“Gold closed above $1,300 an ounce for the 1st time in 5 years, oil closed above $60 per barrel for the 1st time in 4 years, and the U.S. dollar fell the most in 14 years. Interesting that no one is worried about what this implies for inflation or interest rates in 2018!”
Peter Schiff
Falling asleep at the wheel because of easy money. Perhaps we near the end.
A falling dollar makes our exports cheaper for foreigners to buy and benefits our manufacturing and those employed in it.
This is not a bad thing, it employs Americans and pays American taxes.
We import $550 billion more than we export. Higher prices for everyone is not a good thing. Do you ever consider all aspects of a situation or are you just a cheerleader for Trump?
So why do you think our imports are higher than out experts?
And are you among those that doesn’t consider, say, China a currency manipulator that cheapens it currency to gain an advantage or us (as well as other nations) in their exports to us?
Money we spend on our own products, no matter the price, circulates in our own economy and employs Americans who, in turn, spend their earnings on American products and employ still more Americans (all paying American taxes) and boosting our own economy.
Money we spend on foreign products circulates in foreign economies and dose that for their workers at the expense of our workers.
I think it may be yourself than needs to consider all aspects of the situation.
Or are you just another anti American leftist that wants our economy and people to suffer to benefit someone else’s?
You do realize 67% of our economy is consumption and 12% manufacturing. Right genius?
The cheap imports are sold at stores employing Americans you nitwit. Are there more retail related workers in this country or more manufacturing workers?
Your solution will put far more retail workers out of work than new workers in manufacturing. You do realize manufacturers now use robots rather than people, right?
You spin a false narrative with your money circulating in America. You are either obtuse or just a liar.
I’m going with OBTUSE!!
About time I had some fucken company.
I knew you’d like that. 🙂
“why do you think our imports are higher than out experts?”
Do we have short ‘out-ed’ experts?
I admit I don’t understand Fx. With the Fed shrinking its balance sheet and raising short term interest rates that should be positive for the dollar. Throw in the fact that the US has been exporting over 1 million barrels of oil per day not to mention growing amounts of natural gas, the global chemical industry setting up shop in America to take advantage of cheap feed gas feedstock and Trump’s MAGA policies our trade deficit should be improving. Finally the new tax laws will allow US companies to repatriate cash balances from abroad back to the US and an apparent ‘shortage’ of dollars in the global banking system to pay back the trillions in dollar denominated loans taken out by foreign corporations and governments the why of a falling dollar is a mystery to me. Perhaps someone can explain it.
We export gasoline and diesel. We import over 8 million barrels of oil per day. We are a net importer of petroleum products and will be forever.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRIMUS2&f=W
True but our net oil deficit has narrowed by 5 million barrels per day over the last 10 years thanks to fracking. That is a huge shift in our balance of trade. I realize our fiscal situation is bad but no worse today than when Obama and Bernanke were in charge. In fact, with the Fed shrinking its balance sheet ( if they continue the program) that will, in effect, neutralize half the fiscal deficit by mopping up the dollars QE released into the money supply. Compared to what the Central Banks in Europe, Japan and China are doing we are tightening our money supply which should bolster not weaken the dollar against those currencies.
You’ve convinced me. Everything is rosy. $1 trillion annual deficits won’t matter. All is well.
The Fed stopped QE years ago. Why did the dollar fall 14% this year? FX is much more complicated than you think.
67% of our economy is consumption based on debt. Strengthening the USD will crush the engine of growth.
“Strengthening” (manipulating) the fiat will change the “engine” (illusion) of growth.
Living inside a boardgame of monopoly makes strength the stacks of scrip & engines the little pot metal representatives of the players. The pots, boards – aka countries – hold the played. The Playa del played? I like it.
Musical chair•iots, Ben-Hur. Remember that coliseum race, & the tricked out blade-hubs? Art’s happy endings may be compensatory for life’s more typical other endings. Plus it feeds the engine of the “engine” – “it could happen” {belief}.
The savings rate has collapsed to 2.9 %. With the unfunded tax cuts, the fiscal deficit will probably balloon towards $1 trillion, without taking into any surprises such as interest rate escalation or an economic downturn occurring, which is likely given that the current cycle is now one of the longest in history (approaching 10 years).
The Fed will be tightening, and selling government debt (approximately $ 600 billion in 2018), into an environment for increased demand for new issuance by the Treasury ( north of $ 600 billion). Given that the available savings pool for this demand is now less than $350 billion, where is the funding coming from?
The Fed selling debt and soaking up dollars from the money supply does affect the deficit, but not by reducing it. The shortage of money to fund government debt should tend to drive up interest rates, particularly with the Fed tightening, so the effect will be to increase the deficit by increasing debt service cost.
What about foreign funding? Is it likely that capital flows will increase into the US, above its current high level? Possibly, but we know a concerted effort is afoot, globally, to diminish dollar demand through alternative trade settlement, not least of which is oil-for-yuan, which will be rolled out early next year. Since the primary demand for US dollars is for financial purposes (ie. recycling the petrodollar to fund US deficits) this might cause a drop in demand for dollars, putting upward pressure on interest rates, since available funding should become more difficult.
As for corporate cash coming back to the country…. well the majority of that is already encumbered. Cash is a current asset on the balance sheet, and so has been used as collateral for corporate borrowing, which has ballooned to all-time highs for funding stock buybacks.
The likely scenario is that after causing major problems in the markets with their tightening program, particularly in the bond market (but equities, as well), the Fed will quickly reverse back to easing, which will crush the dollar.
CUT GOVERNMENT SPENDING! ELIMINATE THE DOEs (both of them), DH&HS, DHS, save trillions!
But why am I the only one shouting this, in a nation of 330 million?
We truly DESERVE the government we get!
Repatriating dollars could serve to help neutralize the pain of reversing QE. Since the dollars involved are under the control of the elite, the asset bubbles may continue to grow. It appears that the Fed tightening and corporate taxes loosening are coordinated. Surprise!
Sub-$1,200 gold the last 5 years?
In which alternate universe?
Peter Schiff’s crystal ball is right about once every 15 years or so. Maybe he’s due for another good call in 2018. If the dollar continues to decline in 2018, of course hard assets priced in dollars will continue to rise.