The value of the U.S. dollar’s a matter of opinion.

Discussion in 'Economy' started by Supposn, Apr 27, 2011.

  1. Supposn
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    Supposn VIP Member

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    The reputation of any currency is a matter of opinion.

    The value of a currency, (similar to many goods) is somewhat dependent upon buyers’ opinions; we’re uncomfortable considering the extent of subjectivity that’s factored into the value of any currency.

    If those who pretend to manage governments’ currencies honestly consider the consequences of panic, they must often suffer and are awaken from their nightmares.

    Panic is powerful force; a currency can power dive driven by panic. Fearing the repercussions due to legislators’ publicly considering default of U.S. debts is not a foolish consideration.

    Brazil’s experience demonstrates the great extent of opinions effect upon currencies values. It’s a remarkable story.

    How Fake Money Saved Brazil : Planet Money : NPR
    or Google: npr, how fake money saved brazil

    Respectfully, Supposn
     
  2. Mr. H.
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    Mr. H. Diamond Member

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    I'm not well versed on this particular subject, but I do know this ain't Brazil.
     
  3. Mad Scientist
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    Mad Scientist Feels Good!

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    So we're supposed to believe and NPR propaganda piece that that QE II and maybe QE III (Fiat Money) is good for us huh? It's only good for the Bankers.
     
  4. sparky
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    sparky VIP Member

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  5. editec
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    editec Mr. Forgot-it-All

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    What were Brazils import/export numbers at the time?

    What was the national debt?

    How about the debtload of the average citizen?

    Those things are going to matter a lot to really understand why this worked.

    If Brazil's balance of trade was positive, then I can see how this might work since their devalued currency wasn't expected to buy a whole lot of foreign made goods.

    Cause let's face it, you may be able to convince the producers in Brazil that the REAL is real, but could you convince foreign trade partners?

    I don't think so.

    Maybe I'm missing something, but I suspect that the USA is not in the position to pull this off because of our trade imbalance.
     
  6. Norman
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    Norman Gold Member

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    And exactly what value ISN'T a matter of opinion?
     
  7. Toro
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    Toro Diamond Member

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    All value is a matter of opinion.

    That's what makes markets so great.
     
  8. Supposn
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    Supposn VIP Member

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  9. Supposn
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    Supposn VIP Member

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    Restoring public confidence

    Mr. H, Mad Scientist & Editec:
    According to the article some of the prior government administrations implemented the conventional austerity measures to halt their currency’s inflation.

    All of those prior administrations could not slow down their currency’s rate of inflation.

    What Brazil did in 1992-93 was create an imaginary currency they described as a Brazilian “Real”. I’m haven’t read what they pegged that imaginary currency to. Possibly it was pegged to the value of the U.S. dollar or to the value of gold?

    Each day the media reported upon the government’s announcement of the current “exchange rate” between Brazilian’s actual currency and the imaginary “Real”. Good news or bad, the announced rate was an "honest" rate.

    The population continued to receive their pay and spend their actual Brazilian currency. The point was to restore the population’s confidence in their actual currency.

    I’m sure that this would not have succeeded if they did not also continue implementing the conventional austerity measures.

    Respectfully, Supposn
     
  10. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I think the notion that the value of the dollar is a matter of opinion is nonsense. Go to the supermarket and buy the same stuff you bought a year or two years ago and tell me the value of the dollar isn't less than it used to be. When you have to pay $50 instead of $40, that ain't no opinion.
     

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