
Originally Posted by
Melonie
again you ignore my previous comments !
In regard to the cost of a house, in case you hadn't noticed the asphalt shingles, copper piping and wiring, plastics and (energy intensive) processed wood are all tied to the pricing of global commodities. Despite the fact that new US homebuilding is 'on it's a$$ in terms of new demand, the prices of all of these basic materials is still far higher than they were 5 years ago. So while there may be some deflationary bargain-hunting possible in regard to the value of the 'dirt' under homes in particular locations, on the average there is a fair amount of correlation between the US dollar weakening 33% over the past 5 years and the prices of new homes increasing 33% while Joe Sixpack's paycheck remained essentially the same.
BTW college costs are also up nearly 33% over the past 5 years, by pure coincidence of course. Not - energy costs are a major component of operating a college. Medical costs are also up nearly 33% over the past 5 years, again by pure coincidence of course. Not - that new MRI scanner is based on the cost of huge copper wound electromagnet coils manufactured in Japan.
you don't need to be a sophisticated currency exchange trader to know that a country that spends far more money than it earns, whose financial regulatory body is regularly cutting interest rates, and whose financial regulatory body prints up new money at a rate of something like 14% per annum in order to pay for that additional spending, is highly unlikely to have a RISING currency exchange rate !
Case in point, the Fed injected 43 Billion freshly printed dollars today via TOMO's. The US stock markets took a big upward leap as a result. Now watch the overnight US dollar exchange rate drop !
again, this is 'classic wisdom' that was true in the 1950's, when most of America's oil was pumped in Texas, when GE built television sets in New York, and when Volkswagen only imported a few hundred cars a year into the US. This was arguably still true as a matter of degree up through the 1980's. However, as the US economy became increasingly globalized in the 1990's, the effect of the US dollar's exchange rate became a larger and larger factor in everything that Joe Sixpack wants and needs, as more and more of America's commodity demand had to be supplied from overseas sources, and as manufactured products sold in America were increasingly produced overseas with foreign labor instead of produced domestically with domestic labor.
Granted this development was somewhat disguised by the relatively stable US dollar exchange rate that existed for many years prior to the 9/11 attacks. But after that point, the increased instability in the US dollar exchange rate quickly translated into an effect on US dollar denominated prices of all items with significant global content.
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