Tuesday, March 25, 2008

Finally An Accurate Picture of the Euro/Dollar Relationship....

For those of you out there in the blogoshpere who felt that perhaps I was being too hard on the dollar and its devaluation, I finally found a picture that represents what is occurring between the dollar and the euro at this moment....


Basically, yes, the Euro is taking the Dollar in well you know...it is self-explanatory. And just as Nicholas Sarkozy has commented this will not be good for the United States and from November until now has risked breaking out into a full blown trade war between the trading partners....

Now that the risk of a trade war is settling into the reality that there is a trade war one can only speculate that currency fluctuations will grow in proportion to the intensity and amount of conflict this causes between the EU and the US. Fred Bergsten said as much in 1997 and at the time, many in the current administration were either not listening to him or not paying attention.

At its best today 1.00 U.S. Dollar = 0.6406 Euro. At its worst 1.00 U.S. Dollar = 0.5993 Euro. With all that volatility, what has gone up? Predictably both commodities and gold have risen at faster than average rates since 2001 causing an increase in the global core inflation.

Side Effect: The Global Dairy Wars

It is interesting that a "free market" promoting country, would use price controls to try to set things right, but that is exactly what the United States is doing in the vein of both China, Venezuela and the USSR. I find it a little more than ironic that after penalizing Cuba, China and Venezuela for using price controls, we are using the same types of price controls on milk and durable goods. The Milk wars would be coming, if we were not producing enough, but thankfully the US can still produce enough milk for the entire world, but you will not be paying pennies for it any more, as long as the "socialist cartels" operate the dairy business like OPEC.

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