As the dollar goes down, it is supposed to level out things, and make our exports cheaper afar, thereby benefiting American manufacturers. Why does the dollar go down, first of all? Easy. It is because it is basically a worthless piece of paper or denomination, whose grand proliferation by a President run wild with spending, has so many of them floating around, that they are not taken for a grain of salt yet, but if nothing else, a laughing stock by other governments around the world. In his State of the Union speech, Bush proclaimed even more spending, more printing press moolah, and more and more deficits. Since about half of the debt offered for sale to sucker “investors” around the world, and even in the US, aren’t bought, they simply buy their own debt, thereby effortlessly increasing the money supply. Isn’t that incredible? They print the debt instruments and then buy it themselves, which may be extremely shoddy, but perhaps isn’t actually illegal. Like a fairy coming down from above, and the dollars magically appear on the books with not a single buyer except themselves who created the notes.
Now, the treasury has decided that those 9.5% interest bonds are costing so much, that they are being called in. Turn them in, and lose your income that you had counted on till 2009, or you lose, Buckwheat. Has the US government reneged on a legitimate debt? Yup. If you promised to pay someone a certain amount of interest on an investment, and you decided it was too expensive, and decided not to do it, could you be taken into court and sued? Yup. Except, you can’t sue the government without its permission, and it isn’t going to give it. In other words, the United States Government you know the one with the “full faith and credit” has reneged on a debt. Nothing new here of course, because governments throughout the ages have done the same thing over and over again.
As a matter of fact, the mere printing of trillions of them, is a reneging of a debt. The old “sound as a dollar” phrase is ridiculous and absurd now. The dollar is becoming toast, the government knows it, and is doing it deliberately. To “help” exports, is the reason the give. Everyone says, “Hooray for Bush, because he’s helping manufacturing. Let’s all vote for him.” Except it is doing in the citizens, even if we did have something to export. Think about it this way, which is not only logical, but correct. Since we all have to buy foreign stuff from China Marts, women buy Japanese cars with profits going back to Tokyo, and just about everything else is made overseas; lowering the dollar’s ’value’ (sic) makes our consumer goods cost MORE. The fictitious exports are helped, but Ma and Pa trying to survive, have to pay more for their necessities, which now are made overseas with cheap labor. Why? Because as the declining dollar makes our exports cheaper, it makes imports more expensive. This isn’t just my opinion, but a fact of life. For every action, there is a re-action, and this includes debasing a currency.
With the dollar going down the tubes, and interest rates in the neighborhood of 1%, why would anyone with a brain, buy debt of a government that is debasing its currency? China has, because it exports to us by the thousands of containers, but if you were the treasurer of Lower Slobovia, and had a billion numeros to invest, would you place it in the hands of a government that is debasing its currency, and pays little or no interest? The dollar has gone down about 25%. 1% savings account interest, which is taxable, makes a loss of 24%, as far as I can see. Foreigners are beginning to cash in and refusing to get sucked in for more of their currencies. Why would they invest in America? If they have a half brain, they won’t.
Now for Mr. & Mrs. America, who love government, and love dollars, what kind of fix have they gotten themselves into? “Oh, we have our dollars in a money market fund, and it pays 3%,” might be the response. This means that you have only lost 22%, plus tax on your 3%. When the dollar goes down by 25%, isn’t it logical to believe that consumer goods made abroad, which are most of them, will cost 25% more? Hey, you savers in dollars out there, WAKE UP. You are being robbed by big government, big time. They are trashing your dollars which you save in, lowering their value and purchasing power right before your eyes. And you keep them in banks?
But the “full faith and credit” outfit, insists there is little inflation. About 1% isn’t it? Something like that, I believe. Except that is a huge lie. Inflation, according to a dictionary definition, is simply “an increase in the currency supply.” Look it up for yourself. Just bought a dozen eggs before I started writing this, and they were $2.09 per dozen. A mere 50% increase over the past few months, but of course that must be an exception, because the government says its only 1%, and we can trust them, because they always look out for us, correct? All those bureaucrats sitting at their desks with their computers and calculators wouldn’t fool us, would they? Government is trustworthy, isn’t it? As Ronnie Reagan said in 1986, “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
The glorious media, are so taken in by the glitz and fake glamour of DC, that they simply print all the releases, without ever thinking about it. If the government says it’s so, it must be so, correct? I mean if they say they have created prosperity, and can print wealth, it must be true, huh? If government uttered one day, that the moon was actually made of green cheese, the media would print it, and say it’s true, I honestly believe. Think about it. Government says all is well, and the economy is improving. Yet the dollar is going down the tubes, thereby making imported things cost more. They say they are “creating jobs,” but experts say only a thousand have been created, and for a true recovery to be made, over 200,000 per month would have to be created. P/E ratios of stocks are at outlandish levels, and a respected stock magazine with a high subscription rate, (Morningstar), says that out of 5999 stocks, 2496 are losing money. That’s 41%!
Various nations and OPEC, are threatening to price their oil in euros, rather than dollars, and I would too, if I had something of value, such as oil, and wanted to get a return on my product. Why sell oil, priced in a fading currency? Now some of the Arabs are threatening to price oil in ounces of gold. If that happens, won’t that be a fine kettle of fish? Let’s see now, 14 barrels of oil for an ounce of gold? Since a barrel has 42 gallons, that’s 588 gallons of oil for an ounce of gold, or 70 cents a gallon. Not too far off, is it? Who has the gold to buy the oil? No one. All everyone has, are gobs of pieces of paper, with meaningless scribble on them, and nothing to back them up.
It’s a huge “Catch 22” position the government finds itself in, and we the citizenry are the ones suffering. The dollar goes down, and we can export, but no one will buy our debt, and our consumables go up in dollar costs to us. We raise the dollar and interest, and people buy debt, but we can’t export. We keep the interest low, and people re-finance their homes, and even build new ones. We raise it, and the housing market collapses, which to me, is the only thing keeping the ship afloat anyway. Can Bush keep it afloat till November? He hopes so. Who knows? But PLEASE protect yourself!