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What a weak dollar really does...

Discussion in 'Economics, Business, and Taxes' started by Lukey, Mar 8, 2012.

  1. Lukey

    Lukey Senator

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    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...
     
  2. degsme

    degsme Council Member

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    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.

    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.


    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"
     
  3. Sgt Staples

    Sgt Staples Mayor

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    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.
     
  4. degsme

    degsme Council Member

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    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.


     
  5. degsme

    degsme Council Member

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    No- that simply is not true. You saying it over and over again does not make it so.
    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?
    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).

    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

    True. Because you only need LOGIC 101 and ECON 101 to show that there ... IS NO VALID LOGIC "behind these postions".
     
  6. degsme

    degsme Council Member

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    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.

    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?

    Yes and? you want some oats with all that straw?
     
  7. Sgt Staples

    Sgt Staples Mayor

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  8. degsme

    degsme Council Member

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    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.
     
  9. fairsheet

    fairsheet Senator

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    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.
     
  10. degsme

    degsme Council Member

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    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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