Was hier bzgl des USD gesagt wird gilt fuer den Euro genauso - nur mit zeitlicher Verzoegerung....
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Don's Column (Mon, Wed, Fri)
Sinking Dollar Blues Declining America
Part 18
Sinking money value, is a classic sign of a declining nation. Check history and see for yourself. Ours is classic. Currently, there are some advantages to a sinking dollar, but not too many. One advantage is that it makes American exports more competitive. Except that we don't make much to export. Our factories are mostly gone, workers laid off, and employment figures are blatant lies. Weekly, the D.C. Gang speaks about the 'number of jobs created,' but fail to mention the lost ones, or those who have given up looking.
Another seeming advantage, is that foreigners come here to shop, because of the cheap (in their currencies) prices. On 'Black Friday,' thousands of Canadians came across the border to shop... because even the Canadian dollar is worth more than ours. Except that most of what they buy was made in China! Boon for retailers, and more so for China. Not much help for laid off factory workers. We used to make Hickey Freeman, Hart Schaffner & Marx, and Botany 500 men's suits here, for those of you who like good clothes. No more.
The sinking dollar makes travel to America much cheaper, and the tourist attractions, car rentals, and airlines may profit from the depreciating dollar, but the reverse it also true. Travel by Americans overseas, has become almost prohibitive, due to high prices in dollars overseas, for everything. Sinking dollars, make stuff made overseas cost a lot more for us, including Chinese stuff. The result is that we will necessarily buy less of it. A couple of weeks ago, China began selling more to Europe than America, so the European factories will begin to close...or continue to close.
The sinking dollar has had world-wide repercussions. It seems that every foreign bank, foolishly bought U.S. mortgage paper. Now, banks around the world have pulled in their reins, and have ceased lending to just about everyone. Fanny Mae and Freddie Mac have lost over 50% in value, and the million foreclosures will undoubtedly more than double, possibly taking a few major, and a lot of minor banks with them.
China, if a world wide recession takes place, will have over-built its manufacturing facilities so much, that they may go into a tailspin, with no one being able to buy their stuff. The Euro is being printed also, although not nearly as much as is the buck. It is therefore a bad place to invest.
China and others, continue to invest in dollars; buying them and our debt. Why? To keep us buying their stuff. Chinese are heavy savers in Chinese government paper as well as banks, and both have 'invested' in dollars. With the dollar sinking, the Chinese investments are also sinking in value and return. The same is true with Japan. If China continues to slow its dollar buying, thanks to selling in Europe and taking payment in euros, who will buy our debt? The dollar is now being refused all over the world as a payment vehicle. What will happen if it ceases to be a 'reserve currency?' What if airlines, Japan, Korea, and China ceased taking dollars?
If our manufacturing plants were still intact, a sinking dollar might be of some help, but it's too late. Are we watching the collapse of the old, famous, once stable dollar? It is backed by nothing, but no other currency is backed by anything either. Since all currencies are merely pieces of paper with various inscriptions and engravings on them, it is merely a matter of faith or popularity which keeps them alive. The euro has won of late, because America can't stop fighting wars, and interfering in other's business, which costs a lot of printing press dollars. It can't stop spending, refuses to end earmarks, and loves to finance every hair brained scheme presented to its Congress. Meantime, the Plunge Protection Team keeps up its efforts to boost the stock market, and the Fed buys its own bonds when no one else will. Like a deer in the woods who has been injured, and is bleeding to death. It licks its wounds, drinking its own blood out of sheer instinct, till it collapses and dies. Government buying its own bonds is the deer. Doing each other's laundry, and calling it "The Information Age," is not a panacea for a failing currency, and a nation who no longer makes what it consumes..
We are forced to earn more decaying dollars, just to stay alive, and this places us in a higher income bracket, forcing us to pay more taxes, which of course no one can afford, but are afraid not to pay. Everyone pays the inflation tax, as it is unavoidable. The inflation tax of our currency losing purchasing power each day, thanks to the D.C. Gang and their total fiscal irresponsibility, cannot be avoided. Where will it end? What to do? You know! Protect yourself, that's all. How? By getting off of a sinking ship, like rats always do, because they sense that if they don't, they will drown. The sinking ship is the dollar, and all the dealing, transferring, selling, buying, and other action involving dollars, is merely re-arranging the deck chairs on the Titanic, after the rats have left. As the buck sinks, and continues to sink, more and more will want to get out of them, and into something stable and of historic value, such as gold and silver. There is only so much of those, and production is already behind consumption. Where will the 'top' be in metals? I don't know, but a clue might be where will the 'bottom' be in dollars? If gold goes to $3,200 an ounce, and gasoline costs $12 a gallon, you will have hedged yourself and preserved your assets if you are out of dollars and into precious metals. If gas costs $12 a gallon, and your savings account has gotten you 4% a year, you will have been de-capitalized.
Every time in history, when a currency went to zero, most of the people went with it, and lost everything. No currency has ever survived without gold or silver backing. Not a single one. Will you continue to save in dollars? Will you continue to invest in stocks, euros, yen, and myriad paper devices, rather than tangible, fungible, beautiful, gold and silver? Will you print this or forward it to your friends and loved ones? Follow the rats. The ship is sinking!
