http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html?nclick_check=1 I have been saying for a long time that our profligate spending will eventually cost us our reserve currency status. That day of reckoning appears to be drawing close. Russia proposed this very same thing a week ago, but they have no clout and nobody takes those buffoons seriously. However, China demanding a new reserve currency is a whole different ball game. Now we need to take notice. All it takes now is for the Arabs to jump on board and it will be curtains for the dollar's reserve currency status. When this thing eventually comes to pass, and I believe it will in time, the dollar will be one of the currencies that make up the basket along with the yen, euro, sterling and who knows what else. But the artificial demand for the dollar will collapse......central banks, companies and individuals will no longer need as many dollars and will be able to easily make transactions and carry other currencies. Bernanke is running the printing press at full power. It appears the Democrats now running Washington clearly have no intention of addressing the coming entitlement debacle. The Chinese have decided to make a hasty escape from the entire mess..........and who can blame them?
I'll take it seriously when they stop artificially pegging their currency to the dollar. Until then it's chest puffing.
I am so delighted the currency I hold money in is poised for a big fall because of our disastrous policies. I get a warm feeling. Seriously. Time to diversify.........in anything other than the dollar. Naturally, I'll keep my mortgage in dollars because I have no other choice but, most importantly, I will be able to pay it back in depreciated dollars.
Yeah. I am wondering how they are going to make this jibe with the dollar peg. Are they going to unpeg it with this SDR or what? I don't think I will call their bluff. I think I'll diversify. What tells me is that this is not a bluff is that it came from the central bank governor and not some hack in the Finance Ministry or Communist Party.
Well, I have been predicting this for a long time and am somewhat positioned to take advantage of it. But this is the end game for the United States. No more running perpetual monster twin fiscal and trade deficits.
Indeed that would be wise, to have all your long term debt in US dollars would be the ideal think to do.
This is all going to end disastrously, but there isn't a way around it. America created the problem with it's unending trade of green paper for other nation's stuff, but it could only work if other countries went along with it and perverted the world money supply in order to keep it going.
Conducting business with other nations did not cause this problem. It was the billions and billions that we have printed over the past year and the trillions we have financed abroad.
I've been saving an old truck I have precisely for this instance. I'll sell it in about a year for $2.5M and pay off all my debts.
Spejcic is right. We have grossly consumed more than we have produced via sending greenbacks abroad for mostly consumer goodies. That will all come to an end. The good news is that it could lead to an eventual revival of American manufacturing way down the road.
I have a friend who bought a billion Zimbabwe dollars (or whatever they are called) on Ebay for a dollar or something.
It would take a tremendous sea change for that to ever happen. I suppose that, if hyper-inflation were to indeed arrive, the $75 p/h paid to employ auto workers would be a drop in the bucket and maybe the US could begin to compete again. Either way, I'm not very nationalistic so it really doen't matter to me where things are made. Most of what I sell is made in India and Indonesia, to be honest.
If the world had actual free trade instead of a government-subsidized anti-protectionism, pretty quickly the world would have a large bunch of American green paper and they wouldn't take any more until they could use the ones they already had. Things naturally balance out. But it would mean that we live with less and, more importantly, those other nations have oil/labor output/material that has no where to go. But instead they conspired to keep the situation going. They were willing to take and keep green paper for stuff, year after year. It's like a bar that lets you keep a tab and never calls it in for decades. Wouldn't you get used to drinking Dom Pérignon every day? It takes more than one party to make this mess.
The peg has gradually been adjusted to a real exchange rate since the 1980s and has been finally lifted in 2005, so you can take it seriously...I still don't though, because China needs the Dollar. They have no choice, because given the fact that they own the biggest Dollar reserves out there, China would be the biggest loser of a Dollar-depreciation.
Taking green paper for stuff? How is that any different than me going the supermarket and giving Mr. Walton $50 for some milk, eggs, and steaks? If your talking about taking the green paper and keeping them to finance our debt, as in the Chinese have close to 1 trillion in US reserves, then you will notice I am in agreement with you.
This is sending a message to the Treasury Department that if they keep printing greenback as if there is no tomorrow then major central banks will have to diversify. It all has to do with the over production of paper money called Dollar. Chinese are trying to maintain its value while Bernanke keeps printing more.
Yes it is. And Obama realizes that the biggest problem with health care is the cost. We spend twice as much in GDP terms as everyone else. Unfortunately, he proposes spending EVEN MORE MONEY, without ever really addressing the cost issue. You are not going to save 10's of trillions by fiddling with medical records. Until somebody addresses the cost inflation in the medical sector and takes on the medical-industrial complex, this is all mental masturbation and eye-wash, nothing else.