The US dollar may collapse

[Geist 0]

It was reported today that after adjustments, we are spending at the second highest level (after WWII) in our history. And what will we reap for that expenditure? Unless you are in the game of war......nothing.

Well, for one thing, we'll have a lot of debt for our kids to pay off!

But as my landlord likes to say, "Don't worry! $5 Trillion dollars will be worth a lot less by the time we get around paying it back!"

And on another positive note, if the dollar's value keeps falling, pretty soon we'll all be millionaires!

[Trumplestiltskin 5,791]

I saw the other day that the USD and the Canadian Dollar are almost 1:1. Pretty amazing - didn't it used to be 3:1 not so long ago?

[DeadPoolX 9]

I saw the other day that the USD and the Canadian Dollar are almost 1:1. Pretty amazing - didn't it used to be 3:1 not so long ago?

Yup.

What's amazing about that is Canadians will still pay more products in Canada, even though the Canadian Dollar is equal (or depending on the market, sometimes worth more) than the American Dollar. Whoever engineered the cost of items between the U.S. and Canada, designed it so that no matter what the value of the U.S. and Canadian Dollars are, Canadians will still be charged more for what they purchase. Pretty unbelievable, if you ask me.

Of course, this only holds true for Canadians while they're in Canada. If they visit the U.S. (and turn CAD into USD), they'll get a fantastic exchange rate right now. So that part works in their favor. I'd also have to assume that Canadians ordering products online from the U.S. would also benefit from the exchange rate as well (although that might be somewhat negated by shipping and customs charges). This assumes that the online store in question would even ship to Canada; most seem to, but others won't for some products (like Amazon.com, since they usually feel Canadians should be buying from Amazon.ca) and that can make life unnecessarily difficult at times.

Edited October 23, 2007 by DeadPoolX

[Geist 0]

...and apparently it's not the only thing!

[Heracles 417]

I saw the other day that the USD and the Canadian Dollar are almost 1:1. Pretty amazing - didn't it used to be 3:1 not so long ago?

The Aussie dollar is nearly 1:1.

[Heracles 417]

And on another positive note, if the dollar's value keeps falling, pretty soon we'll all be millionaires!

I am missing something here.

My friend was recently here from London. He was spending like a Saudi Prince since he got $2 USD for every pound. He thought everything is so cheap here.

[Trumplestiltskin 5,791]

And on another positive note, if the dollar's value keeps falling, pretty soon we'll all be millionaires!

I am missing something here.

My friend was recently here from London. He was spending like a Saudi Prince since he got $2 USD for every pound. He thought everything is so cheap here.

Good for him - not so good for us. I spent nearly $1000 on a week-long vacation in Germany. Can't see myself going back to the UK for a long, long time with the exchange rate the way it is.

[Geist 0]

And on another positive note, if the dollar's value keeps falling, pretty soon we'll all be millionaires!

I am missing something here.

My friend was recently here from London. He was spending like a Saudi Prince since he got $2 USD for every pound. He thought everything is so cheap here.

The joke is that we'll all be millionaires if the dollar keeps losing value, but only because the dollar will be worthless. Picture an exchange rate where instead of it being $2 to 1 Sterling, it's $1,000 or so

[trailmix 77]

I bought some U.S. dollars last week and made money yahoo! In fact if you exchange 10k Canadian right now you will get $10,181.23!

It's true things are still costing way too much in Canada, however it is slowly being adjusted, some big department stores have started to cut prices considerably - about time.

On the other hand, anytime the CDN dollar has gone up against the U.S. there is usually an interest rate adjustment - that's not happening this time so I suppose they wanted to wait and see.

[Heracles 417]

And on another positive note, if the dollar's value keeps falling, pretty soon we'll all be millionaires!

I am missing something here.

My friend was recently here from London. He was spending like a Saudi Prince since he got $2 USD for every pound. He thought everything is so cheap here.

Good for him - not so good for us. I spent nearly $1000 on a week-long vacation in Germany. Can't see myself going back to the UK for a long, long time with the exchange rate the way it is.

Tell me about it. For a month long vacation in Europe I worked out that I would need about $15K USD minimum. Based on the conversion rate I would have $10.5K Euro. Then take off another 20% due to the cost of stuff there.

[Amby 490]

the euro is a good idea but I don't like them they look like money from a board game haha

[russ 1]

options are too complicated for most. But for your comments are very true.

I think many investors would benefit greatly by using options more than they do. Puts have much lower risk than shorts. The equity markets have always had a long bias, but much of that is Wall Street telling investors to be long all of the time. The pros still make money selling weakness.

As for the Dollar - it has already collapsed. The Euro has gone from $0.87 in Jan 02 to $1.41 now (about 5 years). That is quite a decline. That is also the principal reason for high gas prices (oil is priced in dollars).

As for a huge sell off, market crash event like '87 - not going to happen. Mutual funds and private equity have too much cash, and they need to own something with it. This creates a floor for equity prices.

[mawilson 2,133]

I saw the other day that the USD and the Canadian Dollar are almost 1:1. Pretty amazing - didn't it used to be 3:1 not so long ago?

Yup.

What's amazing about that is Canadians will still pay more products in Canada, even though the Canadian Dollar is equal (or depending on the market, sometimes worth more) than the American Dollar. Whoever engineered the cost of items between the U.S. and Canada, designed it so that no matter what the value of the U.S. and Canadian Dollars are, Canadians will still be charged more for what they purchase. Pretty unbelievable, if you ask me.

Canadians angry over ‘loonie’ prices

Canadian shoppers are up in arms. Many have suddenly noticed that their dollar does not

have the same purchasing power as the US dollar, and they are struggling to understand why.

The comparison has become much easier in the past 10 days since the “loonie” – named

after the aquatic bird on the Canadian one-dollar coin – soared to parity with the greenback

for the first time in 31 years.

With the currencies at one-for-one, consumers no longer need to do any arithmetic to work

out that the conversion rate on foreign exchange markets is not the same as that on store

shelves.

Thus, the price of Alan Greenspan’s just-released memoir, The Age of Turbulence, is listed

on the dust-jacket as C$26.45, but just US$20.99. Similarly, the cover price of the Financial

Times is $2 in New York but C$2.50 in Toronto.

Douglas Porter, deputy chief economist at the Bank of Montreal, calculated last week that the

prices on a random sampling of goods were an average of 24 per cent higher in Canadian

dollars than US dollars.

Complaints are streaming in to newspaper letter columns and radio talk shows.

“Why are we not seeing the price stickers on many goods going down?” asked the host of a

two-hour phone-in show on the issue on the Canadian Broadcasting Corporation on Sunday

afternoon. Some callers noted that businesses were quick to push prices up when the loonie

sank to an all-time low of 62 US cents in early 2002.

The wide gap in car prices is an especially sore point. One caller to the CBC show said that she

had seen a Toyota Avalon saloon priced at C$41,000 in Ottawa but just US$31,000 south of the

border.

Car imports from the US have soared in recent months. However, the process involves a small

mountain of paperwork, and there are numerous other hurdles to overcome.

Some vehicle manufacturers, including Honda and Mercedes-Benz, protect their Canadian dealers

by barring US distributors from selling to Canadian residents. Warranties on a vehicle bought

in the US are not always honoured in Canada.

A Toronto law firm filed a class-action suit last week alleging that four carmakers – General

Motors, Chrysler, Honda and Nissan – have violated competition laws by holding up prices

north of the border.

Derek Nighbor, a vice-president at the Retail Council of Canada, defends the price gap by noting

that “the costs of doing business and getting goods to market are more expensive at the best

of times”.

Mr Nighbor points to the higher distribution costs in a vast country with a population of just 32m,

as well as requirements to add metric and bilingual labelling to products made in the US.

Canadian businesses also generally pay higher taxes. “The comparison is not a fair one,” he says.

Whatever the justifications, businesses are undoubtedly feeling the heat to bring down Canadian

dollar prices. Porsche, the luxury carmaker, announced last week that it was shaving 10 per cent

off the prices of 2008 models.

“The pressure up and down Canada’s supply chain to lower prices is bound to intensify in the

months ahead,” Mr Porter says.

Mr Nighbor predicts that many import prices will come down in the spring and summer of next

year as businesses replenish inventories.

Such cuts could have a significant macro-economic benefit. The “core” consumer price index,

which excludes energy, food and other volatile items, rose by 2.2 per cent in the year to August,

somewhat above the Bank of Canada’s 2 per cent target range.

The bank signalled its concern in July by raising its key interest rate for the first time in more

than a year.

With lower prices in the offing, the Bank of Canada could reverse course, keeping interest rates

low and thus helping to stave off the ripple effects of a softening US economy.

Financial Times

[Mr. Big Dog 10,747]

In March a US Dollar got you .75 Euro

April and May got you .74 Euro

July was .72

August was better at almost .75

Beginning September it was .73

Mid September it was .72

Today it’s at .71

I remember well -because it wasn't all that long ago - when I paid USD 0.90 or so for EUR 1.00. Today, I shell out USD 1.40 or more for the same. That's north of 50% more for the EUR. Likewise, the good ole' days (not that old) where you got a loonie and a half for your buck. Today you gotta shell out in excess of a buck for a loonie. Again, a 50% difference over the course of four short years. I'd call that significant.

The EUR is gaining traction as a reserve currency. It's just a question of time until it is the primary one.

[Jaseball 0]

The EUR is gaining traction as a reserve currency. It's just a question of time until it is the primary one.

I see it this way as well. The only reason the dollar isn't even worse off now is the Chinese, Europeans, Middle Easterners, etc., have to figure out an exit strategy from US securities and currency and get out in a controlled manner.

Many countries have been propping up the dollar and our markets, only because they have a vested interest.