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We all know that the paper dollar is constantly losing purchasing power, and that all fiat currencies eventually fail. On a scale from 1-10, how likely is the USD to collapse in the next 3 decades? With 1 being an infintesimally small probability and 10 being an absolute certainty.
Why or why not is a dollar failure likely, how would a currency collapse happen, what effects would it have on American society and the global economy, and what should a prudent saver do to protect himself? Are precious metals, land/property, or even Bitcoin good protection measures?
Go read some Ziehan, or better yet, just watch his most recent lecture on YT....they are only about 45 minutes long, but he explains in simple terms why the next century is an American century, and a gilded age at that. The rest of the world (The whole thing) will fall into a depression, but the US will only get richer. His argument is based on data, not so much opinion, which is why he is so convincing.
Also, as to the true value of the dollar, that lies in the fact that the US dollar is the reserve currency of the planet and so long as the US controls the SWIFT mechanism this fact will never change. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a mechanism that allows for global financial transactions. When Bank A wishes to send money to Bank B they use this mechanism. The US, under Obama, made it so that the US can lock any country or entity out of this mechanism with the flick of a pen. This is important because nearly all international trade takes place in the dollar. For example, if a Mexican company wants to trade goods with a Japanese company they do not exchange goods for Peso's or Yen, instead they exchange their currencies into dollars, trade the dollars and then exchange them back into their home currency once again. Even within the EU, which have access to the Euro, they will exchange for dollars first! That is what it means to be the reserve currency! Because we have such complete control over the currency through both the Fed and SWIFT, we control it almost totally. Demand for dollars is extremely high all over the globe because of these facts, so the dollar will not crash in our lifetime. It just won't
Go read some Ziehan, or better yet, just watch his most recent lecture on YT....they are only about 45 minutes long, but he explains in simple terms why the next century is an American century, and a gilded age at that.
Anybody who makes predictions a century out is foolish. Too many things can change too quickly. As one example, the internet as we know it today is only about 25 years old. Who back in 1919 would have predicted such a paradigm change?
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Also, as to the true value of the dollar, that lies in the fact that the US dollar is the reserve currency of the planet and so long as the US controls the SWIFT mechanism this fact will never change. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a mechanism that allows for global financial transactions. When Bank A wishes to send money to Bank B they use this mechanism. The US, under Obama, made it so that the US can lock any country or entity out of this mechanism with the flick of a pen. This is important because nearly all international trade takes place in the dollar. For example, if a Mexican company wants to trade goods with a Japanese company they do not exchange goods for Peso's or Yen, instead they exchange their currencies into dollars, trade the dollars and then exchange them back into their home currency once again. Even within the EU, which have access to the Euro, they will exchange for dollars first! That is what it means to be the reserve currency! Because we have such complete control over the currency through both the Fed and SWIFT, we control it almost totally. Demand for dollars is extremely high all over the globe because of these facts, so the dollar will not crash in our lifetime. It just won't
I will readily admit that I am not a banking expert by any means, so I took a few minutes to read up on this. Assuming the wiki article is correct , almost everything you say is wrong.
SWIFT is a European institution, and the US has one of three data centers necessary to operating swift. Transactions that involve US currency do go through the US data center, but according to the article, that is only about 1/2 of the large transactions using the system.
That is certainly sizable, but not a monopoly as you imply. If 1/2 of the transactions do not use US dollars, it seems that it would be possible to reduce US denominated transactions over time in some way.
Although you claim the US has complete control, it does not.
Gold maintains its value because it does not corrode like buildings, food, clothing, artwork, fuel, or roads. Gold doesn't cost you money to maintain like animals. Gold is easier to trade than economic activity. Most trades people don't want to trade their service for a service that they don't need now or ever. They will trade for gold though. They know that they can trade the gold for a service that they do need.
This is all true, but begs two questions. First, can't we find some better substitute for means of exchange, than gold? And second, isn't it here merely the case, that we choose gold because of the useful properties that you enumerated... rather than for its intrinsic value?
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Originally Posted by artillery77
..30 years from now the epicenter of the economic world will be firmly in Asia. The "West" has will start punching at weight again from its oversized stature of the past 200 years...
And that’s really the core theme of our age. Everything else in economics or geopolitics – tariffs, immigration, Brexit, “fiat moneyâ€, theft of intellectual property, demographics, the pension crisis, “identity politics†– is all subsumed by the inevitable rise of Asia. It will probably take longer than 30 years; it might be 130 years, or some such number. But it’s inevitable. And today’s throes and tantrums are just a desperate flailing against the inevitable.
Nationalism – and national currency! – is only attractive as a rallying-cry, when your nation is strong, or can potentially become strong. But if a new nation comes along to dominate, one’s own nation isn’t so attractive for business, investment or commerce. It is better to “globalizeâ€, meaning, to try to erase national boundaries, so that maybe the new-strong would be willing to deal with the formerly-strong. Perhaps people with money realize this, which is why people without money resent “globalism†and are willing to harm their own selves in the interim, in Quixotic effort to stymie China’s rise.
It still seems to me, that the 21st century will remain thoroughly American. Others in this thread have already mentioned, quite wisely, that nobody trusts China… whereas even investors or sovereign funds who ideologically might hate America, nevertheless trust its markets. Everyone the world over clamors to buy American real estate –at least real estate in the nicer places, like NYC or SF (not my locale!). Who wants a house, at least for investment-purposes, in Beijing?
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Originally Posted by Taggerung
My understanding is that the US ended being the worlds dominant currency not due to transparency or strong fiscal policy, but rather essentially by accident. We were the only industrial power left standing after The Event and we had 2/3s of the worlds gold.
The World Wars were catalysts. They accelerated a transformation that was already foreordained. Even in 1890, the US was poised to eventually dominate, the only question being one of time. Perhaps had Europe not wracked itself by fratricidal slaughter, today’s world would not be so uni-polar. The possible alternatives are unfathomably vast. But it still seems to me, that in some capacity, the US would have emerged as the dominant power in the 20th century.
"In 1944 at Bretton Woods, as a result of the collective conventional wisdom of the time,[15] representatives from all the leading allied nations collectively favored a regulated system of fixed exchange rates, indirectly disciplined by a US dollar tied to gold[16]—a system that relied on a regulated market economy with tight controls on the values of currencies. Flows of speculative international finance were curtailed by shunting them through and limiting them via central banks. This meant that international flows of investment went into foreign direct investment (FDI)—i.e., construction of factories overseas, rather than international currency manipulation or bond markets. Although the national experts disagreed to some degree on the specific implementation of this system, all agreed on the need for tight controls."
The system seems like a stunning breakthrough of goodwill amongst the industrialized nations. If country X is running a trade surplus with country Y, the funds should be used to be reinvested in country Y to enhance their production ability.
This is precisely what is being done. The massive trade surplus of the USA at the end of the world that went on well into the following decades was pushed back into Foreign Direct Investment. The exception became Japan, which really didn't want or need foreign direct investment as savings rates were so high, and the much bigger exception of China, which was pretty blatant in using its proceeds to establish power in the currency markets.
The other is Germany, which can run up huge trade surpluses, but now the currency remains the same across borders. Exacerbating the pain of the PIIGS in Europe.
The reality is that Nixon couldn't afford a gold standard at $35/oz as there were significantly more foreign dollars in existence, and these dollars will perpetually increase as these are forever being loaned out. In reality, any currency that is tied to a fixed amount of anything will fail if the currency is also available to make loans with.
Economies that are interesting to me are ones that allow for land sales are generally made in gold. Someone may borrow local currency to acquire the gold, but the loans are not made in gold themselves. This seems like a more realistic alternative to a stable value coin. If gold could be deposited for digital gold coins, these could potentially be more easily stored, traced, traded etc. than physical specie. The coins truly could be limited.
Now, it wouldn't have to be gold either. Our closest alternative is a forever stamp. It's worth something. Transportation costs may come and go, but it is an effective peg for it's symbolic currency of a stamp.
I don't know what the eventual answer will be, but if necessity is the mother of innovation, and foreign governments have a decided interest in not continuing to pour surplus funds into Treasuries...something will be found in the next 30 years.
Total collapse within 30 is unlikely so long as there's no major economically altering black swan event... like a biological terrorist attack. Japan is bulging with debt, but the YEN still holds its value.
On the other hand Republicans seem to have forgotten how concerned they were about debt only four years ago. Now both parties seem to be willing to tolerate higher debt. Ray Dalio keeps saying that the US will "monetize" its debt away, bringing higher inflation. In 1980 the SS COLA was around 14.3% (https://www.ssa.gov/oact/cola/colaseries.html). At that rate, assuming no new debt, 80% US debt would be inflated away in 10 years.
A U.S. dollar collapse will take everyone other fiat currency down with it...
That's exactly what the New World Order pushing global elite want. They want to collapse all the world currencies in favor of a single, cashless, electronic currency. There's no better way to bring that about than a financial crisis (engineered by them, of course).
Not necessarily, if first the usd loses it's reserve currency status it could plummet vs the other currencies.
A dollar collapse would be a serious world altering event. But some economies might survive to carry on and grow more or faster as a result of the USA's physical destruction.
That's exactly what the New World Order pushing global elite want. They want to collapse all the world currencies in favor of a single, cashless, electronic currency. There's no better way to bring that about than a financial crisis (engineered by them, of course).
No modern and successful nation wants to lose its monetary sovereignty.
Maybe with some event causing massive world wide destruction the remaining elite might be able to pursue such a course.
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