Australian Money Forum

[wulfgar]

I see the press pervaded with the phony argument. Many US exports and domestic products are supported by government subsidies. This is funded via the huge earnings on American financials. Nothing like been located close to the money tree! However when the money tree dies, America is in for a huge reality shock!
The death of the greenback will mean the US will lose it's major export industry, that of financiial products! So for years to come, US exports would decline in collective value no matter what. In other words US exports would decline with the cheaper dollar. Think about it!
While the Euro will capture the financial market. So Euro exports would increase with the strengthening Euro!

You don't have to import many raw materials for a financial industry. In export terms it is a fantastic value added product.

The major US industry is exporting dollars and the financial services with them. They lose that industry and they are going, way, way down. Now Ford might turn around and challenge Toyoto with cheaper labour costs. And the same could go for many industries. But these will hardly make a dent in what is going to be the Capital loss in America. At best the American's would competing for market share of such products. Nothing in the slightest degree as lucrative as what they had.

Am I on "planet of the dummies"? I can't figure, why nobody else can figure this out.
Market mechanisms may be simple in the long run. But they cease to be simple when tied into a "Gordian Knot". This takes a long time to unravel!

[Miller]

Am I on "planet of the dummies"? I can't figure, why nobody else can figure this out.

Wulfgar, what would Australia, Europe or China gain if the US collapsed???

I am confident, if the US economy crashes so will ours. Maybe with a bit less blood.

I am not denying the possibility of the big world crisis (depression?) I just do not see any good in provoking it.

[wulfgar]

Wulfgar, what would Australia, Europe or China gain if the US collapsed???

I am confident, if the US economy crashes so will ours. Maybe with a bit less blood.

I'm not sure whether you are arguing my point Miller? I don't deny the consequences you entail. But that is not the specific point of my post!

My point is this. Most continue with this claim that a lowering of the greenback value will be somehow "good" for American exports? This is of course a view consitent with the famed merchantile argument.
Now for starters the question is lot more complex for the US. The US is not exactly a merchantile market in the mold of Japan, China, or perhaps even Germany.
America's dominance in the export industries of that nature is long gone. Although America still has some industrial exports and possibly those will benifit.
But that is not America's bread and butter. Which is operating as the world central market place. The greatly important American "exports" are financial.
These will not in the slightest be aided by a "weak" American dollar. In fact quite the opposite!
World trade is dependant on a good quality world reserve currency. The world's exporters rely on an international currency (that they take their profits in), that is more worthy than their domestic currency (that they pay their costs in).
America no longer supporting their interests in this regard, means they will look elsewhere. And find themselves another "middle man".
In mass terms, whether America can export a few more Caterpillar or Boeing products. Will pale beside the huge capital loss to America of world financiial services.
America's export balance in monetary measures, will go down and keep on going down.
No doubt this is a difficult concept for the ordinary individual to absorb. And we will be discussing this further!

I am not denying the possibility of the big world crisis (depression?) I just do not see any good in provoking it.

I'm sorry Miller. But the rumors of me being a vast criminal master mind after James Bond's "Goldfinger" are all untrue! I don't have the resouces to "provoke" anything beyound a bar room brawl!
Maybe you mean "invoke". Me calling on the gods to doom America? But no, I give little credence to physic powers either!

[Miller]

I'm not sure whether you are arguing my point Miller? I don't deny the consequences you entail. But that is not the specific point of my post!

Wulfgar, I got your point re: weak USD killing America's main export - financial service. And I almost agree I think there is a line between helping Boeing to export more products and killing USD as a world reserve currency. I don't think Fed is so stupid to cross that line.

I'm sorry Miller. But the rumors of me being a vast criminal master mind after James Bond's "Goldfinger" are all untrue! I don't have the resouces to "provoke" anything beyound a bar room brawl!

You are too modest

Saying "provoke" I didn't mean you personally.

[wulfgar]

I don't think Fed is so stupid to cross that line.

Miller, anything American is stupid enough to cross every line!!!

http://business.timesonline.co.uk/tol/b ... 123825.ece
Fed ‘caught off guard’ by rate of US slowdown - Times Online

[wulfgar]

I think my view expressed here is getting vindicated.

Even though the USD has fallen in world parity, the US unemployment continues to climb. Their largest export "financial sevices" is on the skids.