How Bush is Stealing More Money from Each of Us: A weak dollar and the Fed

[demobabe]

From the International Herald Tribune:

Despite the Federal Reserve's latest stay-the-course message, investors are betting on at least one interest-rate cut by January, intended to quell turmoil in the markets and to juice the slow economy. But with the dollar also weak - recently hitting its lowest point in 15 years against an index of other major currencies - the Fed may be reluctant to oblige.

A declining dollar is a source of inflationary pressure because it can boost the cost of imports. So if the Fed tried to rev up the economy with a rate cut at the same time the dollar is falling, it could end up provoking even more inflation. That would be a drag on economic growth rather than a boost. In an extreme case, it could result in a toxic combination of weak growth and high prices that is a central banker's nightmare.

How did the Fed lose room to maneuver? The answer is rooted in the Bush administration's misguided economic policies.

Over the last several years, America's imbalances in trade and other global transactions have worsened dramatically, requiring the United States to borrow billions of dollars a day from abroad just to balance its books.

The only lasting way to fix the imbalances - and reduce that borrowing - is to increase America's savings. But the administration has rejected that responsible approach since it would require rolling back excessive tax cuts and engaging in government-led health care reform - both anathema to President George W. Bush. It would also require revamping the nation's tax incentives so that they create new savings by typical families, instead of new shelters for the existing wealth of affluent families - another nonstarter for this White House.

Full article here: http://www.iht.com/articles/2007/08/08/opinion/eddollar.php

[StClone]

1. Twenty years of Reaganomics

Another post/article here indicated the failures of the current policies have lead America to this dysfunctional financial state.

[demobabe]

2. Well the thing I hate about this the most...

...is that the American people don't necessarily understand what is going on or how the Bush Cabal is stealing money right out of their pockets. We see infrastructure falling apart - like that highway bridge the other day - and say how horrible it is and why wasn't something done... yet here we have the Treasury wide open for the weathiest Americans while the rest of us are literallly bled to death.

What these guys have done is a hidden tax. A huge tax on all of us. When our dollar devalues, that is money straight out of our pockets. They're literally stealing equity from us. Remember when the Euro was valued at less than $1 US Dollar? Now it's worth 0.72 Euros. I was looking at New Zealand dollars. Before Bush got into office, our Dollar was worth about $2 of their dollars. Now $1 US Dollar is equal to $1.31 in New Zealand Dollars.

[demobabe]

3. kick

:kick: