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The Magic Cafe Forum Index » » Not very magical, still... » » Dollars no longer accepted at Taj Mahal... Wow. Good going US. (0 Likes) Printer Friendly Version

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Magnus Eisengrim
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On 2008-02-26 11:55, MagicSanta wrote:
Sure is.... Hey, I have to admit I did go, two years ago, to visit some of the fine manufacturing plants for Canadian companies....I always liked Mexico.


And this comment is in retaliation to....


John
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.--Yeats
Scott Cram
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I'm always amused by panicky stories about currency fluctuations.

I went by a store I regularly visit, and they were having a sale on all their items! Oh no! Their stock isn't worth what it used to be! They must be going out of business!

Another store I regularly visit just raised their prices. Oh no! They'll have fewer sales, and they'll soon be going out of business!

These statements sound overly dramatic when you're talking about stores, but change "store I regularly visit" to "exchange rates", and all of the sudden it's standard business reporting.
MagicSanta
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I was commenting on my love for Canadian companies like Celestica, Northern Telecom (who sold a lot of plants to SCS), guys like that...they are in Guadalajara which is a nice place to visit. You have an issue with Mexico as well as the US?
balducci
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On 2008-02-26 14:30, Scott Cram wrote:
I'm always amused by panicky stories about currency fluctuations.

These statements sound overly dramatic when you're talking about stores, but change "store I regularly visit" to "exchange rates", and all of the sudden it's standard business reporting.

Panicky stories every time the currency exchange rate goes up or down 1 cent is one thing.

But in this case we are talking about a prolonged and fairly significant depreciation of the US dollar.

http://au.finance.yahoo.com/currency/con......t=1&t=5y

http://au.finance.yahoo.com/currency/con......t=1&t=5y

http://au.finance.yahoo.com/currency/con......t=1&t=5y
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
LobowolfXXX
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When you think about it, it's actually rather amusing and counterintuitive that the dollar would no longer be accepted AFTER it's declined so greatly in value. Assuming (which I don't) that the decision WAS related to the value of the dollar, this would be an example of the fear-based, mindless "plan" that many people have with respect to stock investing -- panic and sell the stocks after they've dropped in value.

If you WERE going to have a policy based on the current value of the dollar, it would be far more sensible to keep accepting dollars -- or even START accepting dollars -- now that they're so devalued. Because of the current exchange rates, you can charge much more in American currency, and even a subsquent partial correction would be a nice boost. Let's see...one asset is cheap, the other is expensive...which one should I accumulate?

Ceasing to accept dollars would have been a great idea (in retrospect) when they were at their PEAK value. Now, it's like locking the barn door after the horse is gone.

Yes, I *do* realize that the dollar could continue to drop in value, but it was much more likely to happen when it was relatively high priced than when it's relatively low priced.
"Torture doesn't work" lol
Guess they forgot to tell Bill Buckley.

"...as we reason and love, we are able to hope. And hope enables us to resist those things that would enslave us."
abc
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Quote:
On 2008-02-26 15:33, LobowolfXXX wrote:
When you think about it, it's actually rather amusing and counterintuitive that the dollar would no longer be accepted AFTER it's declined so greatly in value. Assuming (which I don't) that the decision WAS related to the value of the dollar, this would be an example of the fear-based, mindless "plan" that many people have with respect to stock investing -- panic and sell the stocks after they've dropped in value.

If you WERE going to have a policy based on the current value of the dollar, it would be far more sensible to keep accepting dollars -- or even START accepting dollars -- now that they're so devalued. Because of the current exchange rates, you can charge much more in American currency, and even a subsquent partial correction would be a nice boost. Let's see...one asset is cheap, the other is expensive...which one should I accumulate?

Ceasing to accept dollars would have been a great idea (in retrospect) when they were at their PEAK value. Now, it's like locking the barn door after the horse is gone.

Yes, I *do* realize that the dollar could continue to drop in value, but it was much more likely to happen when it was relatively high priced than when it's relatively low priced.

Are you crazy? The average person could not possibly grasp something so simplistic. I guess that is why the average person either tells about the amount of money they have lost in investments or the one time they struck it lucky without mentioning the money they lost prior to or after they struck it lucky.
I also agree that the dollar could continue to drop in value but what is the statistical likelihood of it happening. Depending on your risk profile most people should be accepting or buying dollars now (if they are interested in investing in foreign currency) or unless they think the possibility of the dollar declining further is more likely than it actually recovering. The fed was taken for a ride by Soc Gen and the time of recovery is at hand in my opinion. I recently converted some of my cash (the amount is a secret) to dollars and I am feeling relatively confident.
balducci
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Quote:
On 2008-02-27 00:22, abc wrote:

I also agree that the dollar could continue to drop in value but what is the statistical likelihood of it happening. Depending on your risk profile most people should be accepting or buying dollars now (if they are interested in investing in foreign currency) or unless they think the possibility of the dollar declining further is more likely than it actually recovering. The fed was taken for a ride by Soc Gen and the time of recovery is at hand in my opinion. I recently converted some of my cash (the amount is a secret) to dollars and I am feeling relatively confident.

Yet a number of high profile billionaires, such as Jim Rogers, are desperately trying to liquidate their American assets and U.S. dollar holdings. Jim Rogers went so far as to move his family from the States to China.

But they found the pollution in China to be so bad, that they ended up moving to virtually 'pollution-free' Singapore instead. See this article:

http://www.nysun.com/article/61856

You should keep in mind that the U.S. dollar has had a great 50+ years run. In a sense, what has happened to it in the last 5 or 6 years is nothing compared to what COULD happen, if the 50+ year run truly reverses course even more.

Statistically speaking, what with reversion to the mean and all, it seems quite likely that the dollar will decline much, much further in the years to come.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
LobowolfXXX
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Quote:
On 2008-02-27 00:34, balducci wrote:

Statistically speaking, what with reversion to the mean and all, it seems quite likely that the dollar will decline much, much further in the years to come.


Disagree...I think we've overcorrected well beyond the mean, with respect to certain currencies, at least.
"Torture doesn't work" lol
Guess they forgot to tell Bill Buckley.

"...as we reason and love, we are able to hope. And hope enables us to resist those things that would enslave us."
balducci
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Disagreement is what makes a market. Smile
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
LobowolfXXX
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Definitely true. Regardless of what happens starting now, though, it would be better to accept dollars now than when the dollar had more value, a few years ago.

Too look at it another way, let's say the price of coins fluctuated. You want to sell something for a dollar, but the price of the dime has been dropping, so now it's only worth 5 cents. If someone wanted to pay you with 20 devalued dimes, knowing that they were generally worth around 10 cents each, OF COURSE you should let him. When the dime is "strong," say worth about 20 cents each, so you can only get 5 of them, that's when you SHOULDN'T want to accept them. When prices regain something resembling an equilibrium value, you're stuck with only 5 dimes.
"Torture doesn't work" lol
Guess they forgot to tell Bill Buckley.

"...as we reason and love, we are able to hope. And hope enables us to resist those things that would enslave us."
LobowolfXXX
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Or to look at it still ANOTHER way...

Assuming a fair exchange rate, there's no inherent advantage or disadvantage to accepting a currency that has dropped or increased in value; the advantage or disadvantage is only predicated upon the FUTURE change of the respective currencies.
"Torture doesn't work" lol
Guess they forgot to tell Bill Buckley.

"...as we reason and love, we are able to hope. And hope enables us to resist those things that would enslave us."
balducci
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Quote:
On 2008-02-27 01:41, LobowolfXXX wrote:
Or to look at it still ANOTHER way...

Assuming a fair exchange rate, there's no inherent advantage or disadvantage to accepting a currency that has dropped or increased in value; the advantage or disadvantage is only predicated upon the FUTURE change of the respective currencies.

I think there are additional complications.

Just to name one ...

Different currencies on deposit may earn interest at different rates. In fact, they usually do. So it is not worth holding or accepting the currency that earns the lesser interest rate, unless (possibly) you expect to have some need for the lesser currency at some point in the future (e.g., you have a debt to pay off, payable in the lesser currency, in a year's time).

Consider:

Country A's unit of currency earns 10% on deposit;

Country B's unit of currency earns 2% on deposit.

I don't care what exchange rate you offer, if the interest rates on deposits given above are expected to continue forever, then no one in their right mind would ever accept Country B currency in favour of Country A's. It would always prove to be a losing proposition in the long run.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
MagicSanta
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Darn, if only those scumbag nations in the UN would foot the bill for the conflicts the US are bankrolling for them. Now they will make more against Iran and make demands and the poor ol' US will have to be the scape goat again. Thank goodness that the failed nations in Europe got together to build a common market and put up anti American penalties to make US goods more expensive. They'll get us yet! Hey, we can all move to Singapore, dictatorships are a good thing.
abc
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Quote:
On 2008-02-27 00:34, balducci wrote:
Quote:
On 2008-02-27 00:22, abc wrote:

I also agree that the dollar could continue to drop in value but what is the statistical likelihood of it happening. Depending on your risk profile most people should be accepting or buying dollars now (if they are interested in investing in foreign currency) or unless they think the possibility of the dollar declining further is more likely than it actually recovering. The fed was taken for a ride by Soc Gen and the time of recovery is at hand in my opinion. I recently converted some of my cash (the amount is a secret) to dollars and I am feeling relatively confident.

Yet a number of high profile billionaires, such as Jim Rogers, are desperately trying to liquidate their American assets and U.S. dollar holdings. Jim Rogers went so far as to move his family from the States to China.

But they found the pollution in China to be so bad, that they ended up moving to virtually 'pollution-free' Singapore instead. See this article:

http://www.nysun.com/article/61856

You should keep in mind that the U.S. dollar has had a great 50+ years run. In a sense, what has happened to it in the last 5 or 6 years is nothing compared to what COULD happen, if the 50+ year run truly reverses course even more.

Statistically speaking, what with reversion to the mean and all, it seems quite likely that the dollar will decline much, much further in the years to come.

I have read many articles by Rogers and both his trip around the world books. He is very pro-China. He bringsso much money with him that he is easily accepted into the market in China as an investor. The same is not true for the average investor who would probably lose a lot of money in China.
LobowolfXXX
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Quote:
On 2008-02-27 02:01, balducci wrote:
Quote:
On 2008-02-27 01:41, LobowolfXXX wrote:
Or to look at it still ANOTHER way...

Assuming a fair exchange rate, there's no inherent advantage or disadvantage to accepting a currency that has dropped or increased in value; the advantage or disadvantage is only predicated upon the FUTURE change of the respective currencies.

I think there are additional complications.

Just to name one ...

Different currencies on deposit may earn interest at different rates. In fact, they usually do. So it is not worth holding or accepting the currency that earns the lesser interest rate, unless (possibly) you expect to have some need for the lesser currency at some point in the future (e.g., you have a debt to pay off, payable in the lesser currency, in a year's time).

Consider:

Country A's unit of currency earns 10% on deposit;

Country B's unit of currency earns 2% on deposit.

I don't care what exchange rate you offer, if the interest rates on deposits given above are expected to continue forever, then no one in their right mind would ever accept Country B currency in favour of Country A's. It would always prove to be a losing proposition in the long run.



Unless the value of Country B's unit of currency is increasing relative to the value of Country A's currency by enough to make up the difference.

But my post is only about a single country, at 2 different points in time. If all you know about Currency X is that it's relatively expensive at one point, and relatively cheap at another point, it's better to buy it when it's cheap.

I think your premise is similar to comparing two stocks paying radically different dividends. Generally, you wouldn't want a stock that pays a 2% dividend when you could have one that pays a 10% dividend, but potential appreciation/depreciation of the two can swing that equation (though obviously the 2% stock has A LOT of work to do to catch up).

I'm making a point that is distinct from that, which is, IF at some point in time you're going to buy, say, Johnson & Johnson, you'd rather do it when it's selling for $50 a share than when it's selling for $63 a share (today's price, more or less).
And when would you be able to buy Johnson & Johnson for $50 a share? ...

After it suffers about a 20% loss in value.
"Torture doesn't work" lol
Guess they forgot to tell Bill Buckley.

"...as we reason and love, we are able to hope. And hope enables us to resist those things that would enslave us."
daffydoug
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On 2008-01-06 15:11, Cliffg37 wrote:
I have always wondered what kind of idiot are there? For years people have been asking me, "what kind of idiot are you?"


"Why, is there more than one kind?" (With thanks to Curly Howard of three Stooges fame)
The difficult must become easy, the easy beautiful and the beautiful magical.
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