Money creation – Why is the US dollar strengthening with all the creation of money? ?
By admin in Money FAQ | 5 comments
Money creation Question by David K: Why is the US dollar strengthening with all the creation of money? ?
Dont get it.
You dont see other economies creating $ 700,000,000,000 and much more than that.
You dont see other countries with a national deficit of 6 trillion dollars
and a national debt close to 11 trillion.
Why in the world is the dollar gaining?
Makes no sense.
Overstating new money?
Its all new money. We did not have it sitting somewhere. Ridiculous.
Yes countries that had weak economies and exposure to the US market exist.
But Germany and Russia will wash their exposure rather quickly. They all have been investing to emerging/developing nations so the cheap labor the US has been using overseas those countries are using also. For example Hilti and Bosch are giants in the power tool market. All their tools used to be made in Europe but now the majority are made in China and other cheap labor countries. They have not been inflating their currency for the last 40 years like the US has.
Both your comments are seriously flawed.
We no longer are an export based economy and have not been for a long time. When the Baby Boomers increase soon it will be all over.
Best answer:
Answer by jeff410
Flight to Safety/Quality. Investors see the dollar as a safe haven.
Add your own answer in the comments!
Money creation
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enoriverbend | Sep 7, 2011 | Reply
You are overstating the amount of “new money” created in the US, and possibly understating the amount of financial trouble that non-US countries are facing.
Flight to quality, indeed. Check out the Russian stock market, or Brazil, or China. Check out what the Iceland economy is doing. See the Argentine government steal everyone’s pension money. We look good by comparison.
Paul | Sep 7, 2011 | Reply
Well, you probably aren’t going to like my answer, either. We are currently experiencing deflation. Think about this: how much house could you buy with $ 200 grand a year ago, and how much house today? More or less house? So does the dollar buy more or less? Also, if the banks aren’t lending, then the money supply is contracting.
Long term, we will experience high inflation again (for some of the reasons that you mentioned), but this is probably at least 1 year away.
Also, we WERE an export-based economy. That was the only thing holding GDP up in 2007 and early 2008.
iBelgium | Sep 7, 2011 | Reply
@danmannz The video with the title “zeitgeist money creation” comes from one of the most viewed documentaries online: zeitgeist addendum, you can watch it free on youtube. /watch?v=EewGMBOB4Gg
danmannz | Sep 7, 2011 | Reply
Is there more parts to it?
loorza | Sep 7, 2011 | Reply
where did you get this?