Question for those who know finance

#51
#51
Right now it is not a good thing to have a strong dollar since China is compressing theirs and owns much of our debt. They are using their de-valued dollar to pull jobs from this country to theirs which causes less tax revenue here and less ability to repay debt. It is putting us in a strangehold. If we weaken the dollar the debt also becomes less. Because we owe them on a dollar basis. If we ow them, let's say 1 million and the dollar is worth 90 cents on the 100 and suddenly the dollar is worth 65 on the 100 we owe them alot less debt. we can buy back the debt easier.

I am not saying I agree with this. I'm just saying that right now we have a Big Big problem as long as China comnpresses their dollar.
 
#52
#52
a) once again easing causes the dollar to drop. not to rise. so the fed is doing what you want.

b) how is it cheaper to buy back the debt when treasuries are dollar denominated? i'm not sure how it helps us that china is losing money by holding american dollars.

c) we'd owe them less if the dollar got stronger by this theory. i.e. the dollar buys more chinese currency than it could before. of course the chinese have a fixed exchange rate policy.
 
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#53
#53
I'm not typing all this.

here ya go.



China's big fear is that Washington, having largely exhausted fiscal and monetary stimulus, is resorting to benign neglect of the dollar to galvanize its economy as part of President Barack Obama's drive to double U.S. exports within five years.

Geithner flatly rejected this charge.

"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," he said. "It is not a viable, feasible strategy and we will not engage in it."

But the treasury chief said the United States needed to "work hard to preserve confidence in the strong dollar" -- his first utterance of the mantra "strong dollar" since February -- by maintaining growth and restoring budget discipline.

Geithner said he had delayed a report due last Friday into whether Beijing manipulates the value of the yuan to win time to drum up support within the G20 for "improvements" in the currency policies of China and other emerging economies.

This week's G20 finance ministers' meeting in Gyeongju precedes a summit of the group in Seoul on November 11-12.

Canadian Finance Minister Jim Flaherty said he hoped the meetings would lead to increased currency cooperation.

"This is important so that we avoid the kinds of retaliatory actions that nations can take where they feel that they are aggrieved by the policies of particular countries," he told reporters in Ottawa.

Investors are alert to the risk of a descent into tit-for-tat protectionism, but, for now at least, many are confident that policymakers will succeed in averting conflict.

"We expect international portfolio flows to continue to create rising tension on asset markets over the next several months, but we do not believe we are as yet at the brink of 'currency wars'," Ray Farris and Kasper Bartholdy, foreign exchange strategists at Credit Suisse in London, said in a note.
 
#54
#54
I believe Geithner is lying. I believe he is trying to force Chinas hand. I don't how to answer your question any other way than to state I believe our leaders have decided to weaken our dollar so they can level the export playing field.

I'm also not saying i want the dollar to drop. if the dollar drops here it will create a huge class problem and bring the middle class lower. It will not hurt the rich though. And let's be honest, it is the rich that run the world. By rich I mean net worth 40 million and above. making 500k a year does not make one rich.
 
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#55
#55
nothing in that article has anything to do with what you posted. leveling the export playing field and china holding treasuries are two completely different things. for one thing china has to buy more treasuries the more the dollar drops if they want to maintain the level exchange rate.
 
#56
#56
I honestly believe that the economic system has gotten so global, so confusing, so intertwined that no one really knows what will do what anymore. Every country is tied to the other country's situation now and there are just too many variables. I believe we have entered into the guessing game of global economy which is why eventually (sad to say) there will be one currency.
 
#57
#57
droski said:
nothing in that article has anything to do with what you posted. leveling the export playing field and china holding treasuries are two completely different things. for one thing china has to buy more treasuries the more the dollar drops if they want to maintain the level exchange rate.
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The are both together. They have everything to do with each other. Everything. Trade and debt. That is where you and I are disagreeing.
 
#58
#58
Ihatethebuckeyes said:
The are both together. They have everything to do with each other. Everything. Trade and debt. That is where you and I are disagreeing.
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the only connection is the one i mentioned. i.e. that china has to buy more us debt as the dollar drops to maintain the exchange rate. the dollar dropping absolutely does not make our debt cheaper. if anything the opposite since foreigners don't want to own US debt if they know the exchange rate is going to go against them. therefore the rates will rise and our debt service will go up.
 
#59
#59
Droski, China holds alot of dollar based investments. The reason they are in a very good situation is because they hold so much of this. if we de-value this product while at the same time killing job growth there and raising job growth here through leveling the export field we have hit them on two fronts. It is a two prong attack.
 
#60
#60
droski said:
the only connection is the one i mentioned. i.e. that china has to buy more us debt as the dollar drops to maintain the exchange rate. the dollar dropping absolutely does not make our debt cheaper. if anything the opposite since foreigners don't want to own US debt if they know the exchange rate is going to go against them. therefore the rates will rise and our debt service will go up.
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But they will not be able to buy more us debt as we are buying it back with bogus money. it becomes a cycle. they will also have less currency to buy with which creates a second internal system of issues for them. it also does change the percentage of debt they hold as we flood the market with more dollars. To keep up they have to buy more debt.
 
#61
#61
Ihatethebuckeyes said:
Droski, China holds alot of dollar based investments. The reason they are in a very good situation is because they hold so much of this. if we de-value this product while at the same time killing job growth there and raising job growth here through leveling the export field we have hit them on two fronts. It is a two prong attack.
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but THEY HOLD MORE US DOLLARS if we devalue the currency. not less. and they have a stable exchange rate policy. the only people we are screwing are the euros.
 
#62
#62
I don't care how you slice it if the dollars they hold go down in value they're investment goes down in value.
 
#63
#63
Ihatethebuckeyes said:
But they will not be able to buy more us debt as we are buying it back with bogus money. it becomes a cycle. they will also have less currency to buy with which creates a second internal system of issues for them. it also does change the percentage of debt they hold as we flood the market with more dollars. To keep up they have to buy more debt.
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the amount of debt teh fed is buying compared to the amount issued by the treasury is pretty small. and how will they have less currency to buy when we are flooding the capital markets with money?
 
#64
#64
droski said:
but THEY HOLD MORE US DOLLARS if we devalue the currency. not less. and they have a stable exchange rate policy. the only people we are screwing are the euros.
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Not true. They don't hold more dollars they hold the same ammount. They did not buy on percentages. And the exchange rate is what the US is trying to break right now. Period. That is it. Once the exchange rate is broken China loses its export advantage.
 
#65
#65
Ihatethebuckeyes said:
I don't care how you slice it if the dollars they hold go down in value they're investment goes down in value.
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only if a) the chose to let their currency fload AND b) they convert those US dollars back into yuans (which they haven't done). it's a paper loss at best. they've been doing it for decades and it hasn't seemed to have hurt them.
 
#66
#66
droski said:
the amount of debt teh fed is buying compared to the amount issued by the treasury is pretty small. and how will they have less currency to buy when we are flooding the capital markets with money?
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the only way any of this works is if they break the renminbi. if this isn't broken it won't matter.
 
#67
#67
Ihatethebuckeyes said:
Not true. They don't hold more dollars they hold the same ammount. They did not buy on percentages. And the exchange rate is what the US is trying to break right now. Period. That is it. Once the exchange rate is broken China loses its export advantage.
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if the dollar is dropping in value, meaning the yuan is appreciating, how do they maintain their stable exchange rate? by buying dollars with yuans. why do you think they own trillions of treasuries? because they love the US?
 
#68
#68
droski said:
only if a) the chose to let their currency fload AND b) they convert those US dollars back into yuans (which they haven't done). it's a paper loss at best. they've been doing it for decades and it hasn't seemed to have hurt them.
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But they've been doing it when our currency was much stronger. We already got them to depeg their dollar against us in 2005. the was the first step. Now we just have to make them value it correctly.
 
#69
#69
droski said:
if the dollar is dropping in value, meaning the yuan is appreciating, how do they maintain their stable exchange rate? by buying dollars with yuans. why do you think they own trillions of treasuries? because they love the US?
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You seriously asked me that? Really?
Yes, because they love Mickey. No. Because they are trying to piggy back off us into dominance. They know that they have enough ppl to base their own economy on once they become strong from within. They are building the groundwork to no longer need us or anyone else. They have the people once the system is in place to trade inter country and still be a super power. I believe we are trying to prevent that.
 
#70
#70
Ihatethebuckeyes said:
But they've been doing it when our currency was much stronger. We already got them to depeg their dollar against us in 2005. the was the first step. Now we just have to make them value it correctly.
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i don't share your optomism. it's not worth torpedoing their economy. they have plenty of money (see their stimulus package). we'd probably have to send this country into a depression to make it worthwhile.
 
#71
#71
droski said:
i don't share your optomism. it's not worth torpedoing their economy. they have plenty of money (see their stimulus package). we'd probably have to send this country into a depression to make it worthwhile.
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I honestly don't have much optomism myself. I don't know what the Feds are doing. I was just looking at one view that I thought they might be doing. In no way am I saying the above is what they're doing. I just think they could do it if that's what they're wanted to do.

Sorry, I'm not trying to be confusing.
 
#72
#72
They are either trying to do this to reclaim the debt or they are trying to completely break the US and hand it over to China on a silber platter. It's one or the other in my opinion. Hope that simplies what I'm trying to say here because i don't think I've been very clear.
 
#73
#73
#75
#75
Ihatethebuckeyes said:
They are either trying to do this to reclaim the debt or they are trying to completely break the US and hand it over to China on a silber platter. It's one or the other in my opinion. Hope that simplies what I'm trying to say here because i don't think I've been very clear.
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Paper tiger.

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