Why is the dollar going up??? (real estate, paychecks, companies, interest)

[lifeisbigger]

Hello,

I've only become recently interested in all of these goings-on, maybe the last year or so, so forgive me for my question.

I was always taught that when the government pumps dollars into the system, like the 630 billion they pumped in on Monday or Tuesday, that the dollar would decrease in value. However, I've been noticing on the tickers that the dollar is actually rising against the Euro. How can that be?

Is it that both are falling, but the Euro is falling FASTER? Any explanation would help shed some light on everything that is happening.

Thank you!!!

[ChunkyMonkey]

Just read an article on this. The dollar is rising because the economy is horrible, which means fewer imports, and an easing of the trade deficit. Another support for the dollar is the weakening economies in Europe. If the bailout passes then there may be pressure on the dollar.

Stronger dollar? Believe it. - Oct. 1, 2008

[lifeisbigger]

Fascinating. Thank you very much for that article!

[Nor'Eastah]

Originally Posted by lifeisbigger

Is it that both are falling, but the Euro is falling FASTER?

You answered your own question right there!

[StoneOne]

Originally Posted by Nor'Eastah

You answered your own question right there!

Right. Europe's problems, while not well covered, are probably just as serious if not more so than in the U.S. The problem is that when Europe's economies get into trouble, it always takes them much longer to turn around. In the U.S., turnaround is always much faster, as our economy is much more soundly structured in that regard. Europe, by and large, is much better structured for stability and making sure people don't fall through the cracks, but that makes recovery all the more difficult for them.

The global economic downturn will affect Europe much more adversely than the U.S. and for much longer. That's why you see a stronger dollar, even though the dollar is of course worth less than it was yesterday.

[bhcompy]

the government may have pumped hundreds of millions into the economy the past week or two, but we've also lost over a trillion in market value as well

[sterlinggirl]

Originally Posted by bhcompy

the government may have pumped hundreds of millions into the economy the past week or two, but we've also lost over a trillion in market value as well

That was in one day, and it jumped back up to regain over half of it the next day. That number also includes sovereign wealth funds and all the other foreign investors. Its also only a loss if you panicked and sold.

Yes there was a big scary drop one day, but overall, the DOW is down 350 points from where its been trying to trade all year. In the meanwhile, oil is down since the bailout failed, which will help to curb the rises we've been seeing in our costs of daily living.

If they do pass a bailout bill, get ready for more pain at the pump....and the grocery store....and all the other things you spend money on every day.

[Philip T]

Originally Posted by sterlinggirl

That was in one day, and it jumped back up to regain over half of it the next day. That number also includes sovereign wealth funds and all the other foreign investors. Its also only a loss if you panicked and sold.

Yes there was a big scary drop one day, but overall, the DOW is down 350 points from where its been trying to trade all year. In the meanwhile, oil is down since the bailout failed, which will help to curb the rises we've been seeing in our costs of daily living.

Don't forget that with the 10% annual drop trend line in real estate, sectors even larger and more meaningful than the [silly] stock market are heading downward. This is orders of magnitude more downside risk than just the stock market. Been shopping real estate lately, but watching the price fall right in front of me while checking it out.

If they do pass a bailout bill, get ready for more pain at the pump....and the grocery store....and all the other things you spend money on every day.

Helicopter Ben may be correct -- Deflationary Depression ahead. Means most everything is down -- and in the long run that includes paychecks.

[lifeisbigger]

Thanks again for all of your insightful answers!

What would cause a deflationary depression?

[Ripley6174]

The strong Euro has been seriously hurting European companies anyway, might be good for them?