So the SPAMS are increasing everything and we are......

Discussion in 'Current Affairs, News and Analysis' started by old_bloke, Jun 24, 2004.

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  1. Quite amazing.. not the real world of Bluppet et all.

    See the US Senate has decided to pass the following...

    We however get regiments disbanding but not before another go in the sand pit, Army reducing by x and the latest from the Crabs ...9,000 reduntant. To be announced in the House as the Bluppet goes on his hols.
  2. Would they take ex-UKLF?
  3. Can't we go back to the Inter War years between WW1 and WW2 where armies, navies and what ever airforce they had was capped. Prity much what we did to the Krauts. That way at least we wloud not keep looking like the poorer cousin to the Spams
  4. The US federal government is spending the nation into ruin.

    W's first term has seen the largest inflation-adjusted increases in federal spending since LBJ's "Great Society," '64-'68.

    Since W's inauguration, non-defense discretionary spending has grown 25.3%. "Defense" spending has grown 19.7%.

    9/11 may have instilled an attitude of supine acquiescence in governmental self-aggrandizement.

    The dollar cash index contract (^DXYO) trades on the New York Board of Options Trading. It is a "proxy" for the value of the US dollar, against the currencies of major trading partners, in the foreign exchange market.

    As you can see from the chart linked below, the dollar has declined in recent years.

    It stood at about 120 as recently as the spring of '02. It closed Friday at 88.8.

    At this rate, we could end up with an inconvertible, shunned currency, troops garrisoned in all sorts of unlikely places around the world, an enormous amount of military hardware, and an economy producing a real output of goods and services equal to, say, Denmark.

    Sort of like a chilly, borscht-eating empire that foundered not too long ago.
  5. Asked a Spam on Saturday how big he thought our Army was considering how many deployments we have and operational commitments.


    Welcome to the real world.
  6. Having a gander at Dixie's post there. A question one might have to ask is this.

    If the dollar continues to decline, there will be a loss of foreign confidence. If this happens concievably they will start converting the large amounts of dollars tied into 'safe currency' into others.

    IN theory, as I understand it, would this not be somewhat damaging to the economy of the US?

    As for the defence cuts. It'll always be that way. There will be reductions then increases then reductions. What does worry me is the reduction in, for lack of a better word, capital assets.

    If we continue to sell off bases and the land, if we continue to sell off defence property and city buildings. What happens when something bad does happen and we need this space?

    A military can always shrink but if there's nowhere for it to grow back into it could be a quite awful state of affairs.
  7. A sustained decline of the US$, in the foreign exchange market, would have detrimental consequences within the USA.


    Oil prices are quoted in dollars on the international market. Nevertheless, I've been reading that it appears that Middle Eastern producers, although quoting in dollars, are pegging the price to the euro.

    So, if the dollar slides against the euro, it translates into higher oil prices for people paying with dollars.


    China has pegged the renminbi to the dollar. The Chinese central bank has purchased dollars, in unlimited amounts, at a fixed exchange rate. The Chinese authorities have been reluctant to allow the renminbi to float upwards to a rate that would spare them the need to accumulate so many dollars.

    Why are the Chinese authorities so keen to accumulate a rapidly growing pile of American paper?

    The cheap renminbi encourages Americans to buy Chinese merchandise, sustaining Chinese employment, and financing China's rapid industrialization.

    China is, however, paying a price for overvaluing the US dollar and giving away real goods in exchange for depreciating paper. The day may come when China will feel obliged to let the dollar and the renminbi find their own level.

    A rising renminbi will necessarily mean rising prices at places such as Wal-Mart, half-facetiously referred to as "The Great Wal-Mart of China."

    A rising renminbi would mean domestic higher prices for textiles, clothing, shoes, sporting goods, furniture, toys, and electronic goods within the USA.


    Gold is another commodity whose price is quoted in the London market in dollars per ounce.

    If the dollar falls, say, against the euro, euro holders are thereby enabled to buy more gold with a given quantity of euros. The decline in the euro price of gold stimulates purchases. The rising demand for gold bids up the dollar price of gold.

    Our financial authorities in the USA do not like to see a rising gold price.

    At the end of World War II, there was organized a monetary arrangement known as the Bretton Woods Agreement. It implemented a dollar standard as a replacement for the pre-war gold standard.

    No longer did the principal nations keep their banknotes convertible into a specified quantity of gold. Instead, they pledged to maintain convertibility, at fixed exchange rates, in dollars. Only the USA pledged to maintain convertibility into gold at the rate of $35/ounce.

    This might have worked if US financial authorities had shown some self-restraint in limiting the creation of dollars to an amount bearing a reasonable relationship to available reserves of monetary gold.

    Self-restraint was not, however, much in evidence. The US government financed a substantial part of its budget through a process of credit expansion which could reasonably be compared to running paper money off of a printing press and spending it.

    As foreign-held dollars presented for payment threatened to drain the last of US gold reserves, in 1971, Pres. Nixon shut the gold window and suspended redemptions.

    Since then, the government has been very touchy about the notion that its broken promise of gold convertibility in any way damaged the value of the dollar. It has always insisted that the inconvertible "fiat" dollar is as good as, or better than, gold.

    When the $ price of gold rises, that rise constitutes a demonstration that the world is not fooled by this fiction. It's an unmistakable clue that the dollar is ailing. It tends eventually to get people's attention and stimulate a dollar sell-off as a self-enhancing cycle.


    Foreign central banks, particularly those of China and Japan, have been supporting the dollar in the foreign exchange market for various reasons, including the desire to promote their own export industries.

    These central banks invest the dollars in the market for US Treasury bonds and bills. The enhanced demand for these US government debt instruments raises their price. The "reciprocal" of a higher price for debt securities is a lower rate of interest.

    By bidding up US Treasury bills, Japan and China have been holding down US interest rates.

    Thus the borrowing by US households, businesses, local governments, and the national government has been subsidized through the thrift of foreigners.

    But if it should become apparent that the dollar is in a tailspin, that benign trend could reverse itself. Interest rates could accelerate upwards raising the expense of borrowing dollars.

    Such an increased interest expense would come at a particularly inconvenient time for the federal government as the sheer volume of it its borrowing has risen rapidly.

    Billionaire Warren Buffett, who knows a few things about investing, has declared openly that his doubts about the dollar are causing him to reduce his exposure and look for assets denominated in foreign currencies.