US Dollar: Tracking the Demise of a Reserve Currency.

[mts]

I dont believe there will ever be a global meltdown, gold and silver may be good for investors buying and selling for profit, gold is priced to high for the average investor to play with, and silver is retreating in value along with the price of oil. Th U.S. will never allow its AAA rateing to erode and the dollar will not dip below a certain level. Price controls will most likely be put on food and other neccesary goods.The middle class will shrink further , the government will take more control over our lives and the sheep will fall in line. Quid- Pro-Quo,we have alredy been trumped and there isn"t much we can do about it.

I don't disagree with you. But the author of this thread does. One truth that I've come to realize is that "nothing ever changes". We have had massive debt and declining dollar values in the past many times. Each time the government does just enough to temporarily "fix" the issue for a little while longer. They don't really want to fix the real problem, just patch it. I expect that we will see the same thing once again. And if I'm wrong, I have plenty of gold, silver, and guns to handle whatever is coming next. But I don't think I'll really need them.

It's ok to be worried. Just not too worried.

 

[motell6]

Nothing wrong with back-ups, I plan on getting a ccw permit myself.
Why just Wednesday about 35 gangbangers went in and a cleaned out a corner 7/11 type store, just a few miles from where I live. Although this is a isolated incident it could happen like a chain reaction across the country.
When folks are hungry they will not care if you have gold , silver or guns.

 

[TheRandyMan]

I dont believe there will ever be a global meltdown, gold and silver may be good for investors buying and selling for profit, gold is priced to high for the average investor to play with, and silver is retreating in value along with the price of oil. Th U.S. will never allow its AAA rateing to erode and the dollar will not dip below a certain level. Price controls will most likely be put on food and other neccesary goods.The middle class will shrink further , the government will take more control over our lives and the sheep will fall in line. Quid- Pro-Quo,we have alredy been trumped and there isn"t much we can do about it.

I don't disagree with you. But the author of this thread does. One truth that I've come to realize is that "nothing ever changes". We have had massive debt and declining dollar values in the past many times. Each time the government does just enough to temporarily "fix" the issue for a little while longer. They don't really want to fix the real problem, just patch it. I expect that we will see the same thing once again. And if I'm wrong, I have plenty of gold, silver, and guns to handle whatever is coming next. But I don't think I'll really need them.

It's ok to be worried. Just not too worried.

You gentlemen appear to have misquoted me. I can't remember saying anything about a "global meltdown"...unless your definition of a global meltdown is the loss of our reserve currency status and a drastic change in our standard of living. What I will disagree with you on is the mantra of "nothing ever changes". There are the concepts of "Critical Mass" and "Tipping Point". If the US existed in a vacuum, the concept of kicking the can down the road...doing just enough to get by...playing politics...might work. But we do not live alone on this planet. We trade and interact. And being the biggest economy in the world our actions have repercussions and reverberations that are felt all over the world.

What has happened is that the governments of the world have an addiction to printing money. The infection has spread to the US. In the past, it didn't really matter if the other smaller economies played with their monetary systems because the IMF (with the US backing) would just forgive their debts and "loan" them another few hundred billion which the US (IMF) would eventually forgive. When the economic "ROCK" of the world became infected with the spending money disease, it changed the equation. Now they don't want our dollars. They are watching our politicians to see what they are going to do. If they decide to kick the can down the road again...it will be another slap to the value of the dollar. Here is a post from a blogger I read recently....

"Ned D, yes you have to trade the gold to get things you can use, just as you trade dollars to get things you use. After all you can't make a dollar omelet or put dollars in your gas tank. The difference is that people and nations are getting tired of the US gov making the dollar worth less each year. (The Fed's stated goal is to see the US dollar worth 18% less in ten years--2% inflation rate)
Gold, silver, and other physical assets can't be created out of thin air, that is why they maintain their value.
For example, a home in 1974 cost around $21,000 or 133 oz of gold. In 2010 the average home is about $170,000 or around 133 oz of gold.
Gas in 1964 was around $0.25 a gallon. Today that same 1964 quarter would buy two gallons of gas as it could be sold for $8.50. We would expect modern efficiencies to lower the cost of goods and services over time, instead because of government inflation we pay more to get less.
The US gov is spending far more than it brings in, the interest is eating up more and more every year. If things don't change, they will collapse. A nation that has a large amount of gold and silver and oil, etc stored up will be better able to survive that.
The real question is not why is Mexico doing this but why isn't the US?"

Right now, non discretionary spending for the US is $2.3 Trillion a year...US total Income Revenue is $2.2 Trillion a year. We don't bring in enough in taxes to cover our NON DISCRETIONARY spending. This would be interest on the debt, Medicare, Medicaid, Social Security and the like. There is another roughly $1 Trillion more money spend on discretionary spending which is defense, governmental agencies, security, parks, etc...

All of this is happening in an ultra low, lowest in history period of interest rates...care to imagine what the debt would be like with a 8% interest rate? A 12% interest rate? Or higher? Hyperinflation will be coming...ask Wal Mart.

There may not be a global breakdown because many countries are buying gold to protect themselves in the event of changing of the world reserve currency and the dethroning of the dollar...but there will be an adjustment period that will be very painful to those holding fiat paper.

Two guys are camping out in the woods and talking about what they are supposed to do if they come across an unfriendly bear. One recites to the other that its pretty useless to try and out run a bear since they can do about 30mph or more. Right about that time, a bear walks into the camp and roars his disapproval...the one that had told the other to not bother with running takes off at a high sprint, the other guy a few yards behind him and the bear in hot pursuit. The lagging friend yells out.."Why are we running, you said it was useless to try to run!!" The leading guy yells back...

"I don't have to outrun the bear...I only have to outrun you!".

This will be the story of those who have prepared vs those who have not. No matter how bad or not bad it gets, I would rather be the one ahead of the pack instead of at the back.

Knowledge is Power!

 

[TheRandyMan]

Hello again my friends...I came across this article which summarizes just one aspect of the forces who are aligning against the dollar.

Food for thought.

Soros Event Sets in Motion New Attacks on Dollar
Bretton Woods conference accelerates push for new world currency.

By Dan Gainor
Wednesday, April 20, 2011 5:15 PM EDT

It's been two weeks since George Soros bought himself a major economic conference designed to remake the entire global economy. Just because the event received little major news attention, it still had an impact Americans might be reeling from for years.

When the anti-American Soros spent $50 million creating the New York City-based Institute for New Economic Thinking (INET), he set in motion a major move against the dollar. The billionaire who once crushed the British pound through currency trading openly declared his plans to 'reform the currency system.' In the Machiavellian mind of Soros, the dollar needed to take a back seat and end its stint as the world reserve currency. 'The dollar no longer enjoys the trust and confidence that it once did, yet no other currency can take its place,' he wrote in late 2009.


The rest of the article is here...well worth the 5 minutes of your life it takes to read it...imo.

http://www.mrc.org/bmi/commentary/2011/Soros_Event_Sets_in_Motion_New_Attacks_on_Dollar.html

 

[TheRandyMan]

Recently, there was a big meeting where there were a lot of people wearing dark suits and acting like they knew a lot of things...and a blogger was there who registered an interesting opinion or two...thought it might be interesting reading for you.

By Jeff Harding May 4th, 2011

Report from The Milken Institute Global Conference

The men in dark suits are everywhere. This is serious stuff. The topic on everyone’s mind is money. And there is lots of it. The guys that run pension funds for state, county, and local governments are here in force. The hedge funders, the investment advisers, the economists, government policy makers, the press. Even Mike Milken. He’s a very sharp guy. I probably don’t agree with much of what he thinks but he is sharp and demonstrated a good command of market dynamics. I’m going to make a big guess here and say that he’s liberal in politics and economics.

The panels I attended Tuesday were: Investing in Asia, The Future of Wall Street and the Financial Industry, Outlook For Credit Markets, Global Risk, Is The US Dollar Losing It’s Edge, Breaking The Political Deadlock: Do We Have The Will?

The most interesting one for me was about the role of the dollar as the world’s reserve currency.

The worst was the one on Global Risk. I just didn’t see a lot of insight there. Wesley Clark was the dominant speaker of that panel and he sounds as if he is running for president. If you thought McCain was bad … The former DDI of the CIA on that panel was pretty good (Jami Miscik). She said that the “Arab Spring” has accomplished more in the last few months than Al Qaeda has ever accomplished. Good point. I might add that holds true for our foreign policy as well. The former head of MI6 was there as well, but didn’t add much to the conversation, but I can tell you he fits the role of “M” perfectly

The conclusion of the “dollar as reserve currency panel” was that the role of the USD will shrink and that “eventually” we’ll see the Euro and the yuan (renminbi- RMB) take up some of that role, but that the US will dominate for the foreseeable future. Interestingly, the yuan is already being used regionally by China’s trade partners to settle accounts. But no one thought that the US would lose status as The Reserve Currency.

First let me say that most of these panelists, all engaged with big financial institutions, viewed things like inflation and the nature of currencies, floating rates, and gold incorrectly. But they do understand quite well the mechanics of the current structure. It is no secret that we buy Chinese goods, run trade deficits with them and as a result current account deficits with them as well. It’s no secret that the Fed and the Treasury are purposefully trashing the dollar for political reasons (“We’ve got to export in order to ‘make things’ and create jobs”). It is no secret that in some ways we are “exporting inflation” in the puchase of Chinese goods–they have a lot of dollars but the difference is that their printing to match incoming dollars is based on production, not some fiat effort to make their economy boom. But when our boom ends it affects them. We aren’t their only market, but we are their biggest market and they have been hit by the slowdown in the US economy,

But on a practical level, as they point out, and as I have written about in the past, those who accept US dollars in payment for selling us goods know they are accepting a depreciating asset. The world is tempted to compete by competitive currency devaluations. But to devalue it means they have to trash their own currencies and that means flooding their own countries with fiat money and thereby causing inflation which may lead to social unrest, which ultimately will lead to rising interest rates, and their economies will come crashing down, and then they will have social unrest so they will reinflate and, and, and.

I don’t see the problem with a Chinese trade “imbalance.” Since they are pegging the RMB to the dollar how does that hurt “us?” If the RMB is overvalued then so what; we consumers are getting the benefit of cheap goods, apparently subsidized by the Chinese government. The whole “trade imbalance” thing is just an idea concocted by that part of the world that buys Chinese goods. They think by causing the RMB to appreciate that their domestic producers will do better. But that would mean higher prices for goods for consumers and you know that there are a lot of people who are employed here that sell us cheap(er) goods. What of them and the consumers?

Also when you think about it, the fact they peg the RMB to the dollar more or less puts them on a level playing field with us. They have cheaper labor and they out compete us. So what. We produce computer technology. We produce capital equipment, we produce heavy machinery, we produce technical and financial services. And US manufacturing has the same share of world GDP that it had 20 years ago. So we make stuff and we can compete in the world, just not with the consumer goods the Chinese make.

The panelists were able to spin a number of disastrous examples of what could happen in the future with regard to the dollar. Mainly, what if no one buys our Treasurys? That would be a bad thing because we would have to pay more to borrow money on the world markets. But …

The Chinese are not going to stop selling us things. Therefore they will continue to acquire dollars. Dollars depreciate, so what do they do? I will tell you: nothing. They exchange RMB for dollars that the T-shirt guy sells us. The People’s Bank of China now owns dollars. What do they do with them? Buy our debt? Yes. Buy German goods with them? Maybe, but then the Germans have dollars and what do they do with them? Eventually someone is going to figure out that they will have to buy US assets with those depreciating dollars. Eventually that money will come home. They are stuck.

Fascinating, eh? They have no options in his mind and basically the Federal Reserve can act with impunity because it knows it has the rest of the world over a barrel...at least, for now. "Eventually"...hmm...

(Emphases Added...underlines, italics, etc.)

 

[ivan salis]

yes the foreigners will have all that so called worthless money their stuck with come " home" as they use it buy up our countrys land and resources right out from under the american peoples feet *---thus making us renters & wage slaves within our own country -- as we work at "their factories" in our former country that was sold lock , stock and barrel to them ---toiling away at yanking out our "resources" out of our former ground for shipment to our oversea's ---"owners /masters"

the phillipines has a "law" that only phillipine person's can own land in the phillipines to prevent such ecomonic exploitation from richer "outside" countries

we best wise up too.

 

[TheRandyMan]

Hello friends...another post in a sad litany of stories ...

Financial Times
Dollar seen losing global reserve status

By Jack Farchy in London

The US dollar will lose its status as the global reserve currency over the next 25 years, according to a survey of central bank reserve managers who collectively control more than $8,000bn.

More than half the managers, who were polled by UBS, predicted that the dollar would be replaced by a portfolio of currencies within the next 25 years.

That marks a departure from previous years, when the central bank reserve managers have said the dollar would retain its status as the sole reserve currency.

UBS surveyed more than 80 central bank reserve managers, sovereign wealth funds and multilateral institutions with more than $8,000bn in assets at its annual seminar for sovereign institutions last week. The results were not weighted for assets under management.

The results are the latest sign of dissatisfaction with the dollar as a reserve currency, amid concerns over the US government’s inability to rein in spending and the Federal Reserve’s huge expansion of its balance sheet.

“Right now there is great concern out there around the financial trajectory that the US is on,” said Larry Hatheway, chief economist at UBS.

The US currency has slid 5 per cent so far this year, and is trading close to its lowest ever level against a basket of the world’s major currencies.

Holders of large reserves, most notably China, have been diversifying away from the dollar. In the first four months of this year, three quarters of the $200bn expansion in China’s foreign exchange reserves was invested in non-US dollar assets, Standard Chartered estimates.

The prediction of a multipolar currency world replacing the current dollar dominance chimes with the thinking of some leading policymakers.

Robert Zoellick, president of the World Bank, last year proposed a new monetary system involving a number of major global currencies, including the dollar, euro, yen, pound and renminbi.

The system should also make use of gold, Mr Zoellick added. The results of the UBS poll also point to a growing role for bullion, with 6 per cent of reserve managers surveyed saying the biggest change in their reserves over the next decade would be the addition of more gold. In contrast to previous years, none of the managers surveyed was intending to make significant sales of gold in the next decade.

Central banks have bought about 151 tonnes of gold so far this year, led by Russia and Mexico, according to the World Gold Council, and are on track to make their largest annual purchases of bullion since the collapse in 1971 of the Bretton Woods system, which pegged the value of the dollar to gold.

The reserve managers predicted that gold would be the best performing asset class over the next year, citing sovereign defaults as the chief risk to the global economy.

The yellow metal has risen 19.5 per cent in the past year to trade at about $1,500 a troy ounce on Monday, buoyed by the emergence of sovereign debt concerns in the US as well as eurozone debt woes.

http://www.ft.com/cms/s/0/23183a78-a0c6-11e0-b14e-00144feabdc0.html#axzz1QWStoHSS

Gold...its what central bankers are having for dinner...get u some!

 

[Calculatin Cal]

Its entropy....but I don't see any reason to build a bunker just yet.