Partisanship versus reason

**iravedic** · 09-19-13, 12:03 PM

At least with respect to the point on the "dollar is not 'very weak' historically speaking" Trigger is correct. Not sure what you are reading Laz, but there are numerous sites where you can look at the dollars performance against foreign currencies historically and make your own judgment.

As to the OP - the article was stupid. The study, however, was very interesting. The purpose of this type of research is to inform individuals, it helps people self identify their biases and work to overcome them in an intellectually honest fashion. Something many in this forum could use a healthy dose of.

So ignore the OP and read the Study.

Good stuff phidan - but next time go to the source first

**AetheLove** · 09-19-13, 01:11 PM

Originally Posted by iravedic

At least with respect to the point on the "dollar is not 'very weak' historically speaking" Trigger is correct. Not sure what you are reading Laz, but there are numerous sites where you can look at the dollars performance against foreign currencies historically and make your own judgment.

Agreed that this sort of data is easy to find.

Whenever someone brings up the relative value of the US$ vs other currencies my first question is "and why does that matter?".

Though the relative value of the dollar is important, it's not always relevant. Sometimes having the dollar get weaker is good news for Americans and for US companies. Sometimes it's bad news, and sometimes it's "meh." But my experience is that most people hear "weaker" and think that means "bad", which simply isn't true.

Originally Posted by iravedic

As to the OP - the article was stupid. The study, however, was very interesting. The purpose of this type of research is to inform individuals, it helps people self identify their biases and work to overcome them in an intellectually honest fashion. Something many in this forum could use a healthy dose of.

So ignore the OP and read the Study.

Good stuff phidan - but next time go to the source first

Yeah, good stuff.

Partisan is easy. Reason is hard.

Life is busy, so most people (for most things) pick a simple model that seems to work most of the time and stick with that. Each of us likes to think that we have strong intellectual powers (and maybe some us do), but it's a full day and I simply don't have time to collect and analyze data for every choice - and I know how to get a good sample and run a multinomial probit. How the rest of you poor fuckers can wend your way through life without getting lured by the Sirens and punished by the Furies is beyond me. [1]

So, yes please, I'll have the turkey sandwich on whole wheat. It's organic? Good. I need more organic. What? The turkey is also sugar-free?

Nice.

Sugar is bad. What kind of ice cream do you have today?

Even when we have the time, Reason is hard. Cutting yourself loose from dogma feels liberating at first, but then you realize you've plunged yourself into a sea of uncertainty. And it's easy to be wrong in that sea.

When you were anchored to dogma you were definitely wrong, but at least you didn't suffer from uncertainty. Dogma is comfortable. With dogma, you don't have to worry about uncertainty and you remain blissfully unaware when you're wrong.

From what I can see, you get laid just as often too.

In the sea, logic is necessary but it isn't sufficient. Intuition helps, except for when the correct answer is unintuitive. Of course people tend to stick with their model even when confronted with evidence that they're wrong. Changing your mind is a lot of work and most of us don't like to admit we were wrong. We want to be on the right side. Which side is the right one? Why, the one we're on. Duh.

Everyone has to find their own way. I find that, out here in the storm of reality, the two most valuable things are trust and humility. I tend to trust people who work hard to learn things, but aren't emotionally attached to being right. It's always true - ALWAYS - that the easiest person for you to fool is yourself.

Cheers,

AetheLove

[1] it turns out that strong analysis skills are still a poor defense against mythological doom.

... and don't laugh at mythological doom. You know all those stories the Greeks told us about the Gods bringing terrible vengeance to bear on arrogant humans or willful humans or humans who simply happened to be in the wrong place at the wrong time? Every last one is true.

**Red_Lizard2** · 09-19-13, 02:08 PM

Originally Posted by AetheLove

Sometimes having the dollar get weaker is good news for Americans and for US companies. Sometimes it's bad news, and sometimes it's "meh." But my experience is that most people hear "weaker" and think that means "bad", which simply isn't true.

Isn't it good to have the dollar weaker during a recession? I know there was a story months back about Sweden's currency being weakened was the reason they were doing better then most of the countries since the "global recession." But not much of an economist so not overly sure, just going off others words.

**PvtPrivate** · 09-19-13, 02:17 PM

Partisanship is stupid! Except for the side that agrees with me.

**WickedTribe** · 09-19-13, 03:50 PM

Originally Posted by Red_Lizard2

Isn't it good to have the dollar weaker during a recession? I know there was a story months back about Sweden's currency being weakened was the reason they were doing better then most of the countries since the "global recession." But not much of an economist so not overly sure, just going off others words.

Well, if your debt is in USD, the a weak USD effectively lowers your debt.

**deathgodusmc** · 09-19-13, 04:11 PM

Originally Posted by WickedTribe

Well, if your debt is in USD, the a weak USD effectively lowers your debt.

Only on paper in a different country. The debt effectively stays the same to a person here.

**AetheLove** · 09-19-13, 05:42 PM

Originally Posted by Red_Lizard2

Isn't it good to have the dollar weaker during a recession? I know there was a story months back about Sweden's currency being weakened was the reason they were doing better then most of the countries since the "global recession." But not much of an economist so not overly sure, just going off others words.

No time for a long answer, but a couple points:

A quick way to tell the difference between an economist and a businessman or banker: ask them how The Market is.

Business/Banker: if it's up, yay! if it's down, boo!

Economist: is it working properly? good.

The exchange rate is like a price (with a few other, important, aspects). Having the dollar get stronger (or weaker) is good or bad depending on where you stand.

Regarding any debt you might have:

If you have debt in US$, and your income is in US$, then an exchange rate change doesn't affect you.
If you have debt in US$, and your income in a different currency, then having the dollar get weaker is good for you.

The value of debt (or assets) held internationally can also be affected by interest rate movements.

If the US is having a recession and the rest of the world is doing fine, a weaker dollar can help the US economy by improving exports of US goods. If there is a global recession, and every country tries to devalue its currency, guess what happens?

[There is a similar story to be told about austerity. If some people are having a tough time, they can cut back on spending until things improve for them. If everyone is having a tough time, and everyone cuts back, then the entire economy goes to shit.]

If you're a currency speculator, then you want whichever bet you made to pay off. If you make your money on arbitrage, then you want movements that create rate separations.

One reason Sweden (and Denmark, and Iceland) have done ok since 2008 isn't that their currency moved up or down. It's that they have a national currency that can move up or down. Iceland had a huge financial shock, and their currency depreciated like mad. And that was good.

One reason that Ireland and Greece have had a terrible time since 2008 is that they do not have their own currency (and their common-currency partners have sold them out). The Irish currency can't adjust to Ireland's particular economic issues because the Irish currency doesn't exist.

More if I have time...

Æ

**-Lazarus-** · 09-19-13, 06:35 PM

Originally Posted by iravedic

At least with respect to the point on the "dollar is not 'very weak' historically speaking" Trigger is correct. Not sure what you are reading Laz, but there are numerous sites where you can look at the dollars performance against foreign currencies historically and make your own judgment.

As to the OP - the article was stupid. The study, however, was very interesting. The purpose of this type of research is to inform individuals, it helps people self identify their biases and work to overcome them in an intellectually honest fashion. Something many in this forum could use a healthy dose of.

So ignore the OP and read the Study.

Good stuff phidan - but next time go to the source first

It's not just the performance of the currencies against one another that I was talking about. There's more to it than that when it comes to businesses and how they make and spend money in different economies. Otherwise they would all simply be trading on the Forex.

The buying power of a currency within its principle economy also matters a great deal in terms of where global businesses prefer to focus their energy on in order to maximize margins and be as profitable as possible.

**iravedic** · 09-20-13, 12:19 PM

Originally Posted by -Lazarus-

It's not just the performance of the currencies against one another that I was talking about. There's more to it than that when it comes to businesses and how they make and spend money in different economies. Otherwise they would all simply be trading on the Forex.

The buying power of a currency within its principle economy also matters a great deal in terms of where global businesses prefer to focus their energy on in order to maximize margins and be as profitable as possible.

Sounds reasonable - but what does that have to do with your claim that the dollar is 'very weak' historically. I am fully aware of the lengths that businesses will go to maximize profit and manage their exchange risk - it's a big part of what I do for a living.

**-Lazarus-** · 09-20-13, 02:20 PM

Originally Posted by iravedic

Sounds reasonable - but what does that have to do with your claim that the dollar is 'very weak' historically. I am fully aware of the lengths that businesses will go to maximize profit and manage their exchange risk - it's a big part of what I do for a living.

I didn't say the dollar was very weak historically, did I? Someone else said I said that, as usual someone misquotes me I guess.