the US dollar is turning into toilet paper

[xxThe_Lebowskixx]

my minimal understanding of the econmics of the US currency is that the dollar is getting killed because

the US imports more stuff then they export
the US has huge debts in dollars
the US gov spends more then it takes in

Everything I read and hear pretty much says that dollar will definitely continue to decline, but will do so slowly because a hard fall could hurt the World economy. I have not read or heard a single forcast of the dollar recovering.

While this might not mean much to you guys, for people living overseas, the dollar has declined about 20% in the last three years.

I have invested in Foreign Index ETF like IF and EWM because when the dollar goes down, I believe these go up and equal amount. These seem to work well because 1. they are easy to purchase, 2. they are inversed to the dollar, 3. they gain interest

Comments on the future of the dollar?

[guids]

My investment theory:

bullets

[Jeffmet3]

[ QUOTE ]
my minimal understanding of the econmics of the US currency is that the dollar is getting killed because

the US imports more stuff then they export
the US has huge debts in dollars
the US gov spends more then it takes in

Everything I read and hear pretty much says that dollar will definitely continue to decline, but will do so slowly because a hard fall could hurt the World economy. I have not read or heard a single forcast of the dollar recovering.

While this might not mean much to you guys, for people living overseas, the dollar has declined about 20% in the last three years.

I have invested in Foreign Index ETF like IF and EWM because when the dollar goes down, I believe these go up and equal amount. These seem to work well because 1. they are easy to purchase, 2. they are inversed to the dollar, 3. they gain interest

Comments on the future of the dollar?

[/ QUOTE ]

the dollar getting killed is good for US companies and the economy as a whole. it makes exports cheaper increasing competitiveness & sales. then, it makes imports more expensive without having to impose a tariff or tax. this is beneficial because due to the WTO these actions would be reciprocated.

but it sucks when you travel to europe and pay $7 for a .2 liter coke in Paris, or $20 for a value meal from McDonalds in Switzerland.

there's a balance though, because the drop is leading internationals to park their money elsewhere rather than in US debt. Hopefully the Fed knows how to manage it well.

i think short-term the dollar is supposed to be level/heads upwards.

long-term it's heading down though.

pretty sure this was recent in barrons.

also, how is investing in indonesia and malaysia hedging against the dollar?

[DannyOcean_]

I'm an econ major and have no real idea, i don't get into predicting currency movement much.

However, our actual economy is doing awesome and great. the value of the dollar is only marginally important, really. Good stuff to put in a news report when you are a journalist half-wit and don't understand anything about what you report on.

But the actual US economy is fine, so pls carry on.

[cbloom]

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the dollar getting killed is good for US companies and the economy as a whole. it makes exports cheaper increasing competitiveness & sales. then,


[/ QUOTE ]

This is simplistic and only a small part of the problem. I'm sure that all the countries whose currencies have crashed are delighted about it. Currency crashes are a "good thing" in the sense that as part of the economic lifecycle they turn restore balance by turning you into a 3rd work country where you can make cheap goods and export them at competitive prices. I don't think that's where the US wants to be.

[ QUOTE ]

However, our actual economy is doing awesome and great.


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LOL this is highly debatable/subjective. A few companies are doing very well, which is partly because the top 1% of the US is now more tied to international performance than to domestic performance. The vast majority of Americans have seen a decline in their "real income" (measured in cost of living) since around 1970.


ps. I'm with OP in that I have a large chunk of my investments in international funds. However, this is not the hedge you think it is. In fact, as I said before, the performance of the S&P 500 is more tied to the general world economy than it is to actual domestic economic health. eg. the manufacturing core of the US continues to die more and more each year but it doesn't affect the US markets much. Also, the economies of the foreign countries you're investing in are probably more strongly tied to the US consumer market than even US companies are!! Most of the "emerging markets" make their profit largely from the rich and greedy US retail market. As the US dollar continues to plummet, it will actually be all those foreign exporters that crash.

[Banks2334]

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Good stuff to put in a news report when you are a journalist half-wit and don't understand anything about what you report on.



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Or if you are an econ major and admitted to having no clue as well.

[bobman0330]

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The vast majority of Americans have seen a decline in their "real income" (measured in cost of living) since around 1970.

[/ QUOTE ]

Surely this is false. The majority of Americans didn't even have incomes in 1970. (Google says the US median age is 35, so most Americans weren't even alive in 1970.) Of those that were working then and are still working now, 37 years of experience probably raised most of their wages quite a bit.

[DannyOcean_]

[ QUOTE ]
[ QUOTE ]
Good stuff to put in a news report when you are a journalist half-wit and don't understand anything about what you report on.



[/ QUOTE ]
Or if you are an econ major and admitted to having no clue as well.

[/ QUOTE ]

What i said was that i didn't know how much the dollar would drop in value over the next 10 years, essentially. It's an investment question about will the dollar continue to decline over a long period of time, and essentially no one knows the answer exactly, not even the best economists in the world, let alone an econ undergrad who wants to specialize in game theory.

So good job with your reading comprehension and good job being a smart ass on the interent, idiot.

[DannyOcean_]

[ QUOTE ]
LOL this is highly debatable/subjective. A few companies are doing very well, which is partly because the top 1% of the US is now more tied to international performance than to domestic performance. The vast majority of Americans have seen a decline in their "real income" (measured in cost of living) since around 1970.

[/ QUOTE ]

I don't believe this is true. Real GDP per capita has certainly increased since then. It's at 44,190 as of 2006, which is a bazillionty times higher than 1970 (roughly 5000 dollars? if you use total GDP/population).

Whatever 'cost of living' thing you looked at obv. isnt really telling the picture. I don't want to hijack the thread, but the US economy is fine and dandy.

[guids]

What about the Amero, Ive read some rumblings about it, but whats the deal?