The Laboratoire Européen d'Anticipation Politique / Europe 2020 (LEAP), a European think tank with an impressive track record of predicting major world events, estimates there's an "80% probability that the week of March 20-26, 2006 will be the beginning of the most significant political crisis the world has known since the Fall of the Iron Curtain in 1989, together with an economic and financial crisis of a scope comparable with that of the 1929 Stock Market Crash."\n\n \n\nMarch 20 is the date set for the opening of the Iran Oil Burse (IOB), an international exchange that will permit oil to be purchased in Euros. Currently, oil can only be purchased in dollars, a condition that has artificially inflated the value of the dollar on world currency markets. \n\nAllowing oil to be purchased in Euros will have a strong negative impact on the dollar's value, triggering what LEAP calls a 1929 like financial crisis as nations scramble to unload their dollar reserves and Treasury bonds in favor of Euros. (Currently 49% of America's national debt is held by foreign countries, up from 18% in 1982.) \n\nThis could cause the USA to "monetarize" its debt (print enough extra dollars to cover it) flooding the world financial markets with what LEAP calls "monkey money." It's roughly equivalent to you or I writing a check to pay a debt, knowing we don't have any money in our account, but on a much grander scale. When a nation does this, it creates an inflationary spiral that requires the printing of more money, causing more inflation, and could become a vicious game of musical chairs that soon leaves everyone standing. \n\nThe Federal Reserve has already announced that beginning March 23 it will stop publishing its regular report on the amount of US currency in circulation, called M3, so that no one will know just how many dollars are in play. Recent reports are already showing a significant increase in M3 leading experts to believe that the printing of monkey money has already begun. It's known that new Federal Reserve chairman Bernanke favors this approach.
124011
Chicken Little is exactly right.\n\nHave you actually read the internet articles?  \n\nit starts with:\n\n"its attempt to establish a world empire dominating every nation on the planet, the U.S. has exhausted its ability to finance the expansion and the country now faces imminent financial collapse. From all indications, it looks like 2006 will spell the end for America."\n\n\nWas this article written from a Cabin in Montana, or a second story apartment in France?
487127
It would like to be thought that B would the answer but this is not true. It's to put on as a front as though Europe is united but in reality it's made for competition against the dollar. US currency cannot be challenged by any standalone European nation. However, together in a union the "Euro" has the closest exchange rate of any other foreign currency at 1.27026 to every dollar.
563701
Actually lagging indicators aren't as bad as you think.  The unemployment rate has been steady at or below 5% for some time now, T-bond rates around 5% are high compared to a year ago but moderate in any historical context, and core inflation is up but not dramatically, at least not yet.\n\nI don't think we're headed into a plain old recession like in 1990.  My speculation is the gross mismanagement of US finances will build into some crisis with highly unpredictable results, like maybe a collapse in the dollar.  A perceived crisis would clobber the stock market, but not necessarily in a long bear market like 2000-2003.
38499
The dollar is not directly linked to the stock market. It is a strong currency in that many developing countries, including China, stockpile dollars to give them some "hard currency" strength. The danger is really the longer-term decline of the dollar versus other "hard currencies" such as the euro and yen. The dollar is also strengthened by its ties to various commodities, such as oil, which is denominated in dollars. If Russia and the Middle East countries begin selling oil to Europe or China for euros or gold dinars in a big way, then the dollar would lose more of that stability. Inflation and investors' currency speculation are additional variables. But it is unlikely that the dollar would crash overnight, because those that you might think would benefit from this (such as China) would actually lose billions and billions overnight if all their dollar holdings lost huge value. Longterm erosion in the dollar value is much more likely.
319505
Dollar Diplomacy. Started by President Taft. But the U.S. doesn't/can't just keep printing more money. It doesn't work like that. I wouldn't call it "fooling other countries" though. It's more like investing in what the U.S. wants.
608372
There are cyclical theorists that have charted American history in 80-year cycles (I recommend the book "The Fourth Turning" by William Strauss and Neil Howe).  If their 80-year cycles hold true, then the U.S. will face another Great Depression/World War II-level crisis within the next 5-15 years.  Every time the U.S. faces a crisis like this, it runs the risk of bringing about the end of our nation (or at least as we know it.)  How long will Pax Americana last?  No idea, but we'll have our next challenge soon.
125256
So i guess you know what forex trading is.\n\nFutures and options and forwrds, the easiest, are a kind of derivatives. Derivatives are a financial instrument whose value derives form the value of other, more basic underlying assets.\n\nNow, forwards are contracts in which the price of a commodity or currency is set for the future. It has to do with expectations of the market, and how the market thinks, based on information today, the price of those commodities or currencies will be in a certain date.\nLets say the exchange rate of mexican pesos for us dollars today is $11.09. That´s the spot exchange rate. Now, lets say you and i agree that in june 2006, im your gonna sell me american dollars at an exchange rate of $11.1828. If my expectation is the peso will be higher, im gonna make a deal with you. So, the future of the pedo, for june 2006 will be $11.1828. Imagine our deal, but not made between us, but between thousands of dealers, in the Chicago MArket.\nCompanies use futures a lot as a way to protect themselves. I believe in english its called hedging. If an american firm sells water tanks to a firm in France, but the payment isnt due untill 45 days later, both companies would like to agree to make the exchange of euros for us dollars at a future exchange rate. That way they now exactly how much they owe or get. The same with commodity prices. A future of the price of oil is nothing more than a contract agreeing on the future price of the transaction. Funny thing is, you and i can agree on an oils future contract, where im selling and your buying, but the barrel of oil is never transacted. What we do is, lets say the future price of oil for august is $73 usd. im selling, you are buying, and we agree on that price. Come august 31st, the real price of oil is $78 usd. since you are buying, you win $5 bucks per barrel right? And i lose % per barrel... so instead of giving you a barrel of oil you cannot even store, i just give you $5 per barrel. _If the real price had been $65, i would have won $8 per barrel, and you lose $8 per barrel.\n\nThe same with futures. MAjor difference with forwards is that an exchange of assets is required. Contracts are pretty much standarized. The delivery, kind and quality of product, etc is all defined. Largest exchanges are made in the Chicago Board Trade. Futures include a los of prodcts... live cattle, sugar, coffee, gold, cooper, aluminium, etc.\n\nOptions are a little bit harder. There are 2 basic type of options: call options, giving the holder the right, option, to buy an asset at a certain date at a certain price. Put options, giving the holder the right, option, to sell an asset at a certain date at a certain price. For example, lets say i buy a call option to buy in 3 months stock of yahoo. The actual price is, just an example, $10 bucks, and my call option gives me the option to buy at $12. The price to buy that option for 1 share of yahoo is worth $1. If 3 months pass, and the price of the stock is $11, i certainly wont take my option to buy the stock and lose $1, the initial investment on the option. But if the real price is $15, im going to take my option, buy the stock at $12 and sell it at $15, earning $2. \nJust be careful cause there are american options and european options... european options can only be excersied at the end of the contract, ehile american options can be excercised whenever in the life of the option.
147074
Why would the Bush Administration risk widening Gulf War II to include Iran when it still has the chance to limit its losses to Iraq? The most popular explanation is that the US wants to pre-empt the Iranian decision to set up a Tehran oil bourse to facilitate the selling and buying of oil in euros instead of US dollars.\n\nThe idea is that this would cause a chain reaction in which more and more oil producers and their customers would trade in euros and eventually force the US to pay for its oil in euros too. This would mean the US would have to do what every other country in the world has to do, namely earn foreign exchange through exports in order to pay for its oil imports.\n\nLast year the US trade deficit for petroleum products was about $300 billion. While the $US remains the international reserve currency and oil continues to be traded in dollars, the US can pay for its oil simply by printing more IOUs in the form of US treasury bills.
199897
Yes I heard about it. All immigrants should suport it. According to the anti-immigrant people, "immigrants are a drain on society."  If this is true, then during the day on May 1st the stock market will surge, and the economy will boom.  If not, we prove them wrong once and for all.  We know what will happen!\n Don't listen to those people who said that they will go and buy more things on that day, if they said that it is because they know that it will affect the country!
258029
http://www.ask.com/web?o=0&qsrc=19&q=Will+the+equalization+of+the+%22US+Dollar%22%2Fcanadian+dollar+create+arbitrary+opportunities+when+the+2+currencies+merge%3F
382142
You say the value of each of the currencies have gone up.  Against what currency?\n\nThere are 8 major benchmark currencies: USD, EUR, JPY, GBP, CHF, CAD, AUD, HKD \n\nUsually when USD goes up CAD goes down. So if you expect to gain on this, you would want USD value to fall.\n\nAs for the other two currencies, my question is why would you want to hold these?
149149
The almighty dollar is more important now than what will happen in the future.\n\nIt's like the oil companies.  We'll be out of oil in 50-60 years, but right now, we can make money off of it, and we'll just let the younger generation take care of it.\n\nWell, I AM the younger generation.  About the time I retire, the world will have almost NO oil left.  That will be a catostrophic event.  Homes will go cold, tractors will not run, and no one will be able to get to work.  They need to fix this now.\n\nIt's the same with Global Warming.  Except it's a LITTLE further off...hopefully.\n\nI'm sorry for getting a little off topic.  I;'m using it as a point, and I hope everyone understands.  I'm not one of these crazy, neo-enviromentalists; I actually am interested in politics.  And all this has to do with politics.
136853
You've tapped a very complicated subject my friend - I think all of macro economics is vague and all of the smartest economists don't agree on what is going on... So I don't think it is intentionally vague - any more than the rest of the economic field....  Also China owning US debt began when they became part of the WTO (I believe this may have happened on Bush's watch, but was started by Clinton - i.e. not a republican/democrat thing.) I don't know how easy it will be to find - but seems like to answer your specific question you would want to understand the ownership of US treasury securities.  If you are just curious and want to know about this stuff - China does hold a large portion of our debt and that is because we spend more money than we have and they save more money than they make.  We have trade deficit with China because we want to buy their goods, because they are cheap.  In the past they have been more than happy to lend us the money to do so.  But if we don't watch it, our creditors are going to start saying no.  The opinion of congress right now is that this is China's fault and that they are a currency manipulator who should let their currency appreciate.
90873
Money is only as good as the willingness of others to accept it as a medium of exchange.  So some countries could print money and it wouldn't buy anything.  That was the case of the United States when it was founded.  There were so much US Currency outstanding that it was said to be "Not worth a Continental".  Alexander Hamilton did a lot of reading and concluded that a central bank could borrow money, issue bonds backed by the full faith and credit of the fledgling nation (backed by the way by the power of taxation), and then issue currency in reasonable amounts against that.  He organized the first central bank in the United States, which, in time, evolved to the Federal Reserve.  As a result our currency has, for a long time, been one of the world's standard currency, so-called "sound as a dollar".  \n\nNow, with the United States spending more than it produces, we generate multi-billion dollar balance of payments deficits, especially with China.  Invevitably the value of the Chinese currency will increase and the value of the dollar will decrease.  The increased demand for Chinese goods and services will result in more dollars chasing that demand and therefore, the relative price of those goods and services will increase by the value of the dollar decreasing.\n\nSo, yes, countries can print money, but it is worthless unless other countries will accept it.  And it is not very worthwhile inside the country unless people accept it as a medium of exchange.  So they borrow hard currency like dollars or euros from the World Bank to finance their development and infrastructure.
43519
> Is there a good website/source that predicts the stock market outlook in 2006 (e.g., 3% or 7%)? \n\nThere are some timing services with good track records, but they don't give out their predictions for free.  The good ones don't make predictions a year out--too many things can happen.\n\n> Is the US currency likely to depreciate in 2006?\n\nI can't put a time on it, but eventually the holders of dollars will tire of US financial mismanagement and trade them for yen, euros, or other currencies.  The editor of Barron's had a scary opinion piece on that topic last week.  \n\n> Which sector will perform better than others (e.g., healthcare, consumer staples, financial, energy)?\n\nI've put my money on alternative energy and organic/health foods.  Alternative energy will take a dive if oil goes to $30 a barrel, but steady oil prices will support them for a while.  I admit they're frothy now so this may not be the time to buy.  Whole Foods Market is in a slump but I'm looking for a bottom to buy.  Wild Oats is coming back from the dead.  Hain and United Natural Foods are doing well.  I think this sector will outperform in almost any economic scenario, while alternative energy needs scarcity to thrive.  The potential reward in alternative energy is higher than food, however.  For the very long term, worldwide water shortage is going to mean incredible profits for a few companies.  Start researching now, before the financial press latches onto this story.\n\n> Or, are large-cap stocks expected to outperform small-caps? \n\nLarge-cap vs. small-cap outperformance is a very slow cycle.  I expect small-caps to keep the lead for some time. Right now I'm holding IWM (Russell 2000 fund) and trading the Diamonds (Dow Jones Industrials fund)--buy on pullbacks and sell rises for a small profit.
125839
one answer: currency risk
339269
As one of my finance professors so clearly stated it... "In God We Trust".  It is on every piece of paper and coin in the US.  There is no backing or "gold standard" of the almighty dollar anymore.  It is really just a highly accepted form of trade for a common tool for bartering.