US dollar

[Ecomike]

Interesting to see the US dollar value history going back to 1988. Here is chart.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3449922&cmd=show[s176747883]&disp=P

The chart speaks for itself. Look at the path and distance it took from 2002 to 2005, and the low in early 2008.

[5-90]

Please translate for those of us who don't speak High Finance - what is the rigid benchmark used to pin the value of the dollar? Gold? Silver? Plutonium?

I don't consider petroleum useful for this - it's a finite and dwindling supply (maybe not as fast as people would have us believe, but it's a commodity that gets used up. Metals get used, but the basic form and value doesn't change - a gramme of gold is still a gramme of gold, whether it's bulk metal or a ring - assuming the same alloy.)

Numbers are generally meaningless without a unit attached.

[Ecomike]

First off that is not the chart I was trying to post. I will try again. Still not working right, but to answer your question it is a fixed basket of foreign currencies that they use.

EDIT: Here is working link, finally! LINK (http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3449922&cmd=show[s176747883]&disp=P)



The U.S. Dollar Index® is computed using a trade-weighted geometric average of six currencies. The six currencies and their trade weights are: Euro 57.6 %
Japan/yen 13.6 %
UK/pound 11.9 %
Canada/dollar 9.1 %
Sweden/krona 4.2 %
Switzerland/franc 3.6 %

From WIKI:

The US Dollar Index (USDX) is an index (http://en.wikipedia.org/wiki/Index_number) (or measure) of the value of the United States dollar (http://en.wikipedia.org/wiki/United_States_dollar) relative to a basket (http://en.wikipedia.org/wiki/Market_basket) of foreign currencies.
It is a weighted geometric mean (http://en.wikipedia.org/wiki/Weighted_geometric_mean) of the dollar's value compared only with


Euro (http://en.wikipedia.org/wiki/Euro) (EUR), 57.6% weight
Japanese yen (http://en.wikipedia.org/wiki/Japanese_yen) (JPY), 13.6% weight
Pound sterling (http://en.wikipedia.org/wiki/Pound_sterling) (GBP), 11.9% weight
Canadian dollar (http://en.wikipedia.org/wiki/Canadian_dollar) (CAD), 9.1% weight
Swedish krona (http://en.wikipedia.org/wiki/Swedish_krona) (SEK), 4.2% weight and
Swiss franc (http://en.wikipedia.org/wiki/Swiss_franc) (CHF) 3.6% weight.

USDX started in March 1973, soon after the dismantling of the Bretton Woods system (http://en.wikipedia.org/wiki/Bretton_Woods_system). At its start, the value of the US Dollar Index was 100.000. It has since traded as high as the mid-160s and as low as 70.698 on March 16 (http://en.wikipedia.org/wiki/March_16), 2008 (http://en.wikipedia.org/wiki/2008), the lowest since its inception in 1973.
The makeup of the "basket" has been altered only once, when several European currencies were subsumed by the Euro at the start of 1999.

[5-90]

So, nu, it's a comparison of a unit of fiat money with other units of fiat money - making the whole thing a mass hallucination (as I see it.)

I don't have a great deal of faith in fiat money, but it doesn't matter how crooked the game is if it's the only game in town.

I carry my fortunes about in my head - using the skills I've learned, I can present something a bit more tangible than special bookmarks for use in trade.

All the use of a fiat currency unit does is allow for extra stages in the barter system. That's really all it is - nothing more, nothing less. You can't really "redeem" them for a universally-accepted unit of value without having to deal with an awful lot and lose some worth in the transaction.

For those who don't know the term, "fiat currency" is a monetary unit that has a given value "because we say so" ('we' being the issuers of the unit.) I believe pretty much everyone on Earth is now using fiat currency - and the loss of the specie anchor is what is contributing mightily to the trend of inflation we've been seeing for the last 35 years or so. the use of fiat currency may simplify interpersonal trade, but that seems to be its major contribution to the system. Since it can be manipulated freely by the issuer, it really shouldn't be trusted...

[Ecomike]

I posted this for those who have complained about the value of the dollar dropping. That chart and that basket of currencies is the number the news media is always using to poke the masses with when certain politicians come out of the wood working trying to blame current in power politicians for a falling dollar. As you can see from the chart there is a whole lot more to the story than news media and pundits ever reveal in the news.

[JNickel101]

Arbitrarily printing more money, and digging the US even deeper into debt sure doesn't help our cause though....

[ehall]

The previous administration's explicitly stated strategy was to weaken the dollar to boost exports after the tech bubble burst. As you can see in your own damn chart the dollar had become very expensive during the tech bubble's rise, and as you can also see the dollar stabilized into a range that was consistent with previous spreads, right up until the financial sector started to implode, at which point the dollar got weak (big duh there).

It's interesting that it seems to be heading kamikaze path to the bottom now, don't you think.

[Ecomike]

You need to re-examine the chart. The dollar soared during the financial crisis, not the other way around. Also deficit spending for 2 wars weakend the dollar between 2002 and 2005. It went from 121 to 80 in those 3 years. Right now the dollar is still about8% higher that its 10 year low in early 2008. It is also close to its 1992 low.

The previous administration's strategy was to weaken the dollar to boost exports after the tech bubble burst. As you can see in your own damn chart the dollar had become very expensive during the tech bubble's rise, and as you can also see the dollar stabilized into a range that was consistent with previous spreads, right up until the financial sector started to implode, at which point the dollar got weak (big duh there).

It's interesting that it seems to be heading kamikaze path to the bottom now, don't you think. No, sorry, you don't think

[ehall]

The previous administration stated flat-out that they were going to weaken the dollar for export purposes (that coupled with low interest and tax cuts led the general recovery). Feel free to review some of the damn historical material (http://www.google.com/#hl=en&source=hp&fkt=4566&fsdt=12439&q=%22john+snow%22+weak+dollar+2002)

OTOH I can't find anything from the current administration that says kamikazee dive is intentional. Did you really bring up the subject so as to apparently say that the previous administration is continuing to exercise policy? LOL Do you suppose the current administration is out of control on policy?

[ryguy32789]

The previous administration's explicitly stated strategy was to weaken the dollar to boost exports after the tech bubble burst.

That's what I was about to say. It may cost us more to import oil, but a weak dollar is usually a huge boost especially to the American heavy machinery industry, as a weak dollar makes American made goods look cheaper to foreign buyers.

[WB9YZU]

Money that is not tied to anything of constant value is worth what you say it's worth.

Imagine you want to invest in something using dollars, and the return rate on that investment is close to zero. Each dollar you invest is not worth a whole lot in the long run.

On the other hand, if you invest using Euros, and the rate of return is more than using dollars, you make money.

That means that the Euro as a money is worth more than a Dollar, and the relative value of the Dollar remains low.

What kills us (example here), is that because the Euro is valued so high, it takes less Euros to by more Dollars. That is what is happening to Oil right now. Since Oil is traded in Dollars, Foreign investors are getting a bargan at our expense.

As long as the Fed keeps interest rates low ( devaluing the Dollar ), it will take less foriegn currency to trade Dollars. Keeping interest rates low, also causes inflation because money is not "worth" anything.

Sure, it makes our exports look cheap, but in the long run, this is a failing policy.

Ron

[Ecomike]

https://www.theice.com/productguide/ProductDetails.shtml?specId=194

US dollar rallied up strongly today, along with US stock markets reaching new 52 week highs. Dollar up a good 3% from recent lows.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=s

S&P 500 (and others) index has made new 52 week highs three days in a row now:

http://quotes.ino.com/chart/?s=CME_INX&v=w


Official US Unemployment dropped from 10.2 to 10%. Christmas rally is under way.

Oil was down nearly 2% at one point today, gold dropped $75 last 2-3 days, oil is down about $7-$8 from recent highs.


http://quotes.ino.com/chart/?s=NYMEX_CL.F10.E&v=d1&w=1&t=l&a=50

[90Blue_XJ]

What ever became of the value being backed by silver and gold reserves? I lost that from my memory but I do remember that being the way it was taught in school many, many years ago.

[IslanderOffRoad]

What ever became of the value being backed by silver and gold reserves? I lost that from my memory but I do remember that being the way it was taught in school many, many years ago.

Richard Nixon

[Ecomike]

What ever became of the value being backed by silver and gold reserves? I lost that from my memory but I do remember that being the way it was taught in school many, many years ago.

You are dating yourself sir (LOL), not that I am not by any means. :wow:

Islander is right, Nixon removed the last vestiges of the fractional gold reserve currency link during his reign. He also instituted prices controls to try and control inflation, but failed.

The FED tries to use money velocity and GDP as guides for controlling the amount of money in circualtion, or money velocity. Most money is now just a bunch of electrons stored in computers world wide now backed by GDPs and real assets like real estate.

[Boatwrench]

Richard Nixon

Ding Ding. We have a winner.

[JNickel101]

Lets go with Ron Paul's idea and audit (then abolish) the Fed....

[Ecomike]

Lets go with Ron Paul's idea and audit (then abolish) the Fed....

That is fastest way I know to crash the world economy and start the "Greatest Depression Ever Known" IMHO. IIRC he favors a return to the gold standard, right? If that were too happen, it stagnates the money supply which needs to grow with a growing GDP. Gold standard was part of the problem during the Great Depression.

If the money supply can not be allowed to grow due to a gold link and fixed gold supply, an increasing GDP gets crushed by the fixed money (gold backed) supply. The trick is to grow the money supply to reflect the growth in GDP, so that neither deflation nor inflation can not take off in either direction and ruin the economy.

The FED is about the only thing that saved the economy from total collapse.

[ryguy32789]

IIRC he favors a return to the gold standard, right?

His Audit the Fed bill and position on the gold standard are two separate things. I actually donated money to Ron Paul to get Audit the Fed pushed through. It already has over 200 bipartisan co-sponsors in the House. The American public deserves to know where the Fed is funneling money.

Besides, the Fed helped to CAUSE the crash by manipulating interest rates.

[Ecomike]

His Audit the Fed bill and position on the gold standard are two separate things. I actually donated money to Ron Paul to get Audit the Fed pushed through. It already has over 200 bipartisan co-sponsors in the House. The American public deserves to know where the Fed is funneling money.

Besides, the Fed helped to CAUSE the crash by manipulating interest rates.

The FED sets FED funds interest rates, by law, not sure "manipulation" is the appropriate word. BofA, Citibank and Wallstreet manipulate! Go audit them first! See who they are lending you deposits to? The ones they .05% interest on while charging you 50 times the interest paid in fees to hold and use your money! They are the crooks!

[JNickel101]

Gold standard was part of the problem during the Great Depression.



There were many causes of the Great Depression....devaluing gold is what got us out of the Great Depression - however, it was a short-term fix, IMO, and no standard is what has lead to inflation.

"Speculation" though, is the enemy of any economy....

[goodburbon]

Mike are you suggesting that we aren't experiencing inflation?

Cheapest new car I remeber advertised when I was in high school was a ford ranger base model for $5995

New model base prices are as follows from their respective sites.

2010 Ford ranger $17440
2010 Chevy Colorado $16985
2010 Nissan Frontier $17540
2010 Toyota Tacoma $15345

So that's greater than 100% cost increase aka inflation in 15 years for the same products. Even if you argue that these vehicles are better equipped, or meet stricter standards the government still had a big hand in causing those increases. You may notice similar trends in Fast food prices and other durable good prices. The idea of tying a floating value to a compilation of floating values and pointing out that they are even is total bullshit. Compare costs of durable goods over the past 30 years and note the trend. If you want to be super honest about it, compare something that doesn't change much and you're comparing apples to apples if you don't like my car example. Compare, for instance, the cost of a new rifle, or saddle. My point is that inflation is already outrageous, but you don't notice as much because they pay you more, which drives up the cost of goods, which makes them pay you more, which drives up the cost of goods.

Not having our currency anchored to anything tangible will lead to a dollar value spiraling downward in an exponential fashion. It's already happening. Compare cars in 1960 to 1990, then to 2010. The costs have increased exponentially and are continuing to do so. At some point it all crashes down and the currency must be "revalued" People are fussing about Healthcare costs increasing, but what if they are just a more honest expression of that inflation with a compound effect from people and insurance "just paying"?

[Ecomike]

Gold and oil have dropped substantially, gold down about $100/once in just 2 days.

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&t=f

[Ecomike]

There were many causes of the Great Depression....devaluing gold is what got us out of the Great Depression - however, it was a short-term fix, IMO, and no standard is what has lead to inflation.

"Speculation" though, is the enemy of any economy....

How do figure devaluing Gold got us out of the depression? That implies increasing the value of the dollar (fiat paper dollar) to devalue gold.


????

What I was saying is that restricting the money supply, by tying it to a static supply of gold restricted the FEDs policy options, and allowed deflation to run amuck.

[Ecomike]

Goodburbon, you are using the past compared to past to try show show inflation. Just look at oil and consumable commodities and you will see massive recent deflation. Oil down 50% from last year's high. N Gas down 75-80% since last years high. That is deflation. Housing and real estate prices collapsing. Look at dry bulk shipping rates for grain, coal, wheat worldwide, down 75%. Asset values of ships hauling coal, wheat oil, oil down >50%, and so on. India's Nano car is under $2,000 (LOL).

I bought my Thanksgiving 18 lb Turkey for just under $5! :greensmok

In summary, inflation was a problem in the past, deflation has been the recent problem and is potentially far worse than inflation from an economic psychology point of view. The FED can control inflation. Deflation, if it gets out of control, is dark ages great depression nightmare stuff.

Mike are you suggesting that we aren't experiencing inflation?

Cheapest new car I remeber advertised when I was in high school was a ford ranger base model for $5995

New model base prices are as follows from their respective sites.

2010 Ford ranger $17440
2010 Chevy Colorado $16985
2010 Nissan Frontier $17540
2010 Toyota Tacoma $15345

So that's greater than 100% cost increase aka inflation in 15 years for the same products. Even if you argue that these vehicles are better equipped, or meet stricter standards the government still had a big hand in causing those increases. You may notice similar trends in Fast food prices and other durable good prices. The idea of tying a floating value to a compilation of floating values and pointing out that they are even is total bullshit. Compare costs of durable goods over the past 30 years and note the trend. If you want to be super honest about it, compare something that doesn't change much and you're comparing apples to apples if you don't like my car example. Compare, for instance, the cost of a new rifle, or saddle. My point is that inflation is already outrageous, but you don't notice as much because they pay you more, which drives up the cost of goods, which makes them pay you more, which drives up the cost of goods.

Not having our currency anchored to anything tangible will lead to a dollar value spiraling downward in an exponential fashion. It's already happening. Compare cars in 1960 to 1990, then to 2010. The costs have increased exponentially and are continuing to do so. At some point it all crashes down and the currency must be "revalued" People are fussing about Healthcare costs increasing, but what if they are just a more honest expression of that inflation with a compound effect from people and insurance "just paying"?

[goodburbon]

Goodburbon, you are using the past compared to past to try show show inflation. Just look at oil and consumable commodities and you will see massive recent deflation. Oil down 50% from last year's high. N Gas down 75-80% since last years high. That is deflation. Housing and real estate prices collapsing. Look at dry bulk shipping rates for grain, coal, wheat worldwide, down 75%. Asset values of ships hauling coal, wheat oil, oil down >50%, and so on. India's Nano car is under $2,000 (LOL).

I bought my Thanksgiving 18 lb Turkey for just under $5! :greensmok


No, I'm looking at a trending past leading up to today.

Gasoline was a bubble, that led to a crash when the bubble was no longer sustainable. That bubble started in earnest around Hurricane Andrew. It ended when supply finally started catching up.

Real-estate was a longer term bubble, that led to a crash when the bubble was no longer sustainable.

Ammunition and assault rifles were in a bubble, but the bubble popped when no legislation came through and supply caught up.


You'll note, though, that the bubbles didn't drop back to their original prices when they popped, they normalized at a price much higher than they were before the bubble.

For all of your examples of deflation, I have experienced no associated increase in buying power. You can't pee on my head and tell me it's raining, I'm not stupid. You can say things are better all you like, I don't see it. All I see is numbers manipulated to tell me it's better. I still haven't been called for a job, my neighbor still hasn't worked in 3 months, my other neighbor is still being foreclosed on. My doctor tried to negotiate with the banks on his payments for their summer home, bank ignored him so he defaulted. I see no deflation of consumer goods, only inflation.

When Combo meals at burger king retreat back to $5.00 let me know. When Gasoline remains at $1.50 let me know. When Cragar soft 8's drop back down to $36 apiece let me know. When a Ruger 10/22 drops back down to $164 let me know. Until practical every day goods actually decrease in cost I don't care what statistic you quote, Inflation is real and we've experienced quite a bit in the last 30 years, and thinks to raising the min wage inflation won't ever go down.


BTW an indian car that is not even legal here is not an accurate comparison.

[JNickel101]

How do figure devaluing Gold got us out of the depression? That implies increasing the value of the dollar (fiat paper dollar) to devalue gold.


????

What I was saying is that restricting the money supply, by tying it to a static supply of gold restricted the FEDs policy options, and allowed deflation to run amuck.

Sorry, I mistyped - devaluing currency as it relates to gold was a step to get us out of the depression- but currency still needs to be related to some sort of "real" value (whether it is gold, silver, platinum, beads, moonrocks...), otherwise, you'll always have inflation/deflation in huge spikes.

You hear talk today about the "price of gold is at an all time high" - only because the gold is tied to the dollar, and not the other way around.

The gold standard was abandoned for the reason you said - it restricted the FED - so instead of fixing the REAL problem, the FED created rules/regulations to band aid the situation. The reason you have such a crazy oil/housing market with spikes and dips is because it is tied to something that is essentially worthless - a piece of paper. Speculation drives so much of "the market" today, and there are TOO MANY rules and regulations out there - which is why the FED needs audited and flushed down the comode.

The rest of the world is getting FED (haha...see what I did there?) up with everything being based on the dollar - because nothing is backing it - well, other than our immense amount of debt.

Economics is WAY more complicated than it needs to be. If the average person doesn't understand most of it (like me) then there are serious issues....

[RichP]

When I started driving in 68 gas was .11 cents a gallon for regular, a new mustang GT convertible was $2500 loaded with a 427. If you were supporting a family $10,000 was a good income, two bank presidents my dad knew made $50,000 a year and that was considered 'rich'. In 69 my base bay as an E3 in the Navy was take home $80 every two weeks.
In 73 I bought a new Chevy Vega GT, that cost me $2100. In 82 I bought a new S-10 sport, that cost me $6,000 off the lot.
To have maintained my dads standard of living I would need to be making about $120,00 a year now.

[goodburbon]

When I started driving in 68 gas was .11 cents a gallon for regular, a new mustang GT convertible was $2500 loaded with a 427. If you were supporting a family $10,000 was a good income, two bank presidents my dad knew made $50,000 a year and that was considered 'rich'. In 69 my base bay as an E3 in the Navy was take home $80 every two weeks.
In 73 I bought a new Chevy Vega GT, that cost me $2100. In 82 I bought a new S-10 sport, that cost me $6,000 off the lot.
To have maintained my dads standard of living I would need to be making about $120,00 a year now.


You're offering purely anecdotal evidence, there is clearly no inflation to worry about. Quit trying to use the past to describe the present. The value of the dollar is muey fuerte'.

[Ecomike]

I don't recall a currency devaluation in the US during the Great Depression. I am aware that in 1933 all gold coins were confiscated, outlawed, and forced to be exchanged for Federal Reserve or US Treasury gold certificates, green backs supposedly backed by real gold. I think it happened during or after the 1933 US banking system collapse and bank holiday week.

Gold backed currency did not stop the Depression.

Growing GDP, and a growing asset base, based on a growing GDP, requires a money supply that can grow with the increased GPD and increasing asset base. A static gold supply if used as the money, must be devalued to work with a growing GDP. Good luck doing that!

During the California gold rush inflation was rampant, even though the money was all gold. Also, during the California gold rush the economy grew by leaps and bounds, because the gold money supply grew by leaps and bounds (just dug it out of the ground). When the gold finds were exhausted, the economic expansion ended, then a recession started.

Is an interesting blog a friend of mine just wrote on gold fever and other bubbles.

http://www.iamgv.com/gv/2009/12/gold-bug.html

Sorry, I mistyped - devaluing currency as it relates to gold was a step to get us out of the depression- but currency still needs to be related to some sort of "real" value (whether it is gold, silver, platinum, beads, moonrocks...), otherwise, you'll always have inflation/deflation in huge spikes.

You hear talk today about the "price of gold is at an all time high" - only because the gold is tied to the dollar, and not the other way around.

The gold standard was abandoned for the reason you said - it restricted the FED - so instead of fixing the REAL problem, the FED created rules/regulations to band aid the situation. The reason you have such a crazy oil/housing market with spikes and dips is because it is tied to something that is essentially worthless - a piece of paper. Speculation drives so much of "the market" today, and there are TOO MANY rules and regulations out there - which is why the FED needs audited and flushed down the comode.

The rest of the world is getting FED (haha...see what I did there?) up with everything being based on the dollar - because nothing is backing it - well, other than our immense amount of debt.

Economics is WAY more complicated than it needs to be. If the average person doesn't understand most of it (like me) then there are serious issues....

[Ecomike]

A little more on gold, US dollar, Great depression, FED etc.

Oh, and looks like even gold certificates were outlawed in 1933, so you may be right about devalued currency, but not until 1933, at which point the damage was already done.

"
Monetarists (http://en.wikipedia.org/wiki/Monetarist), including Milton Friedman (http://en.wikipedia.org/wiki/Milton_Friedman) and current Federal Reserve System (http://en.wikipedia.org/wiki/Federal_Reserve_System) chairman Ben Bernanke (http://en.wikipedia.org/wiki/Ben_Bernanke), argue that the Great Depression was mainly caused by monetary contraction (http://en.wikipedia.org/wiki/Contractionary_monetary_policy), the consequence of poor policymaking by the American Federal Reserve System (http://en.wikipedia.org/wiki/Federal_Reserve_System) and continued crisis in the banking system.[21] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-20)[22] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-21) In this view, the Federal Reserve, by not acting, allowed the money supply as measured by the M2 (http://en.wikipedia.org/wiki/M2_%28economics%29) to shrink by one-third from 1929 to 1933, thereby transforming a normal recession into the Great Depression. Friedman argued that the downward turn in the economy, starting with the stock market crash, would have been just another recession.[23] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-22) However, the Federal Reserve allowed some large public bank failures – particularly that of the New York Bank of the United States (http://en.wikipedia.org/wiki/New_York_Bank_of_the_United_States) – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds (http://en.wikipedia.org/wiki/Government_bond) on the open market (http://en.wikipedia.org/wiki/Open_market) to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.[24] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-23) With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch.[25] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-24)
One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit the Federal Reserve could issue was limited by laws which required partial gold backing of that credit. By the late 1920s the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. On April 5, 1933 President Roosevelt signed Executive Order 6102 (http://en.wikipedia.org/wiki/Executive_Order_6102) making the private ownership of gold certificates (http://en.wikipedia.org/wiki/Gold_certificate), coins and bullion illegal, reducing the pressure on Federal Reserve gold"

From : http://en.wikipedia.org/wiki/Great_Depression


Sorry, I mistyped - devaluing currency as it relates to gold was a step to get us out of the depression- but currency still needs to be related to some sort of "real" value (whether it is gold, silver, platinum, beads, moonrocks...), otherwise, you'll always have inflation/deflation in huge spikes.

You hear talk today about the "price of gold is at an all time high" - only because the gold is tied to the dollar, and not the other way around.

The gold standard was abandoned for the reason you said - it restricted the FED - so instead of fixing the REAL problem, the FED created rules/regulations to band aid the situation. The reason you have such a crazy oil/housing market with spikes and dips is because it is tied to something that is essentially worthless - a piece of paper. Speculation drives so much of "the market" today, and there are TOO MANY rules and regulations out there - which is why the FED needs audited and flushed down the comode.

The rest of the world is getting FED (haha...see what I did there?) up with everything being based on the dollar - because nothing is backing it - well, other than our immense amount of debt.

Economics is WAY more complicated than it needs to be. If the average person doesn't understand most of it (like me) then there are serious issues....

[Ecomike]

http://en.wikipedia.org/wiki/Executive_Order_6102

This covers what you were talking about. Happened in 1934, dollar devalued in relation to gold, yes to get us out of the depression.

You said they did this instead of fixing the real problem. How would you suggest they fix the problem?

And here is a link to details on the 1934 act:

http://en.wikipedia.org/wiki/Gold_Reserve_Act

This is worth quoting from the first link:

Every major currency left the gold standard (http://en.wikipedia.org/wiki/Gold_standard) during the Great Depression. Great Britain was the first to do so. Facing speculative attacks (http://en.wikipedia.org/wiki/Speculative_attack) on the pound (http://en.wikipedia.org/wiki/Pound_sterling) and depleting gold reserves (http://en.wikipedia.org/wiki/Official_gold_reserves), in September 1931 the Bank of England (http://en.wikipedia.org/wiki/Bank_of_England) ceased exchanging pound notes for gold and the pound was floated on foreign exchange markets.
http://upload.wikimedia.org/wikipedia/en/thumb/a/a8/International_depression.png/180px-International_depression.png (http://en.wikipedia.org/wiki/File:International_depression.png) http://en.wikipedia.org/skins-1.5/common/images/magnify-clip.png (http://en.wikipedia.org/wiki/File:International_depression.png)
The Depression in international perspective.[42] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-41)


Great Britain, Japan, and the Scandinavian countries left the gold standard in 1931. Other countries, such as Italy and the United States, remained on the gold standard into 1932 or 1933, while a few countries in the so-called "gold bloc", led by France and including Poland, Belgium and Switzerland, stayed on the standard until 1935–1936.
According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, Great Britain and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. Countries such as China, which had a silver standard (http://en.wikipedia.org/wiki/Silver_standard), almost avoided the depression entirely. The connection between leaving the gold standard as a strong predictor of that country's severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including developing countries (http://en.wikipedia.org/wiki/Developing_country). This partly explains why the experience and length of the depression differed between national economies.

[Ecomike]

You're offering purely anecdotal evidence, there is clearly no inflation to worry about. Quit trying to use the past to describe the present. The value of the dollar is muey fuerte'.

Cute, nice to see you still have your sense of humor, a major requirement when out of work for long periods (ask me how I know).

But I still stand by the statement that deflation is the current danger (although less now than 6-12 months ago, but still a danger), and use this example as proof.

Example: Gasoline and oil are currently selling for roughly 1/2 of their recent highs.

[Ecomike]

This was also in the first link, supporting my positions.

"By 1936, the main economic indicators (http://en.wikipedia.org/wiki/Economic_indicator) had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget.[74] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-73) The American economy then took a sharp downturn, lasting for 13 months through most of 1938. Industrial production fell almost 30 per cent within a few months and production of durable goods (http://en.wikipedia.org/wiki/Durable_good) fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938.[75] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-74) Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.[76] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-75) Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production turned up after June 1938."

[Ecomike]

When I started driving in 68 gas was .11 cents a gallon for regular, a new mustang GT convertible was $2500 loaded with a 427. If you were supporting a family $10,000 was a good income, two bank presidents my dad knew made $50,000 a year and that was considered 'rich'. In 69 my base bay as an E3 in the Navy was take home $80 every two weeks.
In 73 I bought a new Chevy Vega GT, that cost me $2100. In 82 I bought a new S-10 sport, that cost me $6,000 off the lot.
To have maintained my dads standard of living I would need to be making about $120,00 a year now.

Intersting. When I started driving in 1973, jan, gasoline, regular was .29/gallon. So it tripled between 1968 and 1973. I paid $7,200 for new Dodge charger in 1976. And my mother LTD was about $7,800 in 1973. My 73 Ford Pinto was $2000.

The house I bought in 1981 and still live in, is now worth about what I paid for it in 1981.

[XJEEPER]

You said they did this instead of fixing the real problem. How would you suggest they fix the problem?


It's simple.....let unprofitable companies fail and go bankrupt. Require our government to stop meddling in the private sector.

It's not that complicated......it's called CAPITALISM. The government screwed with the economy in the 30's and caused the depression to be the Great Depression.

[Ecomike]

It's simple.....let unprofitable companies fail and go bankrupt. Require our government to stop meddling in the private sector.

It's not that complicated......it's called CAPITALISM. The government screwed with the economy in the 30's and caused the depression to be the Great Depression.
As you already I know I disagree. That works fine in a normal economy (letting unprofitable businesses fail), but is a disaster in a collapsing economy when everyone is losing money at an increasing exponential rate due to panic.

[JNickel101]

A little more on gold, US dollar, Great depression, FED etc.

Oh, and looks like even gold certificates were outlawed in 1933, so you may be right about devalued currency, but not until 1933, at which point the damage was already done.

"
Monetarists (http://en.wikipedia.org/wiki/Monetarist), including Milton Friedman (http://en.wikipedia.org/wiki/Milton_Friedman) and current Federal Reserve System (http://en.wikipedia.org/wiki/Federal_Reserve_System) chairman Ben Bernanke (http://en.wikipedia.org/wiki/Ben_Bernanke), argue that the Great Depression was mainly caused by monetary contraction (http://en.wikipedia.org/wiki/Contractionary_monetary_policy), the consequence of poor policymaking by the American Federal Reserve System (http://en.wikipedia.org/wiki/Federal_Reserve_System) and continued crisis in the banking system.[21] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-20)[22] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-21) In this view, the Federal Reserve, by not acting, allowed the money supply as measured by the M2 (http://en.wikipedia.org/wiki/M2_%28economics%29) to shrink by one-third from 1929 to 1933, thereby transforming a normal recession into the Great Depression. Friedman argued that the downward turn in the economy, starting with the stock market crash, would have been just another recession.[23] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-22) However, the Federal Reserve allowed some large public bank failures – particularly that of the New York Bank of the United States (http://en.wikipedia.org/wiki/New_York_Bank_of_the_United_States) – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds (http://en.wikipedia.org/wiki/Government_bond) on the open market (http://en.wikipedia.org/wiki/Open_market) to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.[24] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-23) With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch.[25] (http://en.wikipedia.org/wiki/Great_Depression#cite_note-24)
One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit the Federal Reserve could issue was limited by laws which required partial gold backing of that credit. By the late 1920s the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. On April 5, 1933 President Roosevelt signed Executive Order 6102 (http://en.wikipedia.org/wiki/Executive_Order_6102) making the private ownership of gold certificates (http://en.wikipedia.org/wiki/Gold_certificate), coins and bullion illegal, reducing the pressure on Federal Reserve gold"

From : http://en.wikipedia.org/wiki/Great_Depression

....that's why I stated that it was done to "get us out of the Great Depression" - implying that we were already in the middle of it, and, as you said, the damage was already done ;)

Good info on gold though! I also read that pretty much the only economy not affected by the GD was China - they were on a silver backed economy....interesting....

[Ecomike]

....that's why I stated that it was done to "get us out of the Great Depression" - implying that we were already in the middle of it, and, as you said, the damage was already done ;)

Good info on gold though! I also read that pretty much the only economy not affected by the GD was China - they were on a silver backed economy....interesting....

I found that interesting as well, the silver/china part. I wrote a term paper in college on Silver and Nevada politics in the late 1800s, based on several books I read. There was a real political battle around 1880s, IIRC over silver versus gold monetary policy back then.

[RichP]

We still had silver certificates up until a few years ago, I got a bunch of them put away somewhere.

[Ecomike]

We still had silver certificates up until a few years ago, I got a bunch of them put away somewhere.

They did away with them about 30-35 years ago, IIRC. They are collectors items now. I think Nixon killed them in my teenage years, when he killed the last vestiges of the gold standard/dollar relationship, in order to help continue financing the Vietnam war. Looks like 1968 was when they were devalued and no longer issued, and 1957 was the last year they were issued:

http://en.wikipedia.org/wiki/Silver_Certificate

Lot of intersting US money history on that link.

Also I think 1963 (? or 64?) was the last year silver was used in US coins. Since then they have been nickel plated copper. (fiat coins, LOL)

I have a few of the silver certificates. I also have some very interesting, and odd red ink (not green ink) Federal reserve notes from WWII that my father left me. Special Hawaii currency, used in Hawaii only during WWII. It was to be devalued to 0 if Hawaii fell to Japan.

Found this on the WIKI link above:

"In March 1964, Secretary of the Treasury C. Douglas Dillon (http://en.wikipedia.org/wiki/C._Douglas_Dillon) halted redemption of Silver Certificates for Silver Dollars. In the 1970s, large numbers of the remaining silver dollars in the mint vaults were sold to the collecting public for collector value. All redemption in silver ceased on June 24, 1968. Paper currency is still valid legal tender without the Silver Certificate, instead being backed simply by the perceived strength of the U.S. economy. According to the U.S. treasury, "The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are 'backed' by all the goods and services in the economy."

[XJEEPER]

Hate to say that this was predicted....... are you ready for hyper-inflation?

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

http://www.shanghaidaily.com/article/print.asp?id=423054

[Ecomike]

I would not count on hyperinflation anytime soon. The dollar is steadily going back up right now in a second flight to safety wave, commodities are already dropping, and will continue to drop into early next year, and stocks are about to do a bear market drop again. I would not bet on inflation right now. Smart money is moving quitely back into cash, US dollars again right now. The US, and some foreign stock markets have been giving off a number of scary warning signs the last 4-8 weeks indicating we are going down again soon (stocks and commodities, such as gold, oil, ...), and the money is moving into short term, near zero yield Treasuries again.

http://www.moneyandmarkets.com/what-could-lift-the-dollar-36838

http://ewtrendsandcharts.blogspot.com/



Hate to say that this was predicted....... are you ready for hyper-inflation?

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

http://www.shanghaidaily.com/article/print.asp?id=423054

[Ecomike]

If I read that article right, it says US consumers are spending less on China products, so China has fewer dollars to invest in US Treasuries as a result. US is saving more, instead of spending it, so US savers and US banks will end up buying the excess US treasuries from increased US savings instead of China buying it all. Also, the Central bank of Japan has started buying net US Treasuries on balance for the first time in over 20 years, to keep the Yen from appreciating further in relation to the dollar, and the Euro is dropping in relation to the dollar now due to recent sovereign debt downgrades in Europe (Greece), both which have been pushing the dollar back up the last 1-2 weeks. Have you noticed the large drop in oil and gold prices the last 2 weeks? Gold down $120, oil down $13 at one point mid week, last week.

Hate to say that this was predicted....... are you ready for hyper-inflation?

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

http://www.shanghaidaily.com/article/print.asp?id=423054

[XJEEPER]

I hope your predictions are accurate. I'd love nothing more than to see our economy turn around.

The current rate of spending is unsustainable, so if there aren't some dramatic changes, hyper-inflation is not an if, but a when...........

[Ecomike]

I hope your predictions are accurate. I'd love nothing more than to see our economy turn around.

The current rate of spending is unsustainable, so if there aren't some dramatic changes, hyper-inflation is not an if, but a when...........

Unfortunately it looks like the recovery may stall the next 3-6 months at best (or worse head down and crash again, from which we might not recover), at least as far as the stock markets, and banks are concerned, from what I am reading and seeing in the stock market "Tea Leaf" readings the last few weeks. And if you follow stock market theory, as goes the stock market, so goes the economy (eventually). The dollar will do OK for now, and rebound, but the jobs picture may not move down the way many of us have hoped for a while. I hope they are wrong, but long story short is it looks like the stock market rally has stalled and is about to fall (or correct), which will do the jobs picture no good at all. Right now it is not hyperinflation we should be worried about, but job losses and deflation, short term. If we pull out of this mess, then in 3-4 years we will need to deal with inflation again, and government overspending, no doubt about it.

Earnings reports in late January and early February will settle the fate for the next year, and fate of the rally (as in, is it a bear market rally, or a new bull market, at the moment it could be either, so there is still some hope). I hope earnings come in with a nice positive surprise, or most of us (not just some of us) will be forked for sure, as the market will head south again, and jobs picture will just get worse.

[kastein]

Unfortunately it looks like the recovery may stall the next 3-6 months at best (or worse head down and crash again, from which we might not recover), at least as far as the stock markets, and banks are concerned, from what I am reading and seeing in the stock market "Tea Leaf" readings the last few weeks. And if you follow stock market theory, as goes the stock market, so goes the economy (eventually). The dollar will do OK for now, and rebound, but the jobs picture may not move down the way many of us have hoped for a while. I hope they are wrong, but long story short is it looks like the stock market rally has stalled and is about to fall (or correct), which will do the jobs picture no good at all. Right now it is not hyperinflation we should be worried about, but job losses and deflation, short term. If we pull out of this mess, then in 3-4 years we will need to deal with inflation again, and government overspending, no doubt about it.

Earnings reports in late January and early February will settle the fate for the next year, and fate of the rally (as in, is it a bear market rally, or a new bull market, at the moment it could be either, so there is still some hope). I hope earnings come in with a nice positive surprise, or most of us (not just some of us) will be forked for sure, as the market will head south again, and jobs picture will just get worse.
I think I've been saying that was going to happen since about... oh... April or so. Not happy that people are starting to agree, because it sucks, but hey, at least I get to say I was right all along :dunno:

[Ecomike]

I think I've been saying that was going to happen since about... oh... April or so. Not happy that people are starting to agree, because it sucks, but hey, at least I get to say I was right all along :dunno:

We got good news today that existing home sales were up 10%. Dollar is still rising, gold dropping.

[Ecomike]

Interesting read on the recently rising dollar, and recent history of FED liquidity practice of dollar swaps with foreign central banks, which is now ending (was started late in 2008).

http://www.moneyandmarkets.com/feds-currency-swap-lines-a-big-deal-for-the-dollar-37555

[RichP]

Interesting read on the recently rising dollar, and recent history of FED liquidity practice of dollar swaps with foreign central banks, which is now ending (was started late in 2008).

http://www.moneyandmarkets.com/feds-currency-swap-lines-a-big-deal-for-the-dollar-37555

Keep an eye on the major corporations that are incorporating in Ireland and S Korea and moving lock stock and barrel out of the US.
I noticed a list of some biggies that are moving to Ireland I've been trying to refind it for a while now, Ingersol-rand was one as well as two aircraft companies.

[Ecomike]

Hmm. seems the Euro is in deep shiat now, and the dollar is up nearly 20% off its 52 week lows since we last discussed the US dollar. As I recall the news and panic at the time was that the dollar was about to become worthless. :laugh:

[goodburbon]

Believe that everything is peaches and cream because the dollar, a fiat currency, is up against another Fiat currency (another fiat currency who is tied to countries with debt problems worse than ours). The overall value of the dollar is falling Mike. I certainly can not buy 20% more goods than I could on the 52 week lows. As a matter of fact I can't buy nearly as much because the price of gasoline has doubled since then. Are you even paying attention to the facts? I'm Not talking about the bullshit numbers that some agency reports, I'm talking about the facts of your life as they relate to the purchasing power of your dollars.

[kastein]

Agreed... the only thing that has been going down recently is price of parts at the junkyard.

Milk is double what it was when I left for college 6 years ago. Gas is nearly triple what it was when I went into high school 10 years ago. Candy bars in the vending machine are double what they were. A pack of 5 resistors at Radio Shack now costs me double to triple the prices I remember...

[Boatwrench]

Candy bars in the vending machine are double what they were. ...

and smaller too

[Ecomike]

Agreed... the only thing that has been going down recently is price of parts at the junkyard.

Milk is double what it was when I left for college 6 years ago. Gas is nearly triple what it was when I went into high school 10 years ago. Candy bars in the vending machine are double what they were. A pack of 5 resistors at Radio Shack now costs me double to triple the prices I remember...

Milk here in Houston is, and has been for nearly a year now, 1/2 of what it was in 2007 to 2008.

I bought a new 17" laptop three months ago for $349, that if I bought it 2-3 years ago would have been $2000 to $4000. Electric rates here the last 12 months have been 1/3 of what they were in the first half of 2008.

The Iphone and Droid did not even exist 24 months ago at any price, about $600 when it came out (Iphone), now it is about $100.

Gasoline here is about 60% of what it was in 2007-08.

I can paint a price picture to back up my claims too. The point I was trying to make is the dollar has been climbing for about 4 months now, and has been climbing even faster lately with the Euro / Greece panic building up.

Oil has fallen nearly 10% from its recent highs (near $87) in the last 7 days!!!!! Even at $87, oil is still about 60% of its all time highs in 2008.

[Ecomike]

Believe that everything is peaches and cream because the dollar, a fiat currency, is up against another Fiat currency (another fiat currency who is tied to countries with debt problems worse than ours). The overall value of the dollar is falling Mike. I certainly can not buy 20% more goods than I could on the 52 week lows. As a matter of fact I can't buy nearly as much because the price of gasoline has doubled since then. Are you even paying attention to the facts? I'm Not talking about the bullshit numbers that some agency reports, I'm talking about the facts of your life as they relate to the purchasing power of your dollars.

I am not saying everything is peaches and cream, I am saying the sky is not falling as some have tried to say before.

[kastein]

You've got a point on oil and other energy prices, but as someone in the electrical engineering field, the laptop/consumer electronics price comparisons don't really hold much water with me :spin1: For a given level of performance, electronics always get cheaper over time. I paid $210 for 2GB of DDR2 SDRAM (4 512MB sticks, Patriot brand) in fall 2006; I paid just $110 for 8GB of DDR3 SDRAM (4 2GB sticks, Patriot/Kingston/Crucial brand, I forget) in fall 2009. The last big price war early in the last decade resulted in my dad paying $24 for just 512MB of SDR SDRAM, a killer price that wasn't duplicated for years after that.

Moore's law has not been broken in ~30 years, only badly stretched, and will likely continue for another decade or two at the very least, even though people have been hailing its death since the late 70s.

Milk is down about a dollar or two a gallon here from its high - $4.89, as I recall. It's presently $2.89... but I distinctly remember seeing $1.29/gallon.

I guess what I'm saying is that inflation continues, other countries are just inflating faster.

[XJEEPER]

Saturday, May 5, 2007 12:50 a.m. MDT

Gasoline prices in Utah already are averaging more than $3 a gallon. On Friday, Utah gas prices hit $3.05, the highest recorded average for the state and four cents higher than the national average of $3.01, according to AAA.

Fast forward 2 years..........





(Salt Lake City, UT) - Average retail gasoline prices in Utah have risen 0.8 cents per gallon in the past week, averaging $3.08/g on Sunday May 2, 2010.
This compares to the national average has increased 4.1 cents per gallon in the last week to $2.90/g, according to the Pump Patrol Report at GasBuddy.com.

The change in gas prices in Utah during the past week was $1.01/g higher than the same day one year ago and 13.4 cents per gallon higher than a month ago.
The national average increased 7.9 cents per gallon during the last month and stands at 84.3 cents per gallon higher than this day a year ago.

[Boatwrench]

Uh-Oh. My stocks fell a whole bunch in the last hour...

[Ecomike]

Uh-Oh. My stocks fell a whole bunch in the last hour...


I got lucky today, or bought the right stocks, only lost 1% today. The markets dropped 10% late today, most of the drop in 60 seconds from what I just read.

Dollar is near the 2008 and 2009 highs as of the close today, money ran to the bond and treasuries, and dollar. Oil is down $10 a barrel in just 3 days now.

[XJEEPER]

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532490

http://www.investors.com/image/WEBaa050510_345.gif.cms (http://www.investors.com/NewsAndAnalysis/PhotoPopup.aspx?path=WEBaa050510_FULL.gif&caption=)


In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.

But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

Because debt levels and interest rates can't be lowered overnight, the obvious way of staying within the AAA limits set by Moody's would be to raise revenue.

"It would bias the remedy in favor of tax increases for countries that want to improve their bond rating," said Brian Riedl, budget analyst at the conservative Heritage Foundation.

Because economic growth is a key to fiscal health, Riedl argues that a ratings agency concerned about whether bondholders are repaid should bias spending cuts over tax increases.

Brian Bethune, chief U.S. financial economist at IHS Global Insight, says "the occasional missives about this problem (from ratings agencies) could put some pressure on rates" in advance of any ratings change.

Bethune is among economists who see CBO projections as "wishful thinking."

The budget scorekeeper's outlook assumes discretionary spending restraint, broad-based tax hikes and well-behaved interest rates.

Nevertheless, it sees debt reaching 90% of GDP in 2020, up from 53% at the end of 2009.

In the new Milken Institute Review, Len Burman, former director of the Tax Policy Center and now a professor at Syracuse University, calls CBO projections "wildly optimistic."

"They presuppose that interest rates on government securities will remain historically low, and that the economy will grow at a historically healthy clip," Burman wrote.


:patriot:

[Ecomike]

Author unknown:

Comments made in the year 1955!
That's only 55 years ago!


'I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $10.00.

'Have you seen the new cars coming out next year? It won't be long before $1, 000.00 will only buy a used one.

' If cigarettes keep going up in price, I'm going to quit. 20 cents a pack is ridiculous.

'Did you hear the post office is thinking about charging 7 cents just to mail a letter

'If they raise the minimum wage to $1.00, nobody will be able to hire outside help at the store.

'When I first started driving, who would have thought gas would someday cost 25 cents a gallon. Guess we'd be better off leaving the car in the garage.

'I'm afraid to send my kids to the movies any more Ever since they let Clark Gable get by with saying DAMN in GONE WITH THE WIND, it seems every new movie has either HELL or DAMN in it.

'I read the other day where some scientist thinks it's possible to put a man on the moon by the end of the century... They even have some fellows they call astronauts preparing for it down in Texas .

'Did you see where some baseball player just signed a contract for $50,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the President.

'I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now.

'It's too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet.

'It won't be long before young couples are going to have to hire someone to watch their kids so they can both work.

'I'm afraid the Volkswagen car is going to open the door to a whole lot of foreign business.

'Thank goodness I won't live to see the day when the Government takes half our income in taxes. I sometimes wonder if we are electing the best people to government.

'The drive-in restaurant is convenient in nice weather, but I seriously doubt they will ever catch on.

'There is no sense going on short trips anymore for a weekend, it costs nearly $2.00 a night to stay in a hotel.

'No one can afford to be sick anymore, at $15.00 a day in the hospital, it's too rich for my blood.'

'If they think I'll pay 30 cents for a hair cut, forget it.'

[RichP]

Author unknown:

Comments made in the year 1955!
That's only 55 years ago!


'I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $10.00.

'Have you seen the new cars coming out next year? It won't be long before $1, 000.00 will only buy a used one.

' If cigarettes keep going up in price, I'm going to quit. 20 cents a pack is ridiculous.

'Did you hear the post office is thinking about charging 7 cents just to mail a letter

'If they raise the minimum wage to $1.00, nobody will be able to hire outside help at the store.

'When I first started driving, who would have thought gas would someday cost 25 cents a gallon. Guess we'd be better off leaving the car in the garage.

'I'm afraid to send my kids to the movies any more Ever since they let Clark Gable get by with saying DAMN in GONE WITH THE WIND, it seems every new movie has either HELL or DAMN in it.

'I read the other day where some scientist thinks it's possible to put a man on the moon by the end of the century... They even have some fellows they call astronauts preparing for it down in Texas .

'Did you see where some baseball player just signed a contract for $50,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the President.

'I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now.

'It's too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet.

'It won't be long before young couples are going to have to hire someone to watch their kids so they can both work.

'I'm afraid the Volkswagen car is going to open the door to a whole lot of foreign business.

'Thank goodness I won't live to see the day when the Government takes half our income in taxes. I sometimes wonder if we are electing the best people to government.

'The drive-in restaurant is convenient in nice weather, but I seriously doubt they will ever catch on.

'There is no sense going on short trips anymore for a weekend, it costs nearly $2.00 a night to stay in a hotel.

'No one can afford to be sick anymore, at $15.00 a day in the hospital, it's too rich for my blood.'

'If they think I'll pay 30 cents for a hair cut, forget it.'

I don't even want to tell you I remember when gas was 11 cents a gallon in the no name in Dover NJ, it was weasle piss to be sure but a heck of a lot cheaper than sunoco at 15 cents for their 190. In 73 I paid $1900 for a new Vega GT. I only remember minimum wage at $1.15 or so.

[Ecomike]

I paid $1995 for my first car, new Ford Pinto, no AC, Manual Tranny in 1972, December. $4.95 carton for smokes, .29 for gas, 0.10 for a Coke, .05 for candy,