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Old 05-12-2012, 01:51 PM
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Why the Dollar's Reign Is Near an End.

Up to now the dollar has been the world's safe haven.

Dollar's Reign as World's Main Reserve Currency Is Near an End - WSJ.com
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Old 05-12-2012, 01:53 PM
Location: Atlanta
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Originally Posted by howard555 View Post
Look at it this way:

1. What are the long term consequences of our national debt? The consequences are severe.
The payments we are making toward it each year, are only paying the "interest" and we are printing more dollars to make those payments. Something has to give.

2. We want to pay China the $1.1 trillion we owe them.
They refuse to take gold.
They refuse to take dollars.
They want us to pay them with the new world's reserve currency, which is no longer the dollar.
We can not buy the new currency, because no one will take dollars.

China is currently hoarding gold. If they could buy up all of it, they would. They are buying every ounce they can get.
Why should we worry about paying back China in dollars? If they refuse to accept dollars, then the debt is automatically forgiven, as the loans were in dollars in the first place. China's just screwed themselves out of $1.1 trillion...lol. It's no different than having a bank loan in the amount of $10,000 at 5% interest over 5 years. If the value of the dollar goes down by 1000% in year 2 of that loan, the bank can't just say, you have to pay us back in Euros or gold, or whatever. They HAVE to accept dollars for repayment, as that's what the terms of the loans specified.

That's why hyper-inflation may very will be our ticket out of our currently unpayable debt - inflate that dollar a 1000-fold, and viola, you've just cut three zeros off what we owe the rest of the world...lol.

Not a fair thing to do? Whoever said that the United States plays fair?
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Old 05-12-2012, 01:55 PM
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There is the danger that the dollar's safe-haven status will be lost.

Foreign investors—private and official alike—hold dollars not simply because they are liquid but because they are secure.

The U.S. government has a history of honoring its obligations, and it has always had the fiscal capacity to do so.

But now, mainly as a result of the financial crisis, federal debt is approaching 75% of U.S. gross domestic product. Trillion-dollar deficits stretch as far as the eye can see.

And as the burden of debt service grows heavier, questions will be asked about whether the U.S. intends to maintain the value of its debts or might resort to inflating them away.

Foreign investors will be reluctant to put all their eggs in the dollar basket.

At a minimum, the dollar will have to share its safe-haven status with other currencies.
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Old 05-12-2012, 07:17 PM
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Originally Posted by howard555 View Post
We can't pay in gold because we only have $11 billion.


We have over 260,000,000 ounces of gold and the current spot price of gold is about $1,580/ounce.

Do the math.
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Old 05-12-2012, 10:34 PM
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We're still waiting for your answer to the question: What will become the world's new reserve currency?
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Old 05-13-2012, 07:34 PM
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It will continue to be so for the foreseeable future.

Organizing a world currency is a lot more complicated then many may think. The United States is the reserve currency because its the sole super power and trade flows through this country. The only way to over turn that, is to have an even bigger super power. The only up and coming one is China, which will never be trusted by the world with its current government form.

Out of all the major currencies, the United States dollar isn't that week.
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Old 05-14-2012, 10:55 AM
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Originally Posted by Teak View Post

We're still waiting for your answer to the question: What will become the world's new reserve currency?
I only provided the video to the experts who are predicting the demise of the Eurozone over the next few years.
Germany is not going to ruin their economy trying to save Greece and Italy. The first country to leave the Eurozone may be Greece or Germany.

Greece, as of today, is on the brink of leaving the Euro. There will be a run on the banks, when the Greeks realize the banks are going to shut down for a few days, and convert their Euros into their own currency.

As far as the amount of gold owned by the USA, I found an article that the gold we have is backing up the US dollars that all Americans have to the tune of $23 trillion, I think the figure was.
And that is what amount of gold is needed to back up the dollars.
For it to reach the total needed, to back up the dollars in US circulation (much less our national debts) gold would have to reach $2800 per ounce.
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Old 05-14-2012, 04:07 PM
Location: Conejo Valley, CA
12,468 posts, read 15,539,359 times
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All US debt is in US dollars, how the US dollar is valued against other currencies doesn't matter as for as the US debt is concerned. Now, foreign entities may demand higher yields for new debt....but existing debt won't be effected.

Anyhow, the US dollar being a reserve currency has both positives and negatives.... If the US gets off the dollar it won't be doom and gloom for the US, if anything it would be a net positive.

Gold is irrelevant, the US dollar has no relation to gold anymore...
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Old 05-14-2012, 05:19 PM
Location: The North
4,587 posts, read 7,610,950 times
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Haha this stuff is funny. Howard I know you really believe this stuff and if it makes you happy stick with it. However I am going to believe otherwise. Germany leave the Euro? Wow that would be pretty stupid of them. China as a reserve currency? That would destroy all they have based their economy on. Once you control the reserve currency you basically stop being a net exporter because high demand for your currency makes it impossible to weaken it to overcome economic downturns.

I mean if one really understood economics they would be laughing at the mere ideas brought up here. Under what conditions would the "world" decide they didnt want to do business with the largest economy? Why would one not accept dollars in a new reserve currency? Why even fuss over what is the reserve currency when the marketplace makes that decision? Funny people really believe this stuff when its about as crazy as saying someday mothers will no longer care for their children so just how will kids make it?
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Old 05-15-2012, 09:17 PM
Location: Albuquerque
5,549 posts, read 12,838,974 times
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Originally Posted by howard555 View Post
If no one takes the dollar, how do we pay our debt to China?
There are lots of countries that use their own currencies. It doesn't matter if the dollar is the reserve currency.

Our debt to China is in dollars. We will "pay" our debt to by giving them dollars.
It doesn't matter if the Yuan or some other or no other currency becomes the world's reserve currency.

The United States will always be big enough to issue debt in dollars and other countries will have to take the dollars.
They can then exchange the dollars for what they want - Rubles, rubies, Pounds, silver, and so on ...

If you want to calculate the value of something in terms of the Saudi Rial, you just put
it in the calculator and use the exchange rate for whatever known currency you are using.

No one will care. All the dollar debts will be unchanged. They were dollar debts before. They will still be dollar debts after.

Probably the only thing that will make the dollar lose reserve status is all the wealth
transfer and currency controls and offshore banking controls et al that the contgresscritters
are trying to put in place to control people and their money and their freedom.
Originally Posted by user_id View Post
Gold is irrelevant, the US dollar has no relation to gold anymore...
No, this quote is irrelevant.

The dollar has a relationship that is commonly referred to as a price.
It always has had a relation and will always have one until the dollar is dead and gone.

The gold the US has in reserve is an asset. It is the same as the strategic petroleum reserve.
The US government controls it and when they sell some of it, they get the money.

The strategic petroleum reserve has about 700 M bbls in it worth about $100/bbl, so it is a $70 B asset.
( Note that I used easy round numbers so if anyone claims that the amount of oil or the price of oil is not as stated they can go fornicate themselves in advance. )

The gold reserve has about 250 M oz worth about $1,500 so that is a $375 B asset.

$70 B is not irrelevant. $375 B is not irrelevant. They are just insubstantial as compared to the national debt.

Last edited by mortimer; 05-15-2012 at 09:27 PM..
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