The currency wars are ON!!!!!!!

[Neubarth]

The currency wars are ON!!!!

All of the industrial nations are now engaged in currency wars with each trying to lower their currency opposite the others. If we lower our currency we can sell more of our product at lower prices in foreign markets. Yahoo!

The long term result will be that chaos will ensue.

The short term result is that commodities will soar in price. In the United States, all the Social Security recipients will not receive enough in monthly payments to buy their food as that food (processed agricultural commodities) will be too expensive.

The housing prices will stop going down and that crisis will disappear with only a whimper as the people see inflation arriving just in time to start pushing house prices up and up and up.

 

[Mad Scientist]

But, but the G20 said that they wouldn't devalue currencies!?!

 

[editec]

Could somebody explain to me how the USA will devalue its currency? (except by increasing or decreasing its M1 or debt loads, I mean)

I mean I understand how the market can do that on the open exchange rate.

But how does our government officially declare an exchange rate?

And if they do impose an offical exchange rate, and the market disagrees with their accessment, won't the currency market overhelm the offical declaration, anyway?

The ONLY way that I think this might work is we ALSO tighten control over international trade at the same time.

And even if we did that, if the government's offical exchange rate isn't in line with the market's accessment of the value of that currency, the market is going to be able to buy or sell that currency at the exchange rate IT thinks (collectively) is the RIGHTER value.

Or...

am I missing something about the nature of international currency valuations?

I'd appreciate your thoughts on this subject since it is obvious to me that some of you are much more conversant with this kind of international currency valuation system issue than I am.

 

[Mad Scientist]

Devalue the currency means (to me) that the Fed will print more dollars thus devaluing the currency.

Precious metals are valuable because there is a finite amount of them. Yes there have been bubbles in the metals markets over the years but metals have remained historically stable.

If more dollars are printed without the accompanying growth of the economy, those dollars lose value because there are just too many of them.

What changed my thinking and viewpoint about money was the realization that it is not an instrument of value, but an instrument of debt. DO some reading about the Federal Reserve, you'll learn a lot and get scared shitless!

You can look at the rise of gold like this. Yes there is a bubble of sorts but the main reason gold has risen is not because it is really more valuable, but that it just takes more dollars to buy the same amount of gold because the dollar is worth less. The same thing is happening to commodities as NeuBarth pointed out. You need more dollars to buy that stuff too. And the Feds answer to all this? Print more money? Currency devaluation? WTF?

People are buying gold as a hedge against inflation and the dollar crashing. Buy gold now, dollar crashes, you then trade that gold for whatever is the predominant currency at that time. But the gold bubble (like all bubbles) will burst. The smart ones will have sold before then. Who knows when that will be. I don't have any gold but I'm thinking of buying silver.

 

[Norman]

Currency war - a war where the mission is to kill your own citizens.

TBH, I just can't believe the US government economists are so silly that they think that devaluing the currency does anything good to the economy. In the long run that does not help exports anyway as the prices raise, it just makes you less competitive overall.

So thus, I have to conclude that this is all just a cover up to bail the banks again. Or rather to inflate the houising bubble again.

US owes rest of the world so much that, the rest of the world wants to be paid back so they throw good money after bad.

I am probably wrong but these are my insights.... Then again, just lookin Bernanke or krugman or other toons, makes me think that "never try to explain something that is adequately explained by stupidity". (that or they are pretty good liars).