Saturday, November 17, 2007

The Fall Of the American Dollar…and it taking us down with it

Over the past few years the value of the American dollar has been falling when compared to other currency such as the Euro and the Canadian dollar. The devaluing of the buck has been so drastic that people are no longer looking at it the same way that they used to. Where the US dollar was once seeing as the most stable currency in the world people around the world are dropping the dollar in favor of what is now being seen as more safer currencies.

That’s right people are dropping the American Dollar faster then a hot potato!

China (one of America’s largest investors) has just released a statement that they are going to stop buying American debt.

South Korea is pulling away from the dollar

Saudi Arabia which currency was pegged with the US dollar has decided to break it’s currency away from the dollar.

OPEC is now not going to only use the American Dollar to price the value of oil but will now start using a basket of currencies.

Etc, etc, etc.

What does this all mean? Well that all depends on policies that the American government makes. If we keep running things the same way as we are doing right now we may in fact be heading for some really reeeeeeeeeeeeeeeeeeeaaaaaaaaaaaaaalllllllllllllllllllllllyyyyyyyyyyyy economically troubling times. More then the current recession that we are in (or heading into depending on your view) some fear of the level of the great depression.

But if we take policies that do more to stabilize our dollar we might be able avoid falling into anything that bad and return to be the world’s safest currency again.

Wednesday, November 7, 2007

Should Michigan have been worried about paying off debt or worry about jump starting its economy?

Last time I talked about the fact that it might not have been a smart ideal for the state of Michigan to have raised it sales tax since it could hurt small business in a time where that state should be doing what it can to boost its economy.

But looking at it the question “was raising taxes the right thing to do in Michigan” might not have really been the write one to ask. But giving the fact that Michigan is facing such economic troubles maybe the real focus shouldn’t have been worrying about the states debt at that time and instead worry about how it could get out the economic mess that it’s in.

I can understand the thinking of the governor when she stated that it would be hard to draw in businesses to Michigan if the state can’t take care of it’s own finances and I think it is very important to keep a balance budget. But giving that the state is facing near depression level unemployment, a large exodus of citizens, and a number of other issues there are more important things that the state could be focusing on, that would help solve these problems more directly.

At least of the time being I think Michigan should be taking more of a Keynesian approach. Similar to what Roosevelt did to get America out of the great depression Michigan and do things like starting public works projects. Fix the states high unemployment by putting people to work. Hire people to build (or fix) infraturctor, hire more teachers, etc.

There isn’t a need for anything premenate just enough to kick start the economy and when the economy stablizes (when the business sector in the state is well enough to hire most of the people getting a pay check from the publics works job) we can stop the programs.

I don’t know why people choice to take such a round about way to solve the problem when the more direct approch is often the best.