Re: Obama

Rumpelstiltskin wrote:

On Sat, 03 May 2008 18:15:14 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:


Rumpelstiltskin wrote:

On Sat, 03 May 2008 13:08:24 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:



Rumpelstiltskin wrote:



On Sat, 03 May 2008 08:05:29 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:




Rumpelstiltskin wrote:





<snip>


Is the Riyal locked to the US dollar? I hadn't heard that, though that is true of some countries. There's one country in South America I think that doesn't even have
its own money, it uses US dollars.

It's locked to the US dollar only to the extent that their oil income is based on US dollars.



That's "not locked at all".

Without knowing more about the relationship and currency markets, I'm not going to comment further on this 'linking.'


I do believe that it is also linked to our currency as well. And that South American Country is Eucador. When you visit the Galapagos Islands, you won't have any problems with changing money. You don't have to.



I bet that Ecuadorians who own saved U.S. dollars are not very happy campers these days!

Actually, when I was in Ecuador two years ago, I found prices then to be relatively constant to what I would expect to pay in the United States. What their prices are now, I don't know. I do know that I saw very long lines of Ecuadorians lined up at the US Consulate attempting to get work Visas to the US, so I would imagine that job opportunities aren't great in Ecuador. You may recall that I posted to the unfairness of allowing the Mexican wetbacks who came her illegally to be 'grandfathered' in while the Ecuadorians had to stand and wait in line, only because they weren't fortunate to share a border with the US as does Mexico.


If the Saudi money is not locked to the dollar, their
inflation should be going down at least to the extent
they buy stuff from the USA, since that's cheaper now.

You're forgetting that they have to import a whole lot of other things that we don't. That's where they get the increased inflation from.

Everything the Saudis get from the USA is 40% cheaper for them now in riyals, assuming riyals haven't crashed too.

Actually, they aren't. I believe their rate of inflation is 8%, so that makes up for any other differences.





It would take five years to make up the difference, even if
American inflation were zero. They may have had 8% inflation
a long time as far as I know, though, so maybe the collapse
of the US dollar has just given them back a bit of breathing
room insofar as trade with the US is concerned.

Actually, the decline of the US dollar increases their rate of inflation.

That's

probably a lot of stuff, and they probably haven't increased their consumption by 40% in just a year or two. So they're probably enjoying all the cheap goods from America now.
There's probably some much slower "normal" increase in price in things they get from elsewhere and in things they buy that are produced within their own country.

I don't have particulars about the Saudi economy, so I can't comment.


I don't regard inflation as "normal" myself, though it is
"habitual". I regard inflation as slow theft, resulting from governments being overly tempted to spend more than they
have because people would rather see them do that than raise
taxes. That's because people stupidly think they're getting something for nothing that way. The recent collapse of the dollar is fast theft, not slow theft, though you probably don't agree, I'd say based on your apparent views about the crash of the dollar. Everything's catching up suddenly now with the
deficit spending because chickens tend not to worry about
the wolves until the wolves get really close, but then the chickens panic and fly home to roost in a flock.

I don't view inflation as theft, whether rapid or slow. I view inflation as a consequence of economic and governmental factors. I think that's a more realistic view of the phenomenon.




When we had gold as the standard, there were variations,
but there was no persistent trend of inflation. That should tell you something about paper money.

The gold standard was abandoned for a variety of reasons. I once read why, and I really don't recall why, so I guess I'm going to have to pass your comment above with an 'I don't know,' simply because I guess I'm too lazy to go back and reresearch what I forgot.

Domestic chickens can fly, right? I know domestic turkeys
can't, but I'm such a city boy I don't even know if domestic
chickens can fly or not.



<snip>



Yes, the chart you wouldn't look at shows that the price of
oil in euros has risen from 30 to 70 between 2000 and 2008,
whereas the price in dollars has risen from 30 to 110. Essentially all the 40 euros increase is price hikes, and forty
dollars out of the eighty dollar increase in price in dollars is
similarly price hikes, the other 40 dollars increase being due
to the falling value of the dollar.

No, Rumple, the only thing germane is the price of oil in dollars.




That seems to me a dumb thing to say, but obviously you're locked into it.

Because it happens to be the way the market works. So, yes, I am locked into the real way things work.


The fact that the value of the dollar vs. the Euro is variable has to do with how currencies are valued. I tried to explain why that difference occurs to you, but you seem insistent on ignoring the fact that the two variables that you seem to think are directly related to each other, really are not. When you realize that, you realize why your chart is mostly irrelevant. And I don't see rehashing this, as it would only be beating a dead horse.




That doesn't seem to me recognizable as anything I was talking about, but I guess somehow it seems to you that I was. Oil used to cost 30 euros or 30 dollars. Now it costs 70 euros or 110 dollars. If you feel we should all look the other way and talk about something more comfy whenever I bring up the collapse of the dollar against other currencies, I guess it's time for me to stop arguing with you about it and just say "I
disagree".

If what you're trying to say is that we should have a strong dollar, I don't disagree with you. I'm only telling you why things are the way they are. I'm not condoning them, I'm simply explaining them. You seem to think that any explanation that is not yours is condoning the opposite. Despite the fact that your explanation does not jibe with the way things actually work. But to get a stronger dollar there is going to have to be bitter medicine we have to take.




As far as I can recall, you haven't even admitted that the 40% drop in the dollar against other currencies means we'll have to pay 40% more for imports, and also have to pay more for home-based goods that are affected by imports.

Rumple, there's nothing to admit. What you're saying is common sense.
So? What has that got to do with my comment above?

What OPEC does is manage production, which permits the marketplace to use supply and demand to price oil. And because the demand is rapidly increasing in relation to the supply, the price goes up. It helps the dollar because if we have to purchase oil in some other currency, we will have to pay in dollars, thereby increasing even more the number of dollars in foreign hands, and lowering the price even more than it is today.

Unless the riyal is locked to the dollar, that doesn't make any sense at all, it's just P.T.Barnum stuff. The price of oil in dollars has in fact gone up much faster than the price in euros, so the Saudis have not been acting in a haze of oblivion about the fall of the dollar at all. It makes little
difference whether one pays in dollars or euros or riyals, since it's easy to exchange money at whatever the going rate is at the moment. We're not getting a price break
because we pay in dollars: We pay as much in dollars,
above what people pay who pay in euros, as the dollar has depreciated compared to the euro, so that's a wash.

Again, I repeat: OPEC hasn't raised the price of oil. The marketplace has.




Machts nicht. Oil has gone up, and by more for Americans than for Europeans.

So? Are you jealous?



I sure wish I'd bought euros, pounds, Canadian dollars
or Aussie dollars in 2000. Even if I sold them now, I'd still have nearly double the number of dollars. If that's
"jealous", which I don't really see but let's say it is for the sake of argument, yes I am.

I maintain a supply of foreign currencies because we travel some. I don't maintain huge hoards, because it's unnecessary. Just a couple hundred units of each currency where we likely travel.

But I will tell you that when you do travel, prices are expensive, even in those foreign currencies. In France recently, I paid 52 Euros for lunch. The dollar cost was around $82 at the then current rate of exchange. I know because I charged the lunch. And it wasn't anything spectacular. Similar to what I would expect for lunch in the US. Which I would expect to pay half that amount for. My point, Rumple, is that even in Euros, things are expensive, more so than most. If you neglect the cost of goods and services in those foreign currencies, you get a lopsided picture. Despite the fact that our dollar is worth only about ..6 Euros, we STILL pay less for lunch here than EU patrons pay for theirs in Euros.

Maybe you're not paying enough attention to what Voltaire said, that "Louis XIV was a magician, who could
make people believe that paper was money". A dollar bill is not money, it only represents money, and the merit
of that representation is only based on trust. There's nothing magical about a dollar bill, it doesn't create wealth out of nothing. For castaways on desert islands, dollar bills are only good for burning to heat up their iguana meat and skua eggs for breakfast.

Voltaire knew little or nothing about currency markets.




He clearly knew more than anybody in the Bush
administration!

Well that isn't hard to do. but he still knew nothing about currency markets.



He knew how to handle money, there's no doubt about
that. He was born a man of modest means, but became
very rich and eventually powerful enough to defy Louis XVI. Here's his chateau:
http://www.visitvoltaire.com/voltaire's_later_life_chateau_ferney.htm

So does Bill Gates or Warren Buffet. Should we make either of them dictator of the Treasury and the FED? And buffet even has some interesting philosophies.

Too bad we couldn't have had him

for president, as long as he'd agree not to insult or
persecute the Jews, which to our modern eyes was
a spectacular failing in such an otherwise great man.
It can be understood somewhat as how everybody behaved in that age, but in Voltaire it's still more unforgivable than it would have been in a lesser man.

I don't necessarily think that having a philosopher running government is a prudent thing to do. After all, there are different skills required beyond sidewalk philosophy. However, if the American public goes off its meds, they just might elect Obama and we'll get such a failure running the government.




I completely agree on most philosophers. I can't imagine Nietzsche running a government. But Voltaire
was very much the exception. I remember grinning once while reading an account of Voltaire's early life
that went roughly that "His father wanted to be sure
that he studied law, so that he would always have a secure means of getting income. His father need not have worried."

On the other hand, he did piss Frederick the Great
off, when Frederick gave him a very generous income to stay with him at the German court, and Voltaire promptly embarrassed him by loaning it out at 20% interest. They he wrote a pamphlet, anonymously but everybody realized who had written it, ridiculing Frederick's belovèd college that he had founded in
order to showcase German intellectual accomplishment to the world.








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