Lourens Veen wrote:
On Tuesday 11 July 2006 12:42, Timothy Miller wrote:
On 7/11/06, Hamish Marson <[EMAIL PROTECTED]> wrote:
Just my usual objections to the stability of the US$. Opinion on
this side of the pond at least is that long term the US$ will fall.
It would grate me to have money depreciating in a US bank account
because the $ was going down.
What if it went up? These fluctuations happen all the time, right?
Normally, yes. But you currently have a federal government that is
spending an incredible amount of money, much much more than it has. The
national debt, deficit and trade deficit of the US are truly out of
this world. Especially the latter will eventually cause the value of
the dollar to drop relative to other currencies (if I remember my Adam
Smith correctly).
The problem with that is that it would make products from those other
countries more expensive in the US, so their revenues would drop, which
they don't want. So, to prevent that from happening, for example the
national bank of China has been buying up dollars, keeping the course
artificially high. Also, the international monetary markets are largely
based on trust and right now, despite everything, investors still trust
the US dollar. If a number of them lose that trust and sell their
dollars, the course will drop, which induces others to sell, and you
have a chain reaction going the consequences of which are hard to
oversee.
Of course, if the US dollar really crashes then we'll probably have a
worldwide economic depression on our hands, and the finances of a
foundation will be the least of our problems.
Here are some links:
http://www.iht.com/articles/2006/07/02/opinion/eddebt.php
http://www.ctj.org/html/debt0603.htm
Of the USD keeps falling, can we just hold onto money in euros or
whatever until we need to convert at the last minute?
Well, the question is what that money is going to be spent on, and what
currency is needed for that. If you have a contract with a chip fab
that says that they'll produce your masks for a million US dollars,
then you need a million US dollars. The value of that 1m US$ in another
currency is entirely irrelevant (to you, if they pay their employees in
euros then they'll be in trouble if the dollar drops, because that 1m
suddenly isn't worth as much as it used to).
On the other hand, if the dollar drops a lot, prices of components
(produced outside of the US) will probably rise a lot, and your money
in the bank won't rise along if it's in US dollars.
What is wisdom? I don't know I'm afraid. I'm not an economist or an
MBa...
Lourens
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Like Lourens, I am by no means an economist. Given the global nature of
the project we are attempting, I don't believe there is a perfect
solution. We are dealing with a development company in the US
(Traversal). A large number of the project members are outside the US.
I'm guessing that the majority of non US participants come from
somewhere on the European continent, probably in the EU. If the
foundation were actually to receive large enough donations to help fund
as ASIC, we might well be dealing with a foundry somewhere in the Asia
Pacific region.
We will be subject to currency fluctuations just like every other
international company. If we get enough donations for it to be a
serious concern, then we will have to do what we can to hedge against
those fluctuations just like every other international company. I would
hope that if we get to that point we could actually get some insight
from some business folks who do this for a living.
Patrick
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