Buffett Warns: The Dollar Will Decline

[CARLHAYDEN]

Buffett Warns: The Dollar Will Decline

By Rich Smith

March 28, 2011

On Friday, March 25, 2011, Warren Buffett predicted the decline of the U.S. dollar.

http://www.fool.com/investing/general/2011/03/28/buffett-warns-the-dollar-will-decline.aspx

[opebo]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

[Inverted Things]

I'm with Opebo on this one.  Why is it obvious that a stronger dollar is better?  Weaker dollar implies less outsourcing implies better domestic employment, according to my naive understanding of economics.

[Fmr President & Senator Polnut]

As a future traveler to the US... I'd prefer my trip is cheaper

[opebo]

I'm with Opebo on this one.  Why is it obvious that a stronger dollar is better?  Weaker dollar implies less outsourcing implies better domestic employment, according to my naive understanding of economics.

Actually, I don't want free trade, so it doesn't really apply to me, but given the context of the assinine neo-liberal economics that we have come to accept, impoverishment of the majority is the only way to lift up our rulers.

[Gustaf]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

That's utterly stupid.

A weakening currency is sort of like running a temperature - it's a bad symptom but it's also a good reaction.

[Person Man]

It will be easier to increase manufacturing in this country. They'll be more jobs and more stuff to buy. The only question is- how do you buy the stuff? Perhaps its time to buy Euros or ask that my tenants pay me in Euros or that my employers or contractors pay me in Euros?

[Fmr President & Senator Polnut]

Yay the our dollar now buys $1.03 US

Given when I was there last it didn't get about $0.75...

[CARLHAYDEN]

It will be easier to increase manufacturing in this country. They'll be more jobs and more stuff to buy. The only question is- how do you buy the stuff? Perhaps its time to buy Euros or ask that my tenants pay me in Euros or that my employers or contractors pay me in Euros?

Uh Weasel,

Suggest you find an alternative to the Euro.

Try the 'loonie' (Canadian dollar).

[Cincinnatus]

The dollar declines every year; It's called inflation.  Now that my poor attempt at humor is over with, the Fed thinks it can print money to cover American debt.  Zimbabwe tried to do the same thing and ended up with 1000% + inflation making their currency worth nothing (relative to what it was worth anyway).  Dollar can't really hit rock bottom though until American bond holders as well as Asian debt holders decide we're no longer worth the loan.  If Asian countries (China) decided to stop loaning us money, it's estimated that two weeks later prices will rise so high that Americans will no longer be able to sustain even perceived, poor living standards.

[opebo]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

That's ***************** .

No, Gustaf - that's the fact.  Wages in China are far less than 25% of US wages, so the US worker needs to come a lot closer to the price of the Chinese worker in order to compete.  A weaker currency and some poor-killing polices here at home are the way the US 'competes' in the 'global economy'.

[Gustaf]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

That's ***************** .

No, Gustaf - that's the fact.  Wages in China are far less than 25% of US wages, so the US worker needs to come a lot closer to the price of the Chinese worker in order to compete.  A weaker currency and some poor-killing polices here at home are the way the US 'competes' in the 'global economy'.

Haha! The fact? My goodness. The difference in wages reflect differences in productivity, you simpleton.

Otherwise, all production would just shift to whereever wages are the lowest. And that obviously hasn't happened.

[opebo]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

[ag]

I do not yet see any violation of the rules, but we might be getting close. Please watch your language and lower the intensity of the discourse. It's ok to disagree w/ opinions, but we shouldn't cross the line to personal attacks. Hasn't happened, yet, in this thread, in my opinion, but if it heats up further, I will be forced to act.

[opebo]

I do not yet see any violation of the rules, but we might be getting close. Please watch your language and lower the intensity of the discourse. It's ok to disagree w/ opinions, but we shouldn't cross the line to personal attacks. Hasn't happened, yet, in this thread, in my opinion, but if it heats up further, I will be forced to act.

So in fact I can call people simpletons and stupid at will?  Well, if only that were so.

[ag]

I do not yet see any violation of the rules, but we might be getting close. Please watch your language and lower the intensity of the discourse. It's ok to disagree w/ opinions, but we shouldn't cross the line to personal attacks. Hasn't happened, yet, in this thread, in my opinion, but if it heats up further, I will be forced to act.

So in fact I can call people simpletons and stupid at will?  Well, if only that were so.

Simpleton - on this board, yes. Nobody called any other person stupid - it was an opinion that was thus characterized.

[Gustaf]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

Next I suppose you will claim that the Earth is flat, because it appears to be when you look around you? As long as you keep doing that you will have to endure a little bit of ridicule, I'm afraid. No one is forcing you to make a fool of yourself by talking about things you know nothing about.

You don't seem to realize that Chinese wages are increasing. The reason they are is that their productivity level is increasing. Which, of course, also explains why they are getting certain industries. But as their productivity approaches ours so will their wages. That's just what happened with the low-wage competition from Germany and Japan after WWII.

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

[opebo]

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

Production is in fact moving to Vietnam, Cambodia, Bangladesh, Indonesia, etc., as well as China, and it will also move to Africa as soon as the bullets cease flying.  I never questioned or in fact mentioned productivity - I don't bother with the obvious.  The fact is that labor outside the US is still cheaper even given the difference in productivity, and this is why production is moving.  Your claim seems to be that the cost of labor is irrelevant, or perhaps that increasing productivity means increasing wages.

Surely you realize that American labor productivity has increased rapidly over the last 30 years, while wages have stagnated?  The reason for this is simply that workers are replaceable with hundreds of millions of other cheaper workers. The whole point of unionization and government regulation is to distribute productivity gains - 'the market' won't cause this to happen.

[Gustaf]

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

Production is in fact moving to Vietnam, Cambodia, Bangladesh, Indonesia, etc., as well as China, and it will also move to Africa as soon as the bullets cease flying.  I never questioned or in fact mentioned productivity - I don't bother with the obvious.  The fact is that labor outside the US is still cheaper even given the difference in productivity, and this is why production is moving.  Your claim seems to be that the cost of labor is irrelevant, or perhaps that increasing productivity means increasing wages.

Surely you realize that American labor productivity has increased rapidly over the last 30 years, while wages have stagnated?  The reason for this is simply that workers are replaceable with hundreds of millions of other cheaper workers. The whole point of unionization and government regulation is to distribute productivity gains - 'the market' won't cause this to happen.

You claimed that US wages would have to fall to the Chinese level simply because they have lower wages. That clearly ignores the issue of productivity differences.

To say that wages have stagnated while labour productivity increased is overly simplistic. Productivity gains have been slower for the least qualified labour which means that those people have not been seeing much wage gains. As I recall, higher wage earners in the US have actually seen wage increases.

It is true, of course that there are areas where productivity differences between, say, China and the US are comparatively small and in those areas we've seen production move. This doesn't mean all industry is threatened though.

It's true that the West has had some problems handling the social problems arising from a lack of low-productivity jobs. Young, uneducated men have suffered from this and are the root of a lot of problems in modern society.

Of course, even given that, it remains unclear by what right American workers should have a higher standard of living than those in China. But I suppose that is your racism shining through again.

PS: Africa? You're really digging a hole for yourself.

[opebo]

Of course, even given that, it remains unclear by what right American workers should have a higher standard of living than those in China. But I suppose that is your racism shining through again.

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

PS: Africa? You're really digging a hole for yourself.

Not at all, friend, you're a bit out of date - Africa is booming.  Mostly on the wave of the 'resource boom' which is lifting Australia and South America even moreso, but also due to some political stabilization.  The Chinese are investing there big time.  Exploitation waits for no man - better keep up, gustaf.

[Gustaf]

Of course, even given that, it remains unclear by what right American workers should have a higher standard of living than those in China. But I suppose that is your racism shining through again.

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

PS: Africa? You're really digging a hole for yourself.

Not at all, friend, you're a bit out of date - Africa is booming.  Mostly on the wave of the 'resource boom' which is lifting Australia and South America even moreso, but also due to some political stabilization.  The Chinese are investing there big time.  Exploitation waits for no man - better keep up, gustaf.

No...see, if you think Africa's problems are just about "flying bullets" you are quite deluded. I've studied this issue so I actually know something about it. I'd be happy to provide you with links to articles explaining it. I doubt you're interested in questioning your prejudices though.

(your first paragraph doesn't really make much sense)

[Fuzzybigfoot]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

Next I suppose you will claim that the Earth is flat, because it appears to be when you look around you? As long as you keep doing that you will have to endure a little bit of ridicule, I'm afraid. No one is forcing you to make a fool of yourself by talking about things you know nothing about.

You don't seem to realize that Chinese wages are increasing. The reason they are is that their productivity level is increasing. Which, of course, also explains why they are getting certain industries. But as their productivity approaches ours so will their wages. That's just what happened with the low-wage competition from Germany and Japan after WWII.

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

That depends on the resources some of those countries have, which are often few/exploited by their own governments. 

[Gustaf]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

Next I suppose you will claim that the Earth is flat, because it appears to be when you look around you? As long as you keep doing that you will have to endure a little bit of ridicule, I'm afraid. No one is forcing you to make a fool of yourself by talking about things you know nothing about.

You don't seem to realize that Chinese wages are increasing. The reason they are is that their productivity level is increasing. Which, of course, also explains why they are getting certain industries. But as their productivity approaches ours so will their wages. That's just what happened with the low-wage competition from Germany and Japan after WWII.

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

That depends on the resources some of those countries have, which are often few/exploited by their own governments. 

Since I'm not sure on what your "that" refers to I'm not sure what your point is? I agree that different resource endowments will play a role in allocations of production, if that's what you mean. But feel free to elaborate.

[opebo]

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

(your... paragraph doesn't really make much sense)

Look here, simpleton, it just means they could vote in a strict protectionism if they had the power to do so.  Alas for them apparently they don't.

[Gustaf]

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

(your... paragraph doesn't really make much sense)

Look here, simpleton, it just means they could vote in a strict protectionism if they had the power to do so.  Alas for them apparently they don't.

So?