Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (10799)	5/8/2006 12:38:23 AM
From: koan	Read Replies (1) \| Respond to of 78426

A massive creation of dollars by the US will eventually end up being inflationary. As the great John Kennth Galbraith one said: "the most effective means known to man of transferring wealth from the poor to the rich is through inflation". Bush from day one, has run his presidency with no economic advisors at all for all practical purposes. O'neil was an incompetant figurehead and snow is a pathetic figurehead. The reason is becasue Bush and especially Cheney wanted a feee hand to steal as much from the poor as possible and give it to their rich friends. It was/is class warfare. The VERY FIRST thing bush did was cut a trillion dollars or so in taxes for 1/10 of 1 percent of the richest people in the country. The next was enrich corporations even more. As mentioned, the congressional budget office has said this is the primary reason for the huge deficits. Putting the US back on an even keel might not even be possible now from an amortizing point of view; which only leaves currency devaluation!

To: Broken_Clock who wrote (10799)	5/8/2006 8:25:50 AM
From: E. Charters	Read Replies (3) \| Respond to of 78426

No. A weaker dollar makes the trade deficit better at least temporarily. It is what Canada should have done. In fact the Liberals were on the right track when they allowed the Canuck buck to weaken before they got de-elected. You heard some ferment against it, but the ferment was wrong-headed. Perhaps even driven by a US lobby, as we export a lot of stuff to the States. This is what the States wants out of Canada. Economic mercantilism so to speak. Cheap goods. If they don't get it they bring in free trade, if that does not work then they erect trade barriers. Kind of schiz but that is what they did. It was traditional that when a country, before the golds standard and even after, got into trouble with exports, they devalued their currency. Other nations didn't like this as it caused trade imbalances. In other words more goods ended up coming in and their relative cheapness started a currency flow outwards to the exporting nation. (This happened with Japan from the sixties onward. People called it dumping.) You would think that they would welcome the cheap goods, but it is a double edged sword. When currencies strengthen, it starts to threaten the exporting nation and their economy facing hidden inflation in order to compensate inevitably declines. This again happened to Japan finally in the 1990's. So, no, a weak dollar is the therapy for a bad trade balance. It does not threaten taxpayers, except where the US is primarily an energy and goods importer. UH -Oh.. ok that is a bad. Do I contradict? No, I merely underscore what is wrong with the US economy. It no longer produces. And in an attempt to balance the production at home so its businesses survive in an ever higher tax regime and ever higher regulatory cost regime and ever higher raw materials and labour cost, it tries to outsource. This compounds the outward dollar flow and trade imbalance ever further. Salaries weaken back home, but the output and trade does not increase. The US is facing a major economic problem. It is facing the end of an era, where its pre-eminence in trade and production will not longer be tenable. If that happens, and it appears inevitable, then its days as a super power are numbered. The problem is not whether to make a stronger dollar, or not, the problem is how would you do it? Production does not match and perhaps never will. The US got its world advantage in production compounded by its control of Europe and Asia dollar wise. With the US dollar being used a medium by the US political and military might being pre-eminent, which flowed out of the pre 1940 era, the US dollar could be printed ad infinitum without devaluation. This allowed the best of both worlds and the trade imbalance did not touch the economy. But this advantage has faded. It can no longer be ignored. I firmly believe that Maynard Keynes was blackmailed into making anti-gold statements because his homosexuality was discovered in that bygone era. He said gold was a "barbarous relic" and in many august tomes preached against its use for trade mightily. His clout as a foremost economist could not be ignored. As an economist he should have known better. The timing was fortuitous for the US administration to emplace by the Bretton Woods agreement the primacy of the US dollar as an international medium of exchange. This allowed them to ecnomically dominate the world of trade without a sou of production. A quote on gold --> The monetary quality that sets gold apart from other commodities is not evidenced by gold's performance relative to any fiat currency; it is evidenced by its performance relative to other commodities. For example, the prices of all commodities rose in response to the inflation of the 60s and 70s, but as soon as inflation FEARS began to surge the gold price began to move sharply higher RELATIVE TO OTHER COMMODITIES. This, not the fact that a growing supply of currency was pushing up all prices, was evidence of gold's monetary quality. By the same token, after Paul Volcker managed to bring inflation fears under control the gold price began to decline relative to the prices of other commodities. This, again, was evidence of gold's monetary quality. Note that ACTUAL inflation wasn't brought under control until years after the 1980 peak in the gold price (the money supply growth rate remained high throughout the first half of the 1980s), but Volcker's actions managed to restore CONFIDENCE in the US$.