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Revisit to 4/18/06 & the "New Internet"

Published:

 All this talk of “remaking” the internet with more emphasis on security etc. is, in my opinion, more about protecting gov’t control over who can find out what, rather than “protecting the children”. What kinds of things might they prefer you not know, or be able to put together? Well, here’s an example:

   

Back on 4/18/06, I posted entry #12 about the price of precious metals and the so-called value of the American dollar in relation to a couple other currencies. I said that the Canadian Dollar, American Dollar and the Mexican Peso would all go down the toilet together, and not by accident. 

   

I figure a year later is a good point to revisit the issue, and see where we are. Keep in mind that it took 40 years to get a united currency of Europe. Most people don’t have that kind of span of attention.

   

Sometimes these numbers don’t seem so far apart, but remember that you have to multiply by billions or trillions to get the true picture.

   

My sources are x-rates & kitco. (New York closing prices)

 4/18/2006 4/17/2007  
 per dollar per doller
gain 
 USD 1.00000 1.00000 0.00%
 CAD 1.14210 1.12930 1.12%
 MXN 10.9875 10.98700 0.00%
 EUR 0.81470 0.73697 9.54%
 UK 0.56300 0.49848 11.46%

Not much has changed with the Mexican peso. They seem to be holding a peg to the dollar. Canada, a resources economy, has edged up slightly. But look at everyone else. The Euro & Pound have zoomed near 10 percent. Unsure? Here is the formula:

   

Percent Loss in purchasing power = (1-(1/(old value/new value))) * 100

Some may think that it’d be simpler to take the new value divided by the old and subtract 1. It would be simpler and it would also be incorrect, for what we’re measuring. It would tell you the GAIN in the other currency. The two numbers are slightly different for small numbers but grows as the percentage difference increases. Quick example:

     

If Currency A moved up 0 percent vs. Currency B then
Currency B has moved down 0 percent vs. Currency A

BUT

     

If Currency A moved up 100 percent vs. Currency B then
Currency B has move down 50 percent vs Currency A

Therefore, the formulas are not interchangable.

   

 I will use the “simpler” formula in a minute, though. Some of you can guess why. Wink

   

Anyway, the reason you give a rat’s rear end, in the first place, is because all of these different monies are competing for the same (finite amount of) goods. Imagine the value of your house DOWN 10 percent, for no apparent reason. Well, the reason is that more people want to live in a different neighborhood, because houses in yours are being made on smaller and smaller lots.   

   

Someone points out that certainly the politicians across the pond are just as inept and crooked as the ones here. Surely they are printing “money” as fast as their presses will run, too. How do you measure paper against paper? You use something no one can print….Drum

Taking the dollar price of gold and combining it with the exchange rates gives us the price of gold in the local currencies. (New price / old price) - 1

  PRICE IN LOCAL MONEY
  4/18/2006 4/17/2007gain 
 Dollar Au
 $ 619.30 $ 688.30
 11.14%
 CAD Au
 $ 707.30 $ 777.30
 09.90%
 Peso Au
 $6,804.56 $7,562.35 11.14%
 Euro Au
 € 504.56 € 507.26
 00.53%
 Pound Au
 £ 348.67 £ 343.10
 -1.60%

   

What looked like a 10 percent gain in gold is really a loss of purchasing power in the U.S. dollar (and Canadian dollar, and Mexican pesoRoll Eyes). As far as people outside of North America are concerned, the yellow metal has gone mostly nowhere, but the dollar is tanking. With the 2nd chart, we can also see that what looked like a gain by the U.K. pound and the Euro are also not GAINS for THEM, but LOSSES for US. It will only get worse as foreigners dig out the dollars from under their matresses and begin to trade them in for something (Leavinganything!) better. 

The same thing happened in Germany in the late teens & 1920’s. The market was going up, up, up (booyah! & goldilocks) in local money but sideways to everyone looking in from outside. The Germans ‘fixed’ the problems by controlling the media and lying about the numbers.

We all know how that turned out.Thud


Entry #28

Comments

1.
Comment by pacattack05 - April 18, 2007, 2:44 pm
I agree. Big Daddy wants big brother's little cousin to babysit....LOL
2.
truecriticComment by truecritic - April 18, 2007, 3:34 pm
Other than the fact that I remember it, I don't have any website to back up the British Pound exchange rate.   I remember it being 2x or even 2.5x the US dollar. So it is back to approx where I remember it being.

I also remember Canadian dollars being worth MORE than US dollars at one time.

In either case, back when that was true, I still had more money in my pocket than I have now.   Probably around 1972 is when I noticed that it was getting harder and harder to survive financially.
3.
Rick GComment by Rick G - April 18, 2007, 4:22 pm
Very interesting analysis. Thanks.
4.
time*treatComment by time*treat - April 18, 2007, 9:39 pm
Most currencies don't go straight down until the very end. They bob lower and lower like a boat with a small hole in the bottom. Also, the Canadian dollar is tied strongly to the price of commodities & oil because that is a big chunk of their econ., and many of those had a sharp run-up during the 70s. Nixon took us off the gold standard completely in the early 70s.
The worst part may be that the end is NOT near. Things can get much worse.
A good source for comparing Currency A to Currency B is xe.com

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