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Neither a borrower nor a lender be
Polonius:
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
Incidentally, in the days when Hamlet was first staged, borrowing was epidemic among the gentry, who sometimes neglected husbandry to the point where they were selling off their estates piece by piece to maintain an ostentatious lifestyle in London.
April 8, 1988
Economic Scene; U.S. as Hamlet In Dollar Drama
The American Government has long played Hamlet on the dollar, asking itself: ''To stabilize or not to stabilize?'' To stabilize, it hopes, would be to calm investors' fears of a precipitously falling dollar and thereby to bring down long-term interest rates on dollar assets. But it fears that this would leave the United States trade position in deep deficit. Not to stabilize the dollar might make American goods more competitive but might cut off the inflow of foreign capital.
Hamlet was a tragedy. I'd like to point that out. Tragedies are known for their ability to offer two horrible choices and then have you pick one.
When its worries about the trade deficit are uppermost - and Congress appears ready to push for protectionism - the Administration is willing to let the dollar fall or even to shove it down. But when financial markets take fright over the dangers of a falling dollar, rising inflation and climbing interest rates, the Government seeks to undergird the dollar against a further decline.
There's no way this administration would ever shove it down though. That could cause a panic.
I'm a strong dollar man, we have a strong dollar policy. - Treasury Secretary Henry Paulson, May 1, 2008
Let me be clear: our policy is for a strong dollar. Our dollar policy remains unchanged because a strong dollar is in both the national and international interest. - Former Treasury Secretary John Snow, November 17, 2004
That doesn't mean the dollar couldn't fall in an accident though. Beware the Real Brazilian dagger.
Here's the strong dollar chart.
See Also:
Squanderville versus Thriftville, Warren Buffett, 2003
Source Data:
CIA: The World Factbook
2 comments:
Stag,
Whew! Oil spiked back over $126/bbl today. I was really starting to fear deflation the last couple of days. I mean really. If people see the price start to fall, they'll just start taking vacation days and stop driving. That would be horrible for our economy.
It's comforting to know the fed is on top of things.
MAB,
I looked through the details of the retail sales report. People seemed to eat out a tad more (compared to eating at home). That implies people felt a bit more comfortable. They weren't buying cars though. Go figure.
I've been thinking about it all day. Here's my theory. That's exactly what the tax rebate checks would do. It isn't enough money to buy a new car if you are worried about the future. It is enough to head down to McDonalds though and enjoy one last fling before we head into the abyss though.
I also theorize that some of the money was spent before the checks even arrived. Just seeing the notice that more money would be coming would be enough (think of it as a credible threat). That's how we generally do things in America. In fact, Bernanke counts on it.
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so... - Bernanke, 2002
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