(Untitled)

[renideo]

The commercial paper crisis continues, with major contraction in its seventh consecutive week. The dollar continues to slip and the euro continues to rise, while oil peaks. Still, long term interest rates seem on a persistant uptrend. The US, which has relied on foreign savings to support it for a long time, running a persistant trade deficit and

Comments

[itinerantsphinx]

Hey, sorry been such a long time. So shameful. Sorry...

But you know, I was talking to an American journalist friend about the dollar, and he was saying that the falling dollar was good for the US. Something about it being good for the export market I think... And if Americans don't travel it doesn't make much difference internally. (I don't get economics, as you know). Does that make any sense?

[renideo]

Yep, he's right, it is better for the export market. The reason is that it lowers the effective price of dollar denominated goods, and makes them more attractive to other countries.

However, that is not the only factor at play. It means increased inflation as goods that were known famously as 'cheap goods from china', among others, will also rise. It also means a weaker flow of money to US bonds etc, and diminished ability to keep the spectrum of interest rates low. It also means that the likelyhood that oil will continue to be denominated in dollars has been steadily shrinking.

Meanwhile, oil prices have been rising as the dollar falls. And oil is one of the US's major imports.

[itinerantsphinx]

Oh noooo, too much economics :p

I realise that import prices would therefore rise - do they care? Can they build economy by trying to do more business internally? I suppose that that has it's downsides also though, and international trade is there for an economic purpose.

Meanwhile, oil prices have been rising as the dollar falls. And oil is one of the US's major imports.

Isn't that related though? Oil isn't increasing in proce so fast against the Euro, for example. And I mean, if the dollar is devalued, then it's the same percentage of the country's wealth which is being spent on importing the oil?

Forgive me my deep ignorances...

[renideo]

lol, no deep ignorances.

They do care, because the US is inextricably entangled with other countries in its operations. But, the way in which this is true is complex. I wouldn't want to begin to try to tackle it here.

But also, things which sometimes seem small compared with the whole economy can become big, if they affect vulnerable areas. That's one of the major problems right now, in essence. Though, that understates it.

[nuncius]

Yes US exports become cheaper and more likely to be bought by richer countries, i.e. china [because that's how poor we're getting]
The one significant problem with this strategy?
The US doesn't have any raw material exports anymore.

Except grain, maybe cotton, and badly made steel, the US only exports highly skilled goods [i.e. computers]. Of course in order to make computers cheaply, we import the parts from taiwan and china and korea. Which will only get more expensive.

Also, in the past thirty years, Americans have become accustomed to eating, wearing, and buying imports. We're no longer a self-sufficient economy. And the only way devaluing the dollar helps Americans [I mean people, not corporations] is if we buy American made goods. Which we don't. So we fucked ourselves over in the early 2000s by not intelligently preparing for a market crash or simply avoiding said crash. And so now we're only digging our hole deeper.

[barliman]

I prefer not to buy grain from the U.S., it makes for terrible beer.

[barliman]

The dollar is doing fairly well in Bree, I must say.