The stagnant MP Essay Example for Free

The stagnant MP EssayHence, given the stagnant MP, plus the fact that the bailout is universe financed by foreign borrowing and by printing, there is no question that the dollar bill will fall. Since 2000, the dollar has lost 40% of its value against the Euro. In the chart under, the dollar is compared with the Euro during the bailout from 28 December 2007 to 27 January 2008. The at a lower place graph does indicate some recovery of the dollar against te Euro, only when there can be no doubt as to the long term weakness of the US currency. Apparently, there is some flaccid increase in confidence that the bailout might make the US economy more solvent, but the below information is too limited for a full understanding. From the beginning of the bailout until mid November of last year, the US debt increase almost $958 billion. Add to this the record breaking trade deficit of almost $1 trillion, and the dollar is in serous trouble. The increase in public debt due to the bailout out is destroying the dollars value. According to Asia give-and-take (2008), the US is flat committed to over $8.95 trillion dollars to the bailout. The total US economy was around $13 billion, with the full debt at about $10 trillion. About 61% of this debt was held by foreign investors, the mass Asian. Since trillions of dollars are held by Asian investors, and debt in the US (both private and public) reaches levels of complete insolvency, the Asians will insist on eliminating dollars as a method of doing business and hence, the dollar will not only loose value, but collapse, leading to a crisis of Argentinian proportions in 2009 (Asia News, 2008).This year, the same author at Asia News writes But Asia now understands that the increase of money supply decreases the intrinsic value of a currency. That is why China is seeking a possible and rational attempt to decouple Asian currencies from the dollar, as recent news stories report. (Asia News, 2009). Hence, the math is wide-e yed too many dollars in circulation, too much printing by the Fed to create the bailout liquid means the devaluation and eventual collapse of the dollar, and the US taxpayer is powerless over the private Fed as good as the foreign investors that are publically now saying they will eliminate dollar reserves.The naive realism is this once there is a sense that a country is insolvent, and that it simply cannot pay its debts, compounded by a massive bailout that the country cannot possibly finance on its own, investors run to get rid of dollars. so far worse, capital fight can result, where money begins leaving the insolvent country, in this case the US, investing sooner in Russia, China, Thailand or the EU. Hence, the bailout is merely the tail end of a long fall in th US dollar, a powerful symbol of the US government and corporate governance to control investment and spending..Appendix Chart of the dollar against the Euro Source Exchange Rates. org. References Maurizio, DOrlando . US Debt Approaches Insolvency Chinese Currency militia at Risk. Asia News. December 19, 2009 _______. Chinese Yuan Set to Replace Dollar. Asia News. January 3, 2009 Perry, John. Fed Keeps Banks Afloat in silver Market. Reuters. September 25, 2008. Corbett, John. Bailout by Stealth. The Corbett Report. September 30, 2008. Beck, Frank.Time to Devalue the Us Dollar. Forbes. Devember, 2008 Engdahl, William. Federal Reserve Sets Stage for Weimar mood Inflation. Globalia Magazine. February 2, 2008 Rodgers, Lee. Elite Cant Bail Out Everyone. Funny Money Report. September 17, 2008. Warring, David. Arguments for and Against the Bailout. Informed Trades. November, 2008. The focalise for Responsive Politics. Banking on Becoming President. Open Secrets Reports October 27, 2008.