Economix question/discussion No Politics.

Thread Starter

maxpower097

Joined Feb 20, 2009
816
Ok So I remember when they first launched the EURO. It was 1:1 to the dollar on launch. For a couple years it was a rat race. One would get ahead of the other by 10 or 20 cents, then it would switch. Now since our depression/recession the last value I saw was near 2:1 in favor of the EURO. I get that since the USD and our economy have taken a shalacking that past decade. Then I read the news paper today and front page headline was "EURO on the brink of failure" How is the EURO worth more then the USD but on the brink of failure? Wouldn't the EURO just drop in value against gold or the USD rather then collapse?
 

Thread Starter

maxpower097

Joined Feb 20, 2009
816
Plus I read somewhere yesterday Obama or someone else high up in the gov said " The US will not bail out the EU's financial problems" So whats going on here? Are we looking at a global depression?
 

Georacer

Joined Nov 25, 2009
5,182
Euro is a much more stiff currency, not easy to deflate when you need to.

On the other hand, I don't think USD is at a much better state. It's just that less people have a say at USD matters and thus its state is less known.
 

thatoneguy

Joined Feb 19, 2009
6,359
USD is backed by oil and China has a ton of bonds for it.

The EURO is backed by the word of countries, so it started out fixed 1:1 with the dollar. The US has had extreme inflation lately due to debt, so the value of the dollar dropped, even though it is still the "world cash" for oil. So, the Euro "looks good", since it hasn't been diluted as much
 

MrChips

Joined Oct 2, 2009
20,215
Money is like disk drive capacity. There is never enough. It keeps on growing. And you always need more.

Imagine how much capacity is required to store all of AAC data on a server. It keeps on growing. It is always there.

Money and debt will continue to grow. It will always be there. It never goes away... until the hard disk crashes.

And there is no backup plan in place.
 
Last edited:

Papabravo

Joined Feb 24, 2006
12,897
Apparently a degree in engineering leads to facile beliefs about money and the economy.


  1. It is not true that the US is experiencing high inflation. In fact the opposite is true.
  2. Currencies whose values are allowed to float adjust those values to eliminate arbitrage.
The odd man out of the currency agreement is China whose currency value is fixed and that favors them.

The Euro is having a hard time because the members cannot agree on monetary policy. The Greeks refuse to collect and pay taxes, and adopt austerity measures required by their lenders. The Germans refuse to continue letting the Greeks and the other "weak" economies piggy back on their success. [This is an observation -- not a value judgment]

The Hobson's choice facing the Euro zone members is to accept the bitter pill of cooperation or return to sovereign currencies and monetary policies which gives them back the control without doing anything about the underlying problem of producing a healthy economy.

Here is the US Inflation data

http://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx
 
Last edited:
Top