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kiratwan

Weakening dollar is bad for the countries like China which hold
huge amount of dollars in their reserves. If it continues to weaken
there may be a loss of confidence in dollar as a reserve currency.
Strengthening Euro may substitute for dollar. Chinese are also
pushing to make Yuan as currency of trade in Asia, probably
in Africa and Latin America. China is the biggest trading partner
of 34 or 35 countries.

WT Economist

During the election I said that while Hilary Clinton would competently manage our long, grinding decline, sparing Generation Greed much of the damage, The Donald might get the whole thing over with in a hurry.
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The economy of businesses paying Americans less but selling them more, and the whole world economy dependent on Americans consuming more than they produce, has to end sometime. A collapse in the dollar, like the collapse of consumer credit in 2008, would merely show Americans how much worse off they already are.
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And given what Republicans have done to everyone born after 1957 or so at the federal level, having that happen while there is a Republican President and Congress wouldn't be the worst thing.

nannite

Boy, its almost like our country is run by corporate mercenaries who are only looking out for themselves and their ilk while simultaneously using and lying to poor caucasians with vague emotional lines about being 'great'.

guest-aaawwwmj in reply to Zouf

And then, right on cue, Trump launches into tariff squabbles with China and South Korea.
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He took the page right out of the Reagan playbook.
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Japan to End Restraints on Auto Exports to U.S.
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The restrictions, an example of what is now called managed trade, were begun in 1981, at a time when American car makers were reeling from Japanese competition. But the end of the program comes as Detroit's Big Three have narrowed the quality gap with Japan and are gaining more of the American market.
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http://www.nytimes.com/1994/03/29/business/japan-to-end-restraints-on-au...
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REAGAN SEEKS CUT IN STEEL IMPORTS THROUGH ACCORDS
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http://www.nytimes.com/1984/09/19/business/reagan-seeks-cut-in-steel-imp...
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Trump promised the disillusioned Americans whose jobs were lost to overseas that
he would help them.
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It's gonna be hard for the Dems to pry those votes away from Trump in 2020.
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Especially when the Dems strategy for the Continuing Resolution was about immigration,
and NOT about Middle-Class Americans.
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NSFTL
Regards

Artemio Cruz in reply to guest-aaawwwmj

Trump promised the disillusioned Americans whose jobs were lost to overseas that
he would help them.
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It's gonna be hard for the Dems to pry those votes away from Trump in 2020.

Well, that sort of depends whether they still feel that he's workiing for him then and what else happens between now and then and who else enters the field. Certainly the Democrats need to tack towards the centre that Trump has left wide open and stop focussing on side issues.
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But outside of that: for an outside it's an odd goal to be focussing on re-election so early in the cycle. But I guess that's the US system…

Artemio Cruz

There are several things that suggest that the US government is happy with this: firstly, it can trumpet higher import costs and more competitive export rates as being just what it wants. Let's ignore things imported inflation and trade being much less price sensitive than it once was and just focus on the message… Secondly, the size of the domestic market makes the exchange rate immaterial for a lot of trade anyway so that someone can say the dollar in your pocket is worth as much today as it was yesterday (this argument undermines the first but who needs consistency?). Thirdly, shale means that the US is a net energy exporter and stands to benefit from higher oil prices. Fourthly, having the world's reserver currency is a self-fulfilling prophecy: there will always be demand for it. Yes, yields have risen but not yet enough to cause any problems. Anyway who's going to bet against Trump's man at the Fed doing what his master wants him to? Whether it's hold rates down or buying dollars if international demand is sluggish? And, of course, rising yields and rising equities are great news to those suffering pension funds…
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It all sounds a bit too good to be true. Because it is but there is unlikely to be any significant fallout for a while and that is the biggest risk. The tax cuts will help fund the debt boom and make everyone feel better about things because of the wealth effect so there will be even less poltical willingness to balance the books or invest – haven't heard anything recently from the Dumpster about infrastructure – probably for as long as it lasts.
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Only if yields rise sufficiently to attract capital from other assets, especially equities, are we likely to hear anything other than Nero's fiddle.

MASTER_OF_UNIVERSE

The Corporation of the United States of America just ended Quantitative Easing Infinity, and Cheeto-head-in-chief
added another $1.3 trillion to line the pockets of his Crony Welfare Capitalist Giant Vampire Squid arch criminals with Corporate Tax Breaks. Now the investor class knows that the perennial 'Greenspan Put' liquidity has dried up and will not be replaced with anymore BIG government stimulus. This means that all the smart money will avail themselves of the increased activity that invariably occurs outside of the criminally oriented so-called 'economy' of the Corporation of the United States of America. This means that Emerging Markets will see an influx of investors from the dwindling USD markets because there is no more stimulus to backstop failing share prices of 'Merican corporations. The USD will continue lower until USD is threatened in terms of Reserve Status, and then more stimulus will be printed by the Federal Reserve at the behest of the Treasury Secretary that has to continuously pay for his full time Trophy Wife or she will leave him for someone else from the Giant Vampire Squid roster of American corporate criminals.

Corporate welfare has replaced free market capitalism, and that's why Goldman Sachs-of-shit have insinuated themselves into the Whore House Trump cabinet so that they can control EM & USD markets to their advantage, and our disadvantage.

MOU

u39b in reply to u39b

To simplify things: if international investors shift their balance of assets towards other markets (shrinking the current account deficit), then the US economy will respond through a combination of USD weakness, higher oil prices and reduced net imports of oil.
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Other parts of the US economy are also impacted (e.g. a weak dollar dampens consumer spending and imports; there are some traded-sector and price-elastic economic activities in the US besides oil production...). However, shale oil is probably the most impacted large industry in the US, given dollar weakness in a strong world economy.

guest-aaawwwmj in reply to Zouf

The USD weakness is one topic that the entire Trump administration seems to have ignored since day one.
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Draghi is concerned, according to the German media DW.
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ECB's Mario Draghi worried about euro strength
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Following a meeting of central bank governors, ECB chief Mario Draghi has voiced concerns about the current strength of the euro area's single currency. The development makes it harder to exit crisis-era measures.
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http://www.dw.com/en/ecbs-mario-draghi-worried-about-euro-strength/a-423...
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Heck, if the ECB can buy worthless Greek bonds...
let them buy the worthless USD, then bitcoins, and then....
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NSFTL
Regards

Zouf

The USD weakness is one topic that the entire Trump administration seems to have ignored since day one. Now, after a year, Mnuchin opens up and talks about the positives of a weak USD on US exports, and sort of forgets that the US runs a large trade deficit. And then, right on cue, Trump launches into tariff squabbles with China and South Korea. Maybe they should have stuck with the "ignore it" strategy.

u39b

The US dollar has fallen about 15% against the euro in the past year. That is not remarkable. There have been large year-on-year swings of the US dollar against other major currencies. Whereas a dollar is worth €0.81 today and last year a dollar briefly bought as much as €0.94, keep in mind that in 2008 a dollar was worth just €0.63.
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The US economy has a massive current account deficit. In order to prop up current dollar valuations, massive net capital inflows are necessary. When those capital inflows slow (as they did in 2007-2008, due to the subprime debt crisis and wider contagion in US financial markets), then the US dollar falls - easily as low as €0.63 per USD.
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Of course, there's no reason to expect such an extreme deterioration in capital inflows. European investors are rediscovering a preference for their home market, thanks to booming eurozone and Central European economies; yet, diversification (and strong performance of US equity markets, etc) continue to tempt international investors.
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What we're seeing is a relatively mild currency swing - the US dollar might continue to fall against the euro, yen and renmimbi, maybe by as much as10-15% in some one year time windows, probably driven by strong performance elsewhere in the world economy.
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For a more newsworthy currency story (and a dollar worth under €0.60), we'll need a US stock market crash (even if relatively minor) to shut off capital inflows. Or some drastic action by Trump.

Artemio Cruz in reply to guest-aaawwwmj

Both want inflation, so a dollar decline will help bring it on.
But not really in the US due to the high volume of internal trade. The inflation will be elsewhere in dollarised economies where prices of non-dollar denominated imports will rise. But why would this worry America?

guest-aaawwwmj in reply to WT Economist

It's people like you that encourage GenXcess and GenYners
to overdose and die, because of your "Gloom and Doom"
outlook.
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You said you pulled your money from the stock market
http://www.economist.com/comment/3556340#comment-3556340
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Since then the S&P500 is up about 3%
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The economy of businesses paying Americans less but selling them more, and the whole world economy dependent on Americans consuming more than they produce, has to end sometime.
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That sounds like a GenXcess and GenYner problem of them going
deeply into debt to buy shiny things.
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A dollar "collapse" isn't going to hurt.
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The dollar fell from 1985 to 1991.
1USD = 3.10 German marks in Jan 1985
1USD = 1.50 German marks in Jan1991
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The only recession for that period began in July 1990,
and ended in March of 1991.
http://www.nber.org/cycles.html
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Try again.
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NSFTL
Regards

Zouf in reply to guest-aaawwwmj

Quite right - facing a weak opponent, one is allowed many mistakes. And as long as the mistakes are difficult to explain or understand, they are not so damaging. So when your Treasury Secretary says in the same breath that a low USD is good for the economy and that a strong USD is tied with a strong economy, most voters ignore it. That's the beauty of a polarization strategy: it makes whatever "we" do good, and whatever "they" say bad.

guest-aaawwwmj in reply to CaptainRon

Better yet, do commenters here know what they are talking about?
(rimshot)
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Yeah, I know...
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Better than Jesus and the 5 fish and 2 loaves of bread, as
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a little "red meat" can go a long way.
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NSFTL
Regards