The Dollar Collapse

Post by **bumper** » January 2, 2015, 11:54 am

I haven't followed a good debate in a long time. I really can't take a position on this. We have heard fro years the dollar is history. First let t me tell you what I see the dollar is, a method of measurement, As to value it collapsed a long time ago. Think about what could you bu with a dollar 20 years ago, what can you but with it today. Imagine if you were paid the same amount as 20 years ago today. You quality of living would more then likely be reduced. Some were smart and paid off everything have no bills. Therefore they would not feel the pinch as those who do have bills to pay.

A few things that are bothering me Stock markets going sky high far beyond fundamentals that includes Thailand. Oil dropped to is lowest level since 2008, what else happened in 2008, yep that's right the great recession. Is it possible for it to happen again. Of course it is.

Will the dollar collapse recent history shows if it does it won't be alone.

This article offers what it believes the possible effects could be. President Obama was an individual of Executive Orders, Bit some that are named in this article probably been there all along.

Keep in mind that in the end they will try to dale you something. So let me know what you think?????????

http://beforeitsnews.com/economy/2015/0 ... 88022.html

Post by **parrot** » January 2, 2015, 2:10 pm

bump.......the dollar has been on the 'verge of collapse' for a good number of years. It hasn't. The US economy has been facing a fiscal cliff for years.....so far, it hasn't fallen off. And the prospects for continued growth are very good. Gold, on the other hand, was slated to break the stratosphere, but it didn't. Silver the same.
As for what a dollar buys today......well, consider this:
In 1972, 3 baht bought a bowl of noodle soup in NKP. Today, it's 35-40 baht. A flight from NKP to Udon cost around 150 baht then. And just a few years before that, I was making $1.25 an hour working in a restaurant.
If you subscribed to the view of a 'fiscal cliff' in the US, you might have bailed out of the stock market (US) and put your money into gold/silver. Not only would you have lost a good chunk of value in that move, you would have missed out on a fantastic bull market.
The US dollar and stock market may......or may not.....continue to grow in 2015. But most signs are positive for a good year for the US....as compared to many other major markets. Could the US market or US dollar drop? Of course. But the odds seem to be in favor of a good year for the US.....as compared to Japan, China, EU.
http://www.nytimes.com/2014/11/28/upsho ... 0002&abg=1
http://www.nytimes.com/2014/12/28/upsho ... 0002&abg=1
http://www.nytimes.com/2014/12/29/opini ... overy.html

Post by **fdimike** » January 2, 2015, 3:33 pm

I'm not an economist nor do I have a crystal ball but to say "The US economy has been facing a fiscal cliff for years.....so far, it hasn't fallen off." is somewhat misleading. It seems to me lots and I do mean lots of people lost their life savings, houses, retirement accounts and their jobs etc during the worldwide stock market collapse in the late 80's, followed by S & L crisis, the subprime mortgage fiasco and subsequent housing bubble. And let's not forget the dot com bubble. Some individuals were fortunate and managed to move their investments just in front of the crash but far too many others were destroyed financially and still suffer today. The US job market is hardly anything to shout about unless you're talking about some select industries which supply the military as an example (the military industrial complex is chugging along just fine with wars in the ME and Africa). You can shout about an increase in job numbers all you want as evidence of a healthy economy. However, factor in the low pay for many of those jobs and things may not look so rosy.
The problem with trying to paint the US economy in a good light without considering outside factors is just like trying to paint nearly any other country in that manner without taking into consideration the effects of other economies which may impact it adversely. ie Thailand's rubber farmers were doing a bang up business for a number of years getting a super high return for their product. They continued planting trees without any regard for what may happen with the market when it became saturated with rubber. Today they're crying the blues because the price of rubber on the world market is down in the cellar due to severe oversupply and slowing factory production. Today you'll find rubber tree plantations strewn all throughout the country with farmers unable to eak out a living from their investments.
The US economy is tied to other economies around the world courtesy of free trade agreements etc. Will the US economy crash? Beats me. But look around and you can easily see other large economies (Russia, China, Japan to name just a few) in crisis. Will they have an adverse effect on the US economy? I would say chances are pretty good that they will just as the European Economic crisis has adversely affected the EU even to this day.

Just my 25cents worth

Post by **JimboPSM** » January 2, 2015, 4:16 pm

While I do not use the Dollar Index much on the forum as most members are far more interested in the more direct rates such as USD/THB, GBP/THB etc, the Dollar Index is a considerably better indicator of how the US is actually performing compared to the rest of the world.

This chart shows the annual average of the US Dollar Index (with Presidential terms added for clarity), it very clearly shows the two dramatic falls in the Dollar under the administrations of Reagan and Bush 43.

Note: I have used the annual average rather than the daily US Dollar Index to remove much of the noise that daily charts inevitably contain.

All the forecast deaths of the USD have been greatly exaggerated, while it certainly gets battered and bruised from time to time (in recent years from Reagan and Bush 43) it is by a quantum leap far more resilient than the naysayers and doomsday preppers ever give it credit for.

In a similar vein it is worth noting that all the forecast deaths of the EUR during its adolescent years also have been (and are being) greatly exaggerated – as, indeed, has the rise of any alternatives (such as gold and Bitcoins) been grossly exaggerated.

It has been noteworthy that over the last six years since a black man was elected (and four years later re-elected) as President to live in the White (mans) House that the media has been inundated with far right bigots spewing their ideologically blinkered and economically illiterate drivel along with countless really dumb conspiracy theories (virtually 24/7 on Fox News - no real surprise there).

It didn’t take much reading of the article to see that it was authored by another whacko conspiracy theory nut job.

Although one would hardly know it from the media, the US has recovered pretty damn well since the administration of a white President drove the US (and world) economy of a cliff - the highly selective amnesia of the media is understandable when you consider just how much they were cheer leaders for Reagan, Bush and their economically illiterate policies.

Post by **parrot** » January 2, 2015, 4:42 pm

I'd add that a good many of the people who lost their shorts during the bubbles mentioned above lost them because of seeking things 'too good to be true'. The dot-com bubble when investors were willing to overlook traditional metrics, such as P/E ratio, in favor of basing confidence on technological advancements. The housing bubble when America's mania for home-buying was out of all proportion to sober reality.......I realize the banks/finance companies/fed were largely to blame.....but again, the general public got caught up in another 'too good to be true' scheme of buying and selling homes, in some cases before they were built. Similar news for gold/silver/bitcoin advocates. Surely gold will crack $5000/ounce.......any day now. Sooner or later, I'm sure it will.......just as sooner or later the US will go back into recession and there'll be another big bubble created and burst.

Trying to get back to the topic, 'the dollar collapse', if the info at http://dollarcollapse.com/dollarcollapse-faqs/ is any indication, the the dollar is bound for some deep pits. I guess it all depends on what sources of information you place your trust.

If I dwelt on the past......the panic of 1785 or the dot-com bubble of the late-1990's......I'd probably not be inclined to put much faith in the US dollar or economy. I prefer to look ahead and see a rosy picture......a picture based more on traditional market fundamentals: Employment Data, CPI, trade deficit, consumer confidence, Gross Domestic Product and projected GDP among other things. Everything could change in the flash of a terrorist event or some natural catastrophe.......but for now, I'd say there's slim outlook for a dollar collapse.

Post by **bumper** » January 2, 2015, 6:30 pm

I got nervous with this 2008 mess, so I did a bit of research the U.S. as best I can recall at one point a 100 year recession, no not in this century. Dollar didn't collapse. We seem to go into recession about every ten years. remember there is no up with out a down. That being said that does not include a dollar collapse.

You call it Jimbo another nut job site, why my friend subscribes to it I have no idea. Pretty level headed individual.

Think about it is there an advantage to the world if the dollar did collapse?

I believe this last time around we found that we were in the same boat, China and the U.S. had a lot to do with keeping that boat moving. China is currently slowing down that being said most countries would kill for it's current growth

Will gold hit 5,000 maybe. I remember when it was 36.

The point on P/E's is a scary one, I am only speaking of here where I have watched things, The price of stocks exceed the P/E by miles in a lot of cases. When I was learning I learned to look for solid companies wit a P/E under 10. You would be hard pressed to find that right now. I'm not buying now. I do pick up a bit of gold each month. Looks good on the wife LOL I actually believe it has a ways down to go yet.

Thailand has lots and lots of major projects approved. Problem is I don't see the money for them being paid out, without that it's just dreams.

I don't watch P/E's in the states that much, But with records being broken as they are. The price of stock has to be up. That being said has the value of that companies really increased that much or is it a paper tiger?

Will the dollar collapse I doubt it will it go up and down certainly.

In the end if you look at your money your more then likely doing very well. But the true test is what can you buy with the money you have. Just a wild guess less then with the lessor amount you were paid ten years ago.

A complete change in life style can make that very different, I have more here with 1/3 the amount of money earned . But I did do a trade off to do that.

Well you guys keep chipping away I enjoy seeing your thoughts.

Post by **Laan Yaa Mo** » January 2, 2015, 9:40 pm

If you are debating the collapse of the collapse of the Canadian dollar, it is mostly related to the fall in the price of oil, one of the exports this country relies on to survive. Of course, as the Canadian dollar dives to equal the value of the Icelandic and Lao currencies, the U.S. is becoming very strong as it benefits from the lower prices in oil.

Post by **Laan Yaa Mo** » January 2, 2015, 10:05 pm

Here is an article from the Globe and Mail about the collapse of the dollar. By the way, it started off the New Year with another tumble.

http://www.theglobeandmail.com/report-o ... e22273711/

Post by **bignote1** » January 2, 2015, 10:13 pm

Laan Yaa Mo wrote:If you are debating the collapse of the collapse of the Canadian dollar, it is mostly related to the fall in the price of oil, one of the exports this country relies on to survive. Of course, as the Canadian dollar dives to equal the value of the Icelandic and Lao currencies, the U.S. is becoming very strong as it benefits from the lower prices in oil.

Good point LYM and I think when "The Energy Situation" changes the Canadian $ will increase .Not sure when that will be ,Russia may have to get out of Ukraine and Crimea before that happens.
To my mind the dollar is still the strongest currency in the world mainly I think because the country is economically strong and politically stable. You can exchange dollars almost anywhere. When I was in LOS last year some exchange booths in Patts had signs saying we do not exchange Indian Rupees and some Arabic currencies.
Two or three years ago I would have made many of the points made on this post, but for the USA(and to a large extent Canada) everything has changed recently. They have started hydraulic fracturing and it is estimated they have supplies for the next 100 years The USA currently is importing 32% less gas than it did in2007. The USA is expected to become a net exporter of gas in 2020. (I know there are issues around fracking but that's for a different post.)
At that stage they will be self sufficient again.
More than Europe or the USA I think Russia and China are of greater concern

Post by **thrilled** » January 3, 2015, 12:53 am

I'm surprised that you didn't talk about this 7-12 months ago.Oil getting lower .The US dollar getting stronger.
Um some economist say if there's A problem with the dollar they'll be working the printing presses more.
I believe if your talking about hyperinflation ,now that possibly could happen.Supposely they keep an eye on it.

Post by **bignote1** » January 3, 2015, 1:48 am

Thrilled...... I'm not sure if you are responding to my post but can I say the USA exports 12% of its GDP and Imports 17% of its GDP. While this continues you are right; to balance the equation they must print more money.
I am not saying everything with the US$ is hunky dore ; what I am saying is, imo "Good times are acoming"

Post by **jai yen yen** » January 3, 2015, 6:15 am

I remember awhile back many people saying the U.S. is finished and China is going to take over. The U.S is not to be underestimated and I believe they will do just fine, same with Canada. China's economy is a false one I believe with corruption and poor quality. Thailand as another will only do well until the mass's get a decent amount of pay for their labour and then they will have to compete on a more level playing field, of course corruption will hold Thailand back as well.

Post by **JimboPSM** » January 3, 2015, 3:38 pm

The comments by Ray on P/E ratios made me think a bit deeper about market performance; the P/E ratio is the Market Price divided by Earnings per Share (EPS).

One factor I have previously overlooked in the performance of the Dow Jones Index, is how the impact of the decline in the effective level of corporate tax to large corporates significantly improves their EPS, this flows through to the Market Price and hence, because of their weighting in the index, disproportionately skews the DJ to the upside.

So, while at first sight the DJ appears to be in another big bubble, closer examination of its fundamentals reveals that a substantial part of its performance since 1980 (just how much is open to debate) has actually been due to the substantial decrease in tax being paid by large corporates - due in no small part to the outstanding success of lobbying (brown bags) being deployed in Washington.

In reality, many large corporates are not only welfare queens - they are welfare queens on steroids

Many of the tax breaks to businesses are quite insidious; when you cut to the chase, tax breaks are simply government expenditure by another name, however they avoid the year on year scrutiny of “normal” expenditures - unlike most government expenditures, once enacted, many tax breaks are not only effectively hidden from sight but they avoid being exposed to the voters each year by not being line items in the budgeting process.

If the effective tax rate on large businesses were to return to pre supply side levels the fall in the DJ would be quite marked - I believe it could more than halve the Dow Jones Index (see chart for where 5% compound growth since 1988 would put the DJ now).

While that might appear disastrous, in theory it would enable a significant reduction in the tax burden being carried by the middle classes (assuming that anyone in Washington actually cares one iota about any of them)

Post by **bumper** » January 3, 2015, 4:32 pm

Us Dollar guys.

Should be interesting to see what happens when the steroids run out.

If your in the market might as well hang out and see what Yellin can come up with. But I;m out right now and I'm staying that way till I see how the chips fall.

Post by **JimboPSM** » January 4, 2015, 2:30 pm

While there has been a fall in the CAD, when viewed in a historical context it is not what I would term as a collapse, more as a return towards normality.

In my opinion it is rather more accurate to say that a substantial part of the “fall” of the CAD against the USD over the last three years was actually the recovery of the USD following its fall due to the stunning degree of fiscal incompetence and economic illiteracy of the Bush 43 administration - however some credit should go to the Bush 43 administration for (unwittingly) proving, once again, that supply side “economics” does not work in the real world.

Interestingly, even with the commodity driven recent falls the CAD is still above its average since 1981 and still markedly higher than when Clinton 42 left office.

These two charts show the CAD/USD firstly as a rate and secondly as a percentage against its average since 1981; as can clearly be seen from them, the CAD benefitted very considerably from the Bush 43 years.

By rate:

By percentage:

Note: The reason for my charts starting in 1981 is that is as far back as my data goes.

As quite a meaningful part of the Canadian economy is linked to commodities and energy, it is no real surprise that a structural change in those markets would impact the CAD in the short term, the degree to which it is affected in the medium to longer term will depend on how willing (or not) Ottawa and businesses are to adapt to the new economic reality in the commodity markets or just to stick their heads in the sand.

As international trade is one of the drivers of the exchange rate, this table from Statistics Canada gives a well presented and informative table on the values of Canadian Exports, Imports and the trade balance from 2008 to 2013:

http://www.statcan.gc.ca/tables-tableau ... 2a-eng.htm

Despite the lessons of history, it is quite incredible (and really quite scary) that there are still blinkered ideologues and economic illiterates elected (and even re-elected) to positions of power who not only still believe in the supply side BS, but are continuing to actively and wilfully inflict it on the unquestioning and gullible electorate that (very sadly) were dumb enough to elect them

Google Kansas and Sam Brownback - now that is one total economic Richard Head, kept there by what has proven itself (by re-electing him) to be one of the dumbest electorates in history

Post by **GT93** » January 4, 2015, 3:00 pm

JimboPSM wrote:In reality, many large corporates are not only welfare queens - they are welfare queens on steroids ...

While that might appear disastrous, in theory it would enable a significant reduction in the tax burden being carried by the middle classes (assuming that anyone in Washington actually cares one iota about any of them)

Agree 100% on the first point. With your question about whether anyone cares about the middle class, I understand the Clinton dynasty's 2016 candidate is saying she supports the little people (middle class) while continuing to take huge donations from Wall Street as is the custom with Team Clinton.

Post by **parrot** » January 5, 2015, 3:11 pm

jai yen yen wrote:I remember awhile back many people saying the U.S. is finished and China is going to take over. The U.S is not to be underestimated and I believe they will do just fine, same with Canada. China's economy is a false one I believe with corruption and poor quality. Thailand as another will only do well until the mass's get a decent amount of pay for their labour and then they will have to compete on a more level playing field, of course corruption will hold Thailand back as well.

For all the country's advances in the past 20 years, China continues to do things their way. I hate to borrow a Rumsfeld obfuscation.......but it may be the only good thing I can say about the man.......he was right when he said "there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know." When it comes to China, I'd say there are many many more things we don't know about the country than things we do. While they may grow to be the world's biggest economy, I wouldn't place much value on that fact.....alone.
http://www.nytimes.com/2015/01/05/world ... .html?_r=0

Post by **bumper** » January 5, 2015, 6:17 pm

You know recently looked like China would just buy the states. Interestingly the same thing was said about Japan in the 80's.

I really don't see a dollar collapse the world can not afford it. Al these currencies interact with the measure being the dollar. You simply have to have something to guage it by