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Old 07-20-2017, 03:55 PM
 
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Quote:
Originally Posted by Ro2113 View Post
I just read this interesting article in the Economist about America's strong Dollar policy and how it is tied back to the fact that the American dollar is the world's reserve currency since the end of WWII

It essentially lists the pros and cons of this policy.

https://www.economist.com/blogs/free...njured-reserve

What would be the benefits and consequences of weakening our dollar and excusing it from being the world's reserve currency?
The USD is the king of the worlds reserves since that is the way the world wants it. The USD and its related debt instruments are the most secure and highly sought after and used in the world today. No other currency has enough necessary attributes. Mainly lacking in either security/stability or volume desired to satisfy the world.

IMO in a generation or so, and I'm already saying this for a decade now, China and its currency will emerge and provide another viable alternative. I think that will be great for us, them and the world.
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Old 07-20-2017, 08:57 PM
 
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Why bother to debate it? A tiny global elite decides such things. Ordinary people have no say in it.
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Old 07-21-2017, 06:08 AM
 
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There is a theory out there that everything is decided by some tiny, global elite. As for the US dollar, it's status could hardly be derived in a more decentralized manner. It is people who need to invest or trade internationally who make the case for the USD, and they do it one little trade or transaction at a time.
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Old 07-21-2017, 06:22 AM
 
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Quote:
Originally Posted by Hoonose View Post
IMO in a generation or so, and I'm already saying this for a decade now, China and its currency will emerge and provide another viable alternative. I think that will be great for us, them and the world.
Renminbi is already in growing use as a regional reserve currency in something of the same manner as Australian and Canadian dollars. China however has problems with transparency and with state meddling in the economy. It will also be difficult to continue the pace of growth that they want and need. China is no longer an economic child, but their teen years are apt to be beset with problems. It still seems likely though that adulthood will one day emerge along the sorts of lines suggested.
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Old 07-21-2017, 09:21 AM
 
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Quote:
Originally Posted by Pub-911 View Post
Renminbi is already in growing use as a regional reserve currency in something of the same manner as Australian and Canadian dollars. China however has problems with transparency and with state meddling in the economy. It will also be difficult to continue the pace of growth that they want and need. China is no longer an economic child, but their teen years are apt to be beset with problems. It still seems likely though that adulthood will one day emerge along the sorts of lines suggested.
Hopefully before I croak.

I continue to find it amazing how so many people 'feel' that the USD is doomed to worthlessness due some future excess of USD floating around the world. And yet for another currency to take over, that issuing nation would have to manufacture very much the same prodigious amounts of their money, and then somehow manage to distribute it throughout the world in a timely manner. i.e. basically what the US has done since WW2.
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Old 07-21-2017, 09:49 AM
 
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Even longer than that, but the point is the same. "Since WW2" might apply more aptly to the rise of the EU and the eventual creation of the Euro and its emergence as a global reserve and trade currency. China has been chugging along in that vein, but it has internal systemic albatross factors that may be difficult for it to overcome. As always, the future is uncertain, but it should be interesting to watch it unfold.
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Old 07-24-2017, 04:42 PM
 
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Quote:
Originally Posted by Hoonose View Post
I continue to find it amazing how so many people 'feel' that the USD is doomed to worthlessness due some future excess of USD floating around the world. And yet for another currency to take over, that issuing nation would have to manufacture very much the same prodigious amounts of their money, and then somehow manage to distribute it throughout the world in a timely manner. i.e. basically what the US has done since WW2.
From 2006 until 2013 the Euro Zone floated more banknotes and coins by value than the USA (expressed in USD at current exchange rates). At the peak in 2009 there was almost 30% more Euros in circulation than USD.


Euro/USD Year United States Euro area
-13.4% 2005 $793.99 $687.37
+03.9% 2006 $820.14 $852.15
+23.8% 2007 $828.91 $1,026.07
+22.7% 2008 $889.89 $1,092.01
+28.7% 2009 $928.23 $1,194.66
+17.4% 2010 $982.72 $1,154.10
+09.9% 2011 $1,075.79 $1,182.14
+05.9% 2012 $1,169.13 $1,237.83
+09.2% 2013 $1,241.16 $1,354.86
-05.6% 2014 $1,342.88 $1,267.29
-15.1% 2015 $1,424.92 $1,210.42


When it first happened in 2006 there was a lot of media attention, but it seems to be just another minor statistical blip. I suspect that China with 4X the population means the value of the yuan in circulation will exceed that of the USD. Statistics from China are actually few and far between.

About 88% of the value of Euro-zone banknotes and coins are in four denomination 50 Euros or higher, and roughly 82% of the value of US banknotes and coins are in demoniation $50 or $100. As long as China produces banknotes of RMB100 ~ US$14.82 or less, it will be difficult for them to distribute as much currency as Euro Zone or USA. They will have to introduce a RMB500 banknote and overcome their fear of counterfeits.
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Old 07-24-2017, 05:28 PM
 
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Quote:
Originally Posted by PacoMartin View Post
From 2006 until 2013 the Euro Zone floated more banknotes and coins by value than the USA (expressed in USD at current exchange rates). At the peak in 2009 there was almost 30% more Euros in circulation than USD.


Euro/USD Year United States Euro area
-13.4% 2005 $793.99 $687.37
+03.9% 2006 $820.14 $852.15
+23.8% 2007 $828.91 $1,026.07
+22.7% 2008 $889.89 $1,092.01
+28.7% 2009 $928.23 $1,194.66
+17.4% 2010 $982.72 $1,154.10
+09.9% 2011 $1,075.79 $1,182.14
+05.9% 2012 $1,169.13 $1,237.83
+09.2% 2013 $1,241.16 $1,354.86
-05.6% 2014 $1,342.88 $1,267.29
-15.1% 2015 $1,424.92 $1,210.42


When it first happened in 2006 there was a lot of media attention, but it seems to be just another minor statistical blip. I suspect that China with 4X the population means the value of the yuan in circulation will exceed that of the USD. Statistics from China are actually few and far between.

About 88% of the value of Euro-zone banknotes and coins are in four denomination 50 Euros or higher, and roughly 82% of the value of US banknotes and coins are in demoniation $50 or $100. As long as China produces banknotes of RMB100 ~ US$14.82 or less, it will be difficult for them to distribute as much currency as Euro Zone or USA. They will have to introduce a RMB500 banknote and overcome their fear of counterfeits.
Currency is but small potatoes. The big money is electronic. Here, there, everywhere.
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Old 07-24-2017, 06:47 PM
 
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From 2009 to 2015
the USD banknotes and coins increased by 53.5%
the Euro banknotes and coins increased by 34.0% in Euros, but only by 1.3% when converted to USD at current exchange rates.

Quote:
Originally Posted by Hoonose View Post
Currency is but small potatoes. The big money is electronic. Here, there, everywhere.
While that is certainly true, a lot of economists say not to dismiss currency. Currency is issued by the central bank and has no inherent bankruptcy risk as the central bank cannot go bankrupt, while the primary money supply is now "commercial bank money" that is all created by the commercial banks as a result of loans.

Physical currency was considered somewhat representative of some other asset up until about 1971. After that it was largely considered "fiat" money, although the transition was gradual.

It is becoming more and more popular to no longer talk about physical money and electronic money, but instead to talk about central and commercial bank money. The central banks of northern Europe in particular (Scandinavia and Britain) are talking about leveling the playing field somewhat by allowing the central banks to created an electronic crypto currency using the technology in bitcoin. That way central banks won't be bound by the physical currency.

Sweden in particular with over 60% less currency than they had a decade ago is concerned about the central bank becoming insolvent. The central bank still has a role in setting interest rates, but they support themselves by issuing currency.
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