$100 last month is $7 less this one; dollar's %7 decline...

[originalpckelly]

If you were paid last month and then went on a trip abroad, your money would be only 93% of what it was originally during this weekend. Over the past few days and weeks our dollar has had a significant decline. If you have stock you better be ready for a bumpy ride on Monday.

This devaluation will have a strong impact in our nation if it isn't reversed soon. When you go to the stores in just a few days or possibly a week, what ever period of time the stores supply of goods is restocked with recently bought ones, everything buy will cost 7 dollars more per $100.

If you have money in the bank, when overseas purchases are concerned, say per $1000, it will be $70 less than before.

While at first this may only change the price of foreign goods, it is bound to have significant consequences here at home. It is a truth that our nation imports almost every consumer product one can buy at a big box store. At Wal-Mart, 70% of all goods are imported from another nation. It is because of this that our nation stands to loose a lot from this currency devaluation.

If this currency devaluation continues Americans will suffer greatly, a people now struggling with gas prices will now have a less valuable dollar. I dare say, gas prices will rise even higher soon.

The house of cards has been just looking for a reason to fall, and depending upon what happens on Monday, it may very well this time. Our nation has been spending more than it makes. When the savings rate went into negative territory last year, it was the first time it did so since the Great Depression.

We will have to wait and see.

I wanted to tell everyone on DU and warn you to be ready. I don't know a lot, a lot about economics (and there may very well be a much more knowledgeable person around here), but I know enough that I am extremely cautious. The MSM may not cover this, for fear of causing an economic panic, which could be worse than the actual currency devaluation, but I don't know this for sure.

[Neverarepublican]

1. Should we buy any new appliances now?

We have been considering buying a new refrigerator and stove with something like 12 monthes same as
cash. Would it be wise to buy now than later?

[originalpckelly]

9. I can't say...

I don't think I can say. It might be wise to do so, of course you may need that money to eat. It all depends on Monday. Hopefully, it will come and go with a whimper not a crash.

[gulliver]

2. I moved a bunch of money to foreign stock and bond funds ...

... last year, and have continued to buy into them this year. They have been performing very well. Bush has been a disaster for this country.

[JDPriestly]

3. To get an idea about what this means, read up on the great

inflation in Germany and Austria in the 1920s. I quote from a PBS website on this:

Before World War I Germany was a prosperous country, with a gold-backed currency, expanding industry, and world leadership in optics, chemicals, and machinery. The German Mark, the British shilling, the French franc, and the Italian lira all had about equal value, and all were exchanged four or five to the dollar. That was in 1914. In 1923, at the most fevered moment of the German hyperinflation, the exchange rate between the dollar and the Mark was one trillion Marks to one dollar, and a wheelbarrow full of money would not even buy a newspaper. Most Germans were taken by surprise by the financial tornado.

. . . .

In retrospect, you can trace the steps to hyperinflation, but some of the reasons remain cloudy. Germany abandoned the gold backing of its currency in 1914. The war was expected to be short, so it was financed by government borrowing, not by savings and taxation. In Germany prices doubled between 1914 and 1919.

After four disastrous years Germany had lost the war. Under the Treaty of Versailles it was forced to make a reparations payment in gold-backed Marks, and it was due to lose part of the production of the Ruhr and of the province of Upper Silesia. The Weimar Republic was politically fragile.

But the bourgeois habits were very strong. Ordinary citizens worked at their jobs, sent their children to school and worried about their grades, maneuvered for promotions and rejoiced when they got them, and generally expected things to get better. But the prices that had doubled from 1914 to 1919 doubled again during just five months in 1922. Milk went from 7 Marks per liter to 16; beer from 5.6 to 18. There were complaints about the high cost of living. Professors and civil servants complained of getting squeezed. Factory workers pressed for wage increases. An underground economy developed, aided by a desire to beat the tax collector.

http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_germanhyperinflation.html

I have done a considerable amount of study on this. The PBS article is worth reading in its entirety.

[TomClash]

4. But a devalued dollar

may also increase the purchase of goods and service made in the USA because they become relativley cheaper.

The weakening dollar is caused in part by the staggering current acount and budget deficits, which cannot be maintained forever. That's why the Fed has been raising rates - to attract capital to fund these deficits.

[lutefisk]

10. It might not work like that- US prices will rise as dollar devalues

Isn't that what people are warning about? As the dollar devalues, just about everything will cost more in dollar amounts to make up for the true value of US currency in the global market. Also, aren't most if not all large US corporations multinational anyway? US producers will have plenty of excuses to raise prices-

Bottom line is that as long as the Bush regime holds power, we are in a downward, nightmarish spiral. The have destroyed so much, I really wonder if much of this is even reversible?

[originalpckelly]

11. We are following the exact path of decline of the Roman Republic:

http://en.wikipedia.org/wiki/Roman_republic#The_beginning_of_the_end

[TomClash]

13. That may be right

And - surprise - interest rates are rising.

[JDPriestly]

14. Theoretically, but don't count on it.. What in the world do we

produce that we could export -- fast food? We don't make cars that anyone wants. We don't make clothing. And the world has too much military material as it is. The Chinese are not going to buy computers made here. They make their own, much cheaper than we could. I don't even think we make many computers any more.

[JDPriestly]

5. $1.29 to buy one Euro

You get 0.77 Euros for a dollar. That is really bad. And it is not going to get better for a long time.

[TexasLawyer]

6. You don't have to go overseas

to get pinched by the shrinking dollar. It's a huge factor in the gas prices we pay every day.

30% of America's gas needs come from foreign sources. Saudis, Nigerians, etc... want more cash just to stay even with the crude prices they were getting last year. Domestic suppliers then get a free float of their crude prices on the international price.

Not a bad way to make a living for the domestic US producers.

[Gman]

7. I've been saying for a while now that the market is way, WAY oversold

and is due for a really big correction. Probably to the tune of 2-3K points. Somewhere in the mid-8,000 to low 9,000 range is about right. My reasons are the trade deficit, decline of the dollar, energy prices, and probably most importantly, the concentrating of humongous volumes of money in the defense and energy industries. I think this makes the economy way out of balance as a result. There's not enough money then to circulate into the other industries that would keep the market at the level its at now. Not enough money to get to consumers to spend on other things that keep the other industries healthy. Also, rising mortgage rates due to variable loan rates is siphoning expendable income. Read somewhere here on DU yesterday that foreclosures were up 63% and that variable interest rates were a big cause.

Sell early and sell often.

[originalpckelly]

8. What producers?

A ton of manufacturing jobs have been outsourced. We aren't producers anymore. Well sell food, big whoop.

[SoCalDem]

12. Just in time for my son's World Cup trip

He should have listened to Mom.. I told him to buy his euros last month...he waited, and now they will cost him more.. His $1,000.00 spending mony will now only be worth $781.25.. :(

[high density]

15. Look on the bright side... it will be €781.25

Much better than $781.25 at this point. :)