Kuro5hin.org: technology and culture, from the trenches
create account | help/FAQ | contact | links | search | IRC | site news
[ Everything | Diaries | Technology | Science | Culture | Politics | Media | News | Internet | Op-Ed | Fiction | Meta | MLP ]
We need your support: buy an ad | premium membership

[P]
On The Violation Of The Law Of Conservation

By MichaelCrawford in Culture
Tue Oct 28, 2008 at 04:50:31 PM EST
Tags: Finance, Exchange Rates, Canadian Dollar, CAD, US Dollar, USD, Investment, Financial Panic, Gold, US Treasuries (all tags)

I find myself challenged by a puzzle whose solution seems completely beyond my grasp. Perhaps you can give me a clue.

This evening I went to the Borders Books and Music at the McCarthy Ranch shopping center in Milpitas, California. There I purchased a compact disc, Hello Love by The Be Good Tanyas.

Afterwards I went to the Seattle's Best Coffee there in the bookstore and had a large coffee and a hot and rather tasty Little Italy Ciabatta.

The puzzle that so flummoxes me is that for several days I've had to watch all my expenses with extreme caution, because I am absolutely busted until I get paid on Thursday morning. It was going to be everything I could do to cover the monthly rent on our storage shed in Halifax, which will be charged to my debit card on Monday - tomorrow, and well before I get paid.

Or was busted: I'm completely unable to fathom where I got the money for the CD and the tasty snack. Yet there it is: I did get the money.

Help me out here. I'm begging you.


(Props to the Tanyas for offerring their music in the Free Lossless Audio Codec format.)

I was able to buy these things because the United States Dollar is skyrocketing. No doubt relative to most currencies, but in particular, relative to the Canadian Dollar.

My storage locker in Halifax costs me two hundred three Canadian Dollars on the twenty-seventh of each month. But the bank account from which my payment will be drawn is denominated in United States Dollars.

For about a year up until a month ago, the CAD / USD exchange rate remained quite constant at very nearly one-to-one. But since the end of September, the rate has grown linearly until it reached today's rate of USD $1.00 = CAD $1.27764.

See for yourself:

Upon plugging my monthly locker rental into their handy online currency calculator, I saw that I'd have forty US bucks to spare after paying my rent tomorrow. Delighted, I headed out to McCarthy Ranch to celebrate.

You might claim that I just answered my own question, yet I remain stymied. How could this have possibly happened? I - the last man on Earth you'd expect to understand money - somehow was able to work a special financial magic, and create real value out of - nothing!

Mike the Financier

Bonita was delighted too, as the wires I'll be sending her for the next little while will be much larger on her end, despite the fact that I'll be sending less from my end than usual, and using the savings to pay down my credit card.

I sent her the following just now:

I just had a long talk with my friend Matt about the economy and general and the exchange rate in particular. I could learn a lot from him - I did just tonight. He's a real smart guy, and an active but quite careful and methodical investor.

The reason for the strong dollar, ironically, actually is the chaos in the financial community. Investors throughout the world are abandoning stocks and corporate bonds and putting all their money into safe investments.

The "safe" investments generally don't produce much profit, but they also don't lose value in times of trouble. The three main ones are US Treasury Bonds, gold and United States Dollars.

The thing is, there is only a limited amount of each to go around. The US Treasury has a bond auction each month, but it only sells enough bonds to cover the US tax shortfall until the next auction.

The amount of gold is limited to all the gold that has ever been mined, plus the very small amount that will be mined in the near future. But the amount actually available to investors is much less, as most of the world's gold is locked up in bank vaults and not for sale at any price.

United States Dollars aren't exactly limited, as the Treasury can always issue more of them, but to the extent it doesn't the dollar supply runs short during panics and so the value of the dollar skyrockets.

US Treasuries and Dollars are regarded as safe because the US government has never defaulted on any of its its debts. Matt explained to me that despite the collossal national debt we have now, as a percentage of the Gross Domestic Product we have a comparatively much smaller debt than all but a few other countries - and all those other countries are small ones like Switzerland.

The other factor is that some products can only be purchased with dollars, crude oil for example. So most countries other than the US have to trade their own currencies for dollars so they can supply energy for their economies.

I asked how long he thought the rising exchange rate would last, and he thought it would be two to four more weeks - it's been going on for a month so far. If the current rate of increase is maintained, the CAD / USD rate could ultimately reach 1.4 or 1.5.

The rise will eventually stop because other nations, upon seeing how badly they're getting screwed by having to pay for everything in increasingly-precious US Dollars, will take steps to protect their own currencies.

He said the rate would then level off, and likely would stay constant for a while. I expect it won't go back down significantly until stocks and corporate bonds are again regarded as safe investments. There's no way that's going to happen any time soon. You should be able to enjoy the high US dollar for at least a year, possibly two or three.

From Wall Street To Main Street

The whole economic thing has been to me, while quite frightening, rather distant and abstract for the last year, ever since the subprime crisis started. But it all got driven home in quite a stark and personal way this evening when I celebrated at Borders with the money I'm going to save on my locker, money that I only had because of this rather abstract concept called the exchange rate.

If it weren't for the skyrocketing dollar, moths would have flown out of my pocket when I tried to pay for my album. Compact discs, gourmet coffee and tasty sandwiches cost real money, energy and labor to produce. Yet I was somehow able to get myself one of each with money that as far as I can tell just sprang up out of nowhere. I'm finding that whole concept really difficult to wrap my head around.

I am grateful for any advice you can give me.

-- Mike

Sponsors

Voxel dot net
o Managed Hosting
o VoxCAST Content Delivery
o Raw Infrastructure

Login

Poll
Can Anyone Suggest A Poll? I'm No Good At Polls.
o Yes, I'll Suggest A Poll In A Comment Below. 0%
o No, I Can't Think Of A Poll Either. 100%

Votes: 15
Results | Other Polls

Related Links
o Hello Love
o The Be Good Tanyas
o Seattle's Best Coffee
o Free Lossless Audio Codec
o XE - The World's Favorite Currency and Foreign Exchange Site
o the last man on Earth you'd expect to understand money
o Mike
o Also by MichaelCrawford


Display: Sort:
On The Violation Of The Law Of Conservation | 71 comments (59 topical, 12 editorial, 0 hidden)
FX markets are notoriously fickle (3.00 / 3) (#9)
by Scrymarch on Mon Oct 27, 2008 at 06:45:02 AM EST

The Canadian and Australian dollars are both rich world economies with conservative banking sectors that escaped the current credit crisis, and have a lot of commodity-related exports. First they got pumped up by this crisis to beyond or nearly parity (in the commodity == good phase) now they are getting screwed (in the oh god I'm scared just sell everything and buy US treasuries phase). This is arguably only so pronounced because US investors are relatively parochial, and the US still has a lot of money - overseas investments are being liquidated for the perceived safety the USD.  The economist explanation is that they are traded on the margin - the price oscillates around fundamentals, but is ultimately determined by who really really wants to buy and sell today.

Depending on your debt arrangements you may have also got some relief from the slashing of Canadian and US interest rates over the last few months.

At the end of the day though, it's the US who has the ballooning public and private debt, the underwater mortgages and the fucked banking sector - there's plenty of reason the FX markets might today start jumping the other way. How many phases do we have left? Don't know, but don't load up on posh coffee and sandwiches just yet.

This explains why the exchange rate has changed. (3.00 / 2) (#12)
by rpresser on Mon Oct 27, 2008 at 07:42:24 AM EST

It does not explain where the money comes from.

In a financial transaction, generally, money changes hands: A's account goes down as he receives goods or services, while B's account goes up as he delivers them.

Crawford had an account, which had been filled with a number (his salary) because he provided a service (doing his job). Between the time he received his paycheck and the time he bought the coffee, that number increased.  SOMEBODY's number must have decreased. WHOSE?
------------
"In terms of both hyperbolic overreaching and eventual wrongness, the Permanent [Republican] Majority has set a new, and truly difficult to beat, standard." --rusty
[ Parent ]

As I read it (none / 0) (#14)
by Scrymarch on Mon Oct 27, 2008 at 08:34:12 AM EST

His account didn't go up, he deduced that his Canadian dollar expenses would cost him less against his US dollar bank account.

[ Parent ]
Yes that's it... but I was able to buy American... (none / 0) (#15)
by MichaelCrawford on Mon Oct 27, 2008 at 08:46:18 AM EST

... goods, despite my American money not increasing. That strikes me as very odd.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

uhhhh, because the canadian goods got cheaper? $ (none / 0) (#16)
by th0m on Mon Oct 27, 2008 at 09:06:23 AM EST



[ Parent ]
Not to Canadians (none / 0) (#17)
by MichaelCrawford on Mon Oct 27, 2008 at 09:09:51 AM EST

The whole time I lived in Canada, I was dismayed that exchange rates seemed to have no effect on the price of anything I bought.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

jesus christ, canadians pay in canadian dollars $ (none / 0) (#19)
by th0m on Mon Oct 27, 2008 at 09:14:13 AM EST



[ Parent ]
He bought: (none / 0) (#20)
by rpresser on Mon Oct 27, 2008 at 09:17:45 AM EST

  • Canadian storage space with USD exchange for loonies
  • Canadian coffee with USD exchanged for loonies
  • an American CD from a Canadian store with USD exchanged for loonies

------------
"In terms of both hyperbolic overreaching and eventual wrongness, the Permanent [Republican] Majority has set a new, and truly difficult to beat, standard." --rusty
[ Parent ]
no: storage in CAD, cd+coffee in leftover USD $ (none / 1) (#22)
by th0m on Mon Oct 27, 2008 at 09:25:19 AM EST



[ Parent ]
Oops! I was thinking he was still in Vancouver \\ (none / 0) (#35)
by rpresser on Mon Oct 27, 2008 at 02:36:55 PM EST


------------
"In terms of both hyperbolic overreaching and eventual wrongness, the Permanent [Republican] Majority has set a new, and truly difficult to beat, standard." --rusty
[ Parent ]
Hey (none / 0) (#23)
by Scrymarch on Mon Oct 27, 2008 at 09:25:36 AM EST

You did include some generous error margin in this expense calculation, I hope? Retail customers like ourselves tend to get screwed with fees and commissions on top of the spot rate a site like x-rate will give you.

[ Parent ]
Yes - I'm hip to that (none / 1) (#26)
by MichaelCrawford on Mon Oct 27, 2008 at 09:45:02 AM EST

While my bank gives me a decent exchange rate, they charge FOUR DOLLARS! for doing the exchange.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

UFB direct (none / 0) (#64)
by vectro on Sat Nov 01, 2008 at 01:43:12 AM EST

http://ufbdirect.com --- no transaction fees for foreign purchases. Not even an exchange fee. Reimbursements for ATM use. Good rates. Good service. What else could you ask for (other than branches)?

I'm not an employee, just a satisfied customer.

“The problem with that definition is just that it's bullshit.” -- localroger
[ Parent ]

"markets are fickle" == escape clause (3.00 / 2) (#32)
by khallow on Mon Oct 27, 2008 at 01:26:25 PM EST

By observing that something is "fickle", we are effectively relinquishing any claim to understand that phenomenon.

Stating the obvious since 1969.
[ Parent ]

It's a fair criticism (none / 1) (#46)
by Scrymarch on Tue Oct 28, 2008 at 07:24:49 AM EST

But honestly, at least to my layman's eyes, short to medium term fx market movements aren't that well understood. And in the absence of a good theory (I wave a hand towards one elsewhere), "fickle" seems an apt description when a well established currency can launch itself from a historic high to a historic low in four months.

[ Parent ]
The money is a foreign exchange. (3.00 / 2) (#65)
by vectro on Sat Nov 01, 2008 at 01:47:34 AM EST

When you buy something in Canadian dollars using your US bank account, you are actually engaging in a financial transaction other than the payment itself. In order to make payment to the merchant in Canadian dollars, you first have to acquire some. You do this (or your bank does it for you) by matching up your purchase with a foreign exchange trader. That trader offers you a price for your US dollars, which price varies over time.

Imagine that you had a neighborhood gadget store that only accepted widgets for payment. Before you can buy any gadgets, you have to go to the widgets shop, which accepts regular cash. But the price of widgets at the widget shop changes over time, so if you always go buy your widgets before using them at the gadget store, the price of widgets effectively alters the price of gadgets. That is the situation here; substitute storage for gadgets and CAD for widgets.

“The problem with that definition is just that it's bullshit.” -- localroger
[ Parent ]

The mysterious part is ''price keeps changing'', (none / 0) (#66)
by rpresser on Sat Nov 01, 2008 at 10:49:02 PM EST

which is of course the central feature of any market, and as I think about it more it mystifies me more.
------------
"In terms of both hyperbolic overreaching and eventual wrongness, the Permanent [Republican] Majority has set a new, and truly difficult to beat, standard." --rusty
[ Parent ]
Does it mystify you that the price of oil changes? (3.00 / 2) (#68)
by vectro on Tue Nov 04, 2008 at 10:07:41 PM EST

The price of crude oil is principally connected to two factors: The amount of oil produced from oil wells, and the amount of oil consumed by refineries. As the latter increases, the price goes up, prompting some oil users to switch to alternative products (such as natural gas) or to simply do without. As supply increases, the reverse process takes place, and as the price drops, some buyers increase their usage to take advantage of the new lower price.

The price of currencies is no different. Fundamentally, the thing that drives currency valuations is trade: As in the example here, products paid for in one country and produced in another. As an example, when Canadian whiskey is shipped to the US, the buyer pays the seller something in exchange. The buyer's income is in US dollars and the seller's costs are in Canadian dollars, so somebody (buyer or seller) has to eventually convert US dollars to Canadian dollars. This transaction increases the price of Canadian dollars relative to US dollars, which serves to discourage the same kind of transaction and encourage the reverse. This effect is the principal reason why you never see trade entirely in one direction.

The wrinkle, of course, is that people trade currencies all the time without being involved in trade, tourism, or remittances. They may trade currencies to invest (you have to buy a US company with US dollars), to borrow (interest rates may be lower in Yen than in dollars), or even to speculate on future currency movements. All these actions have an effect on the relative price of currencies.

Any more questions?


“The problem with that definition is just that it's bullshit.” -- localroger
[ Parent ]

OH MY GOD YOU'RE A GENIUS (none / 0) (#11)
by lostincali on Mon Oct 27, 2008 at 07:38:52 AM EST


"The least busy day [at McDonalds] is Monday, and then sales increase throughout the week, I guess as enthusiasm for life dwindles."

My advice: (1.50 / 2) (#13)
by Enlarged to Show Texture on Mon Oct 27, 2008 at 08:27:04 AM EST

Kill yourself


"Those people who think they know everything are a great annoyance to those of us who do." -- Isaac Asimov
i genuinely don't understand your question: (none / 1) (#18)
by th0m on Mon Oct 27, 2008 at 09:13:30 AM EST

  1. you own and/or earn US dollars;
  2. you regularly buy goods which are priced in Canadian dollars;
  3. the value of the US dollars you own/earn fluctuates relative to the value of Canadian dollars;
  4. when the relative value of your US dollars increases, you have more money left over when you buy goods priced in Canadian dollars.

what's confusing about that? do you think there's some kind of principle of conservation of value? if so, why would you even begin to think that?

While money is an abstract concept, CDs aren't (none / 0) (#21)
by MichaelCrawford on Mon Oct 27, 2008 at 09:17:52 AM EST

I don't understand why I had the cash to buy something that actually costs something to produce. It's not like it was a digital file - real labor and energy went into it.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

you're either mental or a troll or both $ (none / 0) (#24)
by th0m on Mon Oct 27, 2008 at 09:27:06 AM EST



[ Parent ]
both ~ (none / 0) (#28)
by rhiannon on Mon Oct 27, 2008 at 12:07:56 PM EST



-----------------------------------------
I continued to rebuff the advances... so many advances... of so many attractive women. -MC
[ Parent ]
you're one dense motherfucker (3.00 / 7) (#29)
by rhiannon on Mon Oct 27, 2008 at 12:10:51 PM EST

You work in software, you build things which are almost completely abstract, and nearly free to reproduce, yet you get paid very well for, and you have difficulty understanding why the monetary system can effect change in the 'real' world?

-----------------------------------------
I continued to rebuff the advances... so many advances... of so many attractive women. -MC
[ Parent ]
what's there to understand? (none / 0) (#31)
by khallow on Mon Oct 27, 2008 at 01:23:04 PM EST

Money is something convertible into real labor and energy. That's why we use it.

Stating the obvious since 1969.
[ Parent ]

But why is the conversion rate so arbitrary? $ (none / 0) (#33)
by MichaelCrawford on Mon Oct 27, 2008 at 01:30:43 PM EST


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

Because supply and demand changes (3.00 / 2) (#36)
by sholden on Mon Oct 27, 2008 at 03:26:12 PM EST

Just like the price of eggs goes up and down, the price of gas goes up and down, the price of coffee goes up and down.

You aren't hedging and locking in prices in advance and hence you see the noise in the market.

--
The world's dullest web page


[ Parent ]
arbitrary? (none / 0) (#43)
by khallow on Mon Oct 27, 2008 at 09:43:11 PM EST

Why should the rate be anything other than what it is? It seems more mysterious to me to expect the price to be different from what it is.

Stating the obvious since 1969.
[ Parent ]

Good choice (3.00 / 10) (#25)
by Harry B Otch on Mon Oct 27, 2008 at 09:34:46 AM EST

Invest your money in CDs.  That way when the I.R.S. comes knocking on your door, you can tell them, "nobody in here but us music fans!" and they'll be forced to fuck off.

-----
...a race of diseased gibbons that descended from the assholes of a dying god - Egil

Brillant! (none / 0) (#44)
by Ig0r on Mon Oct 27, 2008 at 09:45:14 PM EST

I hope you don't expect a comission

[ Parent ]
irony (1.50 / 2) (#27)
by circletimessquare on Mon Oct 27, 2008 at 10:54:22 AM EST

the bullshit on wall street has hurt the worldwide markets such that people run to the safest economic bet, which is still the usa. europeans and asians have been preening about a world not dependent on the usa anymore economically, and someday that might be true, but not today. right now, europeans and asians are hurt more by the tanking us economy than americans

The tigers of wrath are wiser than the horses of instruction.

Wrong? ... bong (none / 0) (#59)
by Corwin06 on Wed Oct 29, 2008 at 07:11:21 PM EST

If, when your money's value goes up relatively to all others, it means you're one fucked country, then the US is just getting as fucked as the EU.

Just a thought... I'm very stoned and I've got psych stoner rock in my head.

"and you sir, in an argument in a thread with a troll in a story no one is reading in a backwater website, you're a fucking genius
--circletimessquare
[ Parent ]
the yen's going up (none / 0) (#60)
by circletimessquare on Wed Oct 29, 2008 at 07:20:12 PM EST

low debt in japan

hat's the big determinant

all hailt the rise of tokyo


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

My advice: Meds are good for you.[] (none / 1) (#30)
by mirleid on Mon Oct 27, 2008 at 12:57:33 PM EST



Chickens don't give milk
+1 FP Michael Crawford for Treasury Secretary (3.00 / 6) (#34)
by BottleRocket on Mon Oct 27, 2008 at 02:12:41 PM EST


$ . . . . . $ . . . . . $ . . . . . $
. ₩ . . . . . . . . . . . . . . . . . . . .
. . . . * . . . . . * . . . . . * . . . . . * . . . . . *
$ . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $
Yes I do download [child pornography], but I don't keep it any longer than I need to, so it can yield insight as to how to find more. --MDC
$ . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . * . . . . . * . . . . . * . . . . . * . . . . . *
. ₩ . . . . . . . . . . . . . . . . . . . .
$ . . . . . $ . . . . . $ . . . . . $
$B R Σ III$

Stop selling those pills (3.00 / 3) (#37)
by AlwaysAnonyminated on Mon Oct 27, 2008 at 03:36:30 PM EST

They keep you from acting like this. Also, no more money advice.
---------------------------------------------
Posted from my Droid 2.
+1FP minutia of MichaelCrawford's finances (3.00 / 3) (#39)
by Phssthpok on Mon Oct 27, 2008 at 06:35:02 PM EST


____________

affective flattening has caused me to kill 11,357 people

I find it all very confusing, too. (3.00 / 4) (#41)
by JackStraw on Mon Oct 27, 2008 at 08:37:46 PM EST

Really enjoyed the story.

I think that part of the answer lies in the psychology; certain commodities like gasoline are constantly re-priced to reflect exchange rates, but most (salaries, food, and apparently locker rentals) lag substantially (I think it's b/c of psychology) even though, in a perfect world, they would probably adjust just as quickly as gas.

On a different note, I started looking deeply into gold during the crisis, and realized something startling (to me): there is no "correct" way to look at the historical prices of anything! e.g., the S&P500 plot for 50 years looks totally different in dollars vs. inflation-adjusted dollars. But, why stop there? It looks even more different when priced in terms of gold (link), euros, or soybeans. Fundamentally, there is no reason to choose normalization by dollars instead of gold--the only "correct" normalization that I can think of is an index of all wealth in the world, weighted by how much wealth exists in each form.

It's just so different from what I'm used to in engineering; all measures of distance, energy, etc. are so rational and fundamental.

-The bus came by, I got on... that's when it all began.

it depends on what you want the money for (3.00 / 2) (#47)
by Delirium on Tue Oct 28, 2008 at 12:04:15 PM EST

If you live in the United States and primarily spend your money in the United States, and you wish to measure the value of money by its ability to buy you goods and services in said country, then value in inflation-adjusted dollars is a pretty good proxy for the local purchasing power of your investments.

Of course, yes, that in itself is calculated using a somewhat arbitrary weighted basket of goods, which may not be equivalent to the basket you're interested in purchasing. Even more fundamentally, it's ill-defined what a fixed good is. If the median price of a new house goes up 10%, but the median size of a new house also goes up 10%, is that 10% inflation, or just people buying 10% more of stuff whose price underwent no inflation? Similar things happen with technological change—there is no real 2008 equivalent to a 1985 computer that is a fair price comparison, since it bundles in technological change (huge deflation in price per unit computing power), changes in consumption patterns (people demand more computing power than previously), and monetary phenomena (what we're actually trying to estimate) all in one.

Basically inflation is trying to put a single number on something—$1.00 today would've bought me the same as $0.25 would've bought me in 1948—that fundamentally has no well-defined single number.

[ Parent ]

Yeah (3.00 / 2) (#48)
by regeya on Tue Oct 28, 2008 at 03:06:17 PM EST

This comment was going to be about 1940 iPods, but then I realized you'd mentioned 1985 computers. Heh, I have a computer in my closet which dates to '86. About $800 new, which was cheap at the time; what do you look at? Do you look at its computing power compared to other 1986 computers, or do you look at its value now? The thing can do 16 colors at 320x200 or 4 colors at 640x240, has four-channel (count 'em) sound, has been upgraded to 640k of RAM, and has a 360k 5.25" floppy drive.

There's no fair way to compare it to the bargain-bin machine I just built, because I'd have to have a large room full of those old Tandys to approach the computing power and storage space of this modern $500 machine.

One area that seems disingenuous is just arbitrarily taking two items, and comparing them. One example is taking the amount of silver in 1960 dimes, and the price of silver and gas in mid-summer. Now, back in 1960 the average price of a gallon of gas is about 30 cents. You melt down those dimes, sell the silver, and you have about $3.86, which would have bought you a gallon of gas.

This seems to indicate extremely out of control inflation, which maybe it does, but there are all sorts of factors between then and now which have kicked in. The most obvious problem is that, if the price is just going back to inflation-adjusted 1960 levels, we need to factor in the added cost of the myriad formulations these days, and subtract out the cost of lead. I'm sure there are more factors; this isn't my field of expertise either.

[ yokelpunk | kuro5hin diary ]
[ Parent ]

ZOMG TEH BUSINESS CYCLE (2.50 / 2) (#42)
by LilDebbie on Mon Oct 27, 2008 at 08:41:50 PM EST

economies do this. they go for periods of growth until the pace of investment outstrips either labor or capital and you get a downturn. in reaction to markets diving, people dump their assets into savings, which are essentially reserve currencies. since the dollar happens to be the mother of all reserve currencies, it gets the biggest boost. investment slows. growth tanks for a while or even retracts until labor starts to outstrip capital investment and people get busy and the economy takes off again.

the trick is in stabilizing this cycle to avoid nasty crashes like black monday. we're not at the nasty crash stage, unfortunately.

My name is LilDebbie and I have a garden.
- hugin -

Welcome to the Big Casino (2.00 / 3) (#49)
by localroger on Tue Oct 28, 2008 at 06:11:29 PM EST

You have just discovered something most people never quite understand -- when you take a position in the market, even by picking a currency to represent your bankroll, you are gambling. The money comes from the same place it does when you roll seven on the come-out at the craps table. Someone gave it to you because, overall, they think (either correctly or otherwise) that over a long run of such transactions, they'll come out ahead.

Investing is considered responsible participation in our economy instead of a pernicious sin only because it is the engine that drives the economy, but the dark little secret as revealed in days of yore by the movie Wall Street is that the fuel that makes that engine go is greed. You put your wealth in $USD or $CDN mainly because you have to put it in something, and bone beads are so out of fashion. But large-scale speculators who treat the market much more like a casino than you do have been making moves, and those moves affect the payoffs on the bets you've inadvertently made too.

And that is what is so great about the internet. It enables pompous blowhards to connect with other pompous blowhards in a vast circle jerk of pomposity

You would have to pretty slow (3.00 / 4) (#54)
by sholden on Wed Oct 29, 2008 at 09:53:03 AM EST

To not realize you are gambling on exchange rates if your income/savings are in a different currency than your expenses.

--
The world's dullest web page


[ Parent ]
What shocked me so much... (none / 0) (#55)
by MichaelCrawford on Wed Oct 29, 2008 at 12:02:35 PM EST

... was just how fast the exchange rate has been changing. In fact I've paid very careful attention to the rate as long as I've been involved with Bonita. But it's completely unprecedented that it would change by twenty-seven percent in just a month.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

You don't read newspapers? (3.00 / 2) (#56)
by sholden on Wed Oct 29, 2008 at 01:03:50 PM EST

Maybe you didn't notice that the stock market has been making 10% swings in a day. Exchange rates are volatile just like the stock market.

So now that you spent your lucky gambling winnings on coffee and cake, what are you going to do when it swings the other way just as fast at some point and you pay 30% more than you expected for your storage locker.

I guess putting the gains aside to hedge against such a thing goes completely against your mood swinging personality though.

--
The world's dullest web page


[ Parent ]
No, coffee, a CD and a tasty sandwich are it. (none / 1) (#61)
by MichaelCrawford on Thu Oct 30, 2008 at 07:33:00 AM EST

I am able to reduce each of Bonita's wires somewhat because of the the high exchange rate. For as long as this happy situation persists, I'll be using that little bit I deduct from her wires in part to pay down my credit card, and in part to build up some savings - for the first time in about twelve years.

Regardless of the exchange, when January comes I will have paid off a couple significant debts completely. I'm going to use the money that once went to service those debts, again, to pay down my card and to build up some savings - but at a faster rate.

When Summer comes, I will have again paid off another significant debt.

You can see where this is all going.

I have only done my budget through the first quarter of next year, but I have the hazy estimate that by the end of December 2009, I will have paid off my credit card completely, and accumulated savings totalling five thousand dollars.

Come January First 2010, I'm going to hit all the New Years' Sales, and blow the lot of that five grand on hats.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

January 2010 (none / 1) (#71)
by deadplant on Fri Nov 07, 2008 at 05:04:11 PM EST

Don't count those chickens just yet.
USD exchange rates are still highly volatile.  Don't make the mistake of assuming that today's rate is the new norm.
The stock market volatility and financial crisis have triggered a wave de-leveraging by banks/funds which is having an effect on the value of the USD.
This is a short term effect and there is reason to believe that the more traditional drivers of exchange rates will reassert themselves in 2009.  Many of those factors will be pushing the USD down vs the canadian dollar and the euro.

[ Parent ]
There is no law of conservation of money (3.00 / 2) (#50)
by Pentashagon on Tue Oct 28, 2008 at 09:36:20 PM EST

And especially no law of conservation of value.

the exception proves the rule $ (none / 0) (#57)
by Phssthpok on Wed Oct 29, 2008 at 02:28:01 PM EST


____________

affective flattening has caused me to kill 11,357 people

[ Parent ]
fucking front page? seriously? $ (3.00 / 5) (#51)
by th0m on Wed Oct 29, 2008 at 02:43:39 AM EST



K5 death rattle (none / 0) (#52)
by Mylakovich on Wed Oct 29, 2008 at 03:45:45 AM EST

The system is dead; everything passes through unfiltered and goes unread and ends up irrelevant.

[ Parent ]
thought it was a joke until now $ (none / 0) (#53)
by th0m on Wed Oct 29, 2008 at 04:36:54 AM EST



[ Parent ]
I love you /nt (none / 1) (#58)
by mirko on Wed Oct 29, 2008 at 05:29:22 PM EST


--
Finally I managed to make the decision that I would work on it. - MDC
we had to huddle together - trane
OVERDRAFT FEES WILL BE ACCESSED. (1.20 / 5) (#62)
by NMC spammer on Thu Oct 30, 2008 at 04:07:02 PM EST


Vote me down, bitches.
mike (3.00 / 3) (#63)
by circletimessquare on Fri Oct 31, 2008 at 07:33:49 AM EST

while yes, staging the exchange rate changes as a violation of the law of conservation is an interesting turn of phrase, you unfortunately have been found to be in violation of the law of conversation

The tigers of wrath are wiser than the horses of instruction.

All you did was make me want to go to Borders $ (none / 0) (#67)
by icastel on Tue Nov 04, 2008 at 03:52:27 PM EST




-- I like my land flat --
imaginary money (none / 1) (#69)
by deadplant on Fri Nov 07, 2008 at 04:46:21 PM EST

dude, money and the numbers we put on it are entirely imaginary.
There is no "conservation of money" any more than there is conservation of mass and energy in an MMORPG universe.

The value of money is a useful collective delusion.
If enough people lose confidence in the delusion the money becomes worthless and the economy collapses.
That is highschool level economics.


furthermore (3.00 / 2) (#70)
by deadplant on Fri Nov 07, 2008 at 04:51:59 PM EST

What's really gonna get you is the way banks work.

When you charge something to your credit card or take out a loan did you think that money comes from somwhere?
It does not!
The bank just changes your account balance in the computer from $0 to $10,000 (or whatever).

It sounds crazy, I know.
It is in fact the way our economy works.

I suggest that you not think about it too hard because it might cause you to lose faith in the system.
(remember that losing faith in the system will make the system fail so keep the faith for christ's sake!)


[ Parent ]

On The Violation Of The Law Of Conservation | 71 comments (59 topical, 12 editorial, 0 hidden)
Display: Sort:

kuro5hin.org

[XML]
All trademarks and copyrights on this page are owned by their respective companies. The Rest 2000 - Present Kuro5hin.org Inc.
See our legalese page for copyright policies. Please also read our Privacy Policy.
Kuro5hin.org is powered by Free Software, including Apache, Perl, and Linux, The Scoop Engine that runs this site is freely available, under the terms of the GPL.
Need some help? Email help@kuro5hin.org.
My heart's the long stairs.

Powered by Scoop create account | help/FAQ | mission | links | search | IRC | YOU choose the stories!