FOLLOWING THE EUROPEAN UNION

I would suggest, you read something about how a country can join the EMU like e.g. here.

Few random thoughts:

Walter is absolutely right about the ECU as predecessor to the euro. (Funny, how people react visually.)

I hate it that the dollar is depreciating against the euro. Freaking euro is now over 15 pesos! I liked it when Europe was only about 10/25% more expensive than Mexico. Now it's almost double.

australia, a hypothetical devaluation of the euro against the dollar would mean little, in terms of standards of living, to the Europeans, since most of their trade is within the EU.

Mexico, how is the mexican currency? know a lot of latin american countries such as Brazil depreciates like crazy. Against the aust $ the brazil reis is practically halved in 3 years. It is great for me travelling there, I can live like a king on not much money. But i feel sorry for the people that live there. Imports must be so expensive.

Though our government stoutly denies it, they are taking no action whatever to stem the depreciation of the dollar relative to the Euro. I believe this is either a conscious policy (or very willing acceptance of a process) on their part that reduces our imports from Europe and increases our exports to them. It is a good way to get Europe to pay their share of the strategic burdens which they shirk and which we carry for them.

I believe it os a clever and necessary policy.

Similarly, Canada refuses to cooperate with some of our concerns about continental immigration and assylum controls, as well as drugs law enforcement. It is certainly their right to go their own way in these matters, bur we should then thake the necessary steps of increased inspection and controls at our internal border with them. While this might have a devastating effect on some Canadiam manufactures supporting 'just in time' deliveries to U.S, producers, it would be entirely appropriate. Canada enjoys a tremendous trade surplus with the United State, but howls loudly whenever we take the slightest action, for any of several legityamate reasons, that impact their steady stream pf profits. At the same time they repeatedly assume a gratuitous stance of presumed moral authority in thwarting steps we are taking to deal with serious security matters that will ultimately affect the whole western world if left unattended.

Europe and Canada are quite content to let the U.S. deal with security issues that threaten us both, enduring the high political and economic costs that go with it, while presenting themselves as neutral in these affairs and ecsaping a share of the burden that is justly theirs. They did this to a lesser degree throughout the Cold War too. During WWII, when the threat to them was both grave and immediate, they were only too glad to accept our help. We should not let such cynical exploitation, duplicity, and hypocricy go unpunished.

"Raping the world with the dollar" others say.

This year alone, USAmerica's trade deficits are projected to amount to 650 billion dollars. That amounts to almost two billion dollars a day.

"Clever and necessary", as George said, since -theoretically- thus the deficit can be lowered, indeed.

Well Walter just in the world of economics a sustained trade deficit normally does induce a reduction of the value of the exported currency relative to the imported one. There is no reason for the U.S. government to expend valuable resources to 'hold back the sea' and attempt to hold up the relavive value of the dollar compared to the euro under these circumstances. We are merely letting the normal feedback process operate to restore balance.

Others have termed this 'rape by the dollar', but this is both unfair and inaccurate. Relative to the European powers the U.S,. sustains a very high cost of military preparedness and, as well, a very high cost in their operations. If there is any benefit from this it inevitably flows to everyone in the Western World. I accept that some believe we are doing harm, not benefit. However in general these folks have little to offer in terms of what they would do to contain the Islamic discontent that is the historical consequence of mostly European actions during the 20th century.

G OB - the USMC thread now being locked I've posted a reply on Lola's Cafe thread.

Will be back in 2 weeks if you really need more info.

P.S. to Walter: you may wish to look up seigneuriage - it can't be rape when the other party agrees!

As for the weak dollar - here is what this week's Economist has to say

Two fast comments:
Mexican currency has been relatively stable against the dollar for almost a decade (we had a terrible devaluation at the end of 1994, and fast "slipping" in 1995). It was horrid from 1982 to 1988, though.

Dollar seignorage.
HofT wrote "it can't be rape when the other party agrees!".
Well, the other party may agree because it finds the rapist too strong. It's a question of relative power.
Why can the US mantain a deficit so big for such a long time (and not have the IMF impose restrictive policies upon them)? Simple, because everyone accepts the dollar, and is ready to finance the US.
And why does everyone accept the dollar, even in times of American inconsistency in macroeconomics policies? Because the US is economically and politically powerful and has a lot of leverage in world financial markets.

Should the US try to appreciate the dollar? Why? Every devaluation of the dollar means that, in terms of other coins, the US foreign debt lowers (every dollar possesed overseas is a US obligation of payment).

fbaezer's quote, "Should the US try to appreciate the dollar? Why? Every devaluation of the dollar means that, in terms of other coins, the US foreign debt lowers (every dollar possesed overseas is a US obligation of payment)." Therein lies the magic wand and the key. Why should the US appreciate the dollar? Our debts have been reduced by 35 percent without our government changing our spending habits. The world trading partners are now holding much devalued dollars for all their previous trades at "full value." Why, indeed!

This has to do with the relative weight of foreign trade in the economy of different nations.

Even with the globalization process, the US economy is more inward directed than the economy of any other industrialized nation. In that sense, a devaluation of the dollar is not as harmful to the US as a devaluation of any other currency is to the corresponding country.

(This also means that the adoption of the euro helps most members of the EU: their currency is 100% stable in terms of their biggest trading partners: the other members of the European Union).

I am trying to assimilate your recent posts with a quote by ther past Sec of the Treasury. (was it ) Oneill was complaining to the Vice-President about our rising deficits to which he replied, increased deficits are not a problem. Reagan proved that.

I must have too much of a blue collar background; I was taught to live within one's means. It's a little puzzling to assert the government is smart by increasing the deficit.

Well, once the dollar is worthless there is no defecit.

I'll put it another way, Mapleleaf.
As long as you have unlimited credit, you can live over your means.
The key is to keep the unlimited credit.
This has not always been possible to the United States. It happened in the late 60s/early 70s, when the US was forced to leave the dollar-gold standard. This, and an inflationary push, due to lack of labor market control in Europe, led to a worldwide recession in 1974-76.

It wasn't that long ago that the Thai baht threatened the economy of the whole world. It amazes me that the US dollar still retains some stability at the rate our government and consumers spend like there's no tomorrow.

And not only spent it like there is no tomorrow, but waste it on non essential expenditure. No wonder the tax rates are so high

Actually, only Mexico and Japan have lower tax rates than the US, among the OECD countries (which include almost all of Europe, Canada, Korea and Turkey).

Yes, I meant Australia but thats okay. How can some countries like Malaysia and Hong Kong have such low tax rates?

I guess that would be over-digressing in this European Union thread.

Isnt' that what Germany did in the inter-war period? Devaluation of the currency made the reparations following WWI manageable for the German economy.

Of course, it caused untold damage to the population and led to the rise of extremes in politics. Nazism beat communism because it received the backing of big business.

Yet another parallel between Germany then and the USA now - the military industrial complex and rise of the right - suppression of human rights (Guantanamo?) and poor management of the economy.