Cafe Hayek - Latest Comments in Milton and (Charlie) Rose

Re: Milton and (Charlie) Rose

kahnbalaya — Tue, 03 Jan 2006 03:35:31 -0000

Two comments:

1. The gold window didn't close. If you look at graphs for the gold supply, it has grown at a steady (if not quite as steep a rate as the dollar) since the turn of the century.

2. Gman's comment is very appropriate. At some point, all shell games must come to an end. Same with the dollar. Milton seems to think that foreign speculators are the only ones hurt in this situation, but what would actually happen is a huge hit in wealth for the American people. A gradual adjustment towards exports would commence, but the shock upward on prices we pay for imported goods (or their comparable domestics) would hit most people quite hard.

Re: Milton and (Charlie) Rose

Babatu Ferguson — Mon, 02 Jan 2006 11:00:29 -0000

For those who want to watch this episode, it's online here:

http://tinyurl.com/7k4fl

Re: Milton and (Charlie) Rose

Joel — Fri, 30 Dec 2005 19:45:04 -0000

Those inflation graphs are always interesting. The gold window closes and the presses start running overtime. Gotta love it.

Re: Milton and (Charlie) Rose

Mark — Fri, 30 Dec 2005 08:25:02 -0000

The US dollar is not just the American currency, it is the currency of choice around the world. If a Zimbabwean wants to trade with an Azerbijanian then they will probably use US dollars for the trade (they will also proabably conduct business in English but that's another matter). Thus as long as countries like China achieve spectacular growth and want currency to trade with each other, they will want to hold more US dollars.

This was the position once held by the British pound, the fact that the US dollar has now taken over is one of the reasons why the pound no longer fetches $4.

Re: Milton and (Charlie) Rose

gman — Thu, 29 Dec 2005 18:17:13 -0000

If only all the holders of pets.com shares traded by the same logic. "I don't want to sell because if everybody sells(this worthless #$%##) the price will go down and we will all lose money....so nobody will sell" In reality, as long as enough market particpants believe they wont be late or last to the exit, this will hold. It is never "different this time". The sterling was once worth $4+.

Re: Milton and (Charlie) Rose

Keith G. Derrick — Thu, 29 Dec 2005 16:11:33 -0000

Ivan,

"Over the last few years, the CPI has been low."

Low doesn't mean no price inflation. It just means there is not as much price inflation as before.

If you want to see what the FED has done to the value of the dollar, check out the graph on my blog at:

http://www.mrderrick.com/bl...

or just view the graph at:

http://www.mrderrick.com/bl...

This graph is a real eye opener.

Re: Milton and (Charlie) Rose

Ivan Kirigin — Thu, 29 Dec 2005 08:35:42 -0000

"inflation-prone currency"

Compared to what? Over the last few years, the CPI has been low.

A bigger risk is a transition away from using the USD as the unofficial petro-dollar. The EU is trying to get Russia to sell oil for Euros. That could get very ugly.

Re: Milton and (Charlie) Rose

Stefan Karlsson — Thu, 29 Dec 2005 08:04:38 -0000

Actually, non-Americans have a very good reason to dump American assets particularly U.S. government securities. I am in fact hard pressed to come up with a worse investment choice than U.S. government securities. Low yields even though they are denominated in the inflation-prone currency called the U.S. dollar.

That does not mean that they are likely to do so. Various Asian governments and Oil exporting governments like Russia, Norway and Saudia Arabia desperetely want to avoid a sharp decline in the dollar so they would likely step in were private investors to dump U.S. assets.