American Currency Will Fall?
American currency, dollars if you prefer will likely fall in December. The US dollar usually falls in December, at least in an article published by the Wall Street Journal. But these are not normal times and 
the downward spiral may be stronger than usual.
As I’ve posted on my blogs, these bailouts will cause downward pressure on the dollar. What that means for you depends on where you live. If you’re an expat in the UK, you’re probably going to take a hit. For me, here in the Philippines, I’m not sure. The dollar stopped its rise last week and lost about a peso. A few days do not make a trend.
Inflation has been a problem in the Philippines, due mostly to growth in the economy. The Philippine economy has been growing at over 5% but slower growth is anticipated for next year. The number I’ve seen tossed around is 3.5%. That might be an optimistic number. I think the growth will be lower and the dollar may grow weaker here because of that.
I sure would like to see it back up P55 to $1 but I may have to make due with less. I heard someone on Fox News last night ask how much money does the government have? I wondered where they dug this woman up from. The US government has all the money it wants. It just issues t-bills to increase the amount of money in the market without printing anything. Printing more dollars is probably the least efficient way to increase the amount of money. The cost of printing money, probably is significant. The day paper money will disappear is going to come sooner rather than later. It’s actually a waste of resources to print American currency.
As government spends and spends and spends to try to prevent global depression, the value of the dollar will have downward pressure on it. Other currencies are also in trouble though so the dollar could still rise, it depends on how we are doing against the rest of the world.
We have two wars going on though and most countries have none. Russia is poised to heat up the cold war once again. I think they see us at a time when we are vulnerable because of the problems the economic crisis to flex its muscle. Also, the US has been acting like a bully in the last 8 years.
So while there is downward pressure on the dollar, only time will tell what kind of effect this actually has on the American Currency.
Tagged with: American Currency • Bailouts • Economic Crisis 2008 • Expat • Money • Philippines • US Dollar
Filed under: Economics and Finance
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A lot of international money is flowing into the us ans the thinking is the us has a better chance of weathering this enconomic storm. I sill think the pi could fall into this bad news times of fear and reduced spending on big ticket items.
No doubt the PI will feel this. Right now, the average person is feeling the cost of fuel goiing down and that’s probably all they are feeling unless they are the ones that loose their jobs. Manufacturing across the board is taking serious hits.
I watch currency rates daily now. The US dollar is gaining on the GBP and the Euro. The euro is at $1 to about 1.2x Euro now. That’s pretty heafty drop.
The dollar is getting stronger because there are fewer dollars out there… As the US creates money by making more loans that will have the affect of decreasing the value of the dollar. The supply of the dollar is increasing. However, banks still are very reluctant to lend.
The US Economy is going to get through this, I agree. China will increase its influence and the US will loose its influence. US influence is decreases every day. As other countries gain wealth, t hey just wont need us as much. We wont become unimportant but we are not always going to hold all the cards. We will always be a leader.
The PI has already seen slower growth and they expect slowered growth for next year. The offical estimate is 3.5% but I think that’s a hopeful number. I think it may very well go negative too. If not, it will likely be out sourcing that is going to prop up the PI economy.
China is now have a migration back to rural areas because the factories are going out of business there. I dodon’t think that was included in the PI’s 3.5% growth estimate.
Yeah, the PI is going to be hurt. The stronger dollar will help with expoerts to the US though. That will likely put some upward flow to the economy in the PI.
But the dollar is doing well right now. It has pretty much gone stable in the PI and even slid a bit over the last couple of weeks. It keeps fliting with P50 to $1 but so far it has not closed above P50. It went over a week or so ago but closed at P49.9X I sent cash yesterday and got only P48.5 to $1 but I always get a poor rate.
when we send money to my inlaws they always get about one peso less than the offical rate. The best exchange I ever got was at the casino bank at the waterfront hotel in Cebu about five or six years ago. Also I always get a better rate at the manila airport than at the banks in Tacloban.
It will be intresting to see what happens after Obama takes over in Jan. Maybe the stock market will settle down. There is still credit here if you score is high. It never went away. The cost of the money is going up. You better hope that inflation dosnt pick up where you are. A good exchange wont do you any good it the cost of food doubles.
Inflation also pushed the value of the dollar up. WHAT will really hurt is if there is inflation in the us. Bailouts will probably lead to inflation later on. Maybe it can be controlled if handled properly. The danger with rapid growth is inflation.
Inflation has been double digit in the Philippines since I got here. Running around 12%
When I got her the dollar was at P39 to $1. With it going to near P50, it was like getting aa $200 a month raise. But yes, inflation in the Philippines does weaken any gain I get on the dollar.
When I transfer money using my ATM, I get the official rate or very close to it. If you get USD into the country, the money changers give rates often better than the official rate. My guess is that they deal in futures. I don’t really understand. I have been really interested in that but I don’t have any idea howo they operate. Do You?
Awww, Tacloban. I’ve been there. Nice place, I thought. I’m a little confused where “here” is for you.
Here for me is the united states. The money changers are probly just changing the money and either hidding it from taxes or just paying a small amount more and depositing it in their bank account.Better not to get involved with the game and just use banks.I’m related to a number of policemen in the pi and I don’t want to be on the wrong side of the law. Some of the banks in the pi pay very high intrest rates. Better to go that route.
I don’t think there is anything illicit going on with the money changers? I suspect they are looking at futures. Futures are a way to gain a larger stake in a market and if you know what your doing, as a money changer would, you can make a lot of money dealing in futures.
I know people get cash sent to them via bank and then have money changers meet them at the bank and convert it there.
If you get the chance ask the relative policeman and let us know.