Strong Dollar Policy...More Fun With Numbers.

[GRG55]

If exports rise 5.7% in Dollar terms, and the Dollar "slides" 12% in trade weighted terms, doesn't that mean exports actually fell in real terms?

See Finster, I haven't been sleeping through your classes after all...

I-Believe-in-Strong-Dollar Turns Relic as China Begs Stability


Oct. 8 (Bloomberg) -- More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning.

Timothy Geithner, the current Treasury secretary, has tolerated the greenback’s 12 percent slide from its peak this year in March as measured by the Federal Reserve’s trade- weighted Real Major Currencies Dollar Index. While he said as recently as Oct. 3 that “it is very important to the United States that we continue to have a strong dollar,” the last time the U.S. intervened in markets to support its currency was 1995...

...One benefit to a depreciating dollar is that it helped shrink America’s trade deficit to $32 billion in July from the record $67.6 billion in August 2006, data compiled by the Commerce Department show.

Exports rose 5.7 percent to $127.6 billion in July from the low this year of $120.6 billion in April...

[Slimprofits]

Re: Strong Dollar Policy...More Fun With Numbers.

I'm reminded of the, was it Chinese high schoolers, that laughed out loud during Geithner's speech...

[GRG55]

Re: Strong Dollar Policy...More Fun With Numbers.

I'm reminded of the, was it Chinese high schoolers, that laughed out loud during Geithner's speech...

They are still at it...

Obama Adviser Summers Says U.S. Is Committed to a Strong Dollar



Oct. 8 (Bloomberg) -- White House economic adviser Lawrence Summers repeated the administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

“He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said today at a forum in New York organized by Bloomberg LP, the parent of Bloomberg News...

...The dollar today fell to its lowest level in almost 14 months against the currencies of six major U.S. trading partners...

[goadam1]

Re: Strong Dollar Policy...More Fun With Numbers.

They are still at it...

Obama Adviser Summers Says U.S. Is Committed to a Strong Dollar



Oct. 8 (Bloomberg) -- White House economic adviser Lawrence Summers repeated the administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

“He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said today at a forum in New York organized by Bloomberg LP, the parent of Bloomberg News...

...The dollar today fell to its lowest level in almost 14 months against the currencies of six major U.S. trading partners...

Totally committed

[goadam1]

Re: Strong Dollar Policy...More Fun With Numbers.

They are still at it...

Obama Adviser Summers Says U.S. Is Committed to a Strong Dollar



Oct. 8 (Bloomberg) -- White House economic adviser Lawrence Summers repeated the administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

“He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said today at a forum in New York organized by Bloomberg LP, the parent of Bloomberg News...

...The dollar today fell to its lowest level in almost 14 months against the currencies of six major U.S. trading partners...

See, see don't buy gold. Hold your bonds. Good dollar, today.

They will screw with your head just enough to keep you confused. The dollar is toast, short of more war.

[jk]

Re: Strong Dollar Policy...More Fun With Numbers.

paul krugman on the benefit of a floating currency [a depreciating currency] for economic recovery:

Modified goldbugism at the WSJ

So I was peacefully drinking my coffee this morning, and was accosted by someone waving the latest WSJ editorial on the dollar in my face, demanding my reaction. Um, this is not cool. Also, with apologies to Brad DeLong, when reading WSJ editorials you need to bear two things in mind:
1. The WSJ editorial page is wrong about everything.
2. If you think the WSJ editorial page is right about something, see rule #1.
After all, here’s what you would have believed if you listened to that page over the years: Clinton’s tax hike will destroy the economy, you really should check out those people suggesting that Clinton was a drug smuggler, Dow 36000, the Bush tax cuts will bring surging prosperity, Saddam is backing Al Qaeda and has WMD, there isn’t any housing bubble, US households have a high savings rate if you measure it right. I’m sure I missed another couple of dozen high points.
Today’s editorial was in the grand tradition. A few months ago falling stock prices showed Obama’s failure — never mind, we meant the falling dollar. And just to provide extra spice, the editorial cited David Malpass as the wise expert on all this.
But more specifically, you need to see the Journal’s fear of a weak dollar in terms of its long-term gold-bug position. The Journal has always maintained that changes in exchange rates play no useful role, that stable exchange rates — preferably enforced by some barbarous relic like the gold standard — are the essence of sound policy.
I explained why this is all wrong a long time ago. But it’s especially important to understand the wrongness of this view right now. If there’s one overwhelming lesson from the Great Depression, it is that putting a higher priority on stabilizing your currency than on domestic recovery is utterly disastrous. Barry Eichengreen pointed out years ago that major economies went off gold in the following order: Japan, Germany, BritainBritain, Germany, US, France. [screwed it up in the first draft: the correlation between going off gold and recovery is in fact perfect] And here’s what happened to their industrial output:


All that glitters went off gold
The WSJ may not realize it, but it wants us to be France in the 1930s. Let’s not.

http://krugman.blogs.nytimes.com/200...sm-at-the-wsj/

[goadam1]

Re: Strong Dollar Policy...More Fun With Numbers.

So one would conclude that the further they go "off" the gold standard the more gold will be worth.

One could agree with Krugman on how to devalue your way out of debt deflation. But earning your way out would be better.
Good thing Obama and Krugman have a nobel prize

paul krugman on the benefit of a floating currency [a depreciating currency] for economic recovery:

Modified goldbugism at the WSJ

So I was peacefully drinking my coffee this morning, and was accosted by someone waving the latest WSJ editorial on the dollar in my face, demanding my reaction. Um, this is not cool. Also, with apologies to Brad DeLong, when reading WSJ editorials you need to bear two things in mind:
1. The WSJ editorial page is wrong about everything.
2. If you think the WSJ editorial page is right about something, see rule #1.
After all, here’s what you would have believed if you listened to that page over the years: Clinton’s tax hike will destroy the economy, you really should check out those people suggesting that Clinton was a drug smuggler, Dow 36000, the Bush tax cuts will bring surging prosperity, Saddam is backing Al Qaeda and has WMD, there isn’t any housing bubble, US households have a high savings rate if you measure it right. I’m sure I missed another couple of dozen high points.
Today’s editorial was in the grand tradition. A few months ago falling stock prices showed Obama’s failure — never mind, we meant the falling dollar. And just to provide extra spice, the editorial cited David Malpass as the wise expert on all this.
But more specifically, you need to see the Journal’s fear of a weak dollar in terms of its long-term gold-bug position. The Journal has always maintained that changes in exchange rates play no useful role, that stable exchange rates — preferably enforced by some barbarous relic like the gold standard — are the essence of sound policy.
I explained why this is all wrong a long time ago. But it’s especially important to understand the wrongness of this view right now. If there’s one overwhelming lesson from the Great Depression, it is that putting a higher priority on stabilizing your currency than on domestic recovery is utterly disastrous. Barry Eichengreen pointed out years ago that major economies went off gold in the following order: Japan, Germany, BritainBritain, Germany, US, France. [screwed it up in the first draft: the correlation between going off gold and recovery is in fact perfect] And here’s what happened to their industrial output:


All that glitters went off gold
The WSJ may not realize it, but it wants us to be France in the 1930s. Let’s not.

http://krugman.blogs.nytimes.com/200...sm-at-the-wsj/

[c1ue]

Re: Strong Dollar Policy...More Fun With Numbers.

Krugman a moron again.

What in blazes does going off the gold standard have to do with industrialization?

Sure, the first to go off the gold standard is the first to devalue - which helps domestic manufacturing.

But it is ridiculous to say that the gold standard is the only reason.

What about mercantilism? What about competitive devaluation? What about the impact of World War II?

What Krugman leaves out of this graph is the relative state of the respective economies in that period. In that time, the US was in China's and then-France was today's Germany.

Krugman needs to extract his tongue some the present administration's seat.

[jk]

Re: Strong Dollar Policy...More Fun With Numbers.

So one would conclude that the further they go "off" the gold standard the more gold will be worth.

One could agree with Krugman on how to devalue your way out of debt deflation. But earning your way out would be better.

our core competency is finance. what better expression of it than to solve our current economic problems via financial manipulation? if we had the means in place to earn our way out, we wouldn't be here in the first place. the whole problem can be seen as one of malinvestment. we didn't build factories or better transportation or a smarter electrical grid. we built mcmansions, and our mathematically inclined students became quants.

[D-Mack]

Re: Strong Dollar Policy...More Fun With Numbers.

U.S. Stands By as Dollar Falls



By JON HILSENRATH and MARK GONGLOFF

The dollar fell to a 14-month low against other currencies Thursday, intensifying a trend that the Obama administration has publicly suggested it opposes -- but which it appears prepared to tolerate quietly.
View Full Image



AFP/Getty Images


Many of America's trading partners, however, are pushing the other way. In Asia, traders said central banks in South Korea, Taiwan, the Philippines, Thailand, Indonesia and Hong Kong again intervened to slow the dollar's fall against their currencies.

Asian officials fear that the dollar's fall could crimp their export-driven economies. "The [Thai] baht has appreciated a little too rapidly compared with our fundamentals," said Suchada Kirakul, assistant governor of the Bank of Thailand.

In Europe, where the strength of the euro is clouding prospects for export growth, the president of the European Central Bank, Jean-Claude Trichet, said Thursday that the stated U.S. "'strong-dollar policy' is extremely important in the present circumstances."


http://online.wsj.com/article/SB1254...s_Most_Popular

[skyson]

Re: Strong Dollar Policy...More Fun With Numbers.

deleted post.

[skyson]

Re: Strong Dollar Policy...More Fun With Numbers.

sorry for the last post. there was a technical problem(i could only post video using firefox, not internet explorer).

here is the "strong dollar" video of larry summers. he looks ugly.

he and geithner both do not show well in public.

summer: arrogant, and blunt. a shark comes into mind.
geithner: slippery and nervous. a fox he is.

they are poor public speakers, not inspiring confidence.

[GRG55]

Re: Strong Dollar Policy...More Fun With Numbers.

our core competency is finance. what better expression of it than to solve our current economic problems via financial manipulation? if we had the means in place to earn our way out, we wouldn't be here in the first place. the whole problem can be seen as one of malinvestment. we didn't build factories or better transportation or a smarter electrical grid. we built mcmansions, and our mathematically inclined students became quants.

The USA most certainly has the means to earn its way out. The problem with that solution is that the rewards would be widely distributed and not so easily concentrated into the hands of the FIRE interests who have developed an entitlement mentality that would do a career welfare recipient proud.

[jk]

Re: Strong Dollar Policy...More Fun With Numbers.

The USA most certainly has the means to earn its way out. The problem with that solution is that the rewards would be widely distributed and not so easily concentrated into the hands of the FIRE interests who have developed an entitlement mentality that would do a career welfare recipient proud.

this reminds me of larry summers casuistic response to el-erian, that he believed the u.s. had the potential to grow strongly, i.e. potential gdp was fine, it's just the gdp achieved in reality that's the problem, i.e. we have an output gap. duh. but clever larry figures no one will see through his double talk, so he can sound optimistic and positive like a good gov't employee, yet keep his intellectual cred by not saying anything he doesn't believe, if only you use the same decoder ring.

yes, the u.s. has the means, if only those means were redeployed in a manner inconsistent with the values and choices of the last 20-30 years or so, and against the interests of many - if not the great majority- of the most powerful in our society. as you say, earning our way out would require reducing the interests and the influence of the fire economy. the instabilities built into our economy haven't been relieved. the financial system hasn't been reformed. we don't have the maturity as a society to deal with our problems until they get much, much worse. no foresight welcome, we're yanks. churchill said you could count on the americans to do the right thing, after they'd tried everything else. we're still working on everything else.

[and everything else includes inflation.]

[GRG55]

Re: Strong Dollar Policy...More Fun With Numbers.

this reminds me of larry summers casuistic response to el-erian, that he believed the u.s. had the potential to grow strongly, i.e. potential gdp was fine, it's just the gdp achieved in reality that's the problem, i.e. we have an output gap. duh. but clever larry figures no one will see through his double talk, so he can sound optimistic and positive like a good gov't employee, yet keep his intellectual cred by not saying anything he doesn't believe, if only you use the same decoder ring.

yes, the u.s. has the means, if only those means were redeployed in a manner inconsistent with the values and choices of the last 20-30 years or so, and against the interests of many - if not the great majority- of the most powerful in our society. as you say, earning our way out would require reducing the interests and the influence of the fire economy. the instabilities built into our economy haven't been relieved. the financial system hasn't been reformed. we don't have the maturity as a society to deal with our problems until they get much, much worse. no foresight welcome, we're yanks. churchill said you could count on the americans to do the right thing, after they'd tried everything else. we're still working on everything else.

[and everything else includes inflation.]

Had an interesting encounter with a dinner guest of mine this evening. He's a professor of finance at the university and someone I know and respect for many years. The debate was about the necessity of the US government to bail out the TBTF banks. He started the conversation with that popular and tired old nonsense we have heard so often..."there was no other alternative because the consequences of not doing that would have been worse". By the time we were done I had him convinced that the USA would have been far better off if the system had been allowed to collapse quickly, thus wiping out the power of the entrenched interests that are now getting in the way of any real reform, and then the government step in to help rebuild using the salvagable assets.

As you point out, America seems to need a severe crisis to show her best...