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The dollar has little risk of losing its place as a reserve currency. Current deficits are manageable.
The deficits certainly are. The problem is the credit creation mechanism which spews far more money unproductively. Deficits spend on real infrastructure could have done much to help preserve the reserve currency which is what they have ironically cut. Our finacial incentives are all designed to make us save during lack of demand. Saving is only effective during high consumerism but the lemmings of our financial system will have nothing of real economics in lieu of their numerological, Pythagorean like mythologies.
The dollar has little risk of losing its place as a reserve currency. Current deficits are manageable.
Quote:
Originally Posted by Jean71
Not quite.
This just in from The Doctor:
Quote:
Oh, dear. I’m starting to notice a shift in the scare talk. Cries that we’re about to turn into Greece, Greece I tell you are getting a bit fainter, maybe because of what I’ve been writing. But taking their place are dire warnings that we’re endangering the dollar’s role as a reserve currency.
Urk. People who talk like this generally have no idea what they mean — that is, they have no idea what the dollar’s role really is, what might endanger that role, and why it matters (to the extent it does). In fact, I’d suggest that there’s almost a Godwin-like principle here, which is that any extended economic discussion ends up with people invoking the need to defend the dollar’s international role — which is in effect a concession that they’ve lost the rest of the argument.
So, what is the dollar’s international role?
...
(Read on)
As for the currency, thats a different story. It's been posted here numerous times that our dollar is st it risk. Mainly from China. I'm not going to repeat all that if you simply going to choose to ignore it.
As for the currency, thats a different story. It's been posted here numerous times that our dollar is st it risk. Mainly from China. I'm not going to repeat all that if you simply going to choose to ignore it.
This new book from someone who specializes in the Chinese financial markets:
China has a great deal of basic social/economic restructuring to do before it can move up as a first world nation and have a significant reserve currency position.
China has a great deal of basic social/economic restructuring to do before it can move up as a first world nation and have a significant reserve currency position.
The least understood requirement is that one must import more than they export. Why? Otherwise the currency will wind up back to China which is like putting the Wiemar Republic on a gold standard.
If my IOUs are to be used as money then I cannot pay them off. This applies to China. US trade deficits print the money in the world. That is the reason why the rest of the world would get creamed when the US economy went sluggish. Large trade deficits from the US supply the finance.
[SIZE=-1]If the United States stopped running balance of payments deficits, the international community would lose its largest source of additions to reserves. The resulting shortage of liquidity could pull the world economy into a contractionary spiral, leading to instability.
[/SIZE]
[SIZE=-1]Its been happening before ou[SIZE=-1]r[/SIZE] very eyes for decades even as most [SIZE=-1]people think Modern Money [SIZE=-1][SIZE=-1]Theor[SIZE=-1]y [/SIZE][/SIZE] is crazy. [/SIZE][/SIZE][/SIZE]Too bad it has one of the soundest empirical basis of any theory then.
People use debt as money and its about time more than 1% of the population understands this. If China does not go into debt, it can't be the reserve currency.
The least understood requirement is that one must import more than they export. Why? Otherwise the currency will wind up back to China which is like putting the Wiemar Republic on a gold standard.
If my IOUs are to be used as money then I cannot pay them off. This applies to China. US trade deficits print the money in the world. That is the reason why the rest of the world would get creamed when the US economy went sluggish. Large trade deficits from the US supply the finance.
[SIZE=-1]If the United States stopped running balance of payments deficits, the international community would lose its largest source of additions to reserves. The resulting shortage of liquidity could pull the world economy into a contractionary spiral, leading to instability.
[/SIZE]
[SIZE=-1]Its been happening before ou[SIZE=-1]r[/SIZE] very eyes for decades even as most [SIZE=-1]people think Modern Money [SIZE=-1][SIZE=-1]Theor[SIZE=-1]y [/SIZE][/SIZE] is crazy. [/SIZE][/SIZE][/SIZE]Too bad it has one of the soundest empirical basis of any theory then.
People use debt as money and its about time more than 1% of the population understands this. If China does not go into debt, it can't be the reserve currency.
I've been called a lot of crazy things in my day, but never a 1%'er! <LOL>
I've been called a lot of crazy things in my day, but never a 1%'er! <LOL>
I say we say something to the IMF who uses too much formating..
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