Article

2004-01-16 Iraq

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Posted by Steve White 2004-01-16 12:13:40 AM|| || Front Page|| [4 views since 2007-05-07] Top

#1 Well, at least this indicates the counterfeiters haven't cranked up the presses. Yet.

Posted by Pete Stanley 2004-1-16 3:03:37 AM|| 2004-1-16 3:03:37 AM|| Front Page Top

#2 "As the dinar has grown stronger, more people have shifted their savings from dollars into dinars in expectations of a further increase in value."

compare this to argentina, Russia, etc. Speculation maybe, but speculators arent stupid, and tend to drive down the values of currencies where they expect the govt to be unable to deal with deficits and to print money instead. Not the expectation here, obviously.

Posted by liberalhawk 2004-1-16 9:30:22 AM|| 2004-1-16 9:30:22 AM|| Front Page Top

#3 compare this to argentina, Russia, etc. Speculation maybe, but speculators arent stupid, and tend to drive down the values of currencies where they expect the govt to be unable to deal with deficits and to print money instead. Not the expectation here, obviously.

It's funny how liberals are suddenly concerned about budget deficits. Of course, this feigned concern isn't actually about deficits per se - it's about getting cover for tax hikes, which do happen to reduce budget deficits. At least until the next liberal spending binge.

As to assertions that this government is printing money - that's the product of economy illiteracy. If the government was printing money, wages in America and prices of domestically-produced goods and services would be rising across the board. This is not happening. The dollar is falling because of cyclical adjustments in the balance of payments. The chest thumpers who were highlighting the dollar's strength as it went from ($1.10 per euro to $0.85 per euro) as a sign of American economic strength are just as wrong as the Cassandras who are now bemoaning the dollar's current weakness ($0.85 per euro to $1.30 per euro) as a sign of American economic malaise.

Whatever the exchange rate, the US economy is growing. Unlike the Third World countries that have encountered currency crises, the US doesn't rely on imports of capital goods from other countries to keep its plants running - most American imports are elective - German BMW's and Chinese toys. If the dollar weakens substantially against other currencies, production can and will be moved back to the US. The problem with the Third World countries that ran into problems related to structural rigidities in their economies. Lousy infrastructure, confiscatory taxes, corruption, unions, regulatory issues, foreign ownership restrictions and a host of business-hostile issues all contributed to their economies not attracting foreign (or domestic investment) even as their currencies depreciated. The US does not have this problem.

Currency depreciation isn't even a problem for every economy that goes through it. After depreciating their currencies by as much as 50%, East Asian economies adjusted, and have now resumed growing at the high single-digit rates they were accustomed to, prior to the depreciations. The Latin American countries continued to be stuck in perennial malaise, but that's a function of business-hostile environments, not currency depreciation.

Posted by Zhang Fei 2004-1-16 10:33:55 AM|| 2004-1-16 10:33:55 AM|| Front Page Top

#4 "Mr.Soros- Kofi Annan on line one..."

Posted by Grunter 2004-1-16 2:56:00 PM|| 2004-1-16 2:56:00 PM|| Front Page Top

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