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No. The dollar is not doomed.
But the government is sure trying their darndest!
The potential is certainly out there. But it is only potential. An awful lot is telling against it and those factors have been overly discounted.
ONE of the few calamities that has not befallen the world economy during the past two years is a dollar crash. During the bubble era that preceded it, many (including The Economist) fretted that foreigners, tiring of America’s gaping external deficits, would send the greenback slumping and interest rates soaring. In fact, the opposite occurred. The crisis began within America, and the deeper it became, the more the dollar strengthened as fearful investors sought safety in Treasury bills. Between September 2008 (when Lehman Brothers failed) and March 2009 (when America’s stockmarkets hit bottom), the dollar rose by almost 13% on a trade-weighted basis.
Currencies: The diminishing dollar | The Economist
Central banks have been increasing their holdings of Treasuries, not decreasing them.
And the falling dollar, which hit 14-month lows against a trade-weighted basket of six currencies last week, has done little to deter foreign central banks: Their holdings of Treasurys with the New York Fed have risen to a record $2.124 trillion as of Wednesday.
Treasury Sales Loom, but Demand Is There - WSJ.com
Of course, foreign central banks do not have an infinite demand for Treasuries, but they have not stopped buying our bonds thus far.
And the dollar remains king as the world's black market "reserve" currency.
The U.S. dollar, once universally accepted as the world's strongest currency, has been trounced in recent months by everything from the euro to the Brazilian real to the South Korean won. But in the back-alley markets where business is done in many of the world's developing economies, the dollar still reigns.
In jewelry stores in Vietnam, taxicabs in Venezuela and outdoor markets in Nigeria, black-market money-changers say the dollar is still the currency of choice, even though its value has fallen in some cases. ...
"Typically, dollars are king in the black markets of the world," says Kenneth Rogoff, professor of economics at Harvard University and former chief economist at the International Monetary Fund.
Prof. Rogoff estimates that as much as 75% of U.S. notes in circulation, or more than $600 billion, are held outside the U.S. Most of that is likely in what he calls the underground economy, where transactions are made beyond the oversight of government -- much of which is juiced by the black market.
"This money is not in cash registers, it's not in bank vaults," Prof. Rogoff says. ...
For Venezuelans, where the black market plays a crucial role in the financial system, the dollar has retained its status. Residents seeking protection against inflation or a devaluation of the bolivar turn to currency traders. Large companies that need dollars for operations abroad also visit the unregulated market.
"Having dollars is like a barricade," says Arnaldo Morales, a cabby who moonlights as a currency trader, buying dollars from travelers as they enter the country, then selling them to Venezuelans. ...
In Nigeria, sub-Sahara Africa's second-largest economy, currency traders still deal predominantly in American currency. The black-market traders even have their own trade group, the Association of Bureaux de Change Operators of Nigeria.
"The dollar still has dominance in Nigeria," said Alhaji Farouk Suleman, the president of the group. "The exchange rate might not be good, but you know what you're dealing with and that you can use the dollar anywhere you go. I don't see any real shift towards the pound or euro."
Globally, the Greenback Remains King - WSJ.com
No doubt the dollar still remains the single largest holding of world central banks, but of the new holdings the Euro and yen has overtaken the dollar. China, Japan and et el. are praying that their treasury holdings will gain value, no one wants to sell off at a low point.
I've been WAITING for you to come back and restore some damn sanity to this forum!Well, just wait till the trillions the Fed is printing start weaving its way through the system. With no end in sight, it is become more inevitable every day.
Eventually we will have to deal with inflation, but it will not happen until we get deflation out of the way.
I think this may be correct, granted I am just an armchair observer. The government has created quite a bit of money, around a trillion, most of it for the banks, who have it parked at the Fed apparently. It hasn't circulated yet, so there is no inflation to speak of. It has spooked foreign central banks though, who are more determined than ever to get away from the dollar.
Government "printing" is only a part of the total money creation process, the other is the banks lending. When they don't lend, money creation stalls. I guess that's why MZM has hit a plateau.
No. The dollar is not doomed.
But the government is sure trying their darndest!
The potential is certainly out there. But it is only potential. An awful lot is telling against it and those factors have been overly discounted.
NONSENSE! Show me all the money that has been printed. What is the value for money in circulation?
No doubt the dollar still remains the single largest holding of world central banks, but of the new holdings the Euro and yen has overtaken the dollar. China, Japan and et el. are praying that their treasury holdings will gain value, no one wants to sell off at a low point.
Something like 35%-40% of new additions to reserve accounts this year have been in dollars, compared to the 60%-65% composition of total reserves that the dollar comprises. In 2008, the dollar actually gained a percent of total reserves, according to the IMF. It seems that the dollar will slip a little this year however as central banks buy more of other currencies.
It should be noted, though, that the dollar made up less than 55% of total reserves in the 1970s compared to the ~63% today.
The yen and the euro will not replace the dollar. Both Japan and Europe have worse structural issues than we do.
It may be that more reserves go into the yen and the euro but neither will replace the dollar.
The yen and the euro will not replace the dollar. Both Japan and Europe have worse structural issues than we do.
It may be that more reserves go into the yen and the euro but neither will replace the dollar.
By replacing I meant, replacing as the chosen reserve currency.
The yen and the euro will not replace the dollar. Both Japan and Europe have worse structural issues than we do.
It may be that more reserves go into the yen and the euro but neither will replace the dollar.
By replacing I meant, replacing as the chosen reserve currency.
So did he.
Replacing the dollar would mean lots of dollars that can't be spent anywhere but here. It would mean a massive devaluation of dollar holdings by foreign countries. And they won't do that.
By replacing I meant, replacing as the chosen reserve currency.
So did he.
Replacing the dollar would mean lots of dollars that can't be spent anywhere but here. It would mean a massive devaluation of dollar holdings by foreign countries. And they won't do that.
By the way what do you think is going to happen when we have to actually pay for all the promises our government has made, Social Security, Medicare.....massive, massive deficits, which will cause a massive devaluation of the US dollar.
So did he.
Replacing the dollar would mean lots of dollars that can't be spent anywhere but here. It would mean a massive devaluation of dollar holdings by foreign countries. And they won't do that.
By the way what do you think is going to happen when we have to actually pay for all the promises our government has made, Social Security, Medicare.....massive, massive deficits, which will cause a massive devaluation of the US dollar.
Given that the promises will have to be paid some 10-20 years down the line, I have no idea.
Ideally the GOP will get in touch with its Reaganesque side, cut taxes, cut spending, cut regulation and allow the economy to grow sufficiently to pay for all of that.
Alternatively, the Dums will continue to give out cookies and milk to anyone who asks for them and we will be looking more and more like (formerly) Great Britain.
Too early to tell.
You are assuming the economy will not grow at all in the next 20 years. If Obama-nomics becomes law then you are probably right. But somehow I doubt it.
jreeves, nothing matters.
We have a printing press that can pump out any Dollars that other countries refuse to loan us at some point.
We're fine.
And nothing is going to replace the Dollar in reserve currency. Toro's points covered that, and also, the currency that is the reserve currency almost ASSUREDLY has to be backed by a country with military prowess to protect it. Kind of like how we've been using our military lately...but that's a different debate.
In all actuality, at some point, the US is going to collapse Roman Empire style. Maybe not now, or tomorrow, or even 20 years from now. But it's going to happen.
Before that happens though, I'm POSITIVE that there would have to be another country that would be able to replace our position in the world.
As far as that, I only see China when I look at the world map. And they would have to literally invade, conquer, and regime change us.
Otherwise, we're too important to everyone else in the world.
Bottom line though, is that we're 'hussling backwards', as rappers would say, and we've dug a hole we'll literally NEVER be able to get out of. It's just a waiting game at this point.
Try to find the beauty in life and leave it at that.
jreeves, nothing matters.
We have a printing press that can pump out any Dollars that other countries refuse to loan us at some point.
We're fine.
And nothing is going to replace the Dollar in reserve currency. Toro's points covered that, and also, the currency that is the reserve currency almost ASSUREDLY has to be backed by a country with military prowess to protect it. Kind of like how we've been using our military lately...but that's a different debate.
In all actuality, at some point, the US is going to collapse Roman Empire style. Maybe not now, or tomorrow, or even 20 years from now. But it's going to happen.
Before that happens though, I'm POSITIVE that there would have to be another country that would be able to replace our position in the world.
As far as that, I only see China when I look at the world map. And they would have to literally invade, conquer, and regime change us.
Otherwise, we're too important to everyone else in the world.
Bottom line though, is that we're 'hussling backwards', as rappers would say, and we've dug a hole we'll literally NEVER be able to get out of. It's just a waiting game at this point.
Try to find the beauty in life and leave it at that.
Do you really think there is no way out of this? Seriously why doesn't the average American citizen know the dire circumstances involved with all of the US governments unfunded liabilities? This shouldn't be a political issue(even though it is). These unfunded liabilities are something that WILL bring down the US if there is nothing done.
jreeves, nothing matters.
We have a printing press that can pump out any Dollars that other countries refuse to loan us at some point.
We're fine.
And nothing is going to replace the Dollar in reserve currency. Toro's points covered that, and also, the currency that is the reserve currency almost ASSUREDLY has to be backed by a country with military prowess to protect it. Kind of like how we've been using our military lately...but that's a different debate.
In all actuality, at some point, the US is going to collapse Roman Empire style. Maybe not now, or tomorrow, or even 20 years from now. But it's going to happen.
Before that happens though, I'm POSITIVE that there would have to be another country that would be able to replace our position in the world.
As far as that, I only see China when I look at the world map. And they would have to literally invade, conquer, and regime change us.
Otherwise, we're too important to everyone else in the world.
Bottom line though, is that we're 'hussling backwards', as rappers would say, and we've dug a hole we'll literally NEVER be able to get out of. It's just a waiting game at this point.
Try to find the beauty in life and leave it at that.
Do you really think there is no way out of this? Seriously why doesn't the average American citizen know the dire circumstances involved with all of the US governments unfunded liabilities? This shouldn't be a political issue(even though it is). These unfunded liabilities are something that WILL bring down the US if there is nothing done.
The average American citizen knows only what the TV teaches them.
We started really going downhill when every household obtained a TV. We got fat, lazy, complacent, apathetic, you name it.
Besides that, there is the entitlement syndrome thing. Many people feel that it is our duty as citizens through our tax dollars, to take care of others.
It's strange, man. Becuase I'm a fiscal conservative, and I disagree with welfare handouts almost 100%. But there are some things I just don't mind my tax dollars going to. Like food stamps for a single woman with a child, and is going to college, for instance. But there needs to be strict standards that are closely monitored.
SS, Medicare, Medicaid...I don't know. Maybe they made a lot more sense when they were first thought of, but in hindsight, it's hard for me to understand how some people still support them. But most people don't even have the first clue about the fiscal reality of them.
At this point, how do you turn back? Cut off the elderly from care and income? Raise the age of retirement?
I'm still a strong proponent of cutting a lot of money from the military budget. We're killing ourselves spending money overseas fighting cavemen and trying to maintain alliances. It's ridiculous, and the founders are assuredly rolling in their graves over it.
We can cut a lot from the defense budget and it wouldn't have such an immediate negative impact as cutting Medicare or SS, or welfare, etc. would.
You've agreed with me in the past on the defense budget issue, too. I mean, come on man...almost 200 countries...REALLY???
