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What a weak dollar really does...

Lukey

Senator
Yup - that's why I cited MARKET DATA. Data that refutes your MODELS... models for which you have NO DATA to support.



What "obvious macro trends"? Such as the dollar GAINING VALUE against the Euro over the last year from 68 cents to 76 cents? That sort of Macro Trend where a 3 cent drop IS NOISE

http://www.advfn.com/p.php?pid=qkchart&symbol=FX^USDEUR


FACTS MATTER
DATA MATTERS
got any to support your claims?
What model was I citing? I listed some currencies and the relative prices at which we'd be paying for gas/oil if the dollar had performed as they have. That's not a model - it's data. These are fairly simple conversion equations. No estimates, no predictions. And as far as I'm concerned you haven't addressed these figures - are they right? Wrong? Do you not have a clue?

Maybe try that and then we can see about doing the conversions from these currencies to gold. This is pretty straightforward stuff...
 

degsme

Council Member
What model was I citing?
Your model is that gold specie is the same as currency and that gold is an actual marker for value directly. That is a model. It is a model that has a very very very poor empirical track record.

I listed some currencies and the relative prices at which we'd be paying for gas/oil if the dollar had performed as they have. That's not a model - it's data.
Extrapolating (incorrectly in the case of the Yuan and Euro BTW) anything is inherently a Model. Again you are asserting something that actually contradicts data. Notice that the data points picked (2002) are highly cherrypicked http://inflationdata.com/Inflation/images/charts/Oil/Gasoline_inflation_chart.htm Because if the starting point had been 1990 or even 1999 - the results would be different.

So the very choice of which starting point to pick is part of THE MODEL. and part of the bogousity of it.


These are fairly simple conversion equations. No estimates, no predictions. And as far as I'm concerned you haven't addressed these figures - are they right? Wrong? Do you not have a clue?
I've pointed out in three cases that the "conversion equations" used are not valid and why

You are the one lacking a clue if that isn't "addressing the figures"
 
IOW if the Dollar falls 10% relative to the Yen - and oil prices go up 10% - then Japan should see zero change in their oil prices based on Yen.
Absolutely false. Oil is NOT priced in yen, it is priced in dollars. So if the dollar falls in relationship to the yen, a yen is worth MORE dollars. Which mean that the Yen would buy more oil.

China is notorious for devaluing it's currency in relationship to the dollar, but since oil is not priced in Yen, the value of the yen has no impact on the price of oil. It is the value of the dollar that controls the price of oil which is purchased in dollars.

Therefore it takes more dollars to purchase oil (and everything else) as the dollar falls in value.

And everything else is going up in price; and everybody is seeing those increased prices when they buy gas or food or clothing or automobiles, despite what the propagandists in Obama's government are telling us. They can't hide reality with lies.
 

degsme

Council Member
Absolutely false. Oil is NOT priced in yen, it is priced in dollars. So if the dollar falls in relationship to the yen, a yen is worth MORE dollars. Which mean that the Yen would buy more oil.
Yes... that is what I said. Which means that if US Oil price increases are driven PURELY by Dollar weakness, then the price of oil in Yen SHOULD NOT CHANGE, much less increase.

AND YET - the data I linked you to, shows that in Yen, Euro, and other demoninations, the price of oil HAS GONE UP.


That means that Oil Price Increases - ARE NOT SOLELY DUE TO WEAK DOLLAR.

Its just math.


China is notorious for devaluing it's currency in relationship to the dollar,[./quote]
Not quite. the PRC has the Renmimbi PEGGED in its exchange rate TO THE DOLLAR. That means that as the dollar changes WRT Oil, the Renmimbi follows EXACTLY. Thus their oil prices ALSO go up precisely BECAUSE Oil is Dollar Denominated.

Therefore it takes more dollars to purchase oil (and everything else) as the dollar falls in value.
Not quite true.
Yes it takes more $$ to purchase similar IMPORTED GOODS
No it does not change the $$ needed to purchase DOMESTIC GOODS

and you are leaving out a critical piece. It now takes LESS Renmimbi to purchase DOMESTIC EXPORTS... So MORE DOMESTIC EXPORTS ARE SOLD.
More DOMESTIC SALES means ... More production, means more work. A GOOD THING.

And everything else is going up in price;
1) no not everything else is going up in price
2) whenever the economy is growing we have SOME inflation. ALWAYS. Having SOME inflation is not bad.

Inflation is ONLY bad when it is higher than GDP growth. And today Inflation is LESS THAN GDP Growth...


FACTS MATTER
MATH MATTERS
LOGICL MATTERS
 

degsme

Council Member
is deficit spending - period! Bush was no supply sider - period!
No- that simply is not true. You saying it over and over again does not make it so.
At a certain point the level of debt begins to inhibit economic growth - period!
yes it does. but

  1. That level VARIES with how the economy is doing:
    • When the economy is growing quickly and the money supply is being strained, there is a premium on the demand for credit. At which point the "certain level" where government debt inhibits growth is lower (since the government then is in competition with private sector in the credit markets)
    • When the economy is growing normally, and demand for credit is normal - then the "certain level" increases somewhat as the demand for credit by the private sector decreases
    • Wne the economy is sluggish, and demand for credit is way below normal - then the "certain level" increases dramatically as the demand for credit by the private sector is almost non-existant.

    And the way we tell which of these is in effect, is by looking at what the Supply and Demand in the Credit MArkets tells us. And that is what a "market auction" is http://www.treasurydirect.gov/instit/annceresult/press/preanre/2012/R_20120312_3.pdf

    When rates go up... we know that demand is exceeding supply. When rates are rock bottom - at historically low prices - we know that no such debt squeeze is happening

    Tell us what the treasury auction tells us?
Prices of commodities tend to move inverse to the value of the currency you are pricing them in - period!
LOL!!! "tend to" and "period" in the same sentence is the definition of an oxymoron. Sorry no. Commodity price movements DO REFLECT currency valuations. But when the commodity price movement is GREATER THAN the currency valuation change - which again I have demonstrated with oil - then OTHER FACTORS ARE INVOLVED.

POOF!!! (the sound of a "period" evaporating).

Obama's big government economic policies are crowding out the private sector
Hmm so we have seen that

  • This is untrue in credit markets
  • this is untrue in construction markets
  • this is untrue in oil price markets


Have we seen ANY MARKET data that shows this to be true anywhere??? Oh yeah... NO

And no one needs a PhD to understand the logic behind any of these positions.
True. Because you only need LOGIC 101 and ECON 101 to show that there ... IS NO VALID LOGIC "behind these postions".
 

degsme

Council Member
. And people use the word precisely the way I did BECAUSE THE DICTIONARY SAYS THAT'S WHAT IT MEANS! Okay?
No. People use it for the same reason people use "irregardless"... like you - they heard it somewhere and thought it sounded cooler than "destroyed"...And didn't realize that like "irregardless" it makes them come across as more ignorant.

And again, gasoline prices are up and the dollar value is down. That's a simple, straightforward truism.
Ah so the fact that the Sun is Up at noon, tells us so much about what time sunrise is - and whether we are in a winter or summer solar cycle...

Simple coincidence is not causal. Anwer this

Are Gas prices up MORE or LESS than the rate of Dollar Devaluation against other WW Currencies that are ALSO buying oil?

You can't prove that currency values do not affect commodity prices because the data doesn't support that - and that, again, is a fact.
Yes and? you want some oats with all that straw?
 
Yes... that is what I said. Which means that if US Oil price increases are driven PURELY by Dollar weakness, then the price of oil in Yen SHOULD NOT CHANGE, much less increase.

AND YET - the data I linked you to, shows that in Yen, Euro, and other demoninations, the price of oil HAS GONE UP.


That means that Oil Price Increases - ARE NOT SOLELY DUE TO WEAK DOLLAR.

Its just math.


China is notorious for devaluing it's currency in relationship to the dollar,[./quote]
Not quite. the PRC has the Renmimbi PEGGED in its exchange rate TO THE DOLLAR. That means that as the dollar changes WRT Oil, the Renmimbi follows EXACTLY. Thus their oil prices ALSO go up precisely BECAUSE Oil is Dollar Denominated.


Not quite true.
Yes it takes more $$ to purchase similar IMPORTED GOODS
No it does not change the $$ needed to purchase DOMESTIC GOODS

and you are leaving out a critical piece. It now takes LESS Renmimbi to purchase DOMESTIC EXPORTS... So MORE DOMESTIC EXPORTS ARE SOLD.
More DOMESTIC SALES means ... More production, means more work. A GOOD THING.


1) no not everything else is going up in price
2) whenever the economy is growing we have SOME inflation. ALWAYS. Having SOME inflation is not bad.

Inflation is ONLY bad when it is higher than GDP growth. And today Inflation is LESS THAN GDP Growth...


FACTS MATTER
MATH MATTERS
LOGICL MATTERS
The fact is the more dollars the Fed prints to buy its own debt the less each one is worth. That means it takes more dollars to purchase anything, even domestic products.

The only way to increase the money supply WITHOUT causing inflation is to increase the amount of goods and services or tie the currency to some standard.
 

degsme

Council Member
The fact is the more dollars the Fed prints to buy its own debt the less each one is worth.
No that is not a "given fact".... what sets the value of the dollar is the Supply/DEmand for those dollars. If Demand is going up then you can increase supply and there is no change in the "value" as measured by the purchasing power.

You are assuming an "inherent value" in currency that has NEVER EXISTED (even with Specie currency). Because "value" for currency really is "purchasing power". Furthermore given Domestic vs. Intl. markets "purchasing power" may go up domestically while going down Intl. and vice versa.

So your "The Fact IS" is remarkably simplistic and naive.
 

fairsheet

Senator
I'm no expert in currencies (by any stretch). What I DO know though ('cuz I can read charts) is that the US dollar has been rather remarkably and historically stable vs. the world's other major currencies, over not just the last year, but the last 3 years.

In fact, the actual charting is curious (to say the least) against the backdrop of some of this farting we've been hearing about hyperinflation, weak dollar, printing/devaluing, and the like.
 

degsme

Council Member
I'm no expert in currencies (by any stretch). What I DO know though ('cuz I can read charts) is that the US dollar has been rather remarkably and historically stable vs. the world's other major currencies, over not just the last year, but the last 3 years.

In fact, the actual charting is curious (to say the least) against the backdrop of some of this farting we've been hearing about hyperinflation, weak dollar, printing/devaluing, and the like.
Ah yup... you got it in one. That's why Lukey and Sgt are struggling with their evidence here. That's why Lukey is having to invoke gold buggery to prove that "hyper inflation" - too bad they don't take gold ingots at the gas pump...The "Greater Fool" theory of investing sure has been playing out in the Gold Market.
 
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