From 2002 through the end of 2007 the value of a dollar has depreciated 29% according to the Congressional Research Service. After several dramatic interest rate cuts by the Federal Reserve Board in the first quarter of 2008 the dollar has fallen further.

The exact amount is in question as it does fluctuate daily, but I think from all I have read it is not unrealistic to add another 6% bringing a loss in purchasing power of 35%. So what would gas cost if the dollar had remained stable? For conversations' sake it would be closer to $2.60.

We can blame OPEC, the oil companies, increased demand in China and India, terrorism or all of the above for high oil prices, but in the end it is the weak dollar that has created the most price pressure. In other words, we can blame ourselves.

Continue reading $4 gas -- who is to blame?

$4 gas -- who is to blame? originally appeared on BloggingStocks on Tue, 08 Apr 2008 08:10:00 EST. Please see our terms for use of feeds.

The currency of our realm, the US Dollar, has been losing value for many years, but lately the results of this sad state of affairs have become increasingly more evident. Concerns are mounting on a global basis not just in the United States. The euro, once pegged at a buck, is now trading at $1.55, while gold has passed $1,000 and oil has continued its charge, breaking through the $110 per barrel mark.

While a good deal of this problem is home grown, the pain is being felt all around the world. We have read many stories about how the American economy is a smaller part of the global economy and becoming somewhat detached. This is nonsense. What has happened is that the global economy has become infinitely more integrated and like any integrated structure (the architect speaking), what occurs in one place is felt everywhere.

The Federal Reserve Board, led by Chairman Ben Bernanke, has been watching the economy in an extremely measured fashion, bordering on casual. To those who see beyond Bernanke's calm demeanor, one should imagine a stock trader of old, holding the ticker tape up to his eyes and monitoring every change, every blip in the market as the ticker tape machine clicks away, spewing out the latest market activity.

Continue reading Serious Money: The falling dollar creates global pain -- Part 1

Serious Money: The falling dollar creates global pain -- Part 1 originally appeared on BloggingStocks on Thu, 13 Mar 2008 15:05:00 EST. Please see our terms for use of feeds.

This concept does not seem to have resonated in Washington and, along with his advisers, our president is either ignorant or avoiding the issue altogether because he does not want to discuss the remedy: everyone tightening their belt financially and taking some economic pain.

Warren Buffett has sounded the alarm many times about this subject, and I will, too. When the dollar falls in value, say 30% (each currency varies), that gives foreign investors 30% more buying power here. Yes, it is true they buy more when our goods and services are "on sale" (and we buy less of theirs). However, what if instead of buying perishables, they buy income-producing property and companies. As long as this trend continues, they would be wise to buy more and more.

A simple example: They buy a company that makes widgets in the United States. They are able to sell (export) more widgets along with their American counterparts because of the devalued dollar. Who makes a higher return on invested capital? The foreign investor, of course, because they paid 30% less for the widget company!

Continue reading Is Bush giving the country away without knowing it?

Is Bush giving the country away without knowing it? originally appeared on BloggingStocks on Fri, 26 Oct 2007 12:45:00 EST. Please see our terms for use of feeds.