William Larsen

Devaluation

I track currency values as a bench mark. The Euro is replacing the Dollar as the currency of choice. This has and will continue to affect the value of the dollar. The price of oil has routinely been priced in Dollars, but as the dollar looses value among other currencies, those selling the oil and being paid dollars find it more costly to buy things in Europe. For that reason there has been a push by Iran to change the pricing of oil to the Euro.

The price of oil though priced in Dollars has risen much slower against the Euro. In simple terms our currency is being devaluated. The most likely reasons are huge budget deficits, large trade deficits and the inability of our representatives to do something to change Medicare and Social Security.

With a devaluated Dollar, we should see exports picking up. However, our representatives must be held accountable for these large deficits, otherwise our dollar will continue to plummet. I see our country as an addict. We spend too much and save too little, why?

We must first admit we have a problem. That problem is a misconception that has been perpetuated by the media and others. That misconception is that the United States is the richest country. It is not the richest country. We have spent in the past forty years, what our forefathers built and saved over 200 years.

We must also admit that the government should not and cannot pay for everything. Affordable healthcare would be nice, but how would government do this? I have heard great things about the VA, but as a veteran, who has suffered using the VA medical system, I would not want this for my family nor yours. For example I waited months to be seen by a neurologist. I got my appointment and then drove 65 miles to Marion where I was seen for about ten minutes and told to go to Fort Wayne to have test done. A year later I was sent back to Marion only to be seen for 5 minutes and told he could not do anything until the test were done. It required well over six hours, 260 miles driving and one year later I still have not been treated.

We need to get back to basics. What does a family do when faced with a layoff? They cut back, they do without. Guess what, that is exactly what we need to be doing as a country.

How large a problem is this? With large deficits since 1959, the government (we the people) must borrow to pay for what we the people want now. It is this "now" syndrome that is bad. We do not want to save and wait, but we want it now! For that reason China, Japan and others have loaned us money to feed the "we are the richest" addiction that created another addiction I call "I want it now."

What happens if we can no longer borrow money to fund deficits? Anyone holding US backed securities abroad such as Treasury note is taking a licking from the devaluation. They certainly will not be in much hurry to invest more and possibly the opposite, sell and cut their losses. Is the US Treasury on the verge of subprime fiasco?

Social Security unfunded liability is over $17 Trillion. The unfunded Medicare Rx drug program is at least $3.5 Trillion under funded and Medicare is at least $8 Trillion unfunded. Then add in all the National debt of over $9 Trillion. What as the total trade imbalance been? It would not surprise me if we the people were indebted over $50 trillion not including personal debt.

posted by William Larsen @ 7:04 PM