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As I understand it, the value of the dollar in CR depends on the dollars circulating or availalble in the country and the Central Bank controls that. They have been trying to buy up dollars to increase the value because many companies here receive dollars in income and pay all expenses in colones so it is not good for them either. I wish the Central Bank would buy up more dollars, this devaluaton is hurting many people.

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...Since all currencies are relative to each other, as long as the rest of the world was in the toilet them selves, the dollar could stay afloat. But as the majority of the world's economies recover...

 

The dollar has done relatively well against the Euro in the last 18 months or so, while it declined against the colon, and the dollar has done okay against some other major currencies during that time. I also don't see that Europe as a whole, and the Euro are poised for a recovery significantly greater or sooner than the US and the dollar.

 

I don't think that other currencies (other than the dollar and euro) have much of an effect on the relative value of the colon. In fact, if we can decipher the snippets of information about CR's economy, CR is experiencing some significant inflation, while tourism has continued to decline at a rate that isn't fully explained merely by the decline in the dollar. IOW, it is taking more and more colones to buy the things Ticos need and want.

 

The debacle at the Canadian mine is going to have some long-term effect on future foreign investment, in part because this incident highlights uncertainty about the ineffective, incompetent, and unpredictable legal system in CR.

 

The latest panic reaction to tax all corporations $300 is more confirmation of CR's unwillingness to address the cultural and other real issues that prevent its legal system from becoming more effective, while continuing to demonstrate CR's preference to increase taxes on the very people that CR needs more of-those who can actually pay the $300, to solve a cultural and ethical problem. CR is already losing foreign tourists and their much-needed dollars and euros, in large part because of CR's problems-not the decline in the currencies, and now they're going after the foreign residents too.

 

And as the world becomes more and more aware of CR's hypocrisy about pollution, environmental issues, personal and real property rights, and illegal aliens...don't look for any surge in foreign tourism anytime soon.

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Cathy, I asked my husband, Randy, why the dollar is not gaining more worth.

 

This is what he told me:

 

"The dollar is a piece of paper and has no intrinsic value. It can be created in unlimited amounts by the Federal Reserve. So the value of your dollar. such as it is, is based on the solvency of the United States government. The United States government collect in taxes about two trillion dollars per year. They have outstanding liability at the present time of about 200 trillion dollars. It's only be the grace of God that the dollar you hold is worth more than a piece of toilet paper. If the average citizen could do basic math, the whole charade would collapse in a few minutes. Buy gold and silver and possibly be one of the survivors or trust the United States government to do the right thing. Your choice."

 

Sincerely,

 

Laura K

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People who subscribe to that way of thinking have been around for many years, always doom and gloom and predicting a financial collapse in the US. The dollar is worth what you can buy with it. If you really are concerned about the value of the dollar, consider inflation rates in the US and other countries.

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People who subscribe to that way of thinking have been around for many years, always doom and gloom and predicting a financial collapse in the US. The dollar is worth what you can buy with it. If you really are concerned about the value of the dollar, consider inflation rates in the US and other countries.

 

 

Yeah exactly, but the thing is to look at the background of inflation, why and which factors are involved in it plus what are their interests. The rate of corruption is also accelerating in the US, but we never put an eye on that neither we do want to, because we are earning good, so why should we have concerns with the others, that's what peple have started thinking about. Isn't it?

 

 

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Yeah exactly, but the thing is to look at the background of inflation, why and which factors are involved in it plus what are their interests. The rate of corruption is also accelerating in the US, but we never put an eye on that neither we do want to, because we are earning good, so why should we have concerns with the others, that's what peple have started thinking about. Isn't it?

 

I don't understand your comment. Are you saying that your opinion that "the rate of corruption is also accelerating in the US" (I see no evidence of that in the banking industry) is somehow related to inflation? The inflation rate in the US is quite low compared to most of the world?

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ciciclista: This is what Randy says: "The only people in America that don't see corruption are politicians, lawyers, and bankers."

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ciciclista: This is what Randy says: "The only people in America that don't see corruption are politicians, lawyers, and bankers."

I personally know some bankers and lawyers in America who are highly ethical and not corrupt, but of course they do see some corruption in America. I have also seen the work of (local level) politicians who really understand the meaning of "public service".

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I don't understand your comment. Are you saying that your opinion that "the rate of corruption is also accelerating in the US" (I see no evidence of that in the banking industry) is somehow related to inflation? The inflation rate in the US is quite low compared to most of the world?

 

Well dude, I usually use to monitor Soap Opera that covers almost each and everything about the US and according to their reports, inflation rate in the US although it is bit slower is accelerating day after day. Secondly, banks are involved in corruptions cases, for that, you can have instances of scams from the US. Although, not all, but yet many of them including their high level officials are involved in corruption and money-laundering. You can have their evidences by Googling online.

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The last notification from the Central Bank was that they will only buy up dollars in $60 million blocks at a time. So the trick is to wait for that. You get about a 15 to 25 colon bump in the value of the dollar when they act. Convert your dollars within a day or two of their action. Then wait for the next $60 million Central Bank move for your next conversion. That's what I've been doing over the last few months and it has saved me a little.

 

 

 

Even people and entities that trust in the dollar and don't subscribe to doom and gloom have enough common sense to diversify. The dollar, like everything tradable, is valued for what it can get you TOMORROW, and not just what you can trade for it today. So if more people today figure out that tomorrow it won't be worth as much as today then the price of the dollar drops TODAY. It doesn't wait to drop tomorrow. There is a built in futures market in every trade, every exchange conversion. Why do you think the dollar is inscribed with "in God we trust"? It's because we don't trust in governments which come and go and make mistakes because they are not perfect. But since God doesn't print money there are only imperfect options left and we have to make the best of it.

 

 

The dollar is a valueless piece of paper, but then so is every other currency in the world technically. Nothing new there. Even currencies that claim to be backed up with something real are nothing more than promises from a government. It's like the Villalobos pyramid financial scam that was here in Costa Rica a few years ago. Everyone knew he was a crook running an unsustainable scheme. But as long as we were all making money no one cared. The argument was something like this: We've been making money at the rate of 3% per month with "The Brothers" for the past 20 years and as long as it continues I'm going to keep riding the gravy train. I can't get a deal like this anywhere else. The only problem would be if you were one of the newcomers and got left holding the hot potato which eventually did happen of course.

 

 

As long as we're making money on it (the dollar) people will continue to value that valueless piece of paper. When the gravy train stops the "newest" newcomers to the game holding the most "hottest potatoes" are the one's to get screwed the worst.

 

Yeah expat, I certainly agree with you. This is we can call a rebellious attitude towards things what actually people show when we're doing something.

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... CR doesn't want expats or tourists much anymore. They made this plain in their new immigration law, where they ratcheted up the dough they expect from us. They only want expats who pay through the nose. Accordingly, while the Central Bank could intervene and buy up dollars (now at an allowable $100 million a month) it is not. The bank bought up $7.5 million this month to "defend" the dollar against the floor. This is nothing. The policy is clearly to allow he dollar to scrape bottom, because they are not out to please us.

If they Ticos don't want us gringos here, the combo of the raised minimum income requirements and the dollar being allowed to sink against the colón should pry certain of us loose and simply dissuade others from coming.

 

As rents go up and the dollar goes down some will have to relocate to 'less nice' digs. And some with minimal SSA incomes from priour toe the last residency law changes may find they are unable to afford to live in CR any longer. But of course returning to UnkaSamlandia may not be an answer for them as that is likely every bit as unaffordable for them, too.

 

Así es la vida, pero poco 'pura'!

 

Paul M.

==

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Today, 12-29-10 La Nacion carried an article about Banco Nacional buying US dollar to prevent it falling further.

El Banco Central ha adquirido desde setiembre de este año el 41% de los $600 millones que anunció que compraría en un lapso de 16 meses, con el fin de fortalecer sus reservas monetarias. Cuatro meses después de haber anunciado un programa de acumulación de reservas, la entidad ha comprado casi $249 millones. Para adquirir los restantes $351 millones, el Banco tiene tiempo hasta diciembre del 2011.

 

So BN has already used 41% of the 600 million to support the 500c floor. It appears to me BN can not keep up with the Fed. Reserve issuing BILLIONS of dollars to buy up (our own) treasury bonds. A month ago i suggest the dollar:colone exchange rate would break above the 520c ceiling if the Democrats lost control of Congress. I have grave doubts that ceiling will be broken. The dollar destruction has gone on for too long. After the Fed gets done dumping the 800billion (QE2) dollars into the banks I do not see a QE3 but the damage has already been done.

I still have hope that US will elect business savy adults and we initiate an energy policy using Nat. Gas to power our cars and Nuclear to power our electricity. That would rein in the billions of dollars we send to the oil rich islamic terrorist countries and create MILLIONS of jobs in the US.

I'm such a dreamer.

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