okie wrote :
Quote:ci and hamburger, isn't it correct that the devaluation of the dollar is not all negative, as it eventually helps us to compete with other countries in manufacturing and other products and raise our exports?
of course , but would you be willing to work for 2/3 rd of your current wage ; that's equal to the recent devaluation of the u.s. dollar .
you know what has happened to the price of oil , right ? it's been going up and the same is likely going to happen to all other imports .
it's the same as if you as an individual try to live better than what you can afford to pay for . so you start borrowing money .
the lender wants to be repaid - and i'm sure you know that much of the u.s. treasury bonds are being held by saudi-arabia and china .
they do want their interest and they also want to repaid for the treasury bills they bought (they are essentially IOU's - i'm sure you kow that) .
now you(the u.s.) have to start repaying that money with interest .
you have two choices :
either you start cutting back on your spending - less vacation spending , no vacation condo , no second car ...
or you have to borow even more money - i'm sure you know what the final outcome is ! you are broke and the lender comes and takes your belongings - house , car , furniture etc .
that's really what's happening when chinese and saudi banks that are "investing" in american banks and properties .
they are slowly beginning to own parts of it - and parts of america .
now , at the level of 5 % that's not bad , but will the u.s. have the money to repay the lenders who have bought the u.s. treasury bills or will the lenders use the u.s. treasury bills they are owning to continue to buy parts of the u.s. economy ?
you can't buy prosperity by cheapening your money . countries tried that over the centuries and didn't have much sucess with it .
canada went through a very painful period in the 70's and 80's when the canadian $ was worth about 60 cents u.s. !
we had spent more money than we could afford .
so we had tax increases (including a federal sales tax) , a cut in all kinds of benefits and luckily an increase in the price of oil(which brought canada additional monies from export) - so that during the last few years we slowly started to climb out of the hole again .
it certainly was NOT pleasant !
but these things can happen quickly again - our curent government has started to cut back taxes and most people think that's just wonderful .
we still have a fairly large natinal debt and i think it would be better to pay down the debt - but that's not much of a vote getter !
it's getting late , so i'm signing off !
hbg
