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1. Our military (we will invade wherever necessary to shore it up (like when Iraq was threatening to accept something other than USD for oil)
2. There is no world reserve currency to replace us. (although BRIC is trying)
Till #2 happens, we are safe.
Ok, that makes sense.
And thank you for a reasonable answer without calling me names and putting me down. I can never figure out why people think that lowering themselves to the likes of a kindergarten bully and being angry gives weight to their arguments. I just feel sorry for them.
If you are really concerned about the collapse / total devaluation of the dollar, then why haven't you traded most of your dollars for tangibles like gold, silver, platinum, whisky, ammunition, fire arms, canned food, etc? Basically, why haven't you shifted to things that can be used for barter/trade after the disappearance of the greenback?
IMO, there's only two true signs that the dollar has fallen:
When you can't pay your taxes with dollars.
When it takes a wheel barrel full of dollars to buy a loaf of bread.
Neither of those situations appears on my horizon.
Thousands of economists keep predicting collapse every day. Sure one of them will be right when there is a recession. Economies are too complex otherwise u would have computer software forecasting stock prices.
And thank you for a reasonable answer without calling me names and putting me down. I can never figure out why people think that lowering themselves to the likes of a kindergarten bully and being angry gives weight to their arguments. I just feel sorry for them.
Because people get tired of "the sky is falling" statements, and come to look at them with derision.
Is the US artificially proped up by our currency being used the world over: sure.
Are our "chickens going to come home to roost" one day when the world 'dumps us': absolutely.
Is it likely it will happen in my lifetime: yes
Is it going to happen in the next 365 days: nope (for the reasons I stated.)
Do people not like to think about this artificial bubble they have lived in all their lives being popped and respond with "it can't happen here" thinking: yes.
Do those of us who have spent time in third world country's know better: yep.
No point trying to change people, just go about your day and don't react to either "the sky is falling" or "it can't happen here"
I was listening to an interview with Peter Schiff (who predicted the 2008 crash -- about 4-5 years before it happened -- and he hit it right on the head -- no, he had the year right but he was one month off) and other economists who say the same thing: that the dollar isn't going to collapse a little but that it's going to collapse A LOT.
And I remember Schiff predicting the 2008 recession -- because I talked about it with my family, friends and coworkers (who couldn't stop laughing at me). And I figured, at that time, that Schiff was dead wrong and everyone else was right. Well, we know what happened. And I had made some not-good financial moves in the 4-5 years leading up to the 2008 recession.
So now that Schiff is talking the collapse of the dollar -- which really would collapse our whole economy and would reverberate around the world -- I thought we might just talk about the possibility and how we would prepare for it.
Do you really believe the economy is improving? I certainly don't. I wouldn't even if I were one of the 1% who has greatly benefited and is still benefiting from the recession. I mean, how can anyone believe the economy is improving?? Even our own usually-lying government says that the average worker is less well off today than he/she was 40 years ago.
So are we going to pretend that the collapse of the dollar will never happen or are we going to think about it and do a little preparing?
If you follow Shiff, you must know he has been wrong, not right, over the last five years. This is what Shiff said:
"You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates and unemployment."
What Schiff does is then double-down on being wrong by claiming that CPI is fudged and we really are having hyperinflation.
However, the smart people at MIT created the Billion Prices Project as a third-party estimate of inflation. This project monitors the daily prices of over 5 million online transactions in over 70 countries. Guess what? This metric only varies slightly from the CPI and it tells the exact same story — namely, that inflation is not a problem.
If there has been any model that has been correct during this crisis, it has been the Keynesian model. Austrians have been wrong consistently.
As Krugman said:
Quote:
Now, the thing about Schiff and all the other Austrians predicting runaway inflation is that they were right to make this prediction given their model. If you believe that a recession is caused by a failure on the production side of the economy, the result of past malinvestment or something, you should also believe that any attempt to correct this decline by expanding credit will simply result in too much money chasing too few goods, and hence a lot of inflation.
By the same token, the failure of high inflation to materialize amounts to a decisive rejection of that model. (And no, it’s not because the numbers are fudged; independent estimates don’t differ significantly from official inflation.)
More generally, the past five years have seen some really dramatic policy actions — huge expansion of the Fed balance sheet, very large deficits, drastic austerity measures in some countries. These kinds of actions are, in effect, natural experiments that give you a lot of information about the validity of different economic models — and the models that have worked are demand-side, more or less Keynesian approaches, while everything else has been wildly wrong.
1. Our military (we will invade wherever necessary to shore it up (like when Iraq was threatening to accept something other than USD for oil)
2. There is no world reserve currency to replace us. (although BRIC is trying)
Till #2 happens, we are safe.
Even number 2 isn't necessarily a concern.
First of all, to the OP, define collapse, precisely. What would it mean in real economy terms? Describe it economic sector by economic sector, and not some vague notion of collapse.
To be sure, over the past 30 years or so, the US has outsourced the bulk of its low/middle technology manufacturing, but it is still an engineering, management, agricultural and manufacturing powerhouse in its own right, and even its own domestic fuel sources have increased recently.
To be sure, the US economy would suffer deprivation if foreigners were to suddenly refuse to buy its bonds and export commodities and merchandise to it. But it would have to be sudden and somewhat unexpected. Otherwise, the US economy could adjust, in due time, if the dollar were no longer the world's reserve currency and it depreciated even by 50%. Perhaps the rate of population growth would decrease, and maybe that wouldn't be a bad thing either.
But globalization means much greater wealth and power for those with technology, engineering, technology, military, manufacturing and agricultural power.
Power wears down those who don't have it.
In either case, a collapse of the dollar would be more a political phenomenon than economic, and I don't see the US breaking up politically any time soon, at least until there is no local renewable energy source as efficient as fossil fuels, and maybe not even in that case.
In short, stop fantasizing about a collapse of the dollar, it belittles your intelligence and ours, unless you are talking about a rather normal market depreciation, which could be as much as 30% in a year and you are a currency trader.
Otherwise, do yourself and us a favor and focus your energy on improving your marketable skills in the global and domestic economies.
If in fact the dollar drops in value, US goods and services become a bargain. Manufacturing moves back for the low cost. Other nations outsource data work to us. Because of this, China moves to prop up the dollar.
I was listening to an interview with Peter Schiff (who predicted the 2008 crash -- about 4-5 years before it happened -- and he hit it right on the head -- no, he had the year right but he was one month off) and other economists who say the same thing: that the dollar isn't going to collapse a little but that it's going to collapse A LOT.
And I remember Schiff predicting the 2008 recession -- because I talked about it with my family, friends and coworkers (who couldn't stop laughing at me). And I figured, at that time, that Schiff was dead wrong and everyone else was right. Well, we know what happened. And I had made some not-good financial moves in the 4-5 years leading up to the 2008 recession.
So now that Schiff is talking the collapse of the dollar -- which really would collapse our whole economy and would reverberate around the world -- I thought we might just talk about the possibility and how we would prepare for it.
Do you really believe the economy is improving? I certainly don't. I wouldn't even if I were one of the 1% who has greatly benefited and is still benefiting from the recession. I mean, how can anyone believe the economy is improving?? Even our own usually-lying government says that the average worker is less well off today than he/she was 40 years ago.
So are we going to pretend that the collapse of the dollar will never happen or are we going to think about it and do a little preparing?
Economy is most certainly not improving. IMHO, even outwardly appearing thriving businesses in reality are not. Interacting with them even briefly, you become aware that cost/expenditure containment is primary; taking advantage of opportunities or pursuing long-term strategies happens at a fraction relative to before the 2008 crash.
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