BUSH WANTS TO SAVE THE US DOLLAR

Ah yes, the economy! It's that thing you're sleeping on, America! It's that thing your precious president (he's not my president!) has peed on while you slept. Sure, the real leader of the free world is Alan Greenspan, but Bush's lower taxes for the rich and hike them for the poor does nothing for the economy. In fact, it stops us poor folks from spending which is what makes the economy go. The economy isn't built entirely on loans given to small and big businesses--it's based on consumerism.

Giving us $300 back in 2001 didn't help worth a damn, obviously. In fact, the dollar has gotten so weak that Silvio Berlusconi, the Italian Prime Minister, had to come over, pull Bush aside and say "What the hell's goin' on, man? Your weak-ass dollar is making Europeans buy more American shit and less European shit! You've got to nip that shit in the bud, bro!"

OK, so I'm paraphrasing. The point is, when you're starting to drag other economies down, you're in a seriously bad situation.

So, check it out--AMERICA, the biggest economy in the world is starting to suck the European economy out to sea with some sort of economic under-tow.

The (vaguely) good news is that Greenspan (The Man) is on the job. He's upped interest rates which means people won't be borrowing money as much. Now, at first I thought "Whoa--hang on--if people are borrowing less, it means they're spending less, right? Doesn't that weaken the economy?"

Then I remembered how loans work. For every loan you take out, that money is effectively created from nothing. I can't remember the exact ratio, but when someone deposits a dollar to a bank, that bank can turn around (I think) and loan that dollar out 10 times--effectively creating 9 more dollars from nothingness. Stopping people from borrowing money means that less of this will go on.

Less money being created means less money period. Less money period means that the money is more valuable.

The funny thing is what a Reuters reporter said in this article--pay attention to the last sentence of this excerpt:

President Bush said on Wednesday a renewed drive to cut U.S. budget deficits should help the weak dollar and that Tuesday's Federal Reserve interest-rate hike showed Alan Greenspan's awareness of the greenback's plight.

Bush made the comments after talks with Italian Prime Minister Silvio Berlusconi, who came to Washington intent on telling Bush of his worries about the euro currency's export-sapping strength against the dollar.

The dollar's weakness is troubling Europe because the relatively lofty euro drives up the costs of its exports to the United States and makes U.S. goods more attractive there.

It was rare for Bush to speak at length about the dollar and equally unusual for him to cite a Fed action.

Hm, why could that be? OH YEAH, because he's AN IDIOT. He doesn't read the papers and probably doesn't even understand what I just explained above. The same article then quotes King George--I think this is the single most complicated series of three sentences the man has ever uttered, check it out:

"We believe that the markets should make the decision about the relationship between the dollar and the euro," Bush said.

"Therefore, to the extent that the federal government is involved with making the conditions such that a strong dollar will emerge, we'll do everything we can in the upcoming legislative session to send a signal to the markets that we'll deal with our deficits, which hopefully will cause people to want to buy dollars," he added.

Well, nice to see he thinks using capaign rhetoric will still work for him now. I mean--do you want to break down how you're going to do this?

Oh that's right--I forgot for a moment--you're an idiot.

Anyway, you can check out the whole article over at the Reuters website.

From the Reuters.com website:

Bush Pledges to Address Weak Dollar, Cites Fed

Wed Dec 15, 2004 03:33 PM ET

By Steve Holland

WASHINGTON (Reuters) - President Bush said on Wednesday a renewed drive to cut U.S. budget deficits should help the weak dollar and that Tuesday's Federal Reserve interest-rate hike showed Alan Greenspan's awareness of the greenback's plight.

Bush made the comments after talks with Italian Prime Minister Silvio Berlusconi, who came to Washington intent on telling Bush of his worries about the euro currency's export-sapping strength against the dollar.

The dollar's weakness is troubling Europe because the relatively lofty euro drives up the costs of its exports to the United States and makes U.S. goods more attractive there.

It was rare for Bush to speak at length about the dollar and equally unusual for him to cite a Fed action.

He said Tuesday's rate increase, the Fed's fifth since June, was "a signal to world markets that the chairman (Greenspan) is also aware of the relative currency valuations between the euro and the dollar."

Treasury Secretary John Snow said Bush was simply reaffirming the administration's strong dollar stance while outlining the fundamentals that underpin the policy.

"Deficit reduction -- short-term, long-term -- and obviously good monetary policy helps create the foundation for a strong economy," Snow said on CNBC television, adding that the Fed has pursued "good, sound monetary policy."

The Fed declined to comment.

Ted Truman, a senior fellow at the Institute for International Economics who served as a Treasury official in the Clinton administration, said he did not think Bush meant the Fed raised rates to support the dollar.

"The right interpretation most likely is that he was saying you can count on the Federal Reserve to run monetary policy responsibly and we'll run fiscal policy responsibly," said Truman.

BUY AMERICAN

Bush said one way to combat the U.S. trade deficit, which hit a record $55.6 billion in October and which is a major factor behind the dollar's slide, was to buy American.

"There's a trade deficit. That's easy to resolve. People can buy more United States products if they're worried about the trade deficit," he joked.

Bush said working with Congress to cut the budget deficit and reform Social Security would signal to financial markets that the United States truly supports a strong dollar.

"We believe that the markets should make the decision about the relationship between the dollar and the euro," Bush said.

"Therefore, to the extent that the federal government is involved with making the conditions such that a strong dollar will emerge, we'll do everything we can in the upcoming legislative session to send a signal to the markets that we'll deal with our deficits, which hopefully will cause people to want to buy dollars," he added.

Whether that strategy will work is unclear. Bush's plan to create private Social Security accounts for younger workers could cost some $1 trillion to $2 trillion over a decade, and the administration has indicated it will borrow the money.

Billions of dollars more in Iraq funding, expected to be requested in January, may further bloat the deficit.

Bush said Berlusconi raised the topic of currencies in their Oval Office talks.

"I told him that we're going to take this issue seriously with the Congress. The best thing we can do from the Executive Branch of government in America is to work with Congress to deal with our deficits," he said.

The U.S. dollar was trading around $1.3415 against the euro on Wednesday. It has fallen about 5 percent against the single European currency this year and about 4 percent against a basket of major currencies. (Additional reporting by Glenn Somerville)

© Reuters 2004