Cheat Sheet Q & A:
Topic: The future of the US dollar
What are your thoughts on the dollar losing it's place as the world go to currency. It seems steps are being taken around the world for countries to pay in things other than dollars. Once we can't just print our way out of debt do you see our lifestyle changing dramatically? Will it happen? What kind of a timeline?
Bottom Line: A little background for those who may not be familiar with the US dollar’s role as the worlds “Reserve Currency”. Commodities all around the world are US dollar denominated. This means that whether you buy a barrel of oil in the
There have been concerns voiced by many in recent years that the dollar’s role as the reserve currency could be in jeopardy. The argument often centers around the Federal Reserve’s aggressive policy of “QE” or money printing so to speak. In essence as we create more currency out of thin air (most recently $85 billion per month), it devalues the outstanding dollars we all hold. So will it happen?
In my view there is virtually no chance of the US dollar losing it’s position as the world’s Reserve Currency. Despite our issues – we’re still the most viable option available (at least for now). The issue for those who support a change away from the US dollar, is to offer up a better solution. Any replacement would have to be provided by an economic power:
While the US dollar isn’t quite the pristine standard it once was, it’s still easily the best option available for the foreseeable future.
If you have a topic or question you’d like me to address email me: firstname.lastname@example.org
The next generation iPhone announcement:
Bottom Line: All Things Digital was the first to report what since has become a mainstream story. The announcement for the next generation iPhone(s) will be September 10th. So what can we expect?
In essence the replacement for the iPhone 5 is likely to be an update to the existing model rather than a revolutionary product. The cheaper model will be aimed largely towards emerging market countries (as well as Americans that don’t care for all of the bells and whistles). More to come…
Your credit score is worth hundreds of thousands of dollars:
Bottom line: Do you treat your credit score as an investment worth hundreds of thousands of dollars? The odds are that you don’t. We tend to look at a credit score as a number that either grants or denies access to loans or products. While most know that they’ll have to pay more for lower credit, I don’t think the full extent is understood.
I came up with this story idea when I saw what the difference in mortgage rates where for those who minimally qualify vs. those who qualify for the best rates. With few exceptions, the lowest credit score you can have to obtain a mortgage is 620. The top rates are going to people with credit scores of 760+. The difference in mortgage rates with that 140 point difference is currently 1.5%. While that might not sound huge… It is. On a $300,000 mortgage that difference is $101,000 on a 30 year fixed rate mortgage. And that’s just one average mortgage. By the time you factor in the cost of auto loans, personal lines of credit, insurance costs, etc. you’re talking about the potential for hundreds of thousands of dollars of impact during the course of your life. If you though of your credit score in terms of hundreds of thousands of dollars would it alter the way you manage it?
This is a message we need to share and teach our kids. There is no better time to understand the cost\benefit of a good credit score than before it’s established.
Twitter will soon be ready for your investment:
Bottom line: Every so often we have a case of a company accidently tipping their hand by virtue of a job posting. This was just the case with Twitter.
Twitter recently posted a job opening online for someone who would need to be able to prepare monthly and quarterly reports for reporting purposes. Those are the needs of a publically traded company that needs to file with the SEC. Once this gained a little attention Twitter removed the posting but the intention is clear. Twitter is finally preparing to go public. With LinkedIn hitting a series of new highs and Facebook getting back to it’s IPO price, the appetite for social media is high on Wall Street. It makes sense that the largest social media company, that isn’t currently open for public investment, would be preparing to take the leap. Expect a 1st half 2014 IPO.
Holder’s plan to save money in Federal prisons:
Bottom Line: Plenty of people are arguing over the politics associated with releasing non-violent drug offenders that are held in Federal prisons (and reducing Federal sentencing for these individuals). AG Eric Holder announced his desire to eliminate the mandatory Federal prison sentences for non-violent drug offenders yesterday.
In this entry I want to focus on the economics of this potential change. Will it save a significant amount of money? The answer is yes.
So the societal implications aside – it does potentially achieve the cost savings objective that AG Eric Holder outlined when making the proposal.