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01-22-2008, 04:06 PM
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#1
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Full time employment: Posting here.
Join Date: Aug 2006
Posts: 563
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Tin Foil Hat Time...
I've heard from various sources that the only way we (USA) can get out of this mess is to devalue the dollar. Which basically means that owning stocks, real estate, CDs and anything else in US dollars is not the place to park money. Basically move your money to foreign currencies. Anybody else heard this opinion expressed from different media sources? (I listen to the radio a lot) Any opinions? Just a concerned citizen. 
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01-22-2008, 04:18 PM
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#2
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,190
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No, I haven't heard this elsewhere.
There may be some valid reasons for wanting to park money in foreign currencies, but the possibility of devaluation of the dollar in 2008 is not a concern that keeps me awake at night. Personally I just don't think the situation is all that bad at the present time. The economy just needs some time to settle out.
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01-22-2008, 04:26 PM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2006
Posts: 7,725
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If the dollar is devalued I think gold and real estate would both do pretty well as would foreign assets.
To a large extent we are already seeing the effect of a devalued dollar, high oil prices, and a strong relative performance of international stock funds.
A weak dollar has a number of positive effects, one of which is to make US exporters more competitive and the secondary effect is to make the value of foreign held securities worth less. While I don't think there is a Trilateral commission type conspiracy, I am sure they Fed is quite aware of what there are doing and why they are doing it.
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01-22-2008, 04:30 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 49,709
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Our floating exchange rate constantly values the dollar vs. other foreign currencies. If you look at how those exchange rates have changed over the past couple of years, you can see that the dollar has already been significantly 'devalued'. (I believe the correct term is 'depreciated', but it has been a very long time since Econ. 101.)
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Numbers is hard
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01-22-2008, 04:38 PM
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#5
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Oct 2003
Posts: 5,105
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I don't think the "various sources" know what they are talking about. REWahoo explained how the US$ exchange rate works and what has happened to it. The Fed Reserve can only influence the exchange rate with the Fed Rate and as you can see the recent cut didn't change it that much.
Poor countries try to manage their exchange rates with currency controls and import fees.
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01-22-2008, 10:11 PM
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#6
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Recycles dryer sheets
Join Date: Dec 2005
Posts: 137
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No, that's pure red herring. There's been a buildup of anti-dollar sentiment for the last few years, lots of people have joined the ranks of the goldbugs.
The US will end up being the best of a bad lot, when it's all done.
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01-22-2008, 10:30 PM
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#7
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,846
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 Quote:
Originally Posted by REWahoo
Our floating exchange rate constantly values the dollar vs. other foreign currencies. If you look at how those exchange rates have changed over the past couple of years, you can see that the dollar has already been significantly 'devalued'. (I believe the correct term is 'depreciated', but it has been a very long time since Econ. 101.)
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Hey, Uncle Ben's Plunge Protection Team did the best it could today. As REW has pointed out, the dollar is already trading at quarter-century lows and doesn't have much room left to fall.
But if you're worried about a dropping dollar, then like that punchline of the guy praying to God to win the lottery you could meet Him halfway-- buy some international equities for your asset allocation. They sure went on sale this week...
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