Currency exchange rates
nicks...@ece.villanova.edu
I just returned from three weeks in England, Scotland, and Ireland.
In terms of dollars, everything you buy is at least 50% more expensive.
My belief that exchange rates will be the mechanism by which trade
imbalances are corrected was only reinforced and this is unfortunate as
it makes certain a significant decline in U.S. living standrds. The shift
to an export savings driven U.S. economy will take several years. Until
accomplished, there's really no prospect of a better life for the American
people. It will take time for higher paying export driven jobs to replace
low paying service industrry employments. American labor must acquire
a whole lot of new skills.
It would be very difficult to convince the public that there is little or
no inflation in the United States. Currency adjustments are making imported
goods cost more and we import much of what we consume. Productivity induced
deflationary pressures have kept inflation in place everywhere even in
the face of enormous excess liquidity. The situation is fueling worldwide
economic growth which will likely accelerate. It is a perfect storm and
will certainly ease our situation.
The Chinese currency has fallen with the dollar since 2002 because it is
pegged to the dollar. The undervalued yuan has stimulated their economy
by promoting exports but has created excessive liquidity in China. Foreign
capital has poured in looking to benefit from 10% plus growth opportunities.
The currency peg has made it impossible to raise interest rates in any
meaningful way to cool off their increasingly speculative economy. Even
more money would simply pour in. The only effective solution is to abandon
the peg and let the yuan float upward against the dollar. Their economy
would benefit greatly. For us, Chinese goods costing more money puts
further downward pressure on U.S. living standards.
I'm continually amazed by Harbor Freight tool prices...
Nick
dfr
> Something arrived in the mail which seems to make sense:
>
> I just returned from three weeks in England, Scotland, and Ireland.
> In terms of dollars, everything you buy is at least 50% more
> expensive. My belief that exchange rates will be the mechanism by
> which trade imbalances are corrected
Pity that the USD is locked to the chinese currency.
> was only reinforced and this is unfortunate as it makes certain
> a significant decline in U.S. living standrds. The shift to an
> export savings driven U.S. economy will take several years.
Taint gunna happen.
> Until accomplished, there's really no prospect of a better life
> for the American people. It will take time for higher paying export
> driven jobs to replace low paying service industrry employments.
Taint gunna happen.
> American labor must acquire a whole lot of new skills.
Nope, because it aint gunna happen.
> It would be very difficult to convince the public that there is little or
> no inflation in the United States. Currency adjustments are making
> imported goods cost more and we import much of what we consume.
Pity that most of what is imported comes from
china and its currency is locked to the USD.
> Productivity induced deflationary pressures have kept inflation in
> place everywhere even in the face of enormous excess liquidity.
Its mostly been very cheap imports from china that have done that.
> The situation is fueling worldwide economic growth which will likely accelerate.
We'll see...
> It is a perfect storm
Nope. That's just another glib cliche.
> and will certainly ease our situation.
Unlikely when the USD is locked to the chinese currency.
> The Chinese currency has fallen with the dollar since 2002 because
> it is pegged to the dollar. The undervalued yuan has stimulated
> their economy by promoting exports but has created excessive
> liquidity in China. Foreign capital has poured in looking to benefit
> from 10% plus growth opportunities. The currency peg has made it
> impossible to raise interest rates in any meaningful way to cool off
> their increasingly speculative economy. Even more money would
> simply pour in. The only effective solution is to abandon the peg
> and let the yuan float upward against the dollar.
Pity about the downsides of doing that.
> Their economy would benefit greatly.
Fantasy.
> For us, Chinese goods costing more money puts
> further downward pressure on U.S. living standards.
> I'm continually amazed by Harbor Freight tool prices...
There's a hell of a lot more involved than just tool prices...
Beachcomber
>nicks...@ece.villanova.edu wrote:
>> Something arrived in the mail which seems to make sense:
>>
>> I just returned from three weeks in England, Scotland, and Ireland.
>> In terms of dollars, everything you buy is at least 50% more
>> expensive. My belief that exchange rates will be the mechanism by
>> which trade imbalances are corrected
>
As long as you realize that many times, the high prices in Europe are
also supported higher wages and Europeans may be paying a lot more
taxes (gasoline, VAT, higher income taxes, import Tariffs, etc.).
These high taxes support the greater socialist model that European
countries expect, such as universal health care, expensive transit
projects, increased funding for the arts, etc.
Contrast that with many places in the US (Oregon and Florida) for
example, where people just don't like paying high taxes, may prefer
shopping at Wal-Mart or Costco, mostly ignore mass transit, tolerate
mediocre schools, and are offended when gas goes over $3/gal.
(Europeans generally pay the equivalent of $4- 5/gal).
The point is that there are many, many factors that set prices, wages,
and taxes. Some of it is cultural. Seldom is there a simple
explanation.
A Mate
situation there's a simple solution - and - it's usually wrong!
"Beachcomber" <inv...@notreal.none> wrote in message
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