The Declining Dollar Erodes Personal Savings

[brewer12345]

Re: The Declining Dollar Erodes Personal Savings

A visitor to TO once asked where all the Street people were, the answer was they are put in cupboards after 8 o'clock.

Not true. They are actually made into stew and served at the gummint run daycare centers.

 

[ladelfina]

Re: The Declining Dollar Erodes Personal Savings

"The Road to Serfdom" is an excellent book that should be in everyone's library. Laurence, I don't know why you are bringing socialism into it. Hayek was an ANTI-socialist.

I can't really understand why you are all ganging up on camberiu?!? I have no idea who Ron Paul is but I think it's funny that so many ER's or ER-wannabes think deficit spending is somehow necessary on a government level, while every third post on this board is about the general public's massive personal debt, overspending, undersaving, and general ignorance of basic finance.

Interestingly, the Euro zone (with the Maastricht treaty) put a deficit cap at 3% of GDP. Admittedly, countries have gone over their limits, but this is generally viewed as a "bad thing". Meanwhile, would anyone disagree that even this fig-leaf of deficit control has allowed the euro to outpace the dollar?

As far as Japan goes, they have debt probems worse than ours:

 

[brewer12345]

Re: The Declining Dollar Erodes Personal Savings

Without a doubt, the USD is going to be under pressure as long as we keep borrowing so much from overseas. But that doesn't mean that gold, gold!, GOLD!!! is the answer.

 

[laurence]

Re: The Declining Dollar Erodes Personal Savings

ladelfina, I'm not calling anyone a socialist, if fact my point was that if human nature could be relied upon, socialism could work. But alas that's not people.

I have a lot of thoughts on this, but I'd have to dig out my Econ books I kept from college and do some fact checking, and explain my explanations, etc. and I'm just not up to that.


For the record, camberiu seems like a perfectly nice guy, I just disagree with him. These types of arguments were brought up back in the late 70's and early 80's, then we had 20 years where they were forgotten as we had unprecedented success with our current system. Now that we have another challenging time, everybody blows the dust off the old manuscripts and starts preaching again.

 

[brewer12345]

Re: The Declining Dollar Erodes Personal Savings

Yeah, I am mostly just pulling camberiu's tail because I am A) sick of working on big spreadsheets while it is nice outside and B) somewhat tired of hearing about how gold can cure cancer.

 

[HFWR]

Re: The Declining Dollar Erodes Personal Savings

So, if you have a fixed amount of currency, tied to gold/beaver cheese/kayaks, and the economy grows larger, it means you have fewer "dollars" chasing more goods/services. What doth that wrought?

 

[johnlw]

Re: The Declining Dollar Erodes Personal Savings

Just to add a little more fuel to the fire, let’s establish that Alan Greenspan is also a member of the “tinfoil hat brigade” :

http://www.usagold.com/gildedopinion/Greenspan.html

 

[Maximillion]

Re: The Declining Dollar Erodes Personal Savings

For the record, this has been one of the more intelligent posts at this site.

Well thought out and reasoned arguments without too much scurrilous behavior.

brewer, Gold, Muskets, Scotch whiskey, the important thing is that some measure must be installed to protect us against Politicians who just want to print money to buy their jobs.

 

[laurence]

Re: The Declining Dollar Erodes Personal Savings

So, if you have a fixed amount of currency, tied to gold/beaver cheese/kayaks, and the economy grows larger, it means you have fewer "dollars" chasing more goods/services. What doth that wrought?

You get deflation, and people hoarding their dollars in anticipation of cheaper goods tomorrow, and nobody willing to invest in any business or industry, and a halt of growth....

 

[d]

Re: The Declining Dollar Erodes Personal Savings

Well thought out and reasoned arguments !?

is this in reference to the various posts in this thread? if so, I think you're about 50% right correct.

 

[camberiu]

Re: The Declining Dollar Erodes Personal Savings

You get deflation, and people hoarding their dollars in anticipation of cheaper goods tomorrow, and nobody willing to invest in any business or industry, and a halt of growth....

According to this logic, no one should be buying computers and electronics (everyone holding their dollars in anticipation of cheaper goods tomorrow) and companies like SONY, Compaq, HP and IBM would not be investing on cheaper and faster computers, video games or larger LCDs. After all, the computer/electronic business are in constant state of "deflation". Please read "The Blessings of Deflation" by Llewellyn H. Rockwell Jr. for a different point of view.

 

[Maximillion]

Re: The Declining Dollar Erodes Personal Savings

No Laurence, you get more production of the things that money will buy.

 

[perinova]

Re: The Declining Dollar Erodes Personal Savings

that's the big problem about deflation. people staying oin the sideline.
but the problem is the opposite for inflation.

what you do depends on how you anticipate the prices to be tomorrow (just like stocks).

everyone knows about the computer deflation. since they are always coming with better stuff the new one is more expensive, production costs are high and there are people out there willing to pay premium for the latest stuff.
older products are discounted at low margins for the tighwads.

I personally wait a bit before getting the latest technology. while fun those new things always break down more and do not always run smoothly.

deflation is not quite the same thing as obsolescence and new technology introduction: it is due to overproduction (thanks Maximillion) and companies desperate to offload products.

 

[camberiu]

Re: The Declining Dollar Erodes Personal Savings

everyone knows about the computer deflation. since they are always coming with better stuff the new one is more expensive, production costs are high and there are people out there willing to pay premium for the latest stuff.
older products are discounted at low margins for the tighwads.

It is not quite like that. There is REAL deflation on the computer business. This is what killed companies like Sillicon Graphics, Cray and it is what is killing Sun Microsystems. There is hardly any need for high end computers anymore, since the low end stuff is almost as powerful (if not more). Computers used to be a VERY high margin business, today even the most expensive top of the line ones are a little more than a commodity. It is so true the the Playstation and Xbox are sold at a LOSS. The manufacturer "hopes" the recoup the money via software sales. Very different from the late 80s when SNK would sell its Neo-Geo system for the price of a Yugo and have a 45% profit margin.

 

[perinova]

Re: The Declining Dollar Erodes Personal Savings

camberiu
we pretty much said the same thing. I personally would not call that deflation because there is still high demand for products just not the same one. the new products are more expensive and there is no over production (or is there? - I don't follow the computer industry that much)

there sometimes overcapacity for specific high tech products when competitors abound (ie wireless or optoelectronics industry post 2000)

 

[laurence]

Re: The Declining Dollar Erodes Personal Savings

According to this logic, no one should be buying computers and electronics (everyone holding their dollars in anticipation of cheaper goods tomorrow) and companies like SONY, Compaq, HP and IBM would not be investing on cheaper and faster computers, video games or larger LCDs. After all, the computer/electronic business are in constant state of "deflation". Please read "The Blessings of Deflation" by Llewellyn H. Rockwell Jr. for a different point of view.

That's exactly what people are doing, and profit margins for PC's get smaller and smaller, notice how long we've been running on Pentium 4's? Ever been to a mom and pop computer shop? They charge you 3% to use a credit card instead of cash, that's how small profit margins are now. Sure, we as consumers benefit in this small area, but innovation has slowed tremendously in the IT arena because of this. Video games are completely different, they are consumables, the profit margin is still huge, and the price of games has remained nominally risen, that's why that particular industry is booming.

 

[camberiu]

Re: The Declining Dollar Erodes Personal Savings

That's exactly what people are doing, and profit margins for PC's get smaller and smaller, notice how long we've been running on Pentium 4's?

http://www.officeroutlook.com/news/Infrastructure/944.htm

PC sales made a strong showing in the first quarter of 2006. Unit volume for desktops and notebooks sold to consumers was almost 6.4 million units from January through March, an increase of 10.1 percent over 2005. Revenues rose less than 2 percent as average prices tumbled from $982 to $902.

 

[laurence]

Re: The Declining Dollar Erodes Personal Savings

Now let's not make a thesis on one quarter!

But you chose a quote that didn't reveal the full story. Notice in the second paragraph, desktop sales continue to tank. Notebooks are what is driving that increase. Consumers are adopting notebooks, and so PC makers will see some profit as this platform saturates, but just like desktops, the profit margin there will shrink to nil as well. Technology has always been about early adopters generating the profit, then the technology slides down the prestige sale from luxury to utensil. Apple understands this, sure thier IPOD is a huge success, but their long term health is dependent on Itunes, a steady stream of consumables.

 

[brewer12345]

Re: The Declining Dollar Erodes Personal Savings

I'd also note that the economics of an individual industry are VERY different from what happens when the economy as a whole is in a period of deflation. Incidentally, when we get deflation is exactly when gold and other physical commodities are worth fewer dollars.

 

[Maximillion]

Re: The Declining Dollar Erodes Personal Savings

Chrysler have just announced an Ultra Inexpensive Mini Van, people were complaining about the price of cars are were buying used ones.

I would guess about $12,000 in the U.S.?

 

[TomSimpsonAZ]

Re: The Declining Dollar Erodes Personal Savings

Our government is our largest employer....that seems like a problem to me.....since we pay for those employees.....hmmmm.....


Its like having a dozen kids and trying to find **** for them to do so that you can give them an allowance every week.


I'm broke, it is time for the kids to move the hell out.