right now the dollar is falling hard

Post #332,942 by boxley 9/22/10 7:04:32 PM Reply	right now the dollar is falling hard Who said gold? But right now a dollar is 1/1400 of an oz. We dont need a commodity, the euro is a basket currency already. There is already talk about redoing Bretton-Wood read http://www.brettonwo...ct.org/art-564824 Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,943 by Another Scott 9/22/10 7:43:57 PM Reply	The Euro may not survive; and B-W-II is a non-starter. I'm having trouble following the thread of logic here. How does this relate your proposal to devaluing the dollar by 12% by fiat? Yes, the Euro was assembled from a fixed basket of currencies. And it's acting to hamper economic recovery in many countries that use it and some say it may not survive. As Krugman and others have pointed out, if the economy collapses in New York, people can move to Texas where opportunites might be better. There are larger barriers (e.g. language) for someone in Greece to start over in, say, Finland. If the pain does not relent, it's hard to imagine countries saying they'll strangle efforts at recovery just to keep it. http://www.guardian....e-single-currency http://krugman.blogs...ible-is-the-euro/ The IMF is a creature of its members, like the UN. They already have powers they're not using - B-W-II isn't needed (and wouldn't work anyway). Fred Bergsten's congressional testimony from 2004: http://www.iie.com/p...fm?ResearchID=209 Third, China's peg to the dollar essentially blocks the participation of all of East Asia (even, to a partial extent, Japan) in the needed adjustment process. China is the world's most competitive major economy, and has become even more competitive as it has ridden the dollar down against virtually all other currencies, and its neighbors are understandably reluctant to let their currencies rise against the dollar because doing so would mean they would also rise against the renminbi. Thus Korea, Taiwan, and Japan have resisted fully participating in the global adjustment process along with China even though their exchange rates are nominally floating; their own trade-weighted exchange rates have either risen minimally (Japan and Korea) or, like China's, actually declined (Taiwan). The obvious question is what to do about all this? The Treasury Department reported to the Congress on April 15 that it is Âencourag(ing)Âpolicies for large economies that promote a flexible market-based exchange rate.Â However, the report concluded that Âno major trading partner of the United States met the technical requirements for designation (for currency manipulation) under the Omnibus Trade and Competitiveness Act of 1988.Â Moreover, the International Monetary Fund Âconcur(red) with our conclusionsÂ when Treasury consulted with them, as required by the statute. These conclusions by both the Treasury and the IMF are patently incorrect . China's huge intervention, which has prevented any appreciation of its currency against the dollar, is clearly intended to maintain an undervalued exchange rate to strengthen the country's international competitive position. Japan's even larger intervention has not precluded some significant rise in the yen but that rise would clearly have been much greater in the absence of Japanese official action. Similar conclusions obtain, on a lesser scale from a global standpoint, for Korea and Taiwan. Hence the Treasury Department by failing to act against this widespread manipulation is clearly violating both the letter and spirit of US law. The IMF is likewise violating its own rules. Article IV, Section 1 (paragraph iii) of its Articles of Agreement stipulate that each member shall Âavoid manipulating exchange ratesÂin order to prevent effective balance of payments adjustment or to gain unfair competitive advantage over other members.Â The Fund itself (Article IV, Section 3) is to Âexercise firm surveillance over the exchange rate policies of membersÂ and, under principles and procedures adopted in 1977 (after the initial advent of floating exchange rates), the first indicator of the need for such surveillance is Âprotracted, large-scale intervention in one direction in the exchange market.Â This is exactly what is happening in all the East Asian countries cited, yet no discernible Fund action has been taken. How does this relate to your original proposition that the dollar can be devalued by 12% relative to the euro by fiat? Cheers, Scott.
Post #332,945 by boxley 9/22/10 8:23:52 PM Reply	you have stated that we couldnt peg the dollar I have shown you in multiple ways that it can be done by fiat by our president. What are you arguing about now? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,949 by Another Scott 9/22/10 9:43:42 PM Reply	No you haven't. You've made lots of assertions. We're just going 'round. I'll quit now. But, before I do, here's a recent paper that may make my points a little more clearly - http://www.gs.cornel...con/cae/09-02.pdf (31 page .pdf): [Substitute "dollar" for "rupee" and "Euro" for "dollar"]. The present paper is not concerned with the rationale behind a central bankÂs aim, but in the pure mechanics of how it goes about achieving its objective. Suppose, for whatever be the reason, the RBI [Reserve Bank of India] wants to devalue the rupee vis-a-vis the dollar. Since India is on a floating exchange rate system, where banks and other foreign exchange dealers are free to announce the exchange rate (or, equivalently, the rupee price of the dollar), the RBI cannot influence the rate by diktat but by buying and selling on the foreign exchange market. It is believed that the way the RBI devalues the rupee is to ask a public-sector bank to buy dollars from the market. This typically raises the price of dollars and so, equivalently, causes the rupee to depreciate. Usually, the RBI stays behind the scene and the only visible action on the market is that of a public sector bank making a large purchase of dollars. Here is Mint newspaperÂs web edition, Livemint.com, August 20, 2008 (2:45 pm), speculating about central bank intervention in India: ÂState-run Indian banks were seen selling dollars to help the rupee recover from a 17-month low [Â]. IndiaÂs central bank uses state-run banks to intervene if it wants to slow a rupee decline or prevent it from rising too quickly, and private bank dealers said WednesdayÂs dollar selling looked like intervention.Â This is by no means special to the Indian central bank. To quote from a textbook (Auerbach, 1982, p. 414): ÂThis method of influencing exchange rates is not always easy to detect. The central bank may have parties in the private sector intervene for them.Â In the U.S., to effect an intervention in the foreign exchange market, the Fed will often contact a dealing bank, such as Citibank and buy currency at CitibankÂs quoted rate (Lyons, 2001). Moreover, a lot of the FedÂs interventions, by some counts nearly half of them, are done secretly (Hung, 1997). And, often the explicit purpose of the FedÂs intervention is to influence the exchange rate (Evans and Lyons, 2000). If the market is driving up the value of a currency, central banks have little power to counteract that over more than a short period of time. Too much money is involved - especially in the case of the dollar (which is the currency used for most of the world's commerce). But since the main issue with the dollar is that the Yuan is vastly undervalued, this discussion about the Euro has been a distraction anyway... ;-) HTH. Cheers, Scott.
Post #332,954 by drook 9/23/10 10:08:22 AM Reply	Assuming we can, are you saying we should? Because here's the funny thing: A few people here (Yes, you and BeeP) keep citing examples of bad legislation or stupid statements from politicians, as proof that government can't be trusted to do anything. In your case Net Neutrality seems to be a big issue. Every example of bad technology decisions from a government agency -- even if it was 80 years ago http://iwt.mikevital....iwt?postid=36076 -- is proof that government shouldn't be allowed to do anything. But when it's something that you think should happen, sure, "tank the dollar". You could argue, if you want, whether the solution to bad government decisions is fewer government decisions or better government decisions. That is, in fact, the language lots of conservatives like to use. But it's pretty obvious to everyone else that they don't really mean it, since they only use that argument when trying to prevent decisions they don't like. -- Drew
Post #332,956 by boxley 9/23/10 10:47:03 AM Reply	for you and nother Nother stated way up thread you cannot lower the dollar. I have proved that if nixon did it obama certainly can. Nother seems to have some strange ideas that it couldnt hold, with a law making it illegal to trade outside the peg it certainly could. Works the same way it did with the ruble. If you take more than 1k outside the country jail time. If you are a entity outside the US attempting to trade outside the limit US assets seized and a warrant issued. Now on whether it is a good idea or not isnt the issue, the question becomes whether on can do it. A floating currency's value is based upon the markets expectation of future worth. Excessive speculation warps that. That is why gold is at extreme highs and dollars acting as a safety currency is losing lustre http://www.nysun.com...-echoes-in/87088/ Only days after the former Federal Reserve chairman Alan Greenspan warned that Âfiat money has no place to go but gold,Â the dollar has collapsed to a new low. International finance is broken badly yet no one at the fed or the government appears to be paying attention. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,957 by drook 9/23/10 10:52:06 AM Reply	One part I can agree on "International finance is broken badly" I just realized this conversation sounds like all the ones I read about food laws. Until you fix the ridiculous corn subsidies -- which encourage poisonous livestock practices, unsustainable farming, and rampant health issues -- you're rearranging the deck chairs. -- Drew
Post #332,963 by beepster 9/23/10 11:44:11 AM Reply	/me sneaks in here to say... ...glad to see you agree that government intervention into markets is a bad idea.... nudge, wink, say no moah :-) Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,972 by drook 9/23/10 1:18:21 PM Reply	Just a formality ... Bad intervention into markets is a bad thing, no matter who is doing it. Good intervention into markets is a good thing, no matter who is doing it. -- Drew
Post #332,961 by jake123 9/23/10 11:25:08 AM Reply	Oh, I think they're paying attention they just have come to the realisation that the US' days of being in a position to do something about it are over.
Post #332,964 by Another Scott 9/23/10 12:05:07 PM Reply	RCP? Nother stated way up thread you cannot lower the dollar. Did not. I said you can't do it (effectively, for a meaningful period of time) if the market is driving the value up. http://iwt.mikevital....iwt?postid=35575 and http://iwt.mikevital....iwt?postid=35570 Nother seems to have some strange ideas that it couldnt hold, with a law making it illegal to trade outside the peg it certainly could. Works the same way it did with the ruble. Is the Ruble a Reserve Currency? Is the Yuan/RMB? No, they aren't. Things are different for Reserve Currencies like the dollar - http://en.wikipedia..../Reserve_currency A reserve currency, or anchor currency, is a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, and commodities such as oil, gold, etc. This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currencies with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others. You want to crash the world trade system by saying the dollar can't be taken outside the US? Now on whether it is a good idea or not isnt the issue, the question becomes whether on can do it. Box - 'I didn't say it wouldn't destroy the world economy, but he could do it.' :-/ Last I looked, Obama isn't Führer. There's a big difference in going off a fixed exchange rate for the dollar and imposing a fixed exchange rate for the dollar. But I'm repeating myself... That is why gold is at extreme highs and dollars acting as a safety currency is losing lustre I thought you were not advocating a return to a peg to gold? Gold has no more intrinsic value than Darmstadium - people pay for it because they want it, not because it has special intrinsic worth. Adjusted for inflation, the gold price peak was $2176 in 1980 according to http://goldprice.org...d-gold-price.html It's now at ~ $1294. It's got a ways to go to get up to where it was. So much for being a hedge against inflation and a weak dollar... FWIW. Cheers, Scott.
Post #332,966 by boxley 9/23/10 12:53:01 PM Reply	point out the post where I said the USD couldnt travel? if you are travelling outside you exchange prior to leaving. It wouldnt do anything to the billions already in circulation outside. putting a currency on a peg is exactly the same as taking it off obama has the same authority as nixon had and more. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,967 by Another Scott 9/23/10 1:07:41 PM Reply	How would this work? I want to buy 10M barrels of oil from Saudi Arabia. I have $750M in cash in the bank in the US. Whoops. Oil is priced in dollars. My dollars can't leave the US under the Boxley Plan. Now what? Tell me how I would pay for the oil I want that is priced in dollars. Waiting with baited breath, I remain, Scott.
Post #332,968 by boxley 9/23/10 1:13:08 PM Reply	its a dollar transaction end to end you wire it to the saudis just like now if the saudis wanted to be paid in euro's they would get the pegged rate. Dollar transactions are just that. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,975 by Another Scott 9/23/10 1:50:04 PM Reply	Last post on this topic (I hope). You can't have it both ways. You're wanting to peg the dollar the way the Chinese peg the yuan/RMB or Euro or Yap or unicorn horns. The Chinese can do that because they control the amount of currency that can leave the country and the exchange of yuan/RMB for hard currency. if the saudis wanted to be paid in euro's they would get the pegged rate. What does that mean? I am sending money (assuming it can leave the country), in dollars, to them for the oil. They "would get the pegged rate" from whom? If they wanted Euros, they would have asked for Euros. Lets say they do want Euros. For my $750M I could get 561M Euros on the open market today. You're proposing that my $750M buy 493M (-12%) Euros, from somewhere, thanks to the Boxley Plan peg. Why would I want to do that again? I wouldn't unless there was no choice. A peg only works when there's something standing behind the currency that serves as the ultimate arbiter of its value. In the gold-standard days, it was the US government saying, "bring me 35 pieces of paper and I'll give you a shiny metal token". Now, the dollar is the only currency that can be used to buy Treasuries and invest in the US economy. A peg doesn't work for a floating reserve currency. For the n-th time: The cat is out of the bag - we aren't going back to fixed exchange rates. "But we could..." No, we can't. There's not enough money to do so. Also, too: http://www.pkarchive...lobal/canada.html Here's what the world looked like in 1960: Almost all countries had fixed exchange rates with their currencies pegged to the U.S. dollar. International movements of capital were sharply limited, partly by government regulations, partly by the memory of defaults and expropriations in the '30s. And most economists who thought about the international monetary system took it for granted, explicitly or implicitly, that this was the way things would continue to work for the foreseeable future. But Canada was different. Controlling the movement of capital across that long border with the United States had never been practical; and U.S. investors felt less nervous about putting their money in Canada than anywhere else. Given those uncontrolled movements of capital, Canada could not fix its exchange rate without giving up all control over its own monetary policy. Unwilling to become a monetary ward of the Federal Reserve, from 1949 to 1962 Canada made the almost unique decision to let its currency float against the U.S. dollar. These days, high capital mobility and a fluctuating exchange rate are the norm, but in those days they seemed outrageous--or would have seemed outrageous, if anyone but the Canadians had been involved. And so perhaps it was the Canadian case that led Mundell to ask, in one of his three most famous contributions, how monetary and fiscal policy would work in an economy in which capital flowed freely in and out in response to any difference between interest rates at home and abroad. His answer was that it depended on what that country did with the exchange rate. If the country insisted on keeping the value of its currency in terms of other nations' monies constant, monetary policy would become entirely impotent. Only by letting the exchange rate float would monetary policy regain its effectiveness. Later Mundell would broaden this initial insight by proposing the concept of the "impossible trinity"; free capital movement, a fixed exchange rate, and an effective monetary policy. The point is that you can't have it all: A country must pick two out of three. It can fix its exchange rate without emasculating its central bank, but only by maintaining controls on capital flows (like China today); it can leave capital movement free but retain monetary autonomy, but only by letting the exchange rate fluctuate (like Britain--or Canada); or it can choose to leave capital free and stabilize the currency, but only by abandoning any ability to adjust interest rates to fight inflation or recession (like Argentina today, or for that matter most of Europe). Prove me wrong. Give me some links. I've had my say on this topic, I think. Cheers, Scott.
Post #332,979 by jake123 9/23/10 2:08:37 PM Reply	heh Mundell was born in my hometown.
Post #332,983 by Another Scott 9/23/10 2:20:31 PM Reply	It's nice that some are reading this thread closely ;-)

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