Why is the US dollar getting weaker compared to other currencies?
Answer:
The more a country is living beyond its means and in this case living on obscene levels of credit, printing money as if there is no tomorrow without backing up that money supply with products , the $$$ loses purchasing power and investors confidence. The sins, stupidity and insanity are catching up!
Further - The strength of a currency is determined by the products produced for export to get hard currency reserves to pay for imports. Look at China as an example. They have become the banker for the US... holding vast reserves of US treasury bills, bonds and US$ cash. I think the latest figures were around 1.8 Trillion.. 1.800.000.000.000 $$$ That is money that left the US and works for its adversaries.
Further - the US being a highly industrialized country with enormous manufacturing capabilities is directing that capacity more to destructive purposes (The military Industrial Complex).producing very expensive military hardware worth hundreds of Billions each year which will be destroyed. That does not make any sense.
Further - The manufacturing base in the US is being systematically curtailed, eroded due to outsourcing to countries where labor is cheap. That is pure greed and the fallout can and will be catastrophic in the long run for the US. It means that the wealth of the nation is being shipped out. Whole industries have left contributing to more unemployment, less social services because the tax base becomes ever more eroded. All these negative factors contribute to a lack of confidence regarding foreign investment in the US. Should China ever decide to cash in all their $$$ reserves.. that will be the end of the US$.
I feel sorry for you folks South of the border. China, India, the EU and Russia with its enormous potential will be the shining stars - they already are. They are smarter and stay away from all the wars.... gleefully watching the slow but inevitable demise of the US.
Second question first, Canada's , the looneys' been on a tear recently, slipped a little but not alot.
The US buck is down due to other countries economies being stronger, them having commodities like copper, oil, fresh water, diamonds etc that buyers in companies want.
However in Canada our manufacturing sector is going in the toilet because we can't compete with the cheap labour in India , China and elsewhere.
my guess is, the US economy is getting very lazy nowadays
i didnt like the way sig ended his, its sounded like despair, all these years, with war and just pouring our money into manufacturing weapons we've been slipping and not to mention... bush, its kinda one of the reasons people have been hassling him and saying bad things about him. but many countries are trying to grow economically and theyre growing faster than us
Our dollar has been supported, strengthened, by countries keeping it in their vaults. They supported our borrowing by keeping it strong so we will buy from them.
The problem is, it is inflationary. They cannot keep supporting the dollar. Our spending is the dollars strength. When we have finally borrowed ourselves to death, we will have to go into a recession. Our politicians have kept us from going into a recession, because it is good politics. So, the government has been spending like mad and it has been increasing our economic strength.
We are in an artificial economy, created by borrowing and spending. When we finally do go into a recession, it will be bad. It is part of the economic cycle of supply and demand. The economy is supposed to breathe. Growth, Recession, Growth, Recession. It prevents businesses from over expanding and over supplying the market place.
When you create to much product, it devalues the price of the product. therefore, the labor, unless you create higher productivity through innovation. The computers were a blessing for business, More work, less time.
The Federal Reserve has reduced the interest rate for a bananza of borrowing. The economy was already beginning to faulter. Most people do not remember that all of the prices were falling. You can't even find anything about the depreciation of prices, meaning, to much competition. The federal reserve rate was reduced so low, that any lower would have been a money give away, lower than the 4% cost of managing money. It was going to be a disaster. The economy was slipping, due to the depreciation. Low and behold, gas prices went up. All of the manufacturers had to add the fuel cost to prices. It leveraged growth, by stopping the depreciation cycle, but the cost of borrowing has gone up. The higher gas prices creating higher costs of products, stimulated the economy and created higher taxable goods. When the gas prices go down, it creates a profit for an already inflated price, for the manufacture. It also looks good on wallstreet. It looks like the businesses are doing well, when the costs of production, went down, due to gas prices falling.
Ladies and Gentleman, when you are talking about inflationary fears, look at your debt, you are carrying inflation by carring debt. An inflationary fear, that the Federal Reserve watches, is Wages. When people start demanding higher wages for the costs of living, the market place will have to add the costs, therefore, increasing inflation and slowing down growth.
This is why we are outsourcing and shipping in cheap labor. It keeps the costs down. Here is the problem, who would want to buy our products, when our products have a debt price tag added to the value of the product. You don't see it, but it's there.
Now, the idea was, we were supposed to trade with China when Chinese have more money in their pockets. Hello,,a big duh! Why would they want to buy our higher priced products when they have a billion poor people, not counting India. All of our manufacturing base, including military, will be made somewhere else. Until, it's cheaper to make it here, due to the price of fuel transporting it.
Also, China is scooping up all of the fuel reserves around the world, their currency will eventually compete with the dollar. As soon as we go into a recession, the dollar is through. We have over supplied the world with dollars and they are grossly inflated.
I am waiting for something to slip and then, its the domino effect. Our country has been through two financial disasters, one in 18** and the other in 1929. They were both from over speculation. The housing market has been over speculated. Over supply kills the market place. The housing market has been over speculated by greed. The sub prime lenders leveraged the prices by giving people money, who could not afford the loan. This was a criminal act. The sub prime lenders cannot be that stupid. Interest rates will go up. Balloon payments, will be due. With the price of fuel, cutting into their paychecks, it will not be too long.
Oh, I have heard another reason why we went into Iraq, and it sounds reasonable. Because Saddam was threatening to get rid of his holdings of dollars, for Euro's. Once the foreign governments and investors stop buying our bonds and supporting our spending, we will finally get some political change in our country, hopefully to throw out both political parties on their a**'s, since they are all greedy pimps, Wineing and Dining with Big Money...
as for why the dollar is getting weaker is id say other economies are getting stronger.
some guy said we are borrowing over our eyeballs and if thats the case we are still able to finance it so not big deal. the problem is the dollars out there is so much in quantity that there isnt enough uses for them. its like back in the days where kingdoms were around, rocks were valuable because they were able to make walls for defense but today theres no real use for them so its practically worthless. another reason why the dollar is down cause our trading partners arent so kind in spending their savings so we end up printing loads of money, its like back to the gold standard. america was shipping alot of gold out and was running out of reserves for gold so they dropped the gold standard for the floating paper that can be printed easily.
US dollar getting cheaper compared to any other currencies means that the demand for dollar is falling.this can happen due to falling US interest rates causing an outflow of hot money, rise in impotrs in USA causing a rise in supply of dollars, US goods are less competitive in international market causing a fall in demand for dollar,etc.any factor that woould increase supply or decrease demand for US dollar would result in US dollar to get weaker against other foreign currencies.
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers: