Nobel Peace Prize winner kills US Dollar

The dollar was weak when Obama took over and there was and there is little that can be done about it its certainly not been engineered by the democratic government its been geared by Americans living high on the hog whilst having too much on credit. We are talking plastic money and jello.

Yes devaluing the dollar will not make jobs but how can you devalue something that is already weak?  The world is becoming weary of the bad US economy supporting the world currency exchange. I really hope that another more reliable currency is used if not USA will drag the worlds economy down each time its slumps on its journey of self ruin.

You can not just keep on printing money to keep an real bad economy stable and there is nothing Obama can do to stop the dollar devaluing other than printing more money. In the end we would see the same effect that happened in Germany pre war or in Zimbabwe a few years ago. Money that has no value what so ever. Obama can not wave a magic wand but the world can change the currency exchange system. I believe we are seeing the beginning of that process now.

USA Global wealth is only a paper dragon propped up by the dragon, China and other wealthy nations. No the dollar was dead prior to Obama's takeover he has now only one path to take devaluation to a more realistic and honest value. 

Scary and shocking as you and I wrote, little people have to know about, which is the reason I keep myself alert on this kind of developments. Not recently but already for over two decades. What ever the kind of the 'wake up call' is, authorities in charge don't listen and have their own agenda. It is not a matter of right or left wing both have committed the same suicidal process. It shouldn't have been comitted, but politics in general is geared to win the voters on their site, and consequently they promise free lunches that don't exist.

Devaluing the dollars is killing the dollar for which a peace price is offered. It should have been the other way round. But now the (value of) Nobel Peace Price has been devalued too.

Indeed the Canadian Dollar's increase in value like the Euro's are good examples to show the US$ devaluation's progress. The problem is that the US Dollar is the world's only reserve currencies, which in fact means that the US Government is irresponsibly misusing their authority for selfish interest in trying to bend the wrong into worst, by letting to suffer the rest of the world, culminating is a draconian lack of confidence at all levels of society!

"But now the (value of) Nobel Peace Price has been devalued too."

GREAT line.

Much to digest here, PIM. As you've rightly pointed out, the winners here once again are the banks and their overseas affiliates.Unfortunately, this might be part of the solution to the current crisis. Strengthening the banking and financial markets is a necessary evil right now. Furthermore, the weak currency has the effect of giving more capital to the banks, without directly doing so, through expanding money supply. (I think.)

In normal times weak currencies generally lead to inflation, because a country is able to by more imported goods, driving up consumer spending. As everyone with a brain knows, US and by extension most developed countries are not in a consumption mode. Unemployment and housing devaluations have got average consumers reeling. Furthermore, generally speaking, weak currencies devalues debt currently outstanding. Notice that Asian countries intervened to prop ut the dollar just yesterday. see this link for additional input on this point. http://www.nakedcapitalism.com/2009/10/asian-countries-intervene-to-prop-up-greenback-dollar-bind-edition.html The flip side of cheaper cost of current debt service via the weak dollar is it makes future borrowing more costly.

If interest rates start rising too soon, it will devastate the already on life support, residential housing markets. And, we're expecting fallout in the commercial real estate markets to materialize any day now.

I'm not an economist, and don't propose to know what the answers are to this current crisis. But I'm pretty sure that raising interest rates, and strengthening the dollar right now, is a recipe for disaster.

i disagree, you can not in all honesty blame everything on obama....blame the govt bureaucrats, international finance.......but pleeeeasssssseeeee take a breather...

Shepard what is meant the moral value, although you are right in terms of money. But Nobel price Laureates's value carry more that the material value!

Mariano only the ones are blamed that are in charge and have been is charge, left or right doesn't matter. In the posting is clearly explained where and how it went wrong. B&B = Ben and Barack are in charge now, Ben before with George Bush and Alan Greenspan before Ben, who is the designer of this all mess. There is no blame made at all. It is factual explained and reported.

Nanute yr analysis is correct however the US Dollar is the world's reserve currency and that makes a big difference. Of course the US want tu inflate their currency to reduce the original value of their debt, but wait a minute: How long will China and Japan as the largest debtors -that lent the US Government their money- tolerate this process? The moment China and or Japan quit the financial world is in turmoil! Very 'Scary' as Hugh concluded above.

Pim,

China isn't blameless here. They seek the best of both worlds. Pegging their currency to the dollar, but not permitting the currency to float. If China wants a stronger dollar it can purchase more. Taiwan Singapor and Malaysia  did just that yesterday, as I noted in my previous post.

The question is whether the inflationary pressure on the currency will have a positive or negative impact on the US economy. If my analysis is correct, I think it is a positive effect. Maybe not for European countries and China in the near term, but long term maybe so. The process is painful, and some feel that the US created this mess and should be responsible for paying for it. Contrary to what some may think, believe me, we are paying for it.

We the US), can't import our way out of this mess. You noted the decline in US GDP since 2000 is 25%, while Germany's is only down 4%. Is it any wonder? Approximately 2/3rds of the US economy is based on consumer spending. What's the equivalent in Germany? And how much does Germany spend on defense?

Yes Roy China is predatory correct, but the Chinese like the Japanese have limited patience with US. The day one of those discover the US is lying to guard the value of the US currency, as it does, since you posted an article about Gheitner lying as I did, the party is over. The Chinese so far spend their US Dollars by buying everything they can buy, even land in Africa. Just to minimize their lost. For the moment they are in the boat and have to follow, but that could change overnight in the not too distant future. The Obama Government is at the moment trying to find the limits, but Chinese patience is almost worn out, better to count with that.

To give you an idea Roy: China has about 2 trillion US$ in assest (cash and treasures) and Japan 1 trillion US$.

There is no way to deleverage this quantity of debt (paying down through -export- earned US$ and not inflated ones!) by the US in a short period of time. Oil might be traded in Euros or other currencies, but that requires a political hassle. Russia intended it, about a year ago, but was not successful. Eventually this will happen sooner than later, when the US economy and the US Dollar are on its knees. The only way to make proper energy saving by not importing oil from abroad is nuclear energy generation like France does. Followed by coal conversion into synthetic fuel that both is CO2 emission free process and when burned.

Why the hell in a time of global recession would you want a high dollar? For Christ's sake - it is the demand that you want to increase!

Supply-side has fallen flat on its face and still the idiot GOPers want to reinvent the supply-side.

Demand is the factor in stability.

Roy and Nanute the Chinese are committing the same mistakes of the West, they have built factories that already are obsolete and idle. These loans are not being paid back. The Chinese government implemented a stimulus package of $500 billion to increase local consumption that didn't materialize. The money went into the stock market like in the West. The bust in China is going to happen according to Mark Faber the China specialist. It's not a matter of if, but when. The Chinese are not going to consume more and will stick to their 25% savings rate for the foreseeable future. Don't bet on China to make money.

The_Cynic you are wrong. Inflating thus lowering the value of the US dollar, has severe consequences for people with savings and living from a pension. It make stuff cheaper for export, but it will not create more consumption since there still  are ca. 10% jobless people on the dole. The supply-side theory only works in a growing economy not in a degrading one. Creative destruction is the answer, which already is taking place see GM etc. The process will take time, 5 - 10 - 15 years you will witness it.

PIM,

It is high time for the developing, and emerging market economies to become the new consumers of the world. US consumers are in no position to lead the way in consumption. If demand (consumption) is down while the dollar inflates, there is a possibility that prices for goods and services will hold constant, and may actually decline. (There is that pesky deflation concern again.)

Here's another take on what's causing the global financial crisis and what needs doing to "fix" it. The basic argument is that until excess global liquidity is addressed, the problem(s) will continue.   "Global Imbalances and the Financial Crisis: Products of Common Causes" 

Nanute thanks for yr comment. At this moment of time there is no fix left anymore. Creative destruction is the only route to go, the world has too much of everything, and these excesses have got to be eliminated, before any improvement can be made or expected. The developing world is not able to pick up the slack in the global overproduction, otherwise it already would have done so. At least the signs should be noticeable.  In another essay I will deal with the development in China. I can tell you now, the results are not very encouraging for growing consumption. More dollar inflation will make US export cheaper, but bear in mind the whole world wants to export themselves out of the recession. And that is for sure an impossibility.

Hugh you're completely right with yr analysis. Greenspan and Bernanke kept the money for too long far too cheap, to fuel the global economy by consumers that bought with the easy money stuff the didn't need. That caused the overproduction and the bubble in the housing market. This bubble is not going to disappear overnight, it can take many years to come, likely 10 or even more.

Most of these houses were built in the wrong place, and not easy to sell. Whether you like it of not B&B have already people's future wealth sold off. Not only ours but that of the children and grand children too. The future looks far from bright in every aspect from every angle one looks at.

Remember Gorbatchev's 1990 nobel peace price award? One year later the USSR collapsed. 

Remember Obama's 2009 nobel peace price award? ......