock bubble and then that and even more was created to blow the housing
bubble. That money fled to commodities as the real estate bubble burst.
Unlike silly *** like McMansions and tech stock prices a run up in the
price of commodities such as oil have a _REAL_ and direct impact on
economies world wide. The result of the run up was that the neoclassical
nincompoops want to label "demand destruction". Most normal, well
adjusted humans can understand that. But a virus is not actually
sentient.

But prior to that, here in the USA we had a tech stock bubble and then
a much more severe housing bubble and that is a very large part of what
caused the commodity bubble.

There is no commodity bubble.

And denial is a river in Africa.

Unlike the silliness of the prices of shares of stock and the
ridiculous run up in real estate prices, the rise in oil prices had/has
a major effect on the cost of actual production.

The oil price affects a hell of lot more than just the cost of actual
production.

Thank you for actually adding support for my general thesis.

Such was the economic "shock" that caused the current slowdown/panic.

Thanks for that completely superfluous proof that you have never ever
had a fucking clue about anything at all, ever.

The ridiculous oil prices were caused by money seeking safe harbor
after the housing bubble

Pity the oil price peaked LONG before the housing bubble went bang.

The housing bubble went bang in late 2006, early 2007. The oil peaked in
July 2008.

and now the economies of the world have actually been damaged.

Not by the oil prices they havent.

And denial is a river in Africa.

The money has no place else to run.

Thanks for that completely superfluous proof that you have never ever
had a fucking clue about anything at all, ever.

We have people and institutions with more money than they can find any
use for and they will simply keep it; nice and safe in a true bank that
does nothing other than store money.

And only a fool would try to pick one of those in the US currently.

Anyone with a clue might go for US treasurys instead.

The Treasury is not offering any decent interest rates and should not
offer any such rates. There is plenty of money out there and that money
needs to find places to go in the real economies. Inflation will eat it
all up if it is not invested. That is exactly as it should be. And if
it can't be invested at a profit then too damned bad.

Amidst all the financial turmoil in the US banking system, US
government sticking itself deeper than ever into debt, the
nosediving stock market, and the prospects of a stalling economy,
you would think that few people abroad have much confidence in the
US dollar.

Still, the dollar rose 6% in the time since the *** hit the fan in
September and even more since it's low point in July. It even rose
2% in the last two days. The US dollar is now stronger than it has
been since Jan 2007. Oil prices (linked to the dollar) drop
accordingly. The Euro drops the most, but the Yen seems closer
linked to the dollar.

What on Earth is happening ?
I'd like to know if this is a short-term effect, or if there is some
structural effect happening.

One explanation is that foreign investors (Chineese or Saudies?) are
buying up dollars by the billions, but that seems bizarre. They for
sure don't invest in the US stock market, nor are they buying
realestate. This seems to affect only the currency exchange rates,
and the international commodity prices, so it must be a cash flow
issue. What reason would foreigners have to buy cash dollars ?

I had macro-economics in high school, but that's a long time ago. I
have forgotten what the relationships are between currency exchange
rates, inflationary and deflationionary effects, interest rates and
debt/assert ratios.

So I have to rely on common sense.

The only common sense explanation for such a steep rise in the
dollar in such a short period of turmoil seems to be that possibly
the US economy is actually stalling. When businesses do not have
short-term money, they will start by reducing their inventory. Just
cancel an order for new (foreign) goods, or stop buying oil (and
rely on the short-term reserves). That means that dollars will not
flow out of the US as fast as it normally does, which means that
from abroad it looks like the US is not consuming anything. That
means that there will be a shortage of dollars abroad, which means
that the dollar rises in value.

Does anyone have a better explanation ?

There is no shortage of dollars. The Fed can, and will (if the Fed
does not wish to be stormed as the Bastille) monetize a lot more debt
at ridiculously low interest rates. But so too will the foreign
banks.

More utterly mindless silly ***.

The entire world has been indulging in "stupidity economics" for the
last 30 years.

Yeah, yeah, and only you have seen the light eh ?

I never went into the darkness....

You've always had your *** in your hand.

Thats why you're now completely blind.

"stupidity economics" is called "supply side economics" so as to
appear to be something other than stupid.

A hell of a lot of the real world hasnt been into supply side
economics, fool.

Yet the world's largest economy HAS been.

Irrelevant to the rest of the world.

And denial is a river in Africa.

It is has been aided and abetted by neoclassical non-economists. The
reality is that the dollar denominated assets of the world are
horrendously overvalued as measured in dollars and in labor. And the
only rational cure is a much further dollar devaluation against
commodities such as oil and metals and real estate.

Taint gunna happen, you watch.

Yet such a claim is irrelevant to the efficacy of the thesis.

There in no 'thesis', just your desperate pig ignorant wanking.

The rest of the currencies will follow. The world should have
learned a lesson from this but they have not done so yet.

And it wont ever, you watch.

.