The-Hogs.net - Washington Football Discussion, Redskins to Commanders Era

Deadskins wrote:

chiefhog44 wrote:See, if countries can artificially lower their currency to make their products and services cheaper

That's backward. Lowering the value of currency effectively raises prices, not lowers them. I get it that you are talking about lowering the prices against international currencies, but it still hurts Americans if the dollar is weaker. Exporting more doesn't help if you receive less for the goods you are exporting.

If your currency drops you get more for the goods you are exporting. So lower currency's help exports. But you're right, currency drops aren't a panacea because you pay more for foreign goods locally. There's a lot of debate as to whether strong or weak currencies help your economy more, and there's no clear answer to the question.

chiefhog44 wrote:You are wrong and right and I wasn;t clear...sorry. Lowering your currency (devaluation) makes your products and services cheaper for other countries to buy so it raises the costs for Americans, but lowers it for everyone else

True, though it's not that simple. Keep in mind in this global economy that huge portions of US operations are overseas and vice versa, so there are odd results. So for example most Japanese cars sold in the US are built in the US and unaffected by a weak US currency, whereas Ford cars built in Mexico are more expensive because they are actually imported, but then parts build overseas for cars and imported to up. The dumbest thing when our currency is low is our massive taxes on repatriation of money to the US, it's a perfect time for US companies to flow money home and politicians tax it to death so they don't do it and keep their money overseas.

chiefhog44 wrote:I'm telling you, it's a race to the bottom and hopefully we do not become a protectionist world. Unfortunately, I see no way around it.

Weak currencies also drive up interest rates to attract capital which stagnates the economy, make it more expensive to travel overseas, though it's cheaper for foreigners to come to the US. And again while the side you say is true, again it's a mixed bag, it's really not a race to the bottom. There are winners and losers both ways. What is driving the US to the bottom currency wise is political tax and spend interest, not business export interest.

KazooSkinsFan wrote:

chiefhog44 wrote:You are wrong and right and I wasn;t clear...sorry. Lowering your currency (devaluation) makes your products and services cheaper for other countries to buy so it raises the costs for Americans, but lowers it for everyone else

True, though it's not that simple. Keep in mind in this global economy that huge portions of US operations are overseas and vice versa, so there are odd results. So for example most Japanese cars sold in the US are built in the US and unaffected by a weak US currency, whereas Ford cars built in Mexico are more expensive because they are actually imported, but then parts build overseas for cars and imported to up. The dumbest thing when our currency is low is our massive taxes on repatriation of money to the US, it's a perfect time for US companies to flow money home and politicians tax it to death so they don't do it and keep their money overseas.

chiefhog44 wrote:I'm telling you, it's a race to the bottom and hopefully we do not become a protectionist world. Unfortunately, I see no way around it.

Weak currencies also drive up interest rates to attract capital which stagnates the economy, make it more expensive to travel overseas, though it's cheaper for foreigners to come to the US. And again while the side you say is true, again it's a mixed bag, it's really not a race to the bottom. There are winners and losers both ways. What is driving the US to the bottom currency wise is political tax and spend interest, not business export interest.

Weak currencies do not drive interest rates. If you are devaluing your currency, the way you do that is by printing money, or buying other foreign reserves...hence LOWERING interest rates. Interest rates are a money supply tool. If you devalue, you print money by lowering interest rates. As inflation drives up costs at home and debts are repaid, THEN interest rates will go up to rein in the money supply. You have it backward.

It does make it more expensive to travel, and hence why you would do it as a country. Keep travel contained to your own country and have foreigners travel to you.

chiefhog44 wrote:

Deadskins wrote:

chiefhog44 wrote:See, if countries can artificially lower their currency to make their products and services cheaper

That's backward. Lowering the value of currency effectively raises prices, not lowers them. I get it that you are talking about lowering the prices against international currencies, but it still hurts Americans if the dollar is weaker. Exporting more doesn't help if you receive less for the goods you are exporting.

You are wrong and right and I wasn;t clear...sorry. Lowering your currency (devaluation) makes your products and services cheaper for other countries to buy so it raises the costs for Americans, but lowers it for everyone else. Other countries have better purchasing power. The cheaper it is, the more you will export, and the more you export, the more revenue you make. Here at home, costs go up. That's why an inflation wave is coming. But it serves the purpose of every country to do this because it is extremely easy to pay down debt, and thus, you have found the root of the issue. Everyone needs to pay down their own debt overhang. As a person or a corporation, you should take on debt right now while it's cheap. It will be extremely easy to pay it off down the line when the value iof the dollar is lower. That's why you are seeing large corporations trying to take out 100 year bonds, even though they are stacked full of cash.

I'm telling you, it's a race to the bottom and hopefully we do not become a protectionist world. Unfortunately, I see no way around it.

You must have not read my whole post, because I clearly stated that I understood you were talking about lowering prices of American goods against foreign currencies. But as I said, even if you export more, you are still getting less for your goods because of the weaker dollar, so it's a wash. And the weaker dollar hurts Americans at home.

I'm not sure about your point on taking on debt now while the dollar is down. I think you have that backward as well. When the dollar comes back you will still owe the same amount, but have to use stronger dollars to pay it back. You want to lend when the dollar is weak, and borrow when it is strong. Now if you are talking about interest rates, then you want to borrow while they are low, and pay back when they go up.

chiefhog44 wrote:Weak currencies do not drive interest rates. If you are devaluing your currency, the way you do that is by printing money, or buying other foreign reserves...hence LOWERING interest rates

Look at it this way. When your currency is going down, that means that for say a German to buy an America bond, they expect to get less back in the future because the American dollar is going down. That means you have to raise interest rates to make up for the expected loss in their repatriating their investment to Germany. Which unlike Americans they do because German politicians aren't as stupid as American Politicians are.

Printing money is at a different level, it's one way that you can make currencies go down. You print money and then your money buys less, which causes inflation and currency devaluation since it takes relatively more dollars then Euros to buy a potato.

Deadskins wrote:

chiefhog44 wrote:

Deadskins wrote:

chiefhog44 wrote:See, if countries can artificially lower their currency to make their products and services cheaper

That's backward. Lowering the value of currency effectively raises prices, not lowers them. I get it that you are talking about lowering the prices against international currencies, but it still hurts Americans if the dollar is weaker. Exporting more doesn't help if you receive less for the goods you are exporting.

You are wrong and right and I wasn;t clear...sorry. Lowering your currency (devaluation) makes your products and services cheaper for other countries to buy so it raises the costs for Americans, but lowers it for everyone else. Other countries have better purchasing power. The cheaper it is, the more you will export, and the more you export, the more revenue you make. Here at home, costs go up. That's why an inflation wave is coming. But it serves the purpose of every country to do this because it is extremely easy to pay down debt, and thus, you have found the root of the issue. Everyone needs to pay down their own debt overhang. As a person or a corporation, you should take on debt right now while it's cheap. It will be extremely easy to pay it off down the line when the value iof the dollar is lower. That's why you are seeing large corporations trying to take out 100 year bonds, even though they are stacked full of cash.

I'm telling you, it's a race to the bottom and hopefully we do not become a protectionist world. Unfortunately, I see no way around it.

You must have not read my whole post, because I clearly stated that I understood you were talking about lowering prices of American goods against foreign currencies. But as I said, even if you export more, you are still getting less for your goods because of the weaker dollar, so it's a wash. And the weaker dollar hurts Americans at home.

I'm not sure about your point on taking on debt now while the dollar is down. I think you have that backward as well. When the dollar comes back you will still owe the same amount, but have to use stronger dollars to pay it back. You want to lend when the dollar is weak, and borrow when it is strong. Now if you are talking about interest rates, then you want to borrow while they are low, and pay back when they go up.

I am correct about it. trust me. Inflation makes it EASIER to pay back loans down the road. Lowering currency is inflationary...that's why countries are doing it. They have such an enormous debt overhang, that if they can manipulate their currency down, it is easier to pay off. Look at it this way....We agree that there has been inflation since say 1990 right? OK, I'll take that as a yes. If you took a loan out in 1990 (disregard what the interest rate was), would it be easier to pay the 30 year interest payments now or when you first took it out? Here's another way to look at it. The Mara family bought the NY Giants for like $500 in 1925. Is that an easy debt to pay right now...not even 100 years later? I again assume your answer is yes. If you add in the fact that rates are at rock bottom, then it makes total sense to take on debt right now. My clients, these publically traded companies, are sitting on mountains of cash right now, but yet they are trying to get financing on 100 year bonds.

In very basic terms, lower dollar, means the government is printing money, which means lower interest rates, and inflation follows. The government will try to be ahead of the looming inflation problem (nothing to worry about while there is so much slack in the economy), and they will try and raise interest rates and taxes to rein in money supply. But they seldom catch it just right for a smooth landing

KazooSkinsFan wrote:

chiefhog44 wrote:Weak currencies do not drive interest rates. If you are devaluing your currency, the way you do that is by printing money, or buying other foreign reserves...hence LOWERING interest rates

Look at it this way. When your currency is going down, that means that for say a German to buy an America bond, they expect to get less back in the future because the American dollar is going down. That means you have to raise interest rates to make up for the expected loss in their repatriating their investment to Germany. Which unlike Americans they do because German politicians aren't as stupid as American Politicians are.

Not sure what you are talking about here. No government cares about someone losing money on a falling currency. That's called currency risk. And if anyone is expecting to lose money on an investment, they are foolish.

KazooSkinsFan wrote:Printing money is at a different level, it's one way that you can make currencies go down. You print money and then your money buys less, which causes inflation and currency devaluation since it takes relatively more dollars then Euros to buy a potato.

That is correct my friend

chiefhog44 wrote:No government cares about someone losing money on a falling currency. That's called currency risk. And if anyone is expecting to lose money on an investment, they are foolish

Agreed and agreed. But if you take your second sentence, the German won't buy American bonds unless they get the interest rate to justify the investment. Then look at your first sentence and what the government does care about is selling the bonds. They have to pay it, they don't want to and it isn't out of the goodness of their hearts. Which of course politicians have only dark, cold voids instead of hearts so it'd be impossible anyway...

I agree with cutting taxes.

Problem with business is. One out of ten businesses succeed in the first year. One out of ten of those who survive the first year survive the next year.
So these government loans that are given out may have a high rate of failure or default.

I think a program should be in place to allow a successful businessman or woman the option of taking over the failing business at a discounted government rate. Those who are willing to take on this risk will be able to change the business to what they want and get a discounted tax rate from the government for the first year.

Or even give a tax break to those starting out a business within the first year. Tax cuts are the key to stimulating the economy.