Do the US Government or The Fed really give a damn about the value of the dollar?

Question

Since the Dollar is a world reserve currency and not linked against gold since 1971, why don't the US govt. or the Fed have reliable contingency mechanisms in place to save their own dollar. In the last Sub-prime loans debacle, it was the world banks that jumped in and poured billions into US banks to save the economy. Why can't the US save itself?

At the moment the US trade dollar is not valued against anything except market sentiment, political restraint and oil.
This week certain members of OPEC suggest unlinking the dollar from oil trading because of the dollar's pathetic performance this year. If this happens, the dollar will drop like a stone and no-one will be able save the US economy this time.

Since its inception as an institution in 1913, The Fed has managed to devalue the purchasing power of the dollar by 96%.

Hey, what a record !!

Answer 1

To prop up the dollar, the Fed could raise interest rates. Raising interest rates would make U.S. treasury bonds more attractive to people in other countries, so they would be more likely to buy bonds rather than dumping their dollars as soon as they receive them.- - but raising interest rates would be hard on borrowers in the U.S.

The only other way to prop up the dollar would be to have less dollars going outside the country. The U.S. government spends a lot of dollars in order to support over 600 military bases and military activity in other countries.. (When the U.S. government does this, it uses dollars to buy foreign currencies to pay for local expenses related to the military bases or military activity.) - If the U.S. government brought some of its soldiers home and closed some foreign military bases, it would help make the dollar stronger. A tax on imports could help in theory, but it could also cause a trade war, making it harder for U.S. companies to sell their products in other countries. A new tax on gas could help, because it would encourage people to buy high mileage cars and thereby reduce the number of dollars going outside the country to buy oil -- but a new gas tax would not be popular with most of the U.S. public.

Answer 2

RIght now America's richest aren't losing money. The better banks allow you to hold your savings in other currencies. Those that have a lot and have advisors probably have their savings at the least in a basket of currencies including some dollars. They are getting ahead. The world is theirs . THe small investor on the other hand probably doesn't know how to get their money into other types of currencies or investments.

I bet that today we are going to see the dollar and stocks tank even more. They say the great depression actually took place over months. America is going into some bad times. The rest of the world looks a bit brighter but will still suffer from the US. The big chips in the US aren't dropping so quickly because they are global stocks now. They will show weakness soon though. Check out the small caps and you'll see real pain.

The trading companies are attractive at the moment because traders(both big and small) are jumping in and out of stocks and everytime they do they pay a fee for the buy or sell,; this is making some change for the trading companies. Eventually people give up and will sit on the sidelines and things will look worse. Watch.

Oh, let me tell you the rest of the world has been on a wild spending frenzy. if credit dries up over here in Asia things are going to get pretty darn bad. Lending practices are twice as bad out here as in the US. There was a reason for the 1997 crash. We all play the same game and after a while governments get lax and people take silly risks. I wonder what Dr. Doom (Marc Faber) is thinking rigth now.

Answer 3

I know what you mean. Have you scoped out wha Lil Debbie cakes cost now? I remember before Clinton got in they cost about what they where worth, then Bush got in and my goodness.

i may be crazy, but i think they were like 79 cents and now like !.49 in the last few years. I even asked a question about it and they said it was due in part to 5% inflation and materials nad stuff going up. In Dick Morris' book Outrage he mentions how we saved the sugar industry here in America to the tume of millions in subs nd each job saved cost like $300,000. I figured at 5% they should be but like a !.29.

Also if you notice the government mint is selling one ounce gold Indian head $50 gold coins for $800. My friend runs a gold mine in cal and told me tht they would shut it down if it got under $320 an ounce as not feasible.

I remember when selling used or preowned cars that they would really screw the bad credit people, which was I dealt with. The fince companys would put surchares and 28% interest and even more and the people would be paying athe same for a six year old car as a new Mercedes. Then they al punted like the house people, new scam all the time.

The Bible mentions this kind of stuff.

lFunny how importing little toys made of toxic stuff can add up and end up costing you trillions. They need to buy some of our stuff, except all he cmpanies have already moved over there to save and make major profits and pollute. Nuff said.

Anyway much better answers, but just wanted to throw this in. tAke care.

Answer 4

The federal reserve act of 1913 created 'The Fed'. In 1914 the Fed introduced 'federal reserve notes' which are fiat money. The Fed started to practice fractional banking.

In 1933, the US came off the Gold standard and has never returned to it.

Look up 'fiat currency' and 'fractional banking'. You will then understand why both the Fed and the US government want inflation.

Answer 5

Ever hear the phrase, "Too big to fail?"

It means the world will not let the dollar drop like a rock because they have too much invested in a strong dollar. First, they own a lot dollar based investments and dollars. Secondly, they depend on a strong dollar to continue selling us their exports.

You wait. You will start seeing the EU, Japan and even Canada start taking measures to weaken their own currencies and prop up the dollar, to put things back to normal.

If gold is all that great, and the dollar is constantly losing value, then why is gold worth no more now than in 1980 dollars?

You say "What a record!!" with scorn. Why? Our economy has become the mightiest on earth in no small part to Fed policies. Our people are wealthier than any other nation.

I say "What a record!!" with great happiness and thanks.

Answer 6

Who is devaluing the dollar? Voters vote for every spending measure. Sub-prime issue, who's fault is that? Was the government forcing people to take out loans they could not repay? American people let this happen both in their personal lives and in government that is by the people for the people. Americans save less then any other industrialized country. We are addicted to excess and now we will pay the piper. No worries for me, I live well below my means.

Answer 7

I got it as well, hope you saw the picks of the people that have to wear pink boxers. I think be is brilliant. We should have this in the Kalahari. I think for people that go to jail for a year or this is perfect. If they get out they will never want to go back.

Answer 8

Ho yes America is just a "paper tiger" Sound like wishful thinking on your part.

Answer 9

It doesn't matter . . . we are the largest consumer base in the world.