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Thread: Dollar loses reserve status to yen & euro

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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by PeteEU View Post
    Because they see it as a "loss of face" it seems. If you notice there are very very few economic arguments in this thread, and much more along partisan political lines and conspiracy theories.
    I certainly don't mind the dollar going down and people putting money into the stock market.

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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by jackalope View Post
    That was interesting, I've never heard health care spending described as a bubble.
    It's not a true bubble, but shares numerous characteristics with bubbles including:

    1. The expenditures trend is unsustainable
    2. At some point in the future, the trend would lead to a crisis--probably a fiscal crisis.
    3. In terms of psychology, one can find literature in which some argue that there is 'nothing wrong' with rapidly rising health expenditures relative to the economy, because such a trend reflects personal choice. Of course, one should not forget that people chose to purchase homes they could not afford, financial institutions made loans to people who should not have received them, etc. Ultimately, the housing bubble burst.
    4. Leverage: The federal government is underwriting the nation's health system and its borrowing needs are increasing. Some might argue that aside from Medicare, Medicaid, the VA System, that the U.S. system is private. It is not so simple. The private system is subsidized through tax expenditures e.g., tax exclusion for insurance policies, etc. Private insurers enjoy anti-trust exemptions.

    Health expenditures cannot grow faster than the economy indefinitely. For starters, the health sector will never even approach 100% of the economy. In addition, as it grows much larger, foreigners will not continue to underwrite the nation's borrowing needs, a growing share of which will be plowed into health care.

    Unfortunately, the time for difficult decisions has not yet arrived. Even as the Baucus bill has its flaws, some of which are significant, the "free lunch" crowd--labor unions and America's Health Insurance Plans (AHIP)--wants to see the bill's limited mechanisms for assuring that it is fully paid-for gutted. IMO, those financing provisions need to be strengthened significantly given past historic experience where Congress routinely waived similar mechanisms e.g., as they related to Medicare reimbursements.

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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by obvious Child View Post
    What does this thread tell us?

    When a Republican president oversaw the fiscally liberal policies that got us here, including the largest decline in the dollar's value in years, he deserved absolutely no criticism at all. Notice neither Goobieman nor Harsaw posted a single link to any of their posts in 2006 criticizing Bush for the massive dollar decline.
    OK, first of all, this is just about the textbook definition of a strawman.

    This thread is about the possibility of the dollar losing reserve currency status. That's an entirely different thing from a mere decline in the dollar's value. The value of the dollar goes up and down all the time. Its status as the world's reserve currency is something decidedly more.

    Second, you can't simply pull out a single story from years ago and demand to see a similar reaction to it, and if there isn't one, it's proof positive of inconsistency. That's, simply put, stupid. No one responds to every single story.

    Third, if you want to prove inconsistency, you need to prove it by linking to previous posts which exonerated Bush for the same thing. You can't just say "I didn't see you complain about it then!!!! You're inconsistent!!!!" You also can't prove a negative.

    Fourth, you also need to keep it consistent with what I actually said here, which wasn't even about spending, but about monetary policy, i.e., printing Monopoly money.

    Fifth, here's a goddamn post of mine bashing Bush and Co. for their spending:

    http://www.debatepolitics.com/archiv...tml#post375019

    "Absolutely no criticism," eh? Maybe you should have some idea what the hell you're talking about before you spout off, Mr. Anti-Stupid.
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  4. #74
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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by Harshaw View Post
    OK, first of all, this is just about the textbook definition of a strawman.
    Only to those ignorant of the subject. Watch. That's you.

    This thread is about the possibility of the dollar losing reserve currency status. That's an entirely different thing from a mere decline in the dollar's value. The value of the dollar goes up and down all the time. Its status as the world's reserve currency is something decidedly more.
    Except that the dollar losing its status as the reserve currency is directly tied to instability stemming from a long history of fiscal policies that directly cause instability in the dollar's value. Massive US debt affects the value of the dollar. With many countries and central banks holding billions of US dollars, our fiscal liberalism is a direct threat to their financial health. Blaming Obama for this when the foundation was clearly laid by Bush and ignoring how Bush nearly double the debt is dishonest and a sign of severe partisan hackery.

    Second, you can't simply pull out a single story from years ago and demand to see a similar reaction to it, and if there isn't one, it's proof positive of inconsistency. That's, simply put, stupid. No one responds to every single story.
    Except that you people are harping on relatively small declines in the dollar yet you completely ignored a TRULY MASSIVE decline under Bush. Furthermore, as I pointed out, none of the hacks were even want to even acknowledge the fiscal policies that got us here under a Republican.

    Democrat = Evil Incarnate
    Republican = Can Do No Wrong

    Ignore the fact that their differences are immaterial.

    Third, if you want to prove inconsistency, you need to prove it by linking to previous posts which exonerated Bush for the same thing. You can't just say "I didn't see you complain about it then!!!! You're inconsistent!!!!" You also can't prove a negative.
    Not at all. You said nothing about Bush's role. Yet you blame only Obama. Furthermore, you deliberately ignored much of the actual argument as to why Bush was the problem and only blame Obama.

    Partisan Hack in this regard you are.

    Fourth, you also need to keep it consistent with what I actually said here, which wasn't even about spending, but about monetary policy, i.e., printing Monopoly money.
    Except that we had the same policies back then as well. Furthermore, monetary policy alone won't do this unless it's Weimar Republic type. The real threat is due to the massive debt and the unwillingness of anyone in Government to take a hard stance against it. We are not the Weimar Republic when it comes to printing presses as much of the spending in the past two years was debt financed.

    And you deliberately ignore how Bush's policies got us to this point. People were talking about the problems of a weak dollar for years. YEARS. But apparently to you, deliberate policies to weaken the dollar under Republicans is okay!

    Wow. One line of criticism. And you did not even mention Bush. Yet in this thread alone you devoted far more time in addition to just bashing Obama.

    I guess you're just another Consistency-Free poster.
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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by obvious Child View Post
    Only to those ignorant of the subject. Watch. That's you.



    Except that the dollar losing its status as the reserve currency is directly tied to instability stemming from a long history of fiscal policies that directly cause instability in the dollar's value. Massive US debt affects the value of the dollar. With many countries and central banks holding billions of US dollars, our fiscal liberalism is a direct threat to their financial health. Blaming Obama for this when the foundation was clearly laid by Bush and ignoring how Bush nearly double the debt is dishonest and a sign of severe partisan hackery.



    Except that you people are harping on relatively small declines in the dollar yet you completely ignored a TRULY MASSIVE decline under Bush. Furthermore, as I pointed out, none of the hacks were even want to even acknowledge the fiscal policies that got us here under a Republican.

    Democrat = Evil Incarnate
    Republican = Can Do No Wrong

    Ignore the fact that their differences are immaterial.



    Not at all. You said nothing about Bush's role. Yet you blame only Obama. Furthermore, you deliberately ignored much of the actual argument as to why Bush was the problem and only blame Obama.

    Partisan Hack in this regard you are.



    Except that we had the same policies back then as well. Furthermore, monetary policy alone won't do this unless it's Weimar Republic type. The real threat is due to the massive debt and the unwillingness of anyone in Government to take a hard stance against it. We are not the Weimar Republic when it comes to printing presses as much of the spending in the past two years was debt financed.

    And you deliberately ignore how Bush's policies got us to this point. People were talking about the problems of a weak dollar for years. YEARS. But apparently to you, deliberate policies to weaken the dollar under Republicans is okay!

    Wow. One line of criticism. And you did not even mention Bush. Yet in this thread alone you devoted far more time in addition to just bashing Obama.

    I guess you're just another Consistency-Free poster.
    OK.

    Not only was the last post a strawman . . .

    THIS post is about moving goalposts. I met your challenges.

    You can only respond by criticizing something different, something completely outside the scope of anything I said.

    If you're embarrassed by your own hackery here and feel you have to try to cover it up with a flurry of words, well, that's your own problem.
    “Offing those rich pigs with their own forks and knives, and then eating a meal in the same room, far out! The Weathermen dig Charles Manson.”-- Bernadine Dohrn

  6. #76
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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by donsutherland1 View Post
    It's not a true bubble, but shares numerous characteristics with bubbles including:

    1. The expenditures trend is unsustainable
    2. At some point in the future, the trend would lead to a crisis--probably a fiscal crisis.
    3. In terms of psychology, one can find literature in which some argue that there is 'nothing wrong' with rapidly rising health expenditures relative to the economy, because such a trend reflects personal choice. Of course, one should not forget that people chose to purchase homes they could not afford, financial institutions made loans to people who should not have received them, etc. Ultimately, the housing bubble burst.
    4. Leverage: The federal government is underwriting the nation's health system and its borrowing needs are increasing. Some might argue that aside from Medicare, Medicaid, the VA System, that the U.S. system is private. It is not so simple. The private system is subsidized through tax expenditures e.g., tax exclusion for insurance policies, etc. Private insurers enjoy anti-trust exemptions.

    Health expenditures cannot grow faster than the economy indefinitely. For starters, the health sector will never even approach 100% of the economy. In addition, as it grows much larger, foreigners will not continue to underwrite the nation's borrowing needs, a growing share of which will be plowed into health care.

    Unfortunately, the time for difficult decisions has not yet arrived. Even as the Baucus bill has its flaws, some of which are significant, the "free lunch" crowd--labor unions and America's Health Insurance Plans (AHIP)--wants to see the bill's limited mechanisms for assuring that it is fully paid-for gutted. IMO, those financing provisions need to be strengthened significantly given past historic experience where Congress routinely waived similar mechanisms e.g., as they related to Medicare reimbursements.

    You should post more, don. Was it in one of your posts, or perhaps somewhere else, I saw someone write that the world is not going to finance America's appetite for overspending on health care expenditures for very much longer. It's a bite that stuck with me.

    I wonder what conditions have to exist before the time for difficult decisions does arrive.

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    Re: Dollar loses reserve status to yen & euro

    Thanks for the kind words, Jackalope.

    IMO, foreigners won't continue to underwrite the growth in U.S. debt, a growing portion of which is projected to be consumed by rising health expenditures, indefinitely without some credible plan for fiscal consolidation for a number of reasons:

    1. Risk perceptions. At some point, the risks of doing so will outweigh the benefits. Risks could arise from concern about a full or partial default. A partial default would entail tolerance of inflation, a greater resort to the monetary printing presses, or a chronically falling dollar that undercuts returns on investments made by foreigners in the U.S.

    2. Globalization. Globalization is leading to a wider range of opportunities for investment. Some of those opportunities will compete with those in the U.S. for international capital. Treasurys will, over time, play a lesser role in the context of that broadening investment environment. Such a development would occur even if actual or perceived U.S. risks remained unchanged. Increased risk perceptions could accelerate such a trend.

    3. A gradually diminishing role of the U.S. dollar. With increasing economic development in China and India, and Asia's economies accounting for a steadily larger role in world output, the role of the dollar as the world's reserve currency is slowly eroding. The recent financial crisis and recession may have accelerated that secular trend. Should Latin America see robust and sustained growth develop, that situation could also strengthen the secular trend. With sound public and monetary policy and increased investment in education, Brazil has genuine potential to become an economic "breakout" state. Overall, that secular trend concering the U.S. dollar will also lead to relative increases in non-dollar-denominated assets. Although I suspect that the evolution toward a broader basket of currencies performing as a global reserve currency or some instrument based on such a basket is probably more likely than not in the long-term due to the U.S. economy's share of global output becoming smaller, the transition need not be messy. Bad policy, high risk, partial default, and failure to remedy the structural flaws in the U.S. financial system are ingredients that could lead to a messy outcome.

    Having said all that, one should not automatically assume a "declinist" outlook for the U.S. With good public policy, a smart regulatory system, and sustained investments in education, the U.S. can still remain an economic, military, and political leader on the world stage. It can still enjoy a lot of opportunity and the rewards realizing such opportunities can bring. Such an approach will entail among the following components: a credible fiscal consolidation plan; regulatory reform in the financial sector; and health care reform that substantially reduces the incidence of uninsured persons, is budget-neutral, and slows the growth in long-term health expenditures and costs to levels consistent with the nation's overall economic growth; and, strong investments in education aimed at increasing the nation's overall educational attainment, particularly among populations where college graduation rates are badly lagging (students from families whose parents did not graduate from college or have low-incomes, underrepresented minorities, etc.).

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    Re: Dollar loses reserve status to yen & euro

    All this talk of officials to blame and Alan Greenspan's name hasn't come up once?

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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by Lord Voldemort View Post
    From this page, "For this reason, the U.S. dollar is said to have "reserve-currency status," making it somewhat easier for the United States to run higher trade deficits"

    At least one good thing...
    Maybe in the next 10 years someone will realize that it's NOT a good thing to have a $1.5+ trillion deficit? I live to see the day

    Note that I only have a very rudimentary knowledge of economics, if the quote I posted is complete BS, please call me out on it.
    The best thing is just to utilize capitalism to create overspending and complete burning out of resources as soon as possible, and make sure there are huge inequality between people. When the model is crashing and resources burning out and the model prove unstable, unreliable and unsustainable, then the best thing is certainly to pretend everything is ok, and burn more paper to keep the overspending unsustainable situation going right up until the point where everything just have to collapse in total and full.

    But then again, anyone who believe that is stupid in the economists who learned their trade in a different world and time, some 10-30 years ago, and certainly do not want to make sure they can steal as much money(labour) from the masses as they can before they leave them to die.
    Europe is illegally occupied by the US

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    Re: Dollar loses reserve status to yen & euro

    Quote Originally Posted by drz-400 View Post
    All this talk of officials to blame and Alan Greenspan's name hasn't come up once?
    Nobody is to blame. The model is to blame, capitalism created all those individuals one "could" want to blame in theory. A model for greed breeds greed. Aint their fault they followed the idiot model.
    Europe is illegally occupied by the US

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