Comments on: They see dollar fallin', they hatin'

They see dollar fallin', they hatin'

azazello — Mon, 05 Nov 2007 06:41:51 -0800

Is Jay-Z signaling a recession? There is something quite alarming on the recently released "Blue Magic" music video ... it wasn't sex, drugs, violence or explicit language that shocked my conscience. It was the Euros. The Jay-Z video flashed large stacks of $500 Euros. When I start seeing rap stars flashing euros instead of U.S. dollars, I know our economy is in trouble.

By: public

public — Mon, 05 Nov 2007 06:45:42 -0800

...$500 Euros.

By: fingerbang

fingerbang — Mon, 05 Nov 2007 06:46:21 -0800

See also: Supermodel 'rejects dollar pay' on the BBC today

By: goodnewsfortheinsane

goodnewsfortheinsane — Mon, 05 Nov 2007 06:46:46 -0800

I like how XE (which hadn't change since 1993 it would almost seem) has now added a question mark bubble as if to say "No, you're right, Canadian is worth more these days".

By: billysumday

billysumday — Mon, 05 Nov 2007 06:46:54 -0800

Dude, you should see Nelly's new video. He's at his computer, trading oil futures and IMing with James Howard Kunstler. END TIMES.

By: goodnewsfortheinsane

goodnewsfortheinsane — Mon, 05 Nov 2007 06:47:55 -0800

more like Jay-€ amirite??

By: soundofsuburbia

soundofsuburbia — Mon, 05 Nov 2007 06:50:10 -0800

It's all about the... uh, modern iron and glass buildings, baby. No, it sure doesn't have the same bling. Maybe "it's all about the purples, baby"? Yeah, better.

By: eschatfische

eschatfische — Mon, 05 Nov 2007 06:50:55 -0800

I wish I was a little bit taller, wish I was a baller, wish there was a stable dollar.

By: Skeptic

Skeptic — Mon, 05 Nov 2007 06:52:46 -0800

500 € bills are called "Bin Ladens" in Spain. Why? Because "everybody talks about them, yet it is impossible to get your hands on one".

By: chef_boyardee

chef_boyardee — Mon, 05 Nov 2007 06:53:11 -0800

Any REAL gangsta hedging against recession will be coming full circle to what he did in the 1990s: flashing the gold chains, not dabbling in fiat currency.

By: Homemade Interossiter

Homemade Interossiter — Mon, 05 Nov 2007 06:53:39 -0800

Well, 50 cent is going to be renamed €0.74 on his next album. *I'll get me coat.....*

By: brain_drain

brain_drain — Mon, 05 Nov 2007 06:54:09 -0800

Interesting! Do celebrities have views on any other topics?

By: Justinian

Justinian — Mon, 05 Nov 2007 06:54:43 -0800

Man the falling dollar would be awesome for American industries that exported manufactured goods. If we had any. Oops.

By: Blazecock Pileon

Blazecock Pileon — Mon, 05 Nov 2007 06:54:44 -0800

Perhaps Jim Cramer was on to something.

By: PeterMcDermott

PeterMcDermott — Mon, 05 Nov 2007 06:56:01 -0800

Its all about the Krugerrands, baby!

By: ageispolis

ageispolis — Mon, 05 Nov 2007 06:57:30 -0800

Ha, I haven't actually seen this video yet. wanna bring the eighties back that's okay with me that's where they made me at

By: Homemade Interossiter

Homemade Interossiter — Mon, 05 Nov 2007 07:02:52 -0800

oops! I did that the wrong way around. 50 cent = €0.34 I've never actually seen anything larger than a €50 note in real life. Supposedly they restrict circulation to prevent forgery.... dunno how true that is though.

By: aubin

aubin — Mon, 05 Nov 2007 07:04:56 -0800

"When I start seeing rap stars flashing euros instead of U.S. dollars, I know our economy is in trouble. " That's cute logic, but it isn't necessarily indicative of anything. Depreciating currency affects buying power for imports, but it doesn't necessarily precede a recession. The reason the currency is depreciating is because of steps being taken to prevent a recession. This is really about confusing cause and effect.

By: three blind mice

three blind mice — Mon, 05 Nov 2007 07:08:49 -0800

Supposedly they restrict circulation to prevent forgery.... dunno how true that is though. It's to hinder money laundering. One suitcase full of 500 Euro notes is a whole lot easier to transport than seven suitcases packed with Benjamins.

By: photoslob

photoslob — Mon, 05 Nov 2007 07:11:16 -0800

This is more about a rapper trying to put their spin on dumb hip-hop cliche than what Jay-Z thinks about the economy. I hate to break it to you but these guys just aren't that deep.

By: psmealey

psmealey — Mon, 05 Nov 2007 07:17:03 -0800

What is Jay-Z's personal Fed Funds rate?

By: DU

DU — Mon, 05 Nov 2007 07:19:43 -0800

The word that best describes my reaction: alarmed.

By: delmoi

delmoi — Mon, 05 Nov 2007 07:19:45 -0800

I think the main reason here is the magnitude, not the unit. Someone like Jay-Z would rather flash a stack of $100 bills then a bigger stack of twice as many €50 notes, even though the Euro stack would be worth more. If the government had any sense, they'd release larger notes to compensate for inflation, instead, they reduce the available currencies in order to make it more difficult to transfer large amounts of money.

By: PenDevil

PenDevil — Mon, 05 Nov 2007 07:22:57 -0800

photoslob: Besides rapping Jay-Z is also CEO of Def Jam records. I think he knows a bit about business.

By: Kattullus

Kattullus — Mon, 05 Nov 2007 07:24:36 -0800

aubin: That's cute logic, but it isn't necessarily indicative of anything Now correct me if I'm wrong, but isn't there a theory of economics that states that extremes are the best indicators for the direction of the over-all economy (for instance, if there's an increase in the sales of recycled toilet-paper versus that of ultrasoft it indicates that the economy as a whole is growing more green-conscious and moving away from the pursuit of luxury). I can't remember the name of the darned thing so I can't read up on it to see if it's strictly applicable to this case, but it seems logical to me that if people like Gisele and Jay-Z are moving from dollars to euros it's indicative of a shift away from the dollar in the economy as a whole. PenDevil: I think he knows a bit about business Quoth the man himself, he's not a buisnessman, he's a buisness, man.

By: Afroblanco

Afroblanco — Mon, 05 Nov 2007 07:26:00 -0800

Maybe he's just trying for international appeal?

By: Kattullus

Kattullus — Mon, 05 Nov 2007 07:26:20 -0800

~~buisness~~ I meant buoysness, obviously.

By: rusty

rusty — Mon, 05 Nov 2007 07:26:23 -0800

Huh. I should push my wheelbarrow full of dollars down to the record store and pick up a copy of that.

By: aramaic

aramaic — Mon, 05 Nov 2007 07:29:36 -0800

Interesting! Do celebrities have views on any other topics? I am also interested in the views of celebrities! If only there were publications we could read, in order to closely follow their views and possibly other aspects of their lives. I am particularly interested in their choice of automobiles, and the clothing they wear while out at parties and other social occasions. If you happen to find such a publication, please alert me. I am eager to learn more about celebrities, and I wish to study their habits.

By: oaf

oaf — Mon, 05 Nov 2007 07:30:01 -0800

I should push my wheelbarrow full of dollars down to the record store and pick up a copy of that. What's a record?

By: aubin

aubin — Mon, 05 Nov 2007 07:34:28 -0800

"if people like Gisele and Jay-Z are moving from dollars to euros it's indicative of a shift away from the dollar in the economy as a whole." We don't need Jay-Z to point out a decreasing demand for dollars. There is a number for that, it's the exchange rate. :) The thing is that demand for dollars means less about the economy than it ever did. If we lived in a cash-only society, maybe, but we have all kinds of non-cash instruments to work with so you need to look at a lot of things before you can forecast a recession. I'm beginning to think I'm overthinking this.

By: robocop is bleeding

robocop is bleeding — Mon, 05 Nov 2007 07:36:17 -0800

Good thing Jay-Z's given us the economic heads up. I remember when Public Enemy gave us the tip that giant clock necklaces were going to be the foundation of barter in the late 80s/early 90s. I managed to dump all my old Energy Dome stock before the exchange rate got too brutal. I had the opportunity to thank Doctor Flav at the 2004 World Bank Meeting and Free-Style Rap Off. Saved me a pile of Euros, he did!

By: b1tr0t

b1tr0t — Mon, 05 Nov 2007 07:36:47 -0800

Now correct me if I'm wrong, but isn't there a theory of economics that states XYZ Yes. For all values of XYZ.

By: creasy boy

creasy boy — Mon, 05 Nov 2007 07:36:51 -0800

I got paid in a stack of €500 bills once. Even though it was a pretty thin stack, I still felt tingly and elevated and ran all the way home.

By: costas

costas — Mon, 05 Nov 2007 07:40:01 -0800

I bought a car the first year the Euro was out ('02) and I paid €2500 as down payment with 5 bills I had stuffed in my pocket. Felt really weird. I remember seeing €200 and €500 notes during the first months of the roll-out, but they've gotten much rarer since then.

By: Heywood Mogroot

Heywood Mogroot — Mon, 05 Nov 2007 07:40:18 -0800

I've heard of Peter Schiff off & on this past year but I finally took some time to read his (bearish!) regular opinion essays, starting with the latest describing Soviet-scale fudging of the numbers to get to the latest positive GDP report. Perhaps worthy of a fpp earlier this year, but at any rate recommended reading for all. Check out the youtube videos of his appearances on the Fox Business Channel, too. I'm getting Bob Brinker's latest podcast right now actually for the walk to work this morning since I want to hear his reaction to this Potemkin GDP report.

By: Heywood Mogroot

Heywood Mogroot — Mon, 05 Nov 2007 07:41:55 -0800

oh, I'm also planning on getting a german car in 2009 (or 2010, depends on when it gets a dual-clutch automanual) . . . I'm halfway thinking of DCA-buying FXE for the next 2 years as a hedge against further dollar depreciation.

By: oaf

oaf — Mon, 05 Nov 2007 07:50:31 -0800

It's all about the Bordens, baby.

By: matteo

matteo — Mon, 05 Nov 2007 07:51:24 -0800

it's a drug thing, the Colombian cartels would rather be paid in strong currency

By: eriko

eriko — Mon, 05 Nov 2007 07:53:09 -0800

I felt compelled to actually check. €500=$723.78 US

By: Slarty Bartfast

Slarty Bartfast — Mon, 05 Nov 2007 07:54:58 -0800

I, for one, welcome our new European overlords.

By: Pastabagel

Pastabagel — Mon, 05 Nov 2007 08:04:16 -0800

Jay-Z and assorted supermodels dumping dollars should be taken as a contrary indicator. Time to load up on dollars.

By: wfc123

wfc123 — Mon, 05 Nov 2007 08:04:29 -0800

A poseur flashing Euros instead of dollars. The only thing this jackass is "signalling" is that he's even a bigger lowlife showoff than before. I noticed in a previous video he was driving a Zonda in Monaco. Enough said? What an embarrassment he is.

By: Mastercheddaar

Mastercheddaar — Mon, 05 Nov 2007 08:06:34 -0800

Wow.... Thank God I haven't bought a new car in a while. Now all those hard earned green backs I stored away will surely give me resources to fall back on in the time ahead! Thanks Republicans!

By: Pastabagel

Pastabagel — Mon, 05 Nov 2007 08:17:18 -0800

Perhaps Jim Cramer was on to something. posted by Blazecock Pileon at 9:54 AM on November 5 Jim Cramer in his now infamous rant wanted the Fed to cut rates. They did, and the dollar tanked. This is what Cramer wanted. And he wants another full point cut as well. I'm not going to be the fool who tries to call a bottom, but in a long term/big picture view, things are looking bottom-ish. The implosion of the banks is well under way, which means it will end relatively soon. In other words, the banks imploding is not something we have still have to wait for. It's happening now which means it will eventually be behind us. We know how bad the mortgage situation is +/- 15%. Contrast this with June of this year when we had no clue. Oil is near $100, but how much of that is the supoply/demand price, and how much is mideast turmoil speculation. Threatening war with iran isn't helping the price of oil to come down. At the end of 2008, no matter who is president, they will be reviled less both at home and abroad than the current President. So on that front, things can only improve. Every day that passes is one day closer to whatever day the troops leave Iraq and return home. When that happens, it will be a huge boost for the dollar. All the charts that matter in any arena look rather exponential, or parabolic, swooping up or down depending on what you are looking at. Again, I'm not stupid enough to try to call a bottom in the market, but I have been burned enough times to know that trends do not continue exponentially forever. Bad times only last so long, so each day they continue is one day closer to when they end.

By: Pope Guilty

Pope Guilty — Mon, 05 Nov 2007 08:18:10 -0800

By: CitrusFreak12

CitrusFreak12 — Mon, 05 Nov 2007 08:20:26 -0800

Anyone care to help out a dreadfully uninformed college student? Is there a definitive reason for the declining value of the dollar, is it a number of reasons...?

By: Tacos Are Pretty Great

Tacos Are Pretty Great — Mon, 05 Nov 2007 08:21:03 -0800

I've never actually seen anything larger than a 50 note in real life. Supposedly they restrict circulation to prevent forgery. I think this is just like in America. Large denomination bills are only used in a few circumstances, since they're silly everywhere else. I've been paid by european casinos in large (500, 100) bills, but I've only stumbled across a 200 once or twice.

By: Tacos Are Pretty Great

Tacos Are Pretty Great — Mon, 05 Nov 2007 08:24:56 -0800

At the end of 2008, no matter who is president, they will be reviled less both at home and abroad than the current President. So on that front, things can only improve. Unless they start bombing Iran. And I'm pretty sure that most of the GOP candidates would be happy to do so. The GOP has become a party of radical extremist ideology. It's foolish to think that this is going to change.

By: seanyboy

seanyboy — Mon, 05 Nov 2007 08:41:41 -0800

Maybe Jay-Z has just run out of Mad Rhymes for "Dollar". It's always possible that he's just working his way through the various world currencies. "And if you're broke, no smoke, looking for nirvana**, just look to Jay-Z sporting bentleys, mucho Hryvnia*" *Ukranian currency: equivalant to 100 kopiykas ** I do not posess such mad skills. This is for example use only.

By: Heywood Mogroot

Heywood Mogroot — Mon, 05 Nov 2007 08:44:50 -0800

The implosion of the banks is well under way, which means it will end relatively soon and this near-record level of consumer household debt is going to start paying itself off in the face of continued implosion of the housing market, a service economy that isn't positioned to actually take advantage of a more competitive currency, and a fiscal governance that is doing everything in its power to keep the wheels on, at least until next November? Get real.

By: Tacos Are Pretty Great

Tacos Are Pretty Great — Mon, 05 Nov 2007 08:46:45 -0800

Anyone care to help out a dreadfully uninformed college student? Is there a definitive reason for the declining value of the dollar, is it a number of reasons...? It's been looming for a long time. Basically, it's a bunch of stuff: 1) The government has increased the money supply. In the past year M3 has increased by 12% and M2 has increased by 7%. Ignoring the technical differences between M2 and M3, this means that the quantity of dollars in the market has increased significantly. Nearly everybody understand supply and demand. If somebody makes too many of something, the value goes down. 2) "Petrodollars". Oil used to be traded exclusively in dollars. This meant that if you wanted oil, you needed to first buy some American dollars, and then if you sold oil, you ended up with a huge reserve of American dollars. In recent years, many countries have started selling oil in euros, either as an option or an exclusive choice. This means that a little under 50% of oil is now bought with euros instead of dollars. As such, many of the dollars that used to sit in the coffers of oil-rich nations are being replaced by euros. There are a lot of other factors, but it could be summarized neatly as such: America sucks more every day. Economically speaking, this is likely to remain true for the foreseeable future.

By: drezdn

drezdn — Mon, 05 Nov 2007 08:50:39 -0800

What do people refer to the 50 Euro as?

By: milkrate

milkrate — Mon, 05 Nov 2007 09:01:37 -0800

Like the petrodollar/petroeuro issue, I think this has more to do with the Euro becoming more common in a particular industry that requires large amounts of a liquid asset, whether it be dollar, euros or Caterpillar tractors.

By: tehloki

tehloki — Mon, 05 Nov 2007 09:16:01 -0800

He's flashing euros because it happens to look good in a music video. Or it's trendy. Or it's -going- to be trendy. It's a medium designed to move designer clothing, alright? Don't look too deep into it.

By: Avenger

Avenger — Mon, 05 Nov 2007 09:18:45 -0800

Is there a definitive reason for the declining value of the dollar, is it a number of reasons...? US Consumers, people like you and me, owe about 2.5 trillion dollars in mortgages and credit cards. Our federal government owes other governments (and also owes itself) about 9 trillion dollars. It also owes about 60 trillion dollars to the future generation of retirees, which is about $170,000 for each currently-living American, or roughly $500,000 per household. Assuming those retirement programs aren't cut and seniors are reduced to picking through trash again, of course. I'm not an economist, so I don't "get" the nuances of international trade and finance like others on MeFi do, but to me, it seems that we, as Americans, have consumed ourselves into poverty. We've lived beyond our means and there will be repercussions, but the powers-at-be are trying to soften the blow with some creative economic gimmicks (lower interest rates, declining dollars) than to let it crash again. The truth is, all of us are actually very poor (most of us, if properly accounted for, would actually have negative bank balances -- and for what? A plasma TV?) and our leaders will do anything to hide that fact from our eyes. Whether they succeed or not, I have no idea.

By: tehloki

tehloki — Mon, 05 Nov 2007 09:21:17 -0800

^Read this twice. It is that true.

By: exlotuseater

exlotuseater — Mon, 05 Nov 2007 09:40:11 -0800

I wanna be paid in BACON. Ain't no BENJAMINS, It's about the OSCARS, SON! meyer's, that is.

By: exlotuseater

exlotuseater — Mon, 05 Nov 2007 09:40:28 -0800

MAFACKIN' BACON!

By: aaronetc

aaronetc — Mon, 05 Nov 2007 09:42:30 -0800

Bad times only last so long, so each day they continue is one day closer to when they end. Vote Hoover in '32!

By: ryoshu

ryoshu — Mon, 05 Nov 2007 09:51:38 -0800

Now correct me if I'm wrong, but isn't there a theory of economics that states XYZ Yes. For all values of XYZ. What about for values of xzbit?

By: fearfulsymmetry

fearfulsymmetry — Mon, 05 Nov 2007 10:08:49 -0800

I wanna a rapper flashing the Yuan... that's the real currency of the future.

By: phaedon

phaedon — Mon, 05 Nov 2007 10:21:30 -0800

They key to Jay-Z's unmitigated success is that he's never done anything original. (Let's not even start the Big L debate.) Anyway, German hip-hop is where it's at: Fuffies im club unzensiert (NSFW). (I think "Fuffies" is slang for fifty-dollar Euro notes.)

By: bitter-girl.com

bitter-girl.com — Mon, 05 Nov 2007 10:24:46 -0800

This is probably the funniest thread I've read in days. Thanks, guys, you're making a bad deadline week less so.

By: Heywood Mogroot

Heywood Mogroot — Mon, 05 Nov 2007 10:26:59 -0800

but to me, it seems that we, as Americans, have consumed ourselves into poverty we've eaten our seed corn (literally, too). I've got portable skills and a mentalité mobile, but J6P is well and truly screwed unless we start getting our act together socio-economically.

By: TheOnlyCoolTim

TheOnlyCoolTim — Mon, 05 Nov 2007 10:47:45 -0800

J6P?

By: Cochise

Cochise — Mon, 05 Nov 2007 10:50:40 -0800

Where does this leave 50 Shekel, the Jew for Jesus rapper?

By: graventy

graventy — Mon, 05 Nov 2007 10:56:18 -0800

Oh, damn. Thanks phaedon!

By: Godbert

Godbert — Mon, 05 Nov 2007 10:59:29 -0800

J6P?

J6P == Joe Sixpack. I had to look that one up myself.

By: Pastabagel

Pastabagel — Mon, 05 Nov 2007 11:09:38 -0800

In recent years, many countries have started selling oil in euros, either as an option or an exclusive choice. This means that a little under 50% of oil is now bought with euros instead of dollars. As such, many of the dollars that used to sit in the coffers of oil-rich nations are being replaced by euros. Do you have a source for that? The two exchanges in which the overwhelming majority of oil trade is conducted are the NYMEX and the London IPE, both of which price in dollars.

By: Heywood Mogroot

Heywood Mogroot — Mon, 05 Nov 2007 11:39:56 -0800

mentalité mobile Note to self: do not throw French terms together without having heard it in context first

By: joseph_elmhurst

joseph_elmhurst — Mon, 05 Nov 2007 11:56:57 -0800

Forget Jay-Z, apparently the copy editor at the Chaska Herald doesn't know how to spell Russell Crowe's name, either.

By: Smedleyman

Smedleyman — Mon, 05 Nov 2007 13:10:55 -0800

I see stuff like this and I miss John Dillinger all the more.

By: painquale

painquale — Mon, 05 Nov 2007 13:18:16 -0800

This thread is fabulous!

By: Artw

Artw — Mon, 05 Nov 2007 14:12:51 -0800

I write comics, and every so often I sell something I've written back to the UK and get paid in pounds, which is awesome - what would be a piutance back there is now a decent amount of money. Conversely other people in UK comics who sell things to the Us are having a bit of a hard time at the moment. Oh, and next time I return home (something I've put off for a while due to life changes and the horrible exchange rate) all my money is just going to evaporate out of my pockets the moment I buy a coffee or a newspaper or something.

By: barc0001

barc0001 — Mon, 05 Nov 2007 14:14:53 -0800

Well, on the plus side, all the Canadian hockey teams are grinning their asses off this year over all the players' contracts being in USD.

By: Artw

Artw — Mon, 05 Nov 2007 14:15:40 -0800

piutance == pitance, of course. Though Piut does sound like it should be some kind of low value currency. When the dollar trades low against the Piut watch out...

By: barc0001

barc0001 — Mon, 05 Nov 2007 14:22:40 -0800

However for me selling stuff on Ebay, not so much with the fun. I used to see a nice little boost off the USD conversion, but these days it ends up being lower. I am wondering if I should just list my auctions in CAD and be done with it.

By: jrochest

jrochest — Mon, 05 Nov 2007 15:21:05 -0800

Although I note with teeth-grinding annoyance that retailers STILL charge Canadians more than Americans, even though our dollar is now worth 1.07 US. Apparently, in the wonderful fantasy land occupied by Canadian retailers and US e-tailers, the Canadian Dollar is now and always will be worth 75 US cents.

By: jet_silver

jet_silver — Mon, 05 Nov 2007 16:21:04 -0800

I've never actually seen anything larger than a €50 note in real life. Supposedly they restrict circulation to prevent forgery.... dunno how true that is though. My gf and I carried 20 €500 notes to a real estate transaction a couple years ago. Talk about feeling like a target.... We used two of them at the local Darty to pay for a couple of appliances. They have scanners at most retailers to check for counterfeits, but there wasn't so much as a raised eyebrow over our presenting these bills there.

By: jfuller

jfuller — Mon, 05 Nov 2007 16:22:00 -0800

> I wanna a rapper flashing the Yuan... that's the real currency of the future. AWRRRRK, PIECES OF EIGHT. PIECES OF EIGHT.

By: salvia

salvia — Mon, 05 Nov 2007 19:08:37 -0800

He's got 99 problems but an impending decision to remove the dollar peg ain't one.

By: bystander

bystander — Mon, 05 Nov 2007 19:22:04 -0800

The yuan renimbi won't be a flight currency like the USD was. That position has been taken by the Euro, and the USD is unlikely to regain the default currency mantle any time soon. Moreso if the claim up thread that nearly 50% of oil is now sold in Euro. People around the world who distrusted their local currency, preferring to deal in dollars, have just watched their holdings decline 15-30% in the last few years measured against their local currency. That rams home it isn't a good currency to hold. If you are an Asian or Middle Eastern investor in US bonds you have seen the same decline. And if you say, own a home in the US it has also declined, as your $500k USD house will now only buy a 350k euro house. Why? Because the US continued consumer policies that fostered easy credit and high spending, topped with a yawning federal deficit made the US a less attractive place to invest. The easy credit/low interest environment meant investors could get higher returns in places like the UK and NZ with probably lower risk (definitely so in hindsight). So they stopped buying government and company bonds (that is, loaning money to US companies and government). Since they weren't buying bonds priced in dollars, they no longer needed to sell their ringgits or euros to buy dollars, so demand falls. Because the US is a net debtor (nation, government, and many citizens it seems) there is no option to sell American investments held off shore in Euros etc. to take advantage of the cheaper 'bargain' US dollar prices, so the decline is likely to continue until foreigner's greed overcomes their fear of a further decline. To spur that greed it would be good to have cheap investments in the US for foreigners, say an undervalued stock market (strike one) under valued property (strike two) or high interest rates (strike three) to compensate for the risk a foreigner would be taking investing in a country with a falling currency. This combination is somewhat deliberate, as the Feds have realised the housing bubble and resultant credit crunch will take a crash or some time to work itself out, so to avoid a crash they have lowered rates. This makes US investments even less attractive, so the dollar gets sold down a bit more. The net effect is the debt owed to foreigners is reduced and the real estate market is reduced too, without visible deterioration of sale prices. Voila! The only downside is if you need to purchase something priced in non-US dollars, or that can be freely internationally traded (e.g. gold, oil). These commodities will now be more expensive, also known as inflation. As the impact of these higher prices is felt, other prices will go up too. The guy importing Swedish truck parts will have to raise his prices, the mom & pop mega chain importing from China will have to raise their prices too. Pretty soon anybody in a union is screaming for a raise (so are the union-less, but nobody listens) and strikes and pay rises trickle through, putting more inflationary pressure into the system. Inflation is bad news, because it costs you more for no tangible benefit, leading central banks around the world to fight it. The US Fed have decided to take a risky path and inflate themselves out of trouble. This is bad for Americans, and a really unfair punishment if you didn't get swept along in the housing bubble and are trying to save money in the bank. But hey, you had a good time while it lasted, right? To get a handle on what could happen if the dollar kept falling, look at Argentina, where the Peso lost about 2/3rds against the dollar in 2001. I can't see similar happening to the US so far, but it is a good example of why trying to inflate your way out of trouble is so risky - you could end up breaking the whole economy.

By: Avenger

Avenger — Mon, 05 Nov 2007 19:53:43 -0800

Capital Flight -- it's not just an airline!

By: gallagho

gallagho — Tue, 06 Nov 2007 03:40:50 -0800

Bah, the £ is popin' a cap in Jay-Z's Euro...

By: rokusan

rokusan — Tue, 06 Nov 2007 09:01:45 -0800

This story adds a little weight to the running away from the dollar. We know it's serious when it's not just rap stars, but also supermodels who are choosing Euros. Oh, and the end of the article also mentions some other guy who is no longer investing in greenbacks... Warren Buffett? I think he's a folk singer or something. Nobody whose opinion matters, anyway. But pay attention to the supermodel!

By: salvia

salvia — Tue, 06 Nov 2007 12:15:29 -0800

some other guy who is no longer investing in greenbacks... Warren Buffett? I think he's a folk singer or something. Yeah, it's because they let you pay with Euros in Margaritaville.

By: Artw

Artw — Thu, 08 Nov 2007 14:06:46 -0800

How can I cash in on the dollar crisis?

By: salvia

salvia — Thu, 08 Nov 2007 16:36:01 -0800

"We are experiencing among our clients an awakening that the United States is in big trouble," said Erik Nielsen, chief Europe economist at Goldman Sachs. [NYT]