De-Dollarisation.

[andrewfi]

Westcoast, allow me to make a suggestion to you. Over the years you have told us that you are (or were before you were fired) an international banker and businessman. Such a role implies knowledge in certain fields.

Now, on the Internet there's an old meme 'on the Internet nobody knows you're a dog'. That's largely true but when one makes claims that depend upon knowledge, implicit knowledge, knowledge in depth, then one's mask can easily fall aside.

So,  the suggestion is this: rather than continually displaying that you are and were not what you claim why not try to, at the least, bone up about relevant matters before writing silly posts that give the lie to your claims?

For a start you might want to learn about what drives currency price variations and how these variations may well have little or nothing to do with the underlying characteristics of the economy that the currency represents.

A while back I shared a basic reading list on this and other aspects of international finance. I suggest that a few days of reading and consequent learning will enable you to once again pretend that you are not the famed dog of the Internet meme.

[Texan77]

Andrew I have been saying that international trade in USA dollars has been dead for several years now. You keep saying it has not. Can you tell us which countries that conduct trade in dollars when not trading with the USA? Even Canada and Australia trade in in Yuan when trading with China. Manny posted something that said Rhodesia no longer uses dollars. I am asking Who trades in dollars when trading with countries other the USA. Does this mean that you agree the dollar trade died a long time ago? That is started to die with the Euro many years ago and now on longer exist.

[Manny]

Manny posted something that said Rhodesia no longer uses dollars.

Rhodesia has been called Zimbabwe since 1980 by the way.

[Texan77]

Complain about anything other than answer the question? Who trades in dollars when not trading with the USA? Answer nearly no body. How can you guys be chipping away at a trade in dollars that does not exist? This whole thing was a myth. All of this trade in dollar was never good for the USA and it is really good it is gone.

[Gipsy]

Complain about anything other than answer the question? Who trades in dollars when not trading with the USA? Answer nearly no body. How can you guys be chipping away at a trade in dollars that does not exist? This whole thing was a myth. All of this trade in dollar was never good for the USA and it is really good it is gone.

Read all please then you may understand..

https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar

https://en.wikipedia.org/wiki/Petrocurrency

https://www.quora.com/Why-do-international-deals-happen-in-dollars-even-when-none-of-the-countries-involved-has-dollars-as-its-currency

http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/

There is more, but I do not wish to bore you..

[Gipsy]

Manny posted something that said Rhodesia no longer uses dollars.

Rhodesia has been called Zimbabwe since 1980 by the way.

I am to young to remember this, but it does seem like yesterday....

[WestCoast]

Westcoast, allow me to make a suggestion to you. Over the years you have told us that you are (or were before you were fired) an international banker and businessman. Such a role implies knowledge in certain fields.

Now, on the Internet there's an old meme 'on the Internet nobody knows you're a dog'. That's largely true but when one makes claims that depend upon knowledge, implicit knowledge, knowledge in depth, then one's mask can easily fall aside.

So,  the suggestion is this: rather than continually displaying that you are and were not what you claim why not try to, at the least, bone up about relevant matters before writing silly posts that give the lie to your claims?

For a start you might want to learn about what drives currency price variations and how these variations may well have little or nothing to do with the underlying characteristics of the economy that the currency represents.

A while back I shared a basic reading list on this and other aspects of international finance. I suggest that a few days of reading and consequent learning will enable you to once again pretend that you are not the famed dog of the Internet meme.

Andy I try my best to keep my posts easy to understand so you, especially, will understand them. As for understanding currency price variations, I did a tour of duty in the currency pits during my international banking days so I well understand what drives currency fluctuations.

It's you and Manny with this nonsense about how the yuan and ruble are going to take over from the USD. First, by now it must be clear even to you and Manny that China will make sure that Russia is never anything more than a very junior partner to China's business operations in the BRICS or in other partnerships.

Second, there is a very real chance that China is in far worse financial shape than the US. So bad in fact that even if China does have the reported $3 trillion in foreign reserves (and there are definitely possibilities that China's foreign reserves are actually must less) that may not be nearly enough to help it get through the current financial quagmire engulfing China's financial sector and economy in general.

[Texan77]

Complain about anything other than answer the question? Who trades in dollars when not trading with the USA? Answer nearly no body. How can you guys be chipping away at a trade in dollars that does not exist? This whole thing was a myth. All of this trade in dollar was never good for the USA and it is really good it is gone.

Read all please then you may understand..

https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar


https://en.wikipedia.org/wiki/Petrocurrency

https://www.quora.com/Why-do-international-deals-happen-in-dollars-even-when-none-of-the-countries-involved-has-dollars-as-its-currency

http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/

There is more, but I do not wish to bore you..

Give me a list of countries that trade in dollars when not trading with the USA! Not some silly link of general nothing of out date stuff but a list countries who still in 2016 trade in dollar other than when trading with the USA. Yes the dollars is the largest reserved currency but here I am taking about countries that do international trade in dollars. Even the petro dollar that you write about is history. Still name a foreign power that buys oil in dollars other than the USA and who they buy it from. I bet you can not name a large country because they do not exist anywhere on this planet. The dollar trade is dead and we are better off. 

[Gipsy]

Complain about anything other than answer the question? Who trades in dollars when not trading with the USA? Answer nearly no body. How can you guys be chipping away at a trade in dollars that does not exist? This whole thing was a myth. All of this trade in dollar was never good for the USA and it is really good it is gone.

Read all please then you may understand..

https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar


https://en.wikipedia.org/wiki/Petrocurrency

https://www.quora.com/Why-do-international-deals-happen-in-dollars-even-when-none-of-the-countries-involved-has-dollars-as-its-currency

http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/

There is more, but I do not wish to bore you..

Give me a list of countries that trade in dollars when not trading with the USA! Not some silly link of general nothing of out date stuff but a list countries who still in 2016 trade in dollar other than when trading with the USA. Yes the dollars is the largest reserved currency but here I am taking about countries that do international trade in dollars. Even the petro dollar that you write about is history. Still name a foreign power that buys oil in dollars other than the USA and who they buy it from. I bet you can not name a large country because they do not exist anywhere on this planet. The dollar trade is dead and we are better off.

Thank you for your comment.

How do you not understand how many countries use the $ for trading with each other and not for trades with the US??

Canada used the US $ for most of its "Non US" Imports, along with the UK with all of its "Non US & Non EU" imports just to name 2 for you.

[andrewfi]

Westy, yes, we get it, once upon a time somebody let you work on the Forex till. Whoop de doo!

I doubt that you will be able to point at a post written by myself or Manny that suggests that the ruble or yuan will take over the world.

You see, I know that this is not what either Russia or China want to happen, both countries' representatives have spoken of the unbalancing effect of having a disproportionate reserve currency, no matter which state that currency belongs to. Both countries' governments have suggested multi-polarity and that is exactly what both Russia and China are implementing. They have also proposed using an administrative currency which would be based upon a basket of currencies, this addresses the issue of multi-polarity and of convenience of having an intermediary currency.

Yes, we get it, you are old and forgetful, but please don't make stuff up and then attribute it to people who are trying to help you. If you are not sure please ask one of your caregivers to check for you, or ask us a question. Both Manny and I are patient with the differently abled - as you have experienced on many occasions

[Texan77]

Canada uses the Euro when trading with Europe and the Yuan when trading with China. Who is left that would be any large amount of trade. China trades with the UK they usually the Yuan. The UK now even has issued government bonds payable in the Chinese Yuan. The dollar international trade has been getting smaller over the last thirty years. Since 2008 that level of trade has fallen off a cliff.

All this crape that made the dollar artificially high all these years has been very bad for the USA and has killed our manufacturing cost of a lot of jobs and sent our money to China. Up until the last few years Chinese actually promoted it. Now that China no longer has a surplus of dollars so it is no longer to their advantage to promote this. China no longer doing trade in dollars has pretty much killed the dollar in international trade between countries that does not include the USA. This is because China does far more international trade than the USA. As per Manny, even some small African countries are no longer using dollars.

Right now the dollar is strong because the USA is importing more dollars than we are exporting. One day that will change. If the dollar does fall then factories will make more profit in America and we will sell more products in China as well as the rest of the world. That will cause the dollar to rise again and this new rise will be much healthy for the USA than this artificial lift the dollar gets from exporting dollars for international trade.   

[Manny]

China trades with the UK they usually the Yuan.

Really? 

I buy quite a lot from China, and only now is it dawning on them that they need not use the dollar any more. The trend has started (fuelled by the government), but it isnt yet complete. I now pay some of my suppliers in RMB or pounds. The odd one still insists on dollars - because they never knew anything different. But this is me, I am a big supporter of de-dollarisation, and I will avoid using it outside the US where I can. I have refused to deal with factories who cannot get out of the dollar rut. But let me tell you that a great many deals done with Chinese factories, including from the UK, are still done in dollars, for now.

So your theory isnt quite correct.

[Gipsy]

Canada uses the Euro when trading with Europe and the Yuan when trading with China. Who is left that would be any large amount of trade. China trades with the UK they usually the Yuan. The UK now even has issued government bonds payable in the Chinese Yuan. The dollar international trade has been getting smaller over the last thirty years. Since 2008 that level of trade has fallen off a cliff.

All this crape that made the dollar artificially high all these years has been very bad for the USA and has killed our manufacturing cost of a lot of jobs and sent our money to China. Up until the last few years Chinese actually promoted it. Now that China no longer has a surplus of dollars so it is no longer to their advantage to promote this. China no longer doing trade in dollars has pretty much killed the dollar in international trade between countries that does not include the USA. This is because China does far more international trade than the USA. As per Manny, even some small African countries are no longer using dollars.

Right now the dollar is strong because the USA is importing more dollars than we are exporting. One day that will change. If the dollar does fall then factories will make more profit in America and we will sell more products in China as well as the rest of the world. That will cause the dollar to rise again and this new rise will be much healthy for the USA than this artificial lift the dollar gets from exporting dollars for international trade.

Canada, like the UK is not yet using the yuan, its very new to them and will take time before it becomes an everyday item..

The dollar has gained in strength mainly due to your own Fed increasing the interest rate, making it aa attractive safe haven for currency holders.

Plus, The US refuses to agree and accept any other currency for its imports/exports than the dollar, thereby artificially increasing its value..

Remember, your country is almost bankrupt, it has about 20t$ debt, and should an investor wish to cash in on Fed bonds, he cannot get his/her money out cash.
Its the same problem with gold holdings, countries who entrusted the US with their gold, cannot get it back in the short term..
If the US did not have any "Wars" to fight, the country would be insolvent.

Don't blame manufacturing, your US bosses saw ways to make more money by moving it to China amongst other places, and it was a highly profitable move, blame them.

Goods made in the US, apart from weaponry/munitions etc, are far too expensive that nobody wants them, think yourself lucky that your Government wanted foreign manufacturers to make their products in the US and financially assisted such moves, otherwise, your "Homemade" brands would be at least 30% more today than they are..

[WestCoast]

Canada uses the Euro when trading with Europe and the Yuan when trading with China. Who is left that would be any large amount of trade. China trades with the UK they usually the Yuan. The UK now even has issued government bonds payable in the Chinese Yuan. The dollar international trade has been getting smaller over the last thirty years. Since 2008 that level of trade has fallen off a cliff.

All this crape that made the dollar artificially high all these years has been very bad for the USA and has killed our manufacturing cost of a lot of jobs and sent our money to China. Up until the last few years Chinese actually promoted it. Now that China no longer has a surplus of dollars so it is no longer to their advantage to promote this. China no longer doing trade in dollars has pretty much killed the dollar in international trade between countries that does not include the USA. This is because China does far more international trade than the USA. As per Manny, even some small African countries are no longer using dollars.

Right now the dollar is strong because the USA is importing more dollars than we are exporting. One day that will change. If the dollar does fall then factories will make more profit in America and we will sell more products in China as well as the rest of the world. That will cause the dollar to rise again and this new rise will be much healthy for the USA than this artificial lift the dollar gets from exporting dollars for international trade.

Canada, like the UK is not yet using the yuan, its very new to them and will take time before it becomes an everyday item..

Let's make this clear to everyone, countries like China and Canada agree to currency swaps but it is companies in the two countries that use each others currencies. 

The dollar has gained in strength mainly due to your own Fed increasing the interest rate, making it aa attractive safe haven for currency holders.

No, US fed interest rate is same as the UK's.

http://www.global-rates.com/interest-rates/central-banks/central-banks.aspx

Plus, The US refuses to agree and accept any other currency for its imports/exports than the dollar, thereby artificially increasing its value..

Gipsey where do you get your info? The US has currency swaps with a number of countries.

http://www.cfr.org/international-finance/central-bank-currency-swaps-since-financial-crisis/p36419#!/?cid=from_interactives_listing

Remember, your country is almost bankrupt, it has about 20t$ debt, and should an investor wish to cash in on Fed bonds, he cannot get his/her money out cash.

Gipsey if you believe the US is broke look up the debt for the UK, it's not much better. The US has the added advantage of being the global reserve currency

Its the same problem with gold holdings, countries who entrusted the US with their gold, cannot get it back in the short term..
If the US did not have any "Wars" to fight, the country would be insolvent.

Don't know why the US won't send gold back to countries such as Germany. The comment about the US being insolvent if it didn't engage in warfare is nonsense. War related GDP is far less than during WW2.

Don't blame manufacturing, your US bosses saw ways to make more money by moving it to China amongst other places, and it was a highly profitable move, blame them.

Goods made in the US, apart from weaponry/munitions etc, are far too expensive that nobody wants them, think yourself lucky that your Government wanted foreign manufacturers to make their products in the US and financially assisted such moves, otherwise, your "Homemade" brands would be at least 30% more today than they are..

Again Gipsey you've got to provide sources for you nonsense. Where do you get the idea that no one wants US manufacturing?

http://www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/webcontent/tg_ian_003364.pdf

[Gipsy]

Canada uses the Euro when trading with Europe and the Yuan when trading with China. Who is left that would be any large amount of trade. China trades with the UK they usually the Yuan. The UK now even has issued government bonds payable in the Chinese Yuan. The dollar international trade has been getting smaller over the last thirty years. Since 2008 that level of trade has fallen off a cliff.

All this crape that made the dollar artificially high all these years has been very bad for the USA and has killed our manufacturing cost of a lot of jobs and sent our money to China. Up until the last few years Chinese actually promoted it. Now that China no longer has a surplus of dollars so it is no longer to their advantage to promote this. China no longer doing trade in dollars has pretty much killed the dollar in international trade between countries that does not include the USA. This is because China does far more international trade than the USA. As per Manny, even some small African countries are no longer using dollars.

Right now the dollar is strong because the USA is importing more dollars than we are exporting. One day that will change. If the dollar does fall then factories will make more profit in America and we will sell more products in China as well as the rest of the world. That will cause the dollar to rise again and this new rise will be much healthy for the USA than this artificial lift the dollar gets from exporting dollars for international trade.

Canada, like the UK is not yet using the yuan, its very new to them and will take time before it becomes an everyday item..

Let's make this clear to everyone, countries like China and Canada agree to currency swaps but it is companies in the two countries that use each others currencies. 

The dollar has gained in strength mainly due to your own Fed increasing the interest rate, making it aa attractive safe haven for currency holders.

No, US fed interest rate is same as the UK's.

http://www.global-rates.com/interest-rates/central-banks/central-banks.aspx

Plus, The US refuses to agree and accept any other currency for its imports/exports than the dollar, thereby artificially increasing its value..

Gipsey where do you get your info? The US has currency swaps with a number of countries.

http://www.cfr.org/international-finance/central-bank-currency-swaps-since-financial-crisis/p36419#!/?cid=from_interactives_listing

Remember, your country is almost bankrupt, it has about 20t$ debt, and should an investor wish to cash in on Fed bonds, he cannot get his/her money out cash.

Gipsey if you believe the US is broke look up the debt for the UK, it's not much better. The US has the added advantage of being the global reserve currency

Its the same problem with gold holdings, countries who entrusted the US with their gold, cannot get it back in the short term..
If the US did not have any "Wars" to fight, the country would be insolvent.

Don't know why the US won't send gold back to countries such as Germany. The comment about the US being insolvent if it didn't engage in warfare is nonsense. War related GDP is far less than during WW2.

Don't blame manufacturing, your US bosses saw ways to make more money by moving it to China amongst other places, and it was a highly profitable move, blame them.

Goods made in the US, apart from weaponry/munitions etc, are far too expensive that nobody wants them, think yourself lucky that your Government wanted foreign manufacturers to make their products in the US and financially assisted such moves, otherwise, your "Homemade" brands would be at least 30% more today than they are..

Again Gipsey you've got to provide sources for you nonsense. Where do you get the idea that no one wants US manufacturing?

http://www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/webcontent/tg_ian_003364.pdf

Westy, your blind patriotism to both the US and Canada are commendable..

The US is paying out more than it has coming in, GDP- debt 103%, if a company was in that position, it would be classed as bankrupt.

The UK is much less, about 85% of GDP.

Difference here is that US debt is around 20t$, whereas the UK's is around £1,3t..

I do know what their respective interest rates are, but you must admit, that when the fed increased from 0.25 to 0.5, there was a rather large influx of investment in $.

I also have some knowledge of currency swops thank you, but this was not the subject of discussion.

As far as being the "Global currency" well that's getting more and more debateable every day, hence why countries (Including your own) are looking more to "Hedging their bets" and using alternative currencies.

As far as your war related costs being less than WW2, well, that's just total bullshit, AND I am sure that you know it, as an example, just look at the costs of new aircraft to the US, and please remember, that much of the war costs was, and is still being carried by others and not the US....

Regarding the German gold, well that's farcical, nothing to do with the war, the US has openly stated that it cannot find the gold, and must re-pour it as it doubts the fineness of the gold, look it up..

When I spoke about US manufacturing, I was addressing the US internal market as you may well have understood, but your wish to try to discredit whatever I write overrode your understanding, please take more care next time..

Finally, anything that I write is my view/opinion, I have no need to go searching the internet for information to justify this, and I must say that I am happy that you were never my financial advisor.

Enjoy your day..

[Gipsy]

Westy


Some propaganda with an element of truth just for you..

http://sputniknews.com/business/20160308/1035978575/us-national-debt-russia-role.html


On a more serious note, kindly give your prognosis to the 2 following scenario's..

1, When the fed meets in march, they will leave the current level of interest rate, if so, what will be the "result" for the US economy..

2, When the fed meet in march, they will raise the interest rate by 0.25%, if so, what will the "Result" be for the US economy..

Just your opinion on both scenario's, no anecdotal evidence from the internet required.

Thank you in anticipation.

[andrewfi]

As a brief commentary to the Sputnik piece:

As we should already know the more money there is in an economy the more prices rise (absent a corresponding increase in economic productivity) This, general increase in prices is inflation, indeed, it is the very definition of inflation.

The 'trick' that the USA has used for several decades is to create money through expanded debt which is used to meet domestic requirements but because the dollar is used for settlements of international trade obligations a very large part of the increase in dollar supply is exported from the US national economy. In this way the supply of dollars increases but because the dollars are removed from the domestic economy their effect upon inflation is reduced.

This simple reality is the underlying mechanism for the effects described in the Sputnik piece.

The danger to the US economy is the repatriation of these overseas dollars. If dollars are used less in international trade then the requirement for companies and states to hold them reduces. When those dollars are sold for whatever the previous holders want to buy (other currencies, US based assets, US exports) those dollars end up repatriated to the US national economy.

When these dollars end up back in the US national economy they end up increasing the national money supply, prices rise as a result and we see increased inflation.

This is the underlying reason why the US has fought wars to stop the use of dollars in international trade.

The article describes this situation as a Ponzi scheme, and, indeed it is similar to one! Holders of US dollars as currency or debt all understand that the process of repatriation results in inflation and thus that the purchasing power of each dollar will tend to decrease the longer that it is held. This means that each transaction that the holders undertake in order to obtain maximum value for their dollars is actually contributing to the future devaluation of the very currency they are holding.
In such a situation the best strategy is that of 'first loss, best loss' whereby holders aim to liquidate their holdings before other holders are able to do so. This will lead, inevitably to a more and more rapid process of repatriation and consequent devaluation.

At the moment we are in a position whereby the US has taken action to strengthen the currency which is acting as a perverse incentive to holders to liquidate now rather than later. The increased interest rates though also reflect the reality that the purchasing power of the dollar is expected to decline - interest can be seen as the cost of money or the risk of holding it. The higher the interest (rate of return) the greater the implied risk in the transaction. In order to persuade lenders to take on US debt the FED has had to increase the rate of return they pay out. This is an ideal time for China, Russia and others to reduce their exposure to the dollar because they get a 'good price'.

What we are seeing is that the US is following a dual path, two incompatible sets of goals. One set of goals requires that the dollar be priced to attract sales of dollars (high interest rates) and the other set of goals requires that the world continues to buy and hold US dollars. The same mechanism (high interest rates) serves both sets of goals but the two sets of goals can not stably co-exist. Something will break and whatever breaks the effect upon the national economy is not good.

[Texan77]

The USA dollar will in all likelihood continue to deflate in the near term meaning the next few years. Andrew you must understand that we have a eight to ten year cycle where we have a recession. This one is likely to be worse than most as we have ten thousand people in the USA retiring everyday. We have a junk bond market which is fragile and likely will not be able to stand the stress of a above normal recession. At this time the boom experienced by the minimum wage worker is driving them back into the house buying market. This is still another sign that the economy is in late stages of the recovery. When the recession starts money will be destroyed by failing loans and make the dollar to still be in short supply in spite of the currency returning to the USA. The other thing that is making the dollar in short supply is money hoarding. Bank interest is so low, many retires are used their "mattress" as a bank. Why risk a bank failure if the bank pays no interest. This hoarded money is also money that is coming out of circulation.

What the government has done with all the extra money has spent it on entitlements. Our bloated health care system is the most expensive in the world. What we have done with all this money is let politicians buy votes. Before my mother died she had a stroke. She was in and out of the hospital for six month before she died. It was real nice the way the government took care of her. The other side of the coin it cost 1.5 million dollars the USA paid for her care. Something like this is what happen nearly when every retired America dies. With ten thousand people retiring everyday you can see the problem. There is no way it can be paid for. Some artificial prop of the system will not be good neither.

The petro dollar was really very bad for the USA. On the surface it seem good and I sure you can find many writers that will say the USA would never survived without it. But the truth it promoted energy consumption above what it needed to be making our balance of payments worse every time the price spiked. This created world wide oil shortages and caused recessions that would not of needed to be as bad both here and abroad.

The concept of us buying stuff from China and then the Chinese hoard our money was never good for the USA. It just kept the price of Chinese products low and that is why the Chinese did it. It cause more factories to move to China and help build their country. The Chinese bought everything in dollars and promoted dollar trade to keep the value of our money up also to make their products cheap in America. It is really good all of this is coming to an end. It just now China is in such trouble that it currency still does not rise. In all likelihood when we have a recovery from the next recession Chinese products will no longer be cheap. This maybe the price inflation you are talking about. It will be good for the USA also and improve our balance of payments.

Our minimum wage worker is really experiencing a boom in the USA now. Three years ago or so they really got the minimum wage of $7.50 and work under thirty hours per week. Now most are getting ten dollars and working about 40 hours. This is a huge increase and is what is causing my business to do so well. We have created so many minimum wage jobs that there is not enough workers to fill them. Do the math. A young couple working at fast food can make over 3000 dollars a month. It has caused my rents to go up and my vacancies to do down.

[WestCoast]

Westy


On a more serious note, kindly give your prognosis to the 2 following scenario's..

1, When the fed meets in march, they will leave the current level of interest rate, if so, what will be the "result" for the US economy..

If the fed does nothing and the interest rate stays at 0.5% the US economy will continue on as usual. For businesses this is what most want to happen. By keeping the interest rate low business can borrow at low interest rates.

2, When the fed meet in march, they will raise the interest rate by 0.25%, if so, what will the "Result" be for the US economy..

If the fed raises the interest rate by 0.25% and I can't see the fed raising the rate by more than 0.25% then the American economy will change very little. Yes, the borrowing rate will increase and some very few businesses will go out of business and some very few people won't be able to borrow to buy a car or house. However, an increase of 0.25% will do very little harm to the US economy as a whole.

On the upside if the fed interest rate goes up than the rate banks give for savings may go up. I say may because with such a small hike some banks are sometimes slow to increase the rate for savings or don't pass on the full increase.

Of course these are just my opinions.
 

[Gipsy]

Westy


On a more serious note, kindly give your prognosis to the 2 following scenario's..

1, When the fed meets in march, they will leave the current level of interest rate, if so, what will be the "result" for the US economy..

If the fed does nothing and the interest rate stays at 0.5% the US economy will continue on as usual. For businesses this is what most want to happen. By keeping the interest rate low business can borrow at low interest rates.

2, When the fed meet in march, they will raise the interest rate by 0.25%, if so, what will the "Result" be for the US economy..

If the fed raises the interest rate by 0.25% and I can't see the fed raising the rate by more than 0.25% then the American economy will change very little. Yes, the borrowing rate will increase and some very few businesses will go out of business and some very few people won't be able to borrow to buy a car or house. However, an increase of 0.25% will do very little harm to the US economy as a whole.

On the upside if the fed interest rate goes up than the rate banks give for savings may go up. I say may because with such a small hike some banks are sometimes slow to increase the rate for savings or don't pass on the full increase.

Of course these are just my opinions.

Thank you..

What do you think might happen to the Dollar in either 1 of the 2 situations...

I am not trying to trick you, I would just like to hear your opinion..

[WestCoast]

Westy


On a more serious note, kindly give your prognosis to the 2 following scenario's..

1, When the fed meets in march, they will leave the current level of interest rate, if so, what will be the "result" for the US economy..

If the fed does nothing and the interest rate stays at 0.5% the US economy will continue on as usual. For businesses this is what most want to happen. By keeping the interest rate low business can borrow at low interest rates.

2, When the fed meet in march, they will raise the interest rate by 0.25%, if so, what will the "Result" be for the US economy..

If the fed raises the interest rate by 0.25% and I can't see the fed raising the rate by more than 0.25% then the American economy will change very little. Yes, the borrowing rate will increase and some very few businesses will go out of business and some very few people won't be able to borrow to buy a car or house. However, an increase of 0.25% will do very little harm to the US economy as a whole.

On the upside if the fed interest rate goes up than the rate banks give for savings may go up. I say may because with such a small hike some banks are sometimes slow to increase the rate for savings or don't pass on the full increase.

Of course these are just my opinions.

Thank you..

What do you think might happen to the Dollar in either 1 of the 2 situations...

I am not trying to trick you, I would just like to hear your opinion..

I doubt anything will happen to the USD in either situation. A 0.25% rise in the current economic climate simply isn't enough to have much impact.

[Gipsy]

 

[Texan77]

Most likely the FED will leave rates where they are but it will be important what insight they give about future rate hikes. The market was pricing in no rates hikes to one rate hike this year. If the market feel after the meeting that their will be more hikes it could sell off. On the other hand if the market feels that the number of rate hikes is correct then the market will look to other data for direction. We had a another good job report which has cause the  stock market recovery to stop for now waiting on getting clues about future rate hikes. If the fed feel our economy can take rate hikes in future then dollar likely to continue to climb short term. If comments are made about possible negative rates the stock market will continue to climb but dollar would likely sell off short term.

If they raise rates this meeting it will be a big surprise to the market and would likely cause a market sell off. What happens after the sell off would depends on what happens in the US economy and what the fed says about future rates hikes.

In the end the amount of rate change is not likely to be big enough to cause a large change in the dollar's value short term. In the end rates are only one factor in the dollar supply and demand equation.

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[Steveboy]

Canada uses the Euro when trading with Europe and the Yuan when trading with China. Who is left that would be any large amount of trade. China trades with the UK they usually the Yuan. The UK now even has issued government bonds payable in the Chinese Yuan. The dollar international trade has been getting smaller over the last thirty years. Since 2008 that level of trade has fallen off a cliff.

All this crape that made the dollar artificially high all these years has been very bad for the USA and has killed our manufacturing cost of a lot of jobs and sent our money to China. Up until the last few years Chinese actually promoted it. Now that China no longer has a surplus of dollars so it is no longer to their advantage to promote this. China no longer doing trade in dollars has pretty much killed the dollar in international trade between countries that does not include the USA. This is because China does far more international trade than the USA. As per Manny, even some small African countries are no longer using dollars.

Right now the dollar is strong because the USA is importing more dollars than we are exporting. One day that will change. If the dollar does fall then factories will make more profit in America and we will sell more products in China as well as the rest of the world. That will cause the dollar to rise again and this new rise will be much healthy for the USA than this artificial lift the dollar gets from exporting dollars for international trade.

Canada, like the UK is not yet using the yuan, its very new to them and will take time before it becomes an everyday item..

The dollar has gained in strength mainly due to your own Fed increasing the interest rate, making it aa attractive safe haven for currency holders.

Plus, The US refuses to agree and accept any other currency for its imports/exports than the dollar, thereby artificially increasing its value..

Remember, your country is almost bankrupt, it has about 20t$ debt, and should an investor wish to cash in on Fed bonds, he cannot get his/her money out cash.
Its the same problem with gold holdings, countries who entrusted the US with their gold, cannot get it back in the short term..
If the US did not have any "Wars" to fight, the country would be insolvent.

Don't blame manufacturing, your US bosses saw ways to make more money by moving it to China amongst other places, and it was a highly profitable move, blame them.

Goods made in the US, apart from weaponry/munitions etc, are far too expensive that nobody wants them, think yourself lucky that your Government wanted foreign manufacturers to make their products in the US and financially assisted such moves, otherwise, your "Homemade" brands would be at least 30% more today than they are..

Ye no wars to fight = no $$$$

I would recommend this to watch "Zeitgeist addendum" You can watch on Netflix , makes you wonder what a **** world we live in..