Originally Posted by Danik

It's a little more complicated than that. If you look at the inflation we are experiencing now, most of it is strictly due to the cost of oil and the pressure it is putting on businesses to raise their prices. It's resource based inflation. Now part of this inflation is due to a lack of confidence in our market because people are spending more than they are producing (making in money).

"I just saw a new thread about how China is dumping our currency because it is losing lots of its value and that is causing inflation. Are you saying that there will not be inflation if the dollar loses its value compared to other currencies?"

When money is dumped into an economy it will decrease the value of currency. Money is simply a representation of the goods and services we produce. You can look at it this way.

Let's say a country's GDP is 1 million, and they have 1 million pieces of currency. 1 piece of currency represents 1 piece of GDP. Now let's say that government prints 1 million more pieces of currency that instant with a GDP of 1 million. Now each piece is 1/2 of GDP and the purchasing power of each is half of what it was before. Since our market is shaky now you have people cashing in and flooding the market with dollars. Likewise even with no additional increase in currency, if GDP falls or the confidence in growth falls then you will see a drop in value of the currency as well, which is also what we are seeing.

Well we do subsidize the production of airplanes just like Europe does with airbus. We also export products that are capital intensive. The main issue with our economy isn't that we don't have a broader range of production, it's that we have a credit craze and other countries are typically the producers. If we were to produce locally the same issues would occur if people overstepped their budget.