Australian Money Forum

[pclevel]

Hi there,

I'm new to this forum but I was hoping someone could explain to me in laymans terms why there is a crisis in the US but it is our dollar that is sufferring. In my mind if it is the US economy that is failing then the hit shold be taken by the US dollar which should drive our dollar up not the other way around. As I said I am new to all of this so please be gentle hahaha

Thanks and regards

[wulfgar]

The US dollar is the master currency. For us, we must trade and unfortunately borrow US dollars to engage in international trade.

A currency must be large, to be a world reserve. We must trade real goods to acquire the US dollars. The US has the advantage of simply having to print them.

The US dollar acts like stamp duty we must affix to every international transaction.

[stocks4beginners]

What wulfgar has mentioned is true. We are at their mercy. If you read the story ran by Candice Zachariahs "Australia, New Zealand Dollars Post Biggest Drops in 25 Years" you will understand what it really is like for us.

Let us hope that everything will take a good turn really soon.

[Vass]

Hi there,

I'm new to this forum but I was hoping someone could explain to me in laymans terms why there is a crisis in the US but it is our dollar that is sufferring. In my mind if it is the US economy that is failing then the hit shold be taken by the US dollar which should drive our dollar up not the other way around. As I said I am new to all of this so please be gentle hahaha

Thanks and regards

Another reason is that many believe that US economy will suffer from the crises less than EU or Australian and recover faster. There is opinion that import-dependent countries (like NZ and Australia) are the most vulnerable to the crisis and countries with the most diversified economies (like the USA) will pay a smaller toll.

[Godfather]

I still believe that the decision of K. Rudd to guarantee the deposits came too late. This started a series of speculations that led AUSD versus Euro to 2.08 AUSD for 1 Euro. Now we'are at around 1.96... But with all the peaks and lows that will come within the next few months it will take a while before AUSD versus Euro will get to 1.70 or 1.60...

[andrew541]

I am also new to this forum and all these issues but was wondering if the fact that our interest rates have the capacity to drop a long way has anything to do with our current dollar situation.

[wulfgar]

The problem is the Aud. There is a lot of the little buggers running around. For example 44 billion Aud against an Aussie population of 21 million. Compare this with 50 billion Canadian dollars against a population of over 40 million.
For the past few yearsforeigners have been happy to hold our debt. If they withdraw, the outllook for the Aud, is not promising. Even if the Aud improves a bit over the next year. The warning is there. Buy Gold!

[kadus]

I believe the current crisis is simply due to people spending too much. If people were taught financial intelligence at school we woudn't be in this predicament.
America are simply the leaders of what has been a world wide spending spree of money that is not even there!
We can all blame the banks and the government for the situation we are in but at the end of the day people need to be taught how to handle money and only spend what they can afford.
Financial literacy needs to be a school subject in my eyes!

[wulfgar]

No, the people to blame are precisely the money regulators and the "excepts". The sound principles of regulating a credit market, were discovered long ago.

The expects decided there was a load of money to be made by breaking all the rules. They didn't care less what the future would bring.

The day of reckoning has now arrived.

Don't expect the great unwashed to run their live according to sound principles of money. That is the duty of care owed by the experts.

I'm recommending show trials and crucification!