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About Warren D. Miller, CFA, ASA, CPA
Expertise
My in-depth knowledge of economics is confined to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Other questions dealing with macroeconomics, the traditional neoclassical paradigm, labor economics, environmental economics, agricultural economics, health economics, and so on should go to those who have the appropriate expertise. N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should be shared, not hoarded. I also believe that such questions are likely to come those trying to cheat.

Experience
I work with Austrian economics (which is different in major and important respects from the traditional neoclassical model), industrial organization (which is about industry structure, conduct, and performance) and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) everyday in my work. I appraise closely-held businesses, and understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.

Organizations
CFA Institute, Strategic Management Society, American Society of Appraisers, Institute of Management Accountants, Academy of Management, Culver Legion

Publications
Valuation Strategies, Value Examiner Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, and Business Valuation Review, among other

Education/Credentials
MBA - Oklahoma State (1991) BBA - U. of Oklahoma (1975) Chartered Financial Analyst designation (2006) Accredited Senior Appraiser (2006) Certified Management Accountant (1992) Certified Public Accountant (1992)

Past/Present Clients
Confidential

You are here: Experts > Arts/Humanities > Social Science > Economics > weakening dollar

Topic: Economics

Expert: Warren D. Miller, CFA, ASA, CPA
Date: 5/11/2008
Subject: weakening dollar

Question
QUESTION: why is it that with the weakening dollar prices of comodities in our countries(outside USA) continue rising when they should be falling.Especially that we do not import from the USA.

ANSWER: Dear Guy--

Thanks for asking for your question, and thank you, too, for using AllExperts.com.

You don't say to what country you are referring, so my answer can't be as precise as I'd like it to be. Still, you've asked an excellent and timely question, Guy. There is a three-part explanation.

#1: Oil prices on world markets use the U.S. dollar (USD) as their currency. There has been talk of late of changing that, but it hasn't happened yet. And those in the U.S. hope that it won't because it would be a severe blow to the U.S. economy.

#2: Many countries around the world 'peg' the value of their currency to the value of the USD. So, when oil prices go up (down) in USD, those prices go up (down) in those currencies, too.

#3: From what country the importing country buys is the last piece of the puzzle. If the country from which it buys has its currency pegged to the USD, then the price of the oil will be what it would be had the importing country bought from the U.S. itself.

Again, a great question, Guy.

Now, if you'd do me a favor: please complete the 'rate the expert' email you'll receive right behind this one. That helps me be more responsive to folks like you who ask such interesting questions.

Thanks again. Hope I've been helpful.

Warren

---------- FOLLOW-UP ----------

QUESTION: As much as the price of oil is a major factor in relation to a bouquet of commodities, how is that some countries are not facing the steep rise in food as others are. the price of wheat and rice (sudan ) have been stable for more than ayear to date.

ANSWER: Thanks for the follow-up, Guy.

First, I don't know what your source of information for the price of wheat and rice in the Sudan being "stable for more than a year," but it's not true. Some links: http://www.fao.org/world/Regional/RNE/UNNews/news106_en.htm (the word "here" in the first line means 'Sudan'), http://www.spiegel.de/international/world/0,1518,547198-2,00.html, http://www.fao.org/docrep/010/ai465e/ai465e07.htm

The main reasons are that those currencies are strong relative to the U.S. dollar. That strength results from a variety of economic factors including fiscal policy, monetary policy, expectations of future inflation, and trade balances. Neither time nor space permit me to elaborate on this, but I know if you do some 'creative Googling,' you can find zillions of links to sources of information to the reasons for the behavior of the currencies of specific countries.

Here are some links to get you started:

http://www.csmonitor.com/2008/0227/p01s05-usec.html

http://www.voanews.com/specialenglish/2008-05-01-voa6.cfm

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahRifIz3hjh0&refer=home

http://www.nytimes.com/2008/03/29/business/worldbusiness/29rice.html?_r=1&oref=s...

Good luck. I hope this is helpful.

Best regards--

Warren

---------- FOLLOW-UP ----------

QUESTION: i appreciate fully your responses but i have been based in khartoum for five years and the price of wheat have been around 1.50 and 2.50 SDG respectively for close to a year. the price of fuel has seen an increase of about 30% but not the cereals. explain this

Answer
Dear Guy--

I'm a little confused here. Let me tell you why, but let me also tell you why I can't answer your question. I do appreciate your follow-up.

Let me begin by quoting part of what you wrote: ". . .and the price of wheat have been around 1.50 and 2.50 SDG respectively for close to a year. the price of fuel has seen an increase of about 30% but not the cereals."

First, the word "respectively" suggests to me that there might be a commodity (besides wheat) that you intended to include. The word "have" and the phrase "but not the cereals" reinforces that perception. So I think the question might be incomplete.

Second, if it's not incomplete, then the range of "1.50 and 2.50 SDG" is a range of 40%, Guy. That is, 2.50 SDG is 40% higher than 1.50. So that would seem to me to be right there w/the hike in the price of fuel.

Finally--and this is the big reason I probably can't respond the way you'd like me to--I'm certainly no expert on the Sudanese economy. My experience in research is that the economic data from such economies are of questionable accuracy and reliability. So, even if I could take what I believe would be the several hours required to dig deeply and try to answer your question, I believe that low-quality data would obstruct my efforts and they would go for naught.

I am happy to try to answer broad questions about economics, of course. I hope my previous response to you affirmed that. I'm not paid to be an expert here, and I'm just a one-man self-employed guy who has to support his family. I hope you'll forgive me for having to beg off at this level of detail, given the amount of time I think it would take and the likely result that I expect.

Now, if you can do some digging and send me some links to reliable and accurate multi-year economic data from the Sudan, I'd be glad to look into it. Even then, however, we might not get to an answer. For instance, it could be that the Sudan has struck some long-term deals in foreign trade that make certain prices less volatile than others. I think that's a long shot, given the little I know about the Sudan, but it is an example of why your question is, I think, incredibly difficult and time-consuming to try to answer.

I'm sorry I can't do better on this, but I hope you understand the constraints under which I'm working. They're purely economic: scarcity. And the scarce resource at my end is time!

Take care, and best regards--

Warren

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