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Is World Dominance by the US Dollar about to End?
The US has in the past been able to print its way out of one problem after another with people and countries world wide clamouring for the greenback as the safest alternative to holding their own currency. Stronger economies such as China and India have had to go along with this albeit reluctantly as world trade is largely done in US dollars.Maybe the US should keep printing money like it is going out of style and keep spending like a drunken sailor to get the last drop of booze before the party comes to an end before somebody else decides to hold their own party. I am not sure how precious metals will play into this,. Maybe the new Asian Saloon will b built on a gold foundation. I am referring to current talks between Japan and China which will probably lead to other mutual discussions regarding trade and commerce and ultimately a common currency along with India and others joining the party. http://www.businessweek.com/news/2011-12-26/yen-yuan-trade-plan-to-cut-d...
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Re: Is World Dominance by the US Dollar about to End?
Lol, thanks Frank.
You read like your a supporter of Congressman Paul. I've lived a few times through the usefulness of FEMA. It should be American history. If you are indeed a Paul supporter ,Why the need for a draft?If our currency was lower ,less American companies abroad,less reason for the American Industrial Complex or better stated ,the protection of it . A streamlined military with bases on American property only,(except in extreme or temporary cases).
I agree with Ron Paul on most of his tenets but not all... and while I agree with him on most points I do not think he is a capable leader - he's just not cut from that cloth. He is better served in an advisory role than the leader of the known free world.
As for FEMA, I think it causes somewhat of a moral hazard and I think there are other organizations that can fill that role (Red Cross, Salvation Army, Habitat for Humanity, etc). I would rather have a Federal Risk Management Agency than an Emergency Management Agency. Underwriters should also do a better job of identifying and controlling the risks of building developments in flood/hurrican prone jurisdictions. I know FEMA has its virtues but I just think the private sector can step in and fill that role much more efficiently than the government can.
As for a mandatory draft. It's no secret that defense spending makes up a sizable chunk of our budget (along with Social Security and Medicare/Medicaid). I would think a good portion of that goes into recruiting and retaining (via benefits) enlistees. Having a mandatory draft for those who do not intend to pursue higher education reduces defense spending, puts idle hands to work, and helps those people develop the skills and discipline to become contributing members to society. If you want an example of mandatory drafts working to societies benefit, look no further than South Korea. We dont necessarily have to scrap all military benefits... for example tuition assistance can be given to those that have enlisted as opposed to conscription. Those that were outstanding students in school but lack the financial support to pursue higher education would also be given tuition assistance upon graduating and may serve in an intellectual capacity when in the military, etc.
Finally, while I don't agree with instigating war (esp pre-emptive wars under the pretense of nuclear proliferation), I do see the necessity to stabilize the region and advance American economic interests.
Re: Is World Dominance by the US Dollar about to End?
You read like your a supporter of Congressman Paul. I've lived a few times through the usefulness of FEMA. It should be American history. If you are indeed a Paul supporter ,Why the need for a draft?If our currency was lower ,less American companies abroad,less reason for the American Industrial Complex or better stated ,the protection of it . A streamlined military with bases on American property only,(except in extreme or temporary cases).
Re: Is World Dominance by the US Dollar about to End?
I nominate scottiepimps for President. Oops, I forgot, I am not a US citizen, but We are in this thing together.
Re: Is World Dominance by the US Dollar about to End?
I think there are several solutions to the myriad of problems - the issue is that medicine always tastes bad and policymakers seem to want to wait until the very last second to move in any direction. The bottom line is that we will have to cut spending both private and public and avoid raising taxes where they matter.
However unpopular, I think some of those solutions include: pushing social security benefits into the death curve; instate a mandatory military draft for those not pursuing higher education (JuCo, University, trade school, whatever); legalize marijuana (and tax the hell out of it); allow only muni and govt bonds in tax-deferred retirement accounts; closing arbitary govt insitutions like DOE, commerce, urban development, FEMA, etc; get rid of Obamacare; get rid of minimum wage; kill the derivatives markets; kill corporate political contributions or at least have full disclosure; kill unemployment benefits beyond three months or so.
Opec can sell their oil to China.It's fine by me.
Its fine by the US too as long as OPEC requires payment in USD.
Re: Is World Dominance by the US Dollar about to End?
Yes ,our manufacturing is still great #1,???, but the goods that are so much a part of that consumer oriented society are mostly made elsewhere. We make things that nobody ever heard of .Absolutely indespensible but largely unknown components of things that are produced or built in other countries. Remember BW ,they changed their name to Materion(I think) .They make indespensible beryllium products,which 99% of the people in this country do not have a clue to what importance beryllium products are. Yet everybody knows what a computer or TV or micro wave are for and none are built here.We lost our edge because though we do still have a great manufacturing society ,it is decreasing every year and the public perception concerning buying quality products made in this country is at an all time low. We actually believe buying American is buying at Target or Walmart. The reality is", the experiment of becoming a more service oriented society failed".Our nations credit defaults and our own credit defaults have made this statement valid.Not saying we have to buy everything American but with a lower currency value it would give opportunity to many start up manufacturers that I think they deserve.
Re: Is World Dominance by the US Dollar about to End?
I know it's all going to take time,but that's what our leaders are suppose to do .Make policy for the good of the country as a whole.I do agree that Americans tend to despise labor but I think it's more accurate to say we don't like cheap labor.If a guy works a construction job making 15/hour ,he's fine with it until he gets hurt ,then he's screwed ,which brings up another problem in our society which is access to healthcare insurance.(I wrote a blog on my views which was largely ignored ,so I won't bore you) ,but essentially if a laborer can get hurt without financially destroying his life ,then more men would make themselves available for labor.Jimmy Carter ,a much maligned President,tried in vain to get the country in a trend towards energy independence in the 70's.Look where we would be now. Not any kind of political statement,just a thinking about the phrase ,no time like the present.Opec can sell their oil to China.It's fine by me. Buy DEJ
Re: Is World Dominance by the US Dollar about to End?
Also, the US already is the worlds largest manufacturer. We also provide half of the worlds grain. Even given these astonishing facts (resulting in $1.3 T in annual exports), we still run a huge trade deficit ($1.9 T in annual imports). It's the consumption that is the problem and Washington insisting that China let its RNB rise should help in this regard while making very little sense for the Chinese themselves.
Re: Is World Dominance by the US Dollar about to End?
Easier said than done my friend. In theory, I agree with what you have to say... That we need to rebuild our manufacturing capacity and ween ourselves off of foreign oil. The sad truth is that American's are conditioned to despize manual labor and that the US needs to subsidize any labor intensive industry (like farming) to get the ball rolling. Even if the US were to focus on manufacturing, corporations will continue to favor cheap labor or technology over those pesky American workers who are constantly demanding higher pay, benefits and basic human rights. Additionally, we're going through a demographic shift, much like Japan. Our population continues to age = greater entitlements and reduced population of capable workers.
As for oil, while we have enough here in North America... oil from the ME is still much cheaper. They have light sweet crude while the oil sands are heavy, difficult to extract and much more damaging to the environment. While natural gas, fuel cell, etc are great alternatives, it will require decades to build up the infrastructure to make it feasible. Do you think everyone will go sell their cars and buy a LNG fueled car? How long would it take for gas stations to go all LNG? It would have to be in phases, starting with public transportation and trucking before it goes main stream and even then I don't see it happening for a couple of decades at least. We dont have that kind of time.
I agree that eventually the USD will lose its status... it just makes sense for the rest of the world. However, the US wont allow that to happen until theyre certain the impact is minimized at home. Until then, its a game to control the worlds oil supplies and to establish the dollar as the world's reserve currency.
Re: Is World Dominance by the US Dollar about to End?
The system that has created a consumer economy is coming to an end.The reserve status will be lost,simply because there are so many other options and we are not as important now as we were just after WW2.(losing reserve status is not going to happen anytime soon) The options have to work that out.In the meantime ,we have to rebuild the manufacturing base inthis country and moderate decline in the value of our currency is essential ,imo. We don't need to buy any oil from OPEC.American and Canadian companies can and will develop the Athabasca and as technology gets better more nuclear,more CNG ,LNG will replace it. Canada's dollar will stay closely at around par with our's and the two countries will be completely independent in energy needs. This sounds like posturing but it's really reality and the reserve currency status has nothing to do with it. The fact that the U.S. will spend a fraction of what it does now on the American Industrial complex,will result in more homegrown investment by all those banks that fear the devaluation of their assets,the biggest of which is DOLLARS!
Re: Is World Dominance by the US Dollar about to End?
Southpen, I know im coming off as a flag waving American imperialist... I don't condone it, I'm just calling it the way I see it.
The other unintended consequence, I think, of the dollar losing reserve status is nuclear proliferation. Japan, South Korea, etc would no longer be able to depend on their "Big Brother" to protect them from their enemies and would probably find it necessary to defend themselves.
USA.. USA... USA!
Re: Is World Dominance by the US Dollar about to End?
the Chinese are well aware of keeping the yuan low,for a continuation of their exporting power.
Who are they exporting to? The US and Europe are their largest trading partners and both are going through a develeraging phase, meaning that even currency suppression wont help make up for China's shrinking exports.
We dont want a weak dollar, we want a strong USD and a strong RNB. In other words, we don't necessary want to export more - the desired result is more about keeping energy costs down while also importing less foreign goods (and buying more American goods).
This country would have lost much of it's higher living standard over the last 10 years if not for the credit ,personal and national
We do have declining standards of living. What do you call near 10% unemployment and collapsing home prices? I think it's clear that the demand in USD comes from the necessity of holding dollars in order to buy dollar denominated commodities. In my mind, we would obviously see an accelerated decline if dollars were to lose it's status for reasons already mentioned in this thread.
Re: Is World Dominance by the US Dollar about to End?
The main advantage beyond that is the ability to print (which is a huge advantage)with nobody really able to punish us for it
To be fair its not like the British economy collapsed to a point of no return when the sterling was replaced by the dollar in 1944. I don't think there will be apocolyptic consequences (at least not initially). I do think, however, that Americans will be materially impacted. There's no question that The US relies heavily on gasoline - more than any other country. Americans will gripe and moan about $4 at the pump, imagine if we had to pay $8-$10 a gallon at the pump - it's a reality for Europeans. The US have evolved alot since 1944... we've built the infrastructure to support the proliferation of automobiles. If we were to suffer a price shock in gasoline, there would be huge, measurable consequences. For starters, housing in suburban economies would crash and the masses would concentrate in urban centers with sufficient public transportation. You can kiss your backyard and bbq grill goodbye. Food costs would also rise dramatically as most of it is package in plastic which is made from crude. Years of excessive consumption would be reversed in a matter of a few years and while the wealthy certainly would feel the impact of inflation and higher taxes, the poor will also feel the impact of not being able to buy food or fill up their gas tanks to go to work. 20 years ago one person could be the breadwinner and support the entire household. Today man, wife and even child in some cases need to work just to survive.
The main advantage you mention - being able to print without consequence - is the only reason to protect the USD as the worlds reserve currency. It allows us to maintain the standards of living we enjoy today without having to produce. It gives us the money to build infrastructure, hire teachers and police officers, provide medical care, etc.
Re: Is World Dominance by the US Dollar about to End?
If it's political rhetoric,from who? The dollar is not low enough to do any good and the Chinese are well aware of keeping the yuan low,for a continuation of their exporting power. Who changed us into a consumer economy? It doesn't work.This country would have lost much of it's higher living standard over the last 10 years if not for the credit ,personal and national.
Re: Is World Dominance by the US Dollar about to End?
You make some good points scottie ,but I can't agree on the issue of how the U.S. reserve currency ,not being used worldwide would be devastating.No ,only to major American institutions that rely on overvalued currency as assets which improve their bottom line.I really can't recall the research exactly but I do remember that the many advantages to being the Reserve currency are something in the order of only about 20 billion a year in actual cash benefit.The main advantage beyond that is the ability to print (which is a huge advantage)with nobody really able to punish us for it,mostly because since they are invested heavily ,it would be like shooting themselves in the foot. . In the long term ,Don't you believe it would liberate regular Americans ?,not the FED of course but the vast majority . Let the dollar devalue.The people it most hurts in this society are the people whom most deserve to deflate! All good points about the oil,imo but if the world dominance of the dollar ends ,I think theirs a silver lining .
Re: Is World Dominance by the US Dollar about to End?
The dollar will devalue and it will be more in line with the Chinese currency which is artificially low.This will cause less imports and more exports to occur daily, in our economy .
In my opinion, this is political rhetoric. The plan has always been to strengthen the dollar without having to actually produce. Americans dont really want to be a export economy, we would much rather continue to be a consumer economy. Export economies create a surplus of goods which they sell to developed economies. Consumer economies like the US dont have surplus goods, meaning they work less and buy more. The politicos want to blame the Chinese for RNB manipulation... nice scape goat while we manipulate the entire currency complex.
Re: Is World Dominance by the US Dollar about to End?
So long as the US maintains its influence over OPEC the dollar will continue to be the worlds reserve currency. Look at those countries that are being criminalized by the US... e.g. Iraq, Iran, Libya and Venezuela. These are oil rich countries who dared to sell oil in currencies other than the USD. http://en.wikipedia.org/wiki/Petrodollar_warfare
If Iran or any other major oil producing country is allowed to successfully sell their oil in any other currency other than USDs, this would put pressure on other OPEC states to move away from the petrodollar standard. There are clear benefits (to the global economy) to trading in a basket of currencies - most obvious lower volatility and improved accessibility - but would be devestating for the American way of life.
Global acceptance of RNB, CHY or whatever won't materialize as a real threat to dollars for many years to come. This is mostly an attempt to monetize the Chinese monopoly of rare earths.
My greatest fear is that the currency cold wars will evolve into a hot war in which energy hungry economies scramble to secure resources. Already we are seeing China and Russia defend their oil interests in Iran. Make no mistakes, this is all about oil and the US must maintain their sphere of influence in the Middle East to defend their global economic dominance despite most of its oil demand being satisfied by our Canadian neighbors.
So what were to happen if this global currency cold war turns into a hot war? Who would fund our war machine if EMs like China stop buying US notes? My guess is that the US will go back to a military draft and cut those benefits/entitlements currently used as recruiting tools. They would also need to raise taxes which would drive away the wealthy and businesses that are cornerstones of American capitalism.
In any event, I see these as bullish scenarios for both gold and oil.
Re: Is World Dominance by the US Dollar about to End?
southpen,You are right and unfortunately the US administration is looking for short term solutions, while the Chinese are planning for the long term. I fear the tortoise will not only outpace the rabbit but will also have him for lunch.
Re: Is World Dominance by the US Dollar about to End?
Lengthy topic Frank.,but an important one. Why doesn't the U.S. just keep spending? We could probably get along with doing just that ,for at least a couple more years.The dollar will devalue and it will be more in line with the Chinese currency which is artificially low.This will cause less imports and more exports to occur daily, in our economy .Doesn't sound to bad to me.The downside is ,We wouldn't know when the devaluation would stop. It could cause a war ,where WE would be the instigators, IF we defaulted with complete indifference to the rest of the World,most especially the countries that hold our treasuries. If we seem to be debt conscience ,all the time rebuilding our infrastructure ,with tricks from the Fed. ,then it's a strategy that is atleast temporarily ,GOOD. . Many Americans here, just don't get that.That's what government in the U.S. has being doing for 30 years ,though Bush set us truly on a path of NEEDLESS spending.(like giving every tax paying American a cheque of between 300 and 600 dollars to go buy Chinese Electronics at Walmart) .LOL. ( supported of course by people who now claim they are fiscally responsible ).That's really the straw that broke the camels back.The back just broke on Obama's watch. We need a new system worldwide ,most people realize this and eventually I would support the hard line of being fiscally responsible but right now,it doesn't favor the masses in the U.S. at all ..People that have the most to lose through currency devaluation are generally wealthy,(through deflation of assets),so being fiscally responsible whether it's in the countries best interset or not, IS in their best interest.They pay lobbyists and lobbyists fuel the fire of the tea party idiots.These people just became fiscally responsible in the last 5 years or so.I hate to remind them that the total irresponsibility of our government started with their hero Ronald Reagan.In truth ,I completely agree with a small segment of the tea party .(Ron Paul people)Unfortunately so many of the Palin people and the Bachman people and the Perry people who really are less libertarian than Obama, are the tea party Republicans that could come to power or at very least strongly influence power in this country. The Chinese will patiently wait .