Thursday, September 20, 2007

It's the economy, stupid

Checking currency conversion rates today, I noticed that the Canadian dollar is 99 cents to the US dollar. Oh, bad sign, I thought. That the Canadian dollar is nearly equal to that of the King of Dollars is something I know hasn't happened in my lifetime. Reading the New York Times today, I came across an article about the euro reaching an all-time high against the dollar.

Well, crap.

I hate to bring up the materialism stuff again, but our excessive consumption is starting to catch up with us here. People are in debt up to their eyeballs; some are drowning. The Fed was forced to cut interest rates that further weakened an already sick dollar, and the result will have a direct effect on my trip. I guess that's minimicroeconomics, eh?

I've developed a system of looking at economics using the Almighty Pint as a sort of global currency. It works like this. If I earn $40,000 USD a year in Washington, DC, that can buy me 200,000 pints of a quality beer (although I've noticed prices beginning to creep up to $5.50 or even $6). However, using today's exchange rate, my $40,000 will only buy 141,993 pints at 5 euro, which is the price of a pint in many Western European cities. While that may mean a healthier liver, it also means I can purchase far less during my trip, the lev being linked to the euro and all.

But more important than the effects on my trip is the fact that the dollar continues to weaken. At what point does this become a concern for us Americans? What the heck is going on here? The gold ain't shiny when there's no light to show us the end of the tunnel.

Dollar problems aside, Bulgarian bank notes are pretty.

1 comment:

  1. I was going to mention this yesterday, but I figured my comment was already too long.

    What's going on is the collision of tight oil supplies, our insane levels of debt, and the mortgage crisis. And yesterday's rate cut was a signal that the money printing presses are being set to "turbo."

    That's why the euro broke the $1.40 barrier today. That's why the loonie is equal to the dollar for the first time in over 30 years. That's why articles like this are appearing:

    Fears of dollar collapse as Saudis take fright

    This has been building for awhile. It used to be $1.50 to a pound sterling, now it's $2. A friend of mine inherited a lot of money and retired to England a couple of years ago. I warned her to put some of her funds into pounds, because the dollar was tanking. She didn't. Now she has to move back to the States, because her money is running out too fast in England.

    I wouldn't put it all into euros, because the euro printing presses are cranking, too. But you might want to diversify. Convert some of your dollars to other currencies as soon as you can. You'll have to do that anyway, right?