Thread: US dollar decline, or collapse?

Originally Posted by Texpat

the founding Nine should have left the whole thing as an EEC as opposed to an EU

That would fall pathetically short toward satisfying their uncontrollable, innate yet futile urge to compete with you-know-who.

And you say I'm obsessed with the US . . . mate, your glass is empty, better fill it up again.

Ok, let's discuss this. I presume you're talking economics, though your wild turkey-blurred brain might not quite understand that.

Nah, let's not discuss it . . . just a question:

EVERY country competes with one another . . . don't they? Isn't that the concept of capitalism? Competing markets?

Hic!

EVERY country competes with one another

If that's the case why did those European countries "introduce the Euro to cut costs in cross border business?"

Sounds like collusion to me.

Originally Posted by Texpat

If that's the case why did those European countries "introduce the Euro to cut costs in cross border business?"

I'll give you a BIG hint here, Texpat . . . the answer to your question lies in the question itself . . .

Here's a 10 minute clip worth watching: Oil Bourse, foreign currency reserve diversification, the CPI lie based on Geometric ajdustment, and the Gold Standard, and secret M3 Money Supply:

Comments and opinions? I see it the way Max Keiser does, as I am a layman.

Watching investors fleeing into the perceived safety of US Treasuries is akin to watching people board the Titanic in the movie - you know that they are doomed. This is because the United States is totally bankrupt - more than bankrupt in fact, since its debts are physically impossible to repay in any circumstances and what we are witnessing now is the cowards way out - the creation of money in whatever quantity is necessary to prevent total gridlock.

Clive Maund
Clive Maund

Originally Posted by Mid

Watching investors fleeing into the perceived safety of US Treasuries is akin to watching people board the Titanic in the movie - you know that they are doomed. This is because the United States is totally bankrupt - more than bankrupt in fact, since its debts are physically impossible to repay in any circumstances and what we are witnessing now is the cowards way out - the creation of money in whatever quantity is necessary to prevent total gridlock.

Clive Maund
Clive Maund

I am a bit confused (as a layman) why the short term 4-week Treasury (t-bill) rate is 0%.

But yes, I think the US government is headed towards insolvency.

Insolvency is when an individual or organization or government can pay the debts when the bill become due.

Bankruptcy, is where the US is headed, unless painful remedies are made.

Here's another segment on the US dollar:

If it's zero percent, guaranteed, my mattress is a better deal.

Originally Posted by HungryHeart

I think once the election is over and Obama wins things all around will start to stabilize.

I think you are mistaking 'change' for 'miracle'.

Change takes a long time, a lot of effort, and sacrifices - none of which will happen in 6 months. The current mortgage crisis and bailouts, and handouts to the auto industry are just the tip of the iceberg -- what do you think will happen once people start defaulting on the massive credit card debt over the next 6 months, along with further escalating mortgage defaults...?

In general, it will take a minimum of 3-4 years to start seeing the possibility of hope of a turn-around (note the choice of words) - all you will get in the interim is a mirroring of what the stock market does -- every couple of days, it bounces up on some statement of 'salvation' or 'turning a corner' only to drop again a few days later when reality sets in.

Yes, people will hope things get better (and, eventually, they always will), but it won't be a miracle 6-months turn-around. If you believe that, you might as well stand in line to welcome throngs of tourists in 6 months at Suvarnabhumi...

Originally Posted by Texpat

If it's zero percent, guaranteed, my mattress is a better deal.

Last week it was sub zero, the thing is that so many folks desperately want to show they have decent securities on their balance sheets they have pushed the yeild down in doing so.
This is why the dollar is strong, huge amounts worldwide have flowed into the one place that they believe their money is safest.

That's the leap humans took hundreds of years ago into fiat money.

Backed by governments.

There are two sides to the $US. One is the same as most countries where its value is based on the countries ability to produce real goods and services for trade. The other is the fact that the $US is the worlds default trading currency and can print their way into or out of debt.

Its a bit like one tribe living on the coast trading seashells with the tribe in the mountains in exchange for pigs and yams. Not a bad deal if you can swing it.
Owning the mint for the worlds default trading currency puts the $US in a very unique trading position. The $US will remain strong as long as people in other countries have faith in its value for trading in real goods and services. But ironically, the strength of the $US has started to price USA out of the word market re balance of trade which is now moving into the negative. For many decades post WW2 USA was a big exporter of quality manufactured goods. The $US was backed up by an export surplus of goods that had real value. Those days are now coming to an end. These days the value of the $US is backed up with only ever increasing debt. To get that debt paid off and start producing a positive balance of trade normally the countries currency would fall in value as it fell out of favour with international investors. Exports become more competitive and imports become more expensive, --- the debt gets paid off not just in paper money, but in real goods and services. But thats not happening with the $US at all. In these scary financial times people are flocking to the $US as a safe haven rather than investing in commodities and production. This pushes up the trading value of the $US and means the only way the USA can stay afloat is to print more paper money and go deeper into debt. Its not unlike the sub-prime fiasco, but on a much much bigger scale. The whole thing has got to unravel somewhere down the track and the longer it goes on the bigger the fallout will be.

^^ If the US Dollar tanks, guess what happens to the rest of the world's currencies???

Originally Posted by Muadib

^^ If the US Dollar tanks, guess what happens to the rest of the world's currencies???

Two things happen.
1. Those who lent money to US get paid back at 50 cents in the $ compared to when they lent the money (in terms of what it will actually buy).
2. The worlds biggest consumer nation will become a nett exporter instead of a nett importer. Which of course will have a massive impact on the economies of countries all around the world, especially China.

The world is in a great big monetary hole putting faith in a trading currency backed by ever increasing debt. No one wants to face the pain of trying to abandon the $US, so they all agree the best way out is to just keep digging the hole deeper.
Such a system cant go on forever and when the crunch finally comes the biggest losers will not be USA, but those who funded their debt.

What a lot of people forget, or rather choose to overlook is that paper money of any currency has no intrinsic value in itself. Rather its only value is the faith people put in its acceptance as a trading medium for real goods and services.

Trade in real goods and services makes the world go round. When the paper money used for trade gets out of whack with the actual value of the goods traded there has to be an adjustment eventually or the whole system falls down. Zimbabwe for example.

Originally Posted by Muadib

^^ If the US Dollar tanks, guess what happens to the rest of the world's currencies???

Probably won't change their lives drastically. Principally, because a great deal of the world's population is real and therefore their existence is directed this way....

Originally Posted by Muadib

when the currency that all other currencies are pegged to fails,

Well, few currencies are pegged to the USD

Originally Posted by Panda

But ironically, the strength of the $US has started to price USA out of the word market re balance of trade which is now moving into the negative.

I might have agreed with you 30 years ago.

Of course, not everyone agrees. But what are the chances of people leaving T-bills, and the USD?

DOLLAR CRISIS IN THE MAKING
Before the stampede

By W Joseph Stroupe

http://www.atimes.com/atimes/Global_.../KC14Dj04.html

Increasingly ominous clouds are gathering in what could soon be the perfect storm against the United States dollar and against the present dollar-centric global financial order.

The stampede in the making

Investors will begin to stampede out of financial assets such as Treasuries and into hard assets like precious metals and certain commodities whose price has been severely beaten down. These will offer comparatively much safer stores of wealth, ones with a real profit potential. China, via its resource buys, is already blazing the trail, going energetically into hard assets, rather than sustaining its 2008 rate of purchases of Treasuries and other financial assets.

Additional info:
W Joseph Stroupe is a strategic forecasting expert and editor of Global Events Magazine online at Global Events Magazine - W. Joseph Stroupe Editor

Borrow shiploads while the credit is still good. Then when the loans dry up, simply print more money so its value declines and you only have to pay back a fraction of the loans. Thats the advantage the US has by owning the worlds trading currency, -- everybody else pays in the end.

Worth reading here. It's not just Japan and China citing concerns over the value of the USD and the notion of reducing US dollar reserves in favor of increasing holding of other currncies.

U.N. panel says world should ditch dollar

Wed Mar 18, 2009 11:16am EDT

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

Link & Entire: U.N. panel says world should ditch dollar | U.S. | Reuters

Dollar has lost about 50 satang since yesterday, still over 35.50 so I will not run to the bank yet.

US dollar decline, or collapse?

what does one expect when attempting to pay off the car loan with a credit card ..................

inflation next

Originally Posted by Mid

US dollar decline, or collapse?

what does one expect when attempting to pay off the car loan with a credit card ..................

inflation next

Thats the whole idea. And it will work pretty well because USA owns the mint to make the money the credit card company loaned. If its only paying a couple of % interest on the credit card, and it prints enough paper money to reducing its trading value by half, then they get the car for just over half price.

I would be pulling the same scam myself if I could talk my bank into it.

The party was fun while it lasted and everyone had fun, but its over now and someone has to put in the labour to clean up the mess.