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Tuesday, February 22, 2005

Nobody's Complained Yet

The market may have undergone a small correction after I posted, but I stand by my recommendations. It's funny, though: The dollar declines, so stocks decline. However- stock is priced in terms of dollars. Even if the price didn't go down, it would still be worth less, because a dollar is worth less. So really, the decline is more about high oil prices. But wait- oil prices went up because the dollar went down, and it takes more dollars to get a barrel of oil. It's all very strange.

Of course, the stock market is actually a few hundred bald men screaming in a room in downtown NY City. So how seriously can you take a fluctuation like this? Not very.

This post is about the weak dollar. GWBush and his posse claim that they want to keep the dollar strong, but they have done nothing to do so. This article explains the situation better than I can- if you don't read anything else, read it. Part of what the weak dollar accomplishes is to reduce American spending slightly, as Playstations are more expensive. It also helps American exports, because they are cheaper in terms of other currencies. The past few years have seen an economy supported by consumer spending, and this may be a chance to take a break and pay down those credit cards Citibank keeps sending me- uh, us.

The trade deficit never bothered me. We send pieces of paper to China, and they send us electronics. Now, the paper is suddenly worth a lot less, while we are using the electronics to run more efficient businesses and collect all 351 pokemon. Of course, restraining our spending would be better, but... that won't happen.

I have a conspiracy theory, as yall know, that Bush is trying to create a fiscal crisis in order to cut USGOV spending. The weak dollar policy is part of this, in that it reduces foreign demand for our bonds. He is also trying to reduce domestic demand by SS privatisation and reduce income via tax cuts. He still spends too much, though. Spending in order to create a crisis and reduce spending would be pretty stupid.


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