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The comeback of the dollar.

worldfinancialblog.com — Weak, weaker, the dollar... But when will it come back again? Many analysts think that the dollar is coming back now and here is why...

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  • DrCrankenstein, on 06/10/2008, -5/+7Obviously it sucks to travel right now, but I like the point that we're positioning ourselves to be in a strong position once things start getting better.

    I sure hope they get better soon!
    • wootup, on 06/11/2008, -1/+5Um, what about peak oil and the serious economic depression that awaits all industrial economies in the coming decades? Or the $9.5 trillion USD American national debt (which is even higher when it includes Americans' personal debts)? Or the $314 billion USD trade deficit for the first half of 2008 alone?

      I'm sorry but every available indicator suggests that the US economy is teetering towards a major, system-wide collapse that will likely make the 1930s look like a mild economic hiccup by comparison.
      • etherreal, on 06/11/2008, -0/+1The weak dollar actually works to bring the trade deficit back into balance.
      • jiqiren, on 06/11/2008, -1/+4Our Money has no value - it's value *is* debt. We don't have a gold or silver standard. If we did, what you said would be true. But it is not true. This is how things work now:

        Inflation will take care of the debt. After WWII, the US had a national debt equal to 124% of the GDP. Inflation took care of that debt as it was never actually paid back. It was just refinanced over and over. For example, right now the treasury dept floats bonds at a sickeningly low rate as bonds with high interest mature. Over the next 20 to 30 years, inflation (even modest 5% inflation per year) will devalue the debt. Having interest rates below inflation is better than printing money.
        http://en.wikipedia.org/wiki/United_States_public_ ...

        Trade deficit is not a problem, the bigger our trade deficit is the more money is available to either 1) raise the value of our current assets and 2) encourage investment from foreign countries. This is caused from the mere fact the $ is only good in the US. One must either buy US assets or invest within the US to exchange their money for value. A strong demand (too many $'s) to buy real assets means our assets rise in value (we raise prices). If buying assets is not an option direct investment is the alternative.

        The weak dollar is simply caused by too many people (or nations) avoiding the buying of assets or investing directly in the US - instead they try to exchange their $'s for some other currency (but since everyone else is doing the same the $ exchange is hurt).

        Our money is based on debt (as is all other money in the world). If the rest of the world doesn't want to use our debt/money to buy real assets or directly invest in the US... then it is their loss.

        Our loss is it is harder for us to invest outside our own economy because of the surplus of our own money being available - the demand to exchange for other currencies is too strong. So just wait it out - once the world has a better gung-ho feeling about the US... investment and asset buying will continue and these problems will go away.
        • wootup, on 06/11/2008, -0/+1jiqiren:

          Wow, that was a REALLY pointless post (and you completely disregarded Peak Oil too, shucks!). When the whole scam unravels in the coming years I really want to see what you Federal Reserve apologists have to say then.
    • digitronix, on 06/11/2008, -3/+2I would say don't count on it. History shows that once a currency gets off the gold standard, it is doomed to crash. Whenever somebody has the power to create money as the Federal Reserve does, the power is always abused, and more and more dollars are created until the dollar is worthless.
      • oldhick, on 06/11/2008, -1/+1It would help to support that claim with facts. The bottom line is you're lying through your teeth. Nearly every single industrialized country in the world today uses a central bank like the Fed and virtually none have a gold or silver backed currency.
        While certainly some economies have seen disaster such as Japan, the market brought about corrections and conditions improved.
        I am by no means saying that I approve of the Fed as I think its unconstitutional and a horrible idea. But I also don't approve of sensationalist list crap that isn't backed up by fact.
        • digitronix, on 06/11/2008, -1/+1http://www.nowandfutures.com/download/gold_vs_curr ...

          I think that's sufficient evidence that you're lying through your teeth. (This is a semi-log chart, so pay attention to the units on the vertical axis.)

          Touché
        • oldhick, on 06/11/2008, -0/+1I wasn't arguing that gold doesn't hold its value better than currency. My point was that every industrialized country in the world uses a central bank and does NOT use a metals backed currency.
          His statement that "History shows that once a currency gets off the gold standard, it is doomed to crash".
          Since every civilized country hasn't crashed, I'm arguing that his point is a lie. You could say "in my opinion, i think they will crash" but thats not a fact.
          Good try though buddy, but you helped prove that every country is in the same boat we're in! I don't have time right now, but I'll be back later to explain to you some of the problems of a gold only model. Now gold as an optional currency is a brilliant idea. Make it legal tender again.
        • digitronix, on 06/12/2008, -0/+1My point is that when on a fiat system, the value of your currency tends to decline with regards to gold until it eventually crashes. This is proven with all fiat currencies to date.
        • oldhick, on 06/12/2008, -0/+1There's no argument there, but are you saying a gold standard doesn't have problems as well? A fiat currency represents work product, gold currency represents a scarce metal... They each have pros and cons.
  • StingingNettle, on 06/10/2008, -4/+5Do you really think Ben is going to raise rates? He's all talk. He'd have to raise them twice as high now just to reach the "official" rate of inflation.
    • Sogui, on 06/11/2008, -0/+2He's pretty much said as much, experts expect him to do as much once we start recovering, and there's absolutely no reason to keep them low once we do.

      The US has always followed a pretty predictable pattern with Fed Funds Rate, GDP starts dropping (recession) and the rate drops with it to compensate and stimulate, the GDP begins to recover and rise... and so does the rate.

      Diggers act like a bunch of high-school idiots when they think their 101 (or none at all) economics background really allows them to understand the economy better than someone ranked among the top 50 economists worldwide. Not to say he's infallible, but when Ron Paul supporters act like they "understand" the economy and actually think that the gold standard, 100% reserve backing in the bank, and the abolition of the Fed would do anything other than send us back to the Financial dark ages... let alone "help" our economy.

      Ron Paul himself admitted we wouldn't even have our internet, cable TV, or any of the modern wonders that require a massive investment in infrastructure if his policies had been in place for the last 50 years. He just stammers on and say "Oh but we'll pay for it eventually", despite the fact that the whole world is tripping over itself just trying to keep up with our economy. Yes we have a deficit, but that wasn't because of an economic policy was it?
      • oldhick, on 06/11/2008, -0/+1Ron Paul doesn't call for the gold standard nor the 100% reserve backing in the bank. He calls for the removal of taxes on gold and silver and for it to be reinstated as legal tender for those who CHOSE to use it.
        People such as yourself are free to continue using paper currency.
        I'm not sure what you're talking about with Ron Paul and the Internet and Cable TV...
        Also, your lack of knowledge on the problems facing our economy are scary. The deficit is a TINY problem. The real problem is currency devaluation/inflation and debt.
  • martso, on 06/10/2008, -9/+1Weak dollar helps US economy for sure - crates more export opportunities, gives jobs to American citizens vs. import labor . But it also kills the small business because of the recession within the US.
    It is more of a psychological impact to US citizens and their spending habits than a real lack of money. But all that is scary enough.
    One other thing that will happen is Europeans, Japanese and Chinese will come and buy US whole sale if measures are not taken. - This already happens in export, re-export business and soon will go to real estate and manufacture.
  • davidhallstrom, on 06/10/2008, -4/+5Interesting theory. Let's see what happens.
    • cyberdork, on 06/11/2008, -1/+2It's not a theory, it's wishful thinking!

      FTA: "The European exports went down and particularly the world export champion Germany yammered very much."

      Strange, the latest numbers I could find for German exports are from February and they say this:
      This February exports rose by 9% (!!!) compared to February 2007, exports to non EU-countries rose by 13.5%, exports to EU-countries rose by 5.6%.
      Actually economists are surprised of how little importance exports to the US have become for Germany.

      So what's up with the author of the article? Seems like he makes up facts to support his opinion.

      • Ecowarrior, on 06/11/2008, -0/+2This is eactly what I was thinking...
  • HSlipwiffle, on 06/10/2008, -3/+4Let's hope so.
  • TheCarDude, on 06/10/2008, -1/+2I hope they are right. I want to travel abroad but haven't because our dollar sucks
    • patpl22391, on 06/11/2008, -1/+2Avoid Europe? It's overrated anyway. I have visited London, most of France, and Geneva, Switzerland. The only thing really worth seeing is the Alps. Particularly the city of Bayeau and the Swiss Alps. Absolutely breathtaking. If you are backpacking across Europe, there are a lot of places that cater directly to tourists like you, and you can get by on a small budget.
      • TheCarDude, on 06/11/2008, -0/+1Thanks for the info. I'm going to bounce long term in a year and I think I'll do Europe last and just check it until I'm broke. I would love to see the alps!
  • Rabbittt, on 06/10/2008, -11/+8The dollar will rebound a bit when Obama is elected, and if he eases up on "pumping the cash," it will continue to rise, slowly..

    But if he chooses to further the BushCo. paradigm of Executive Power and leaves the floodgates open (I don't think he can, if he's rational), it will backtrack and then continue it's steady decline..

    The irony is that Democrats are usually (lately) more financially conservative than Neocons.. Obama might very well help us out of the bind we're in because of Neocon-liberalistic-imperial-spending-sprees..

    One can always hope..
    • etherreal, on 06/11/2008, -0/+1I wouldnt bet on it. If the economy slumps, the fed will continue to keep rates low which keeps the dollar low. Obama has absolutely nothing to do with that.
      • Rabbittt, on 06/11/2008, -0/+1The President definitely has an impact on spending when he sends the military off to war, when he requests special programs, and when he exponentially expands the Executive Branch.. Bush, with Executive Power alone, has driven us deeper in debt than we've ever been.. This has aided inflation and allowed the Democrats to pork-barrel to their hearts content, right along with him..
    • oldhick, on 06/11/2008, -0/+1For the love of God how can people be this ignorant?????
      First, Obama has NO say over the monetary policy set by the Fed and will not be able to stop "pumping the cash" as you call it.
      Second, the current trend has little to do with the Bush paradigm and nearly nothing to do with Executive Power.
      Deficit spending sucks, but Obama will do the same. How the hell do you think you're going to pay for Universal Health care and all the other social programs? But beyond deficit spending, its debt that is the problem and its our monetary policy...
      I hope Obama will cut deficit spending, but that means cutting government spending.
  • jlhoben, on 06/10/2008, -1/+15The private fed will milk America dry.
    • Sogui, on 06/11/2008, -1/+2Yea that crazy non-profit institution has been keeping us out of recession and has kept our GDP as high as the other top 4 countries below us... combined.

      But yea, let's bring back the gold standard, 100% reserve requirements, and abolish the Fed because having a Dark-Ages style economic policy sounds so appealing, but hey the Constitution said something about Gold so we better do it!

      Ron Paul himself admitted we wouldn't even have our internet, cable TV, or any of the modern wonders that require a massive investment in infrastructure if his policies had been in place for the last 50 years. He just stammers on and say "Oh but we'll pay for it eventually", despite the fact that the whole world is tripping over itself just trying to keep up with our economy.

      I'm not saying we're perfect, but having Paulites insist their policies would do anything but ruin our economic infrastructure and spark an exodus of investors out of the US is just silly. I've met some Paulites in real life and having them explain how the Gold Standard would work makes me chuckle, they really can't get past "Oh, but but but our dollar will be backed by REAL VALUE".
  • wonderchemist, on 06/10/2008, -3/+24When is it going to come back? When the dollar is so cheap that China outsources it's labor back to the US.
  • jaymzdean, on 06/11/2008, -14/+6The dollar isn't coming back.
    The Amero is going to replace it.
    Bye-bye dollar.
  • chaserm, on 06/11/2008, -6/+1The only way the fed could save the dollar is to raise interest rates above the ‘actual’ inflation which is about 10% - but that would push the nation into a major recession - so it’s not going to happen. The dollar has no where to go but down.
    • delmar14, on 06/11/2008, -1/+2Inflation's still below 4%. Where did get 10 from?
  • yellowcakewalk, on 06/11/2008, -4/+5On average, you'll be right, over the long term, about 50% of the time.
    • ResonantToe, on 06/11/2008, -0/+1Assuming that over the long term the questions are yes/no true/false...

      • PATSCRU, on 06/11/2008, -0/+1I would figure into the equation that most questions boil down to ultimates, and that if you look at it that way, you'll start to get closer to the 50% number.
  • brainboy77, on 06/11/2008, -4/+9come on, let's get some optimism in here. Do you guys realize that if everyone stopped yelling recession! recession!, our economy would have less fear and would not be as bad as it currently is. Now, of course, it wouldn't magically good again, but not as bad as it is.
    • thewump, on 06/11/2008, -1/+1Yes - trillions of dollars of national debt and trillians of dollars of private debt will simply disappear if we just thing positive! Whats with all the gloom and doom? You took out a big fat loan on a house that isn't worth what you paid for it, and can't get a loan to make your payments? Well, just smile ;-) TING! Just say "Everything is OK, Everything is OK, Everything is OK" 3 times a day - and the 4 houses within a mile of yours for sale by the bank at 50% of their appraised value won't look quite so grim!

      Think positive people!
      • baylat, on 06/11/2008, -0/+1I dont know if you are trying to be funny or sarcastic but you missed the point.
  • crocev, on 06/11/2008, -3/+3Never ever has a country improved its economy by inflationg its currency. Actually the contrary holds right. The most developed countries in the world have a high value currency, export high value products (technology, etc.) and still achieve high standards of living for its people. Their debt is highly regarded.
    When a country tries to be more competitive by inflation, it suffers by getting more expensive imports and trying to promote exports of cheaper / less technologically advanced products that compete with low wage / skilled labor from overseas countries where there is no social security / labor rights... why would a developed country want to be competitive with that??
    And by the way, dollar is not "coming back" anytime soon. First all american households should pay their debts AND start saving.
  • isparadiselost, on 06/11/2008, -4/+3If you truly think the Federal Reserve Note is going to rebound, I'd be happy to trade mine for your gold, silver or a decent plot of land.

    Calling it a "dollar" is a complete whitewashed misnomer. If you want to know what a true dollar is, visit here: http://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dol ...

    Yes, it's a long read so I don't suspect many will do so. That's precisely why the unConstitutional Federal Reserve is running this country. Do a quick check on "apathy" while you're at it.
    • PolishLogic, on 06/11/2008, -0/+2Ok then. Since we don't have a dollar anymore, I nominate "fluggle" as the new currency name. Sounds a bit catchier than dollar anyhow.
      • mCanada, on 06/11/2008, -0/+1It doesn't matter what you want to call it, wooden sticks have been the basis of economies before. If you can trade it, it has value. The argument is about who manages the medium.
        • PolishLogic, on 06/11/2008, -1/+2"It doesn't matter what you want to call it"

          Ah, but it does matter. It's all in the name. Would you do business with a country who's currency is called the "*****-finger"?
        • mCanada, on 06/12/2008, -0/+1If they have oil, I'll trade their *****-fingers any day.
  • argoff, on 06/11/2008, -8/+6The only thing that is more ***** than a dollar comeback is that people actually believe it could happen. For God's sake, the Federal Reserve increased the M3 money supply by 18% over the last year. Did the economy grow 18%, did factories and infrastructure, did trade and commerce, did productivity, did our debts go down sharply, did taxes or government spending sharply reduce. No, no no and no. That 18% can go nowhere other than into inflation and the ruination of the currency.

    ***** the dollar comeback, the US is heading for hyper-inflation, there is no other alternative, I wish people would realize that we are past the point of no return. We not only must deal with the reckless money supply expansion of last year, but the reckless debt expansion, on top of the reckless expansion that has been happening for the last 20 years. We never noticed it so much before because Japan, China, and the Sauds sucked it up for us, now there is no one.

    Crap like this pisses me off, because anyone who had half a conscience would be screaming from the mountaintops that people must buy silver and gold to protect themselves. But if people did that, then we would all know they were huge ***** that have practically committed a crime against humanity. Please, don't be a human sacrifice for the sake of their fraud. Anyone who knows what's good for them will buy gold and silver like a goddam lunatic while they've still got the chance.
  • DurtyJ, on 06/11/2008, -5/+3"Sure thing is that the dollar will come back"
    "The first and most important reason for my theory is fact that the FED can´t relax the monetary policy"
    "On tuesday the third of Juli"

    Are you seriously going to be taking advice on U.S economics from two German students who don't even have a complete grasp on the English language?
  • Dan137exe, on 06/11/2008, -3/+3This is a pretty pointless article. I see no sources nor unique insight.

    The author can't be too reliable with his predictions. He even ends his article with "it's just an opinion…". And frankly, he doesn't sound like he knows enough of what he's talking about to be writing articles and dishing out advice. I'm no economics or business major but I could have told you that a weak dollar will help to balance the U.S.'s trade deficit.
  • elvenrunelord, on 06/11/2008, -3/+4a little side note to this that should be noted that as more and more people buy gold and silver the price will rise due to supply and demand. As a world currency gold will not work simply because there is not enough of it. Current estimates of gold supply equals out to around 4.1 trillion dollars worth of the metal at this time given that all the gold mined on the planet today equals 150,00 tons, about 3/4ths an ounce for each person on the planet. A large amount, but simply not enough to back all the currency on the planet. Silver is an added option but again not enough to back a currency even with gold added in due to the industrial demand and consumer demand for non-currency gold and silver. as much as I would like to believe that going back to the gold standard is the answer, sadly at this time of economic development it is not. However control of profit and inflation is. Does a company really need to make a profit above and beyond 1-2%? Does corporate growth need to maintain 10-15% above the required need for thier product? or should growth be guided by increase of population? No matter what your medium of exchange is as long as the majority of people believe in it, it is useful as a shortcut to cutting a deal. When distrust of the accepted currency grows the value of that currency is diminished. Perhaps we should quit all this talk of distrusting the dollar and look at some of the real causes of inflation. I hate to tell the lot of you but the federal reserve is going NO WHERE. Our government sold us out / made that decision long before any of us were born and not all the shouting we do will change that. With that in mind i strongly suggest you use what intellectual abilities you have to create some effective change that is acceptible to the estabilshed power structure rather than trying to tear it down, because you have no idea what will happen if you ever do manage to get a snowball rolling big enough to get their attention. What are you going to do against the full fource of the United States military........how are you going to fight long distance remote control bombers and fighters that cruise miles above you and yet can kill you like a fly? The answer to that.....well your either going to DIE, or your going to hide...its your choice. yes gorilla warfare is effective to keep trouble stirred up but is it really effective. Not against a technologically superior opponent which is what any of us would be facing if we wanted to go to war with the the established government and their ideologies. i not fond of many things going on in this world right now either. But i plan to live through the upheavals of the future and if you give a single ***** about your family you will to. If you want to change your country you must do it under the rule of law. This is going to take generations. why you ask? because the system was set up over generations. the people at the top work on a generational plan. To compete against them on their level you must play in the same ballpark.
    • delmar14, on 06/11/2008, -0/+1basically, population increased a bunch and gold did not. Thats why we're on the gold standard...
    • MasterJoefus, on 06/11/2008, -0/+2that is waaaay too long.
  • thewump, on 06/11/2008, -2/+1Why is this being dugg? The dollar rebound in the next month? What are you smoking?
  • Jenadae, on 06/11/2008, -2/+2I stopped reading at "Juli"
  • airwalkery2k, on 06/11/2008, -0/+3As a person stuck in Europe with US dollars in his bank account, please let the dollar bounce back quickly.
  • MrTito, on 06/11/2008, -0/+1I've never been one to subscribe the idea that the president has much of a direct effect on the economy. But, with as much as people seem to be paying to this election cycle, I do think that the economy will rebound somewhat after the election and/or inauguration. Not because of the new president (whoever it is, I support Obama), but because there will be some kind of feeling of a national turning of the page. I think that feeling will translate into more positive consumer confidence which will get people out spending and priming the pump of the economy as a whole. Admittedly that doesn't resolve the real underlying issues we need to address, but it's a baby step forward.
  • otis12, on 06/11/2008, -0/+2About time
  • monkeycatDx, on 06/11/2008, -0/+3I am sick and tired of paying $4.50 for a ***** happy meal.
    • curseoflou, on 06/11/2008, -0/+4yeah it's obviously not doing the trick for ya. :)
    • bunkertor7, on 06/12/2008, -0/+1Where do you live? In my city ***** costs at least $50
  • dreamfamous, on 06/11/2008, -0/+1 believe it when i see it
  • polarbobbear, on 06/11/2008, -0/+1Great just in time for me to leave Europe and go back to the states.
  • rahamm, on 06/11/2008, -0/+1Here let me fix the description.

    Instead of writing "Many analysts think that the dollar is coming back now and here is why" it should read "One guy with a blog thinks that the dollar is coming back now and he gives no reason why" there that better?
    • RealmDown, on 06/11/2008, -0/+1Nope, it is now much, much worse, leading to depression, a complete lack of confidence, hoarding, no spending, fueling a downward spiral from which there was previously hope, and thus do you HELP things get worse.

      There, feel better now ?
  • protodon, on 06/11/2008, -0/+1I'll remember this article when I'm building myself a shack mad of money stacks because it will be worthless for anything else.
  • bunkertor7, on 06/12/2008, -0/+1The buck rulez!!!
  • neotech08, on 06/16/2008, -1/+0i dont believe it when i see it

    http://the-digital-asset-management.blogspot.com
  • sportsstar67, on 06/26/2008, -2/+1Will come back strong this fall and especially in Spring of 09....And that is going to really piss off the ron paul folks who want to see our country collapse
  •  

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