Posted in: zjnq.com Date: March 14th, 2010
The US is supposedly at fault for triggering this global crisis by allowing such unregulated Capitalism, and the American financial hegemony is over.... the end of the Empire, blah blah blah...yet, when the poop hit the fan, the rest of the world dumps their own currency onto the market and then runs back to the dollar as their their reserve currency? Wtf??? The fluctuation in the value of the US Dollar has a lot to do with the price of oil. Oil is traded in USD. Oil fell, so the dollar went up. Of course there are other factors, but when the price of oil plummets by more than 50% in a just few months it will always have a noticeable effect on the USD's relative value during that time.There are two things to remember about the US dollar.
1. It is the worlds reserve currency.
2. This is almost the most important, but all commodities, from pork bellies to Oil to gold is priced in US dollars. At the end of the day, that is where our strength comes from.
Also, it is not that the dollar has gotten that much stronger. A good indicator of that is the price of gold. Gold is now back above the 800 dollar mark. I can remember about 4 years ago when it was about 425.
The point is that it is not that the dollar got super strong. True, the dollar is as of now considered a safe haven for the short term, but it is mainly that foreign currencies got really weak. If you are wondering why gas at the pump is down, it is because oil is down because of
A- greatly reduced demand because the world economy is in the toilet.
B- A barrel of oil is down because of speculators getting out of the game. When the dollar got really weak, many fund managers sunk money into oil. However, with the meltdown of many companies, many fund managers had to sell their shares of oil to shore up their accounts, therefore devaluing the value of oil.
Anyways, I hoped this helped clear up your question.Obviously you know too much and must be dealt with!I actually haven't read anything directly relating to the causes of the recent rise of the dollar, but I know that when one country's economy is doing worse than the others, the pressure is for the other economies to buy goods from the hurting economy, given the discounted prices. When more countries buy more of the discounted goods from the hurting economy, the demand for that currency goes up, driving the price of that currency up. This may not at all be the main reason, but it is one of the countervailing forces during economic slumps.because people are now buying commodities like gold and silver. all sold in US dollarsours isn't going up, theirs is coming down to meet ours. Its not ironic. There must be some place to put your money if your a coporation, country or individual. The safest, most liquid place so far is the United States. The US dollar is different than any other currency. Funds went to the USA because there is no other suitable replacement. The US dollar goes up when oil prices go down. Deflation in real estate and oil, increases the US dollar value.Take another look in January, and you'll get a better perspective.Maybe it's US investors cashing out of foreign investments because they are broke and they need to make payments in the US.The crisis in the US means that Americans have less disposable income. This means, amongst other things, that they consume less goods that are imported from the rest of the world.
Since the US economy is so large, many countries will lose a lot of income when that happens. To counter that, these countries can buy dollars in order to artificially depreciate the value of their currency against the dollar. This is what China has been doing for quite some time. It causes some trouble for those countries in the long run, but in the short run it allows China to maintain its market for exporting to the US.Not quite that simple I am afraid.
The net flow of capital into America through either
1. lending from unaffected countries to struggling US entities
2. US entities in dire need of liquidity calling in foreign loans
has artificially propped up the dollar - the worst thing for us.the u.s. government bailed out their market, how does the world who still play by the rules make it when thats happening, other then dropping are dollar to match itI think the government knows this as well and in some kind of cruel yet needed conspiracy, the government has caused this crisis. They knew that other countries were getting to much power and they knew that other currencys were climbing too high. soo they knew if they made the US economy struggle in a controlled manner then all the power would shift back to us and we would be right back on top again. I think the economy will climb right back up within the next two years and it will be even stronger than before.
Isnt it funny how gas prices just plunged like 10 cents every week. Well I think that is the first step to help the economy. the government has alot more control on the price of gas and they know that lower gas equals more economy so this is obviously phase one of the plan. #If you have any other info about this subject , Please add it free.# |
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