In the past year, the dollar has fallen in value:
15% vs. the Euro (an inflationary currency like the dollar)
22% vs. Silver
24% vs. Gold
39% vs. Oil
When I go to the grocery store, milk and bread is much more expensive, as well as other food items.
When you hear about any “crisis”, can you really believe them when they claim something other than inflation as the cause? The current growth of the M3 money supply is over 17%.
I know, a year ago I was talking about us being in a recession (are we there yet?)… the future still does not look bright… http://www.youtube.com/watch?v=4n3g5lUgkWk
Or this: http://www.youtube.com/watch?v=3RhnHo3RDfg and then this:http://www.youtube.com/watch?v=3RhnHo3RDfg
Canada’s dollar became slightly more than our dollar this year too…
The £ issn’t doing too well either 
The US is in a recession which is, i think, two straight quarters of negative growth.
haha wow thanks that just makes me feel all warm inside. I now know that my company is making that much less money. It is hard to turn around a recession… Looks like I will be investing in even more foreign stocks (if I stop buying unicycles that is). I am now going into depression.
It is only going to get worse.
As the housing market continues to dive, more underwater homeowners will walk away, causing the fed to “print more money” to keep the banks solvent. This will further drive inflation and erode the dollar. Consumer spending is diving as people start to feel the reverse “wealth effect”, pushing us into a recession.
Throw into the mix that the problems usually happen in the thick of a recession, not at the very beginning, and you can see how things are going to get much uglier.
With the dollar as the index this growth is measured on? In real terms, we probably have been in a recession for a year then.
The bigger the party, the bigger the hangover, and we had one hell of a party.
Re: The Dollar, “Does it make financial sense to start using them as coffee filters yet?”
We’ve been building our “house of cards” for a long time now. If you look at how our economy has shifted from an industrial base to financial and service taking way too much of the pie it’s pretty easy to see that we aren’t producing anything and creating wealth, we’re just shifting money around. Add to that the trade imbalances and it’s only a matter of time till we bleed out. Printing more money will only fuel inflation, but then again, the people running the show don’t care as long as they stuff their pockets.
If our leaders really cared about fixing the disease and not just hiding the symptoms, instead of sending out tax rebates (which will eventually wind up in China), they oughta think about taking that money along with the cost of the paper work which is huge, and spending it on incentives that will develop new technology (good domestic jobs) in something useful like alternative energy which would help solve multiple problems… Thin film photovoltaic, wind generation, maybe genetically engineer hemp to remove the THC: This could be big as hemp can produce more biodiesel per acre than any of our other plant sources along with being able to grow in marginal land without the need for irrigation or pesticides.
Another buggabo is our aging auto plants and the Detroit mindset. There’s no good reason why we shouldn’t be able to produce World class high MPG autos domestically, except for the fact they are still stuck on big high horsepower vehicles. Before I get jumped on here, not everyone wants to drive a big pickup truck or giant SUV. And most small “domestic” cars are actually rice burners. The Neon was one of very few.
Anyhoo, back to eBay… We need to find 2 replacement cars. My wife wants a Passat and I’ll probably go for a Jetta diesel… Unless of course there are comparable American made cars… Oops, there aren’t!
How about just not creating that new money and let the wealth remain in the private sector to do what they each think would be best for the economy?
I don’t know about you, but I doubt a few hundred lawyers (our politicians) know much about economics, so why should we expect them to direct what should be invested in and what shouldn’t.
Industrial hemp does not contain THC. How about just legalizing the planting of hemp and let the market decide what’s most economical?
Even those who want to drive those large trucks and SUVs would be verry happy if we could cut fuel consumption in half (I know I would be)
The technology is out there but somehow it isn’t being used.
By creating and printing more money without taking money out of currency our government is literaly stealing from us by inflating the dollar making the currency we own worth less
Great analogy! I think we had one hell of a party and then drank the next morning to ease the hangover… thereby only making the hangover worse later on. Eventually we’ll have to stop drinking and face reality.
Maybe the Fed is doing the right thing
I see the only real blot on our economic horizon is that the USA will have a debt by the end of 2008 of almost 10 trillion $ This is the fault of Congress, and the executive branch. The Fed must create a money policy to work with this debt.
Some suggest ending the printing of money. This is unhelpful. Almost all the debt is electronic. There is way less then 5 trillion $ in paper money now. The amount of money printed has no effect on the amount of money the Gov spends. We already have borrowed about 3 times as many dollars as exist on earth in paper form.
It is true that by increasing the money supply the Fed will increase the rate of inflation. What happens if they raise the prime rate ? , the opposite choice ?
We start to miss some of the good things about inflation. Let’s say you ow 10 trillion dollars at 4 % interest. That means, if we have 4 % inflation, 400 billion dollars is magically erased from the value of the debt. Conversely, if there is zero inflation each of the USA’s 300 million people would have to be taxed an additional 1333 $ /yr to achieve the same amount of deficit control. Since only about a third of the people pay much tax, the actual extra amount needed to be collected from each tax payer, is about 5,000 $/yr.
So how many of you would vote to live with zero inflation, if your tax bill would go up 5 K ?
The other problem with the Fed raising interest rates, is unemployment, riots and social alienation. See, some people have lot’s of money in the bank. If you raise interest rates, they get more money. Double so if you start this policy in a zero inflation environment. All the rich need to do is kick back and enjoy. The Ron Paul crowd thinks they are populist, but in a gold based economy, you better have a lot of gold already if you want to compete. Increase the cost of credit, and it is the borrowers who pay. This helps only the rich.
So in sum, yes the economy has problems. I see this as a result of the excess USA gov debt. However, perhaps the Fed is doing the right thing.
Consider that the Ero is also based on a Fiat money system similar to the USA. They have a less insane level of government spending. So the Ero , and the Canadian dollar are doing ok.
On the bright side, my crystal ball sees increasing inflation ending the housing slump. There is only so long that the prices of homes can drop while the price of everything else rises.
So my conclusion is that expanding the money supply keeps people working, and gives some hope of dealing with the deficit. I see little chance of real disaster, unless the deficit grows so large that the USA must default.
We will get a double inflation whammy in that I think the expansion of Asia means that the price of oil will rise, never to fall again. They’re driving now ! All 3 billion of them !
1 Ero, 2 Eros … I Like that!
1 USD = .63464 EUR, 1.00901 CAD, or 1.07657 AUD.
Just thought that was interesting.
Plants:
Several are brand new or recent and modern. But the mindset might not be new. As for big, high-horsepower vehicles, that’s what America still wants. The fluctuations of fuel prices happen a lot faster than the vehicle design cycle, which leaves the car companies high and dry sometimes, making the wrong types of vehicle. In other words, it takes several years to bring a new car “idea” to market, during which things can (and often do) change. Definitely there is a much larger market for fuel-efficient cars at the moment, and this demand will continue as long as fuel prices stay high. If they go down, Americans will very swiftly go back to wanting the muscle cars.
Sad but true! Cars are ego-devices for a large percentage of the car-buying populace, and in America, bigger is still better. Damn the cost, I want those big (gas-eating) rims; I have an “image” to uphold!
Meanwhile, the top foreign automakers generally always have better cars in the fuel-efficient category, because most of them make cars for all over the world, where that type of vehicle is always in demand. So the cars are always more available, and in many cases better products because their makers have more experience with them. Detroit only started learning to make “small” cars 35 years ago, and the early attempts were pretty awful. Can you say Pinto? Vega? Maverick? Gremlin?
Oh come on, you know when people use the phrase of printing more money that they are referring to the creation of new money whether digital or physical.
That’s the very definition of inflation. Consumer prices on the other hand will change as well, but it may be delayed and may change differently across many sectors of the economy.
Magic? It comes from somewhere. It’s the “inflation tax” and it affects the poor and middle class the most. When the government hands out it’s corporate welfare via large government contracts to large corporations, new money is created. The large corporation gets to use that money before the market realizes and adjusts it’s prices to the increased supply of money chasing all the goods in the market. Those on fixed incomes and low pay take the hit the most as the cost of living increases. In other words, the inflation tax is a transfer of wealth from the poor and middle class to the wealthy.
The problem is spending. Every dollar spent by the government is a tax. End the Federal Reserve, let the free market dictate the interest rates for borrowing needed assets, and end government spending. I’d rather have zero inflation and watch the revolt that will happen when the government tries to tax us that 5k extra. When the true cost of tyranny is shown, it’ll help wake people up.
Rich people hold income producing assets with their excess assets. Not cash. Even in the artificially low interest rates of today, holding lots of gold will allow one to sit back and reap the profits. The rich can get the credit at the artificially low rates and then buy whatever they want to speculate on…
The Ron Paul crowd wants competing currencies. End the regulations that prohibit competition with the Fed. Then they want the government to follow the constitution, which only allows the government to issue coin and only to borrow lawful money (gold and silver). This will make it where the federal government is restricted in how much it can spend, because they have no lender of last resort, and they can not overtax the people as that would cause a revolt. It’s all about government spending and reducing it down to it’s limited constitutional role.
And household incomes are not going to go up in proportion.