The US deficit vs the US dollar - Great Read here

Ominous: The US deficit vs the dollar
By Jack Crooks


The US deficit is good, because it stimulates US demand and Asian exports. The deficit is bad because it has created a massive global financial imbalance that will one day need to be balanced. I think that qualifies as doublethink.

I am guilty of doublethink more often than I care to admit. But as I examine the financial "realities" and the implications of the US current-account deficit, the word "ominous" is the only thought that seeps into my mind. And though the timing is anyone's guess, the US dollar is poised to be overwhelmed by the deficit.


Check this part out, a huge drop!

From the peak in this cycle, February 2002, through September 2004, the dollar has fallen only 23%. The current account is now approaching twice what it was when it finally bottomed in 1988. So if we use the current-account "adjustment" as a guide, we should multiply the 42% decline by a factor of two to determine just how far the dollar must fall before solving the current-account problem - that's 84%!



Sp just how bad are the oil prices? And what does this have to do with Gold?



Hmm, you're thinking: if I can somehow get the dollar price of gold to increase, it might take a lot of pressure off of the global economy by reducing the real cost of oil and clear the way for sustained economic growth. If you're thinking that, then you're thinking a weaker dollar.



Wow, what a good read this was!

Ominous: The US deficit vs the dollar

Well I was looking and I knew I had posted information on this before, it seems that oil and the dollar are in for a collision of some sort.


It seems that we are not the only one with worries now does it?

Current oil prices could damage world economy--Germany

KUWAIT CITY--German Chancellor Gerhard Schroeder warned during a visit to Kuwait Tuesday that world oil prices were too high and could endanger the world economy.

"The current prices are high which poses a danger to the world economy," he told reporters after delivering an address at Kuwait's Chamber of Commerce and Industry.

"It is in our interests that we see a fair price for oil on the international market," said Schroeder, who arrived in the emirate Monday on a two-day visit as part of a Gulf tour.

'Current oil prices could damage world economy'--Germany




[edit on 14-3-2005 by edsinger]

Seems the deficit is shrinking , even with these high oil prices....

Why is it that the dreaded federal budget deficit only commands screaming headlines when it's rising, not falling? And why is it that the deficit is portrayed as a fire-breathing, hydra-headed monster only when the press can portray the villain as "irresponsible tax cuts," not runaway federal spending?

We ask these questions in the wake of the great unreported fiscal story of 2005: the shrinking federal deficit. It's down by at least $100 billion because federal tax receipts have skyrocketed this year by 14.6% (or $204 billion) through June. Private economic forecasters now believe the budget deficit may come in at about 2.5% of GDP, which is in line with the historical average for the past 40 years. Given that we're fighting an expensive, must-win war on terror, these deficit numbers aren't too shabby.




LINK

Originally posted by edsinger
Seems the deficit is shrinking , even with these high oil prices....

That's the budget deficit that's shrinking and that is not affected by oil prices. It's affected by tax revenues and budget expenditures. It is still good news that the budget deficit is going down.

The trade deficit however did rise to the second or third highest on record.


census.gov


[edit on 13-8-2005 by AceOfBase]

Originally posted by AceOfBase

Originally posted by edsinger
Seems the deficit is shrinking , even with these high oil prices....

That's the budget deficit that's shrinking and that is not affected by oil prices. It's affected by tax revenues and budget expenditures. It is still good news that the budget deficit is going down.

The trade deficit however did rise to the second or third highest on record.

census.gov

Although I agree that is a problem, but as I remember it, that has been an issue since the 80's.

It means Americans are spending money (that some don't have I will agree) but the economy is GROWING nonetheless.

Not long ago a thread was on ATS concerning China's revaluation of their currency--called the Yuan in money markets. Some of the comments on that thread apply equally to this one:

www.abovetopsecret.com...'.html

There was another thread on more or less the same subject just a few days before the one cited above, but I don't have a link to it. Anyway, it also had many relevant comments that pertain to this thread.

[edit on 13-8-2005 by Astronomer68]

Yeah I was chewing a Congressman about 5 months ago about when Congress was going to push the issue..........looks like I did some good!

With the dollar falling I thought I would update this thread instead of starting a new one,,

Deficit Watch, July 2007

This is very strange: The White House has "lowered" its deficit forecast for fiscal 2007 to $205 billion.

In either case, I think the deficit for fiscal 2007 will be a lot lower: $135 billion (i.e., a harmless 1.0% of GDP). I also see that if the current trends continue, the unified budget would move into balance in October 2008. [The Democrats are still saying there's "no way" the budget will balance even by 2012; I don't know which numbers they're looking at, either, but I will be listening closely to their reaction if the budget does balance in 2008 or 2009.]

The Skeptical Optimist


[edit on 16-7-2007 by edsinger]