Re: Coining a new phrase, "the falling dollar bubble."

In article <[EMAIL PROTECTED]>,
FXcoach.com <[EMAIL PROTECTED]> wrote:
>(c) Dec 3, 2003 by Neil Albala http://FXcoach.com
>Here's something that most people have yet to realize. We're just now 
>finishing the refinancing boom, where people refinanced their homes, and 
>got to take out huge amounts of equity, which they then could then spend. 
>During the past two years THIS is what has been driving our economy. Now 
>that the low interest party is over, in order to keep the economy going, 
>people need more money to spend. Devaluing the dollar is next, ...

The dollar has already been devalued, constantly, for a few years now.

In the name of fighting deflation, the federal reserve bank has used
its powers to keep interest rates low.  The interest rates that are
controlled by the fed are widely reported.  What rarely gets reported
is the byproduct of these interest rate manipulations: growth of money
supply.  How fast is the supply of dollars growing?  It's hard for an
amateur like me to ferret out this information.  I've seen various
figures tossed out in newspaper articles, always as an aside to a more
"important" story.  Figures like 6% per annum, all the way to 12% per
annum.

So why doesn't this result in damaging, 6 to 12 percent inflation?  In
fact, it does.  It's just difficult to spot.  If you examine prices for
a variety of goods and services in the U.S.A., the dollar prices have
been stable, over the past two years.  Does this mean inflation is
absent?  Hell no.  The prices are stable, but the goods and services
are not.  The pickup truck whose price has been stable for two years,
is no longer manufactured in the U.S.A.  An increasing portion of its
manufacturing took place overseas.  It's a different product.  The fancy
skirt at Saks whose price has been stable for the past two years?  It's
no longer made in Alabama.  It's made in China.  Different product, same
price.  It's the same story with services.  The insurance policy you
priced out, the home equity loan you shopped for, the mammogram you had,
these services all share a common property.  Over the past two years,
a steadily increasing fraction of the intellectual labor used to produce
them was shifted to India.  Their costs may have been stable, but the
services themselves are different.

So in fact, the devaluation of the dollar is already affecting Americans.
Due to fierce labor competition from overseas, our wages and salaries
are falling, especially when periods of unemployment are taken into
consideration.  At the same time, we have been largely prevented from
benefiting from the cheap prices of goods and services that we buy from
overseas.  This, because the government is printing money like mad.
-- 
David Arnstein                  Please do not look at laser with remaining eye
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