The real danger of economic failure occurred just prior to President Bush leaving office. If you recall, the economy was falling off a cliff at that time with the financial sector of the USA economy paralyzed. Some of the largest banks, insurance companies and manufactures in the world were facing bankruptcy due to an unregulated capitalistic system that allow excessive leverage/risk in the form of credit default swaps and mortgage backed securities.
Right now the Obama Administration is focused on the deflationary effects of the near economic collapse, so they have come to the rescue of the financial sector and auto industry by enacting bailout legislation and legislation designed to stimulate the USA economy. The side effects of combating the deflationary trends has been a growing deficit and a weakening of the dollar against other currencies. The dollar has particularly been weakened; because, The Feds have lowered interest to a near zero rate to help the housing slump, and the Feds have been aggressively buying mortgaged back securities to stimulate home and commercial real estate. This has lead to foreign countries selling US debt, that cost them almost nothing in in interest expense, (eg selling treasury bill short, for example), and using the proceeds to buy debt in other currencies that pay a more realistic return, (eg buying debt of emerging Asian economies). If you think of the dollar as a commodity, its value decreases as demand for it decreases. I expect these conditions to reverse early in 2010 when the Feds begins to focus more on the weak dollar, the deficit, and possible inflationary pressure by raising interest rates, and the White House submits budgets that will allow surpluses to reduce national debt. Regards, LelandJ On 11/22/2009 09:49 AM, Publius Maximus wrote: > I'm sure there were many passengers on the Titanic who initially > weren't worried by the unusual vibration they felt. The boat was, as > we say today, "too big to fail." > > - Publius > > On Sun, Nov 22, 2009 at 10:31 AM, Leland F. Jackson, CPA > <[email protected]> wrote: >> I'm not worried about hyper-inflation or a crash in the USA >> dollar, as the Obama Administration and Feds continue with >> measures to revive of the USA economy, which will in time >> reduce unemployment. >> >> #-------------------------- >> Excerpt: Washington Post >> >> By Kevin Plumberg and Neil Chatterjee Reuters >> Thursday, November 19, 2009; 10:27 AM >> >> HONG KONG/SINGAPORE (Reuters) - Federal Reserve officials on >> Thursday downplayed the consequences of the falling U.S. >> dollar, underscoring that deflation is still a threat, >> especially with commercial real estate prices falling. >> >> Dallas Fed President Richard Fisher said in an interview >> with Market News International that the weakening dollar, >> which hit a 15-month low against major currencies on Monday, >> is only one of the factors the Fed watches when setting policy. >> >> "You pay attention to this," Fisher said in reply to a >> question about the effects of a weaker dollar. >> >> "On the other hand, in terms of its inflationary input, >> unless it becomes disorderly, a depreciating dollar -- a >> gradually depreciating dollar -- doesn't necessarily add an >> enormous inflation impulse." >> >> Fisher will become a voting member of the Fed's >> policy-setting committee in 2011. >> >> The dollar has fallen 7 percent so far this year and likely >> has become a funding vehicle for bets on higher-yielding >> currencies in growing emerging markets. >> >> Philadelphia Fed President Charles Plosser, answering >> journalists' questions after a speech in Singapore, was also >> not worried about dollar weakness. >> ad_icon >> >> "There's no particular reason you wouldn't expect the dollar >> to go back to where it was before the panic set in -- that >> is essentially all it has done at this point. I don't view >> that as anything particularly of concern," he said. >> >> Plosser will also in 2011 become a voting member. >> >> TRADE OFFS >> >> Fed Chairman Ben Bernanke in a speech on Monday startled >> investors by commenting directly on the dollar's value. He >> said the focus on the Fed's dual mandate of price stability >> and jobs growth will help the dollar to be "strong." >> >> >> >> http://www.washingtonpost.com/wp-dyn/content/article/2009/11/19/AR2009111900514.html >> >> or >> >> http://tinyurl.com/y8eb6zz >> >> #-------------------------------- >> >> Regards, >> >> LelandJ >> [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
