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We don't take their yen. We take their national resouces. China exports to the United States. They then build up dollar reserves. The dollar is the standard, so they need to hold dollars to "back" their currency. They can buy oil with these dollars....or they can buy U.s government debt to allow us to consume more.
They need dollars. We do not need Yen. We simply want the labor and resources of our colony. They can have our paper that we can create endless amounts of...due to the insatiable demand for dollars.
We are not taking their natural resources, we have such a huge trade imbalance with the rest of the world that I find it ridiculous that you would even suggest such a thing..
Apparently Thatsright19 hasn't heard the news that in 2018, oil will no longer be traded in USD. What happens then? I guess according to his logic, the USD will cease to exist? Oil Not Priced in Dollars by 2018? - BusinessWeek
If that happens, and I doubt the U.s Military will allow it, it would be the single greatest story since the Dollar overtook the Pound as the world's reserve currency.
Nothing would cause more change.
We are not taking their natural resources, we have such a huge trade imbalance with the rest of the world that I find it ridiculous that you would even suggest such a thing..
I'm done with this babbling nonsense
You're not very smart to be honest.
When they send us their wood for chairs, or cotton in clothes, or *name item here*, we are getting their REAL resources and labor....in exchange for paper. We can create endless amounts of money in the FRS. They have a huge demand for dollars....WE DON'T NEED THEIR YEN. THEY NEED OUR DOLLARS. THEY GET OUR DOLLARS BY GIVING US REAL RESOURCES.
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What is little understood, is how the role of US trade deficits and the Dollar System are connected. The United States has followed a deliberate policy of trade deficits and budget deficits for most of the past four decades (since 1971), so-called benign neglect, in effect, to lock the rest of the world into dependence on a US money system. So long as the world accepts US dollars as money value, the US enjoys unique advantage as the sole printer of those dollars. The trick is to get the world to accept. The history of the past 30 years is about how this was done, using WTO, IMF, World Bank and George Soros to name a few.
The dollar is still the only global reserve currency. This means other central banks must hold dollars as reserve to guarantee against currency crises, to back their export trade, to finance oil imports and such. Today, some 67% of all central bank reserves are dollars. Gold is but a tiny share now, and Euros only about 15%. Until creation of the Euro, there was not even a theoretical rival to the dollar reserve currency role.
So long as the US is the sole military superpower, the world will continue to accept inflated US dollars as payment for its goods. Developing countries like Argentina or Congo or Zambia are forced to get dollars to get the IMF seal of approval. Industrial trading nations are forced to earn dollars to defend their own currencies. The total effect of US financial and political and trade policy has been to maintain the unique role of the dollar in the world economy. It is no accident that the greatest financial center in the world is New York. It's the core of the global Dollar System.
It works so: A German company, say BMW, gets dollars for its car sales in the USA. It turns the dollars over to the Bundesbank or ECB in exchange for Marks or Euros it can use. The German central bank thus builds up its dollar currency reserves. Since the oil shocks of the 1970's, the need to have dollars to import oil became national security policy for most countries, Germany included. Boosting dollar exports was a national goal. But since the Bundesbank no longer could get gold for their dollars, the issue became what to do with the mountain of dollars their trade earned. They decided to at least earn an interest rate by buying safe, secure US Treasury bonds. So long as the US had a large Budget deficit, there were plenty of bonds to buy.
Because the world payments system, and most importantly, the world capital markets---stocks, bonds, derivatives—are dollar markets, the dollar overwhelms all others. The European Central Bank could offer an alternative. So far it does not. It only reacts to a dollar world.
Last edited by Thatsright19; 01-28-2012 at 07:33 PM..
If that happens, and I doubt the U.s Military will allow it, it would be the single greatest story since the Dollar overtook the Pound as the world's reserve currency.
Nothing would cause more change.
I highly doubt the US military will have any choice in the matter. Are we going to start WWIII with Russia, China, Iran, et al? They are the ones behind this move away from the USD as the world's reserve currency.
When they send us their wood for chairs, or cotton in clothes, or *name item here*, we are getting their REAL resources and labor....in exchange for paper.
That would create a trade surplus, not a deficit, the exact opposite of what we have
I highly doubt the US military will have any choice in the matter. Are we going to start WWIII with Russia, China, Iran, et al? They are the ones behind this move away from the USD as the world's reserve currency.
That depends. The U.s can spend any amount of money to keep the system in place....as long as it keeps the system in place. That's how we defeated the Soviet Union in the cold war. We locked them into a spending war....one we couldn't lose.
Look at the bullying that's being done to Iran right now. Iran stops accepting dollars. U.s leads sactions that actually attack Iranian oil exports. Iran threatens to shut down the world's oil supply by shutting down the Straight of Hormez if we continue with our sanctions. The U.s sends in 2 fleets. Basically, "you aren't selling your oil to anyone if you don't sell it in dollars".
Do you think Russia and China will risk a war with the United States over Iran? If the U.s can bully Iran back into accepting dollars for their oil (following the opec agreement), dollar hegemony is still in place.
If Russia, China, and Iran get their way...the dollar will collapse. If the dollar collapses, the countries who all rely on exports to us collapse. So basically, if the United States loses...everyone loses.
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We often hear the phrase, "Saved by WWII" when talking about the Great Depression and the 1930s. Back then, the world was in disarray, based on economic constraints rooted in WWI reparations, the expansion and bursting of the stock market, and worldwide abject poverty.
Saved by a war that cost 60 million lives? What was the option? The starvation of the poorest had begun in Eastern Europe, and revolution was in the air in the United States. No one can contemplate the extent of the disaster that is coming now, since we don't conceptualize WWII as being caused by economics.
Perhaps it's time to promote this explanation, so it would be clearer just what kind of a precipice we are now looking over.
That would create a trade surplus, not a deficit, the exact opposite of what we have
What are you talking about?
To have a trade surplus, we would have to export more of our national resources to them. That is not what we want. We want to take their national resouces with our paper currency. We create trade deficits BY DESIGN.
Are you even reading a single thing I post?
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We don't take their Yuan. We take their national resouces. China exports to the United States. They then build up dollar reserves. The dollar is the standard, so they need to hold dollars to "back" their currency. They can buy oil with these dollars....or they can buy U.s government debt to allow us to consume more.
They need dollars. We do not need Yuan. We simply want the labor and resources of our colony. They can have our paper that we can create endless amounts of...due to the insatiable demand for dollars.
It's not a cooincidance that the United States runs trade deficits with pretty much everyone. It's the system we set after we won world war 2 and basically were the only unwrecked nation on earth. After Bretton woods went out when nixon closed the gold window, we created the OPEC oil standard in 1971, which really accelerated dollar hegemony. We are the world's reserve currency.
And as you see, everyone else is starting to get sick of us essentially robbing the world blind of it's resources with our green suitcases of paper money. The problem for them is, we can spend endless money to keep the system in place, and are not afraid to act out aggressively with the military to keep it in place (See: Iraq and Libya recently...also what's going on in IRAN---ie we're destroying their currency").
Last edited by Thatsright19; 01-28-2012 at 08:10 PM..
Its all a wealth transfer scam. 29 trillion in banker bailouts for the mega banks and Jamie Dimon, while programs designed to help real people like Social Security get destroyed through genocidal austerity measures. Destroy the lives of millions so people like Jamie Dimon can pay themselves a record bonus, no thanks.
And as you see, everyone else is starting to get sick of us essentially robbing the world blind of it's resources with our green suitcases of paper money. The problem for them is, we can spend endless money to keep the system in place, and are not afraid to act out aggressively with the military to keep it in place (See: Iraq and Libya recently...also what's going on in IRAN---ie we're destroying their currency").
There is no doubt that USD as the world reserve currency is under attack by a few countries. The biggest 2 are China and Russia that have agreements to trade in their own currencies. India recently agreed to trade with Iran with out USD where they are dependent on 12% of their oil consumption. The measure was taken to get around the sanctions that were imposed on Iran.
I often hear people around here say "we need to pay it back" or "it's out of control". In the Federal Reserve System, debt is money. If all debt was paid, there would be no money. The national debt cannot be paid, because the money to pay the interest is not created.
I also hear people say the U.s dollar is just paper backed by nothing. This is not true. The U.s Dollar is backed by the value of OPEC's oil reserves. Their oil is sold exclusively in U.s dollars which creates demand and gives it backing from a resource far more important in the modern world than gold. You need dollars to buy OPEC oil.
It's also backed by the U.s military, who forces countries to accept it, and they must accept it if they want to export to the largest market in the world.
Please read and understand this before you continue to say things that are not true. Stop blaming left or right. It's the same story.
wow I am not an economist but this sounds so wrong!. dollars being backed by oil are you serious. U.S. military forces countries to accept the dollars, ridiculous!!!! debt witch is beyond of what you can pay is bad! very bad! for anyone including countries, just look at Greece!! you sound like the kind of economist Obama might have in his administration! where do they learn this crazy thing?
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