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Hobbyfarmer
Honored Advisor

Re: the dollar is NOT higher

Well how about we go to the Dodge or Ford PU dealership, or something a little bigger, the Deere, CNH, Agco tractor dealerships. 

 

How about the beef steak counter? 

 

Two years ago 1 bu of corn bought about 2 gal of gas. Guess what ... it still will.

 

If you think your money is gaining in value, if your fil had $100,000 in 1980 what could he have bought with that?

 

What would that same # buy you now? How many acres, 100up tractors?  

 

15 years ago I was farming with corn in the $2 range and keeping body and sole together. Try that today. Most experts are quoting it is taking $4 to do the same thing.

 

The USD is not gaining in value just falling slower than in the past.

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jrsiajdranch
Veteran Advisor

Re: the dollar is NOT higher

Hobby sorry to oversimplify the issue. Currency is a relative thing even gold can be relative. Understand even the greenback is a commodity.
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Shaggy98
Senior Advisor

Re: the dollar is NOT higher

Keep in mind I've got little knowledge on the old "dollar value" argument. I've always thought the price of the U.S. dollar went up or down in value compared to its foreign competitors. When we are trading US dollars for US products is it fair to compare today's value against its value say 30 years ago? Maybe the domestic value of the U.S. dollar hasn't changed but the price of US products have increased.

When I got out of college I was earning $7 per hour, now I'm earning well above 4 times that hourly wage. Has my labor worth quadrupled? One thing for sure, my tax rate surly has but my toys are more modern and expensive too.
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Palouser
Senior Advisor

Re: I ...... uh ........ oh, never mind!

Gold has little intrinsic value except industrial use for electronics. The industrial value doesn't necessarily set the value of gold.

 

Again, the relationship between gold and currency is a relationship, not an absolute value.

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Palouser
Senior Advisor

Re: the dollar is NOT higher

I believe the tax brackets are indexed for inflation if I remember correctly. Not necessarily in the past.

 

If you are earning 4 times as much for the same job and buying the same thing for 4 times as much then your realtively balanced IF it takes place slowly over time - like 2-3%. If your money is earning the same rate of interest then you're even on that score.

 

We've got a large pool of cash in this ecfonomy collected by the big institutions and the wealthy due to the Fed and slow borrowing but, it's not circulating much. Fewer $ circulating quickly could produce a lot of inflation.

 

Balance and relative values are the key. Currency and value are dynamic systems, not absolute systems.

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Palouser
Senior Advisor

Re: I ...... uh ........ oh, never mind!

A transaction is a moment in time. The $ has no intrinsic value. Never has, never will. Gold changes too because it has little intrinsic value outside of industrial uses where relaively little is used compared to the overall supply. The dollar is the fuel for economic activity and exchange in activities expected to reward the person that earned the dollar. Changing gold to currency is a hedge with an uncertain outcome.

 

Rampant inflation was predicted after the Wall St banks trashed the economy - with the government's help through lack of oversight. It hasn't happened. Gold doesn't have much of a following among serious investment experts. I don't know what the numbers are but compare the crash in 2007-8 with gold, and then go to the S&P 500 and compare lines. In any case gold hasn't done well in the long run. It has done well at times. Like other commodities you better be good at picking the bottom AND the top or it doesn't work.

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tree fmr
Advisor

Re: I ...... uh ........ oh, never mind!

i agree with Hobby that the dollar has lost value, just not as much as other currencies.  For instance, a dollar buys 36% more Yen than 3 years ago, meanwhile Japan is in a stagflation/deflation era so the Yen, when compared to basic food and other household items, is worth about the same as it was 3 years ago (compared to the dollar obviously the Yen has lost value).  So to someone being paid in dollars and living in Japan, the dollar has gained value.  All depends on how you measure it!

 

Some say prices have gone up here in Japan, these are the ones that only shop downtown at the high end stores, restaurants, etc.  Being a dumb country boy I throw on a backpack and take a ride to the country on my bicycle.  Sightseeing and then return from a farmers market (they are abundant here) with a backpack full of fresh goods at a very reasonable price.  All while not having to buy gas.  Only side affect, my transportation is high water consumption, no problem though, plenty of roadside parks and the tap water is always safe to drink!  Free education as I meet the farmers too!

 

So has the dollar gained value, lost value, stayed the same?  Depends what you compare it to, just remember at the end of the day it is just paper with some ink printed on it.

sw363535
Honored Advisor

Time for a related question??

My opinion that there are very few economic indicators that are not being manipulated and therefore few that say what they traditionally have>>>>>>>>>  How is the relationship between currencies not get distorted as well when one country can expand the supply of currency( Lock its intrest rates also)  and the other country does not have that capability?  Doesn't the value by comparison become distorted and somewhat worthless as well??

 

-------------------------------

 

Are we damaging the rest of the worlds currency by expanding ours to extreme?

 

Do we gain by winning the currency growth game?

 

If I import dounuts will it get me to the three for a dollar level?  Without a long flight at 4 am.  

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Palouser
Senior Advisor

Re: Time for a related question??

The big worry now is deflation. Expanding money supply is relevant depending on the circulation rate. We have fairly low circulation. The cash is looking for investments. It headed to the stock market because inflation is so low, as is paper and bonds. And real wages are arguably in a long decline. That's not inflationary.

 

Our currency isn't being expanded out of bounds with the situation. The only measure is arbitrage between currencies. We have the most stable currency as a standard and global currency. That's exactly why we are the global currency. As is the Euro.

 

Not trying to maintain liquidity in currency could mean deflation and then all bets are off and we go into 'The Greatest Depression'. That's where some would have directed us. A black hole with no easy escape routes and world disorder. Yes, greater than now. In addition to now as the disorder we see started earlier.

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luisvieira
Senior Contributor

Re: Time for a related question??

In Brazil, the a dollar now buys R$ 2.70 - which is the highest value in over nine years. I just read an analysis that says that it will reach nearly R$ 2.80 in the first semester of 2015. Yet, they say that it can reach up to R$ 3.20 this year. That is crazy. And what they will mean for farmers here? This means they will buy inputs cheaper and will get a better payment with the local currency when selling the grains.

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