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The demise of the dollar

Discussion in 'Political Discussion' started by Real World, Oct 5, 2009.

  1. Real World

    Real World Rookie

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    What would this mean if it happened? What would the ramifications be for us? Different people have different views regarding this topic. Soem say it would never happen cuz too many nations have a stake in our debt, others think that it will happen, cuz the dollar is borderline worthless anyway. Anyone want to toss in their 2 cents? Oh, and please, discuss this, and don't come in throwing attacks, or BS, in every direction. I'm genuinely interested in hearing what everyone has to say.


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    The demise of the dollar

    Tuesday, 6 October 2009

    Exclusive report by Robert Fisk
    Death to the U.S. Dollar

    In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.


    Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

    The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.




    The demise of the dollar - Business News, Business - The Independent
  2. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Mav called this a couple of years ago.

    It would mean the US gov would have a tough time selling our debt (bonds).
  3. sdaniels7114

    sdaniels7114 Rookie

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    Two points that make me scratch my head:

    1) How do you peg the price of oil to 5 different currencies that all move relative to each other?

    2) Its one thing to say that the dollar isn't the best currency anymore (I'm assuming that's the reason oil's been traded in dollars all these years) but quite another to say that its not even in the top 5 anymore. We're not the only nation that's trying to spend its way out of recession.
  4. PressCoverage

    PressCoverage Banned

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  5. Wildo7

    Wildo7 Totally Full of It

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    I never thought I'd see the day when Drudge linked to a Robert Fisk article, let alone in his giant red ALERT font as the main title. Does this mean he now thinks Robert Fisk is a credible source? If so I'd love to show him 99% of his other articles....
  6. PressCoverage

    PressCoverage Banned

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    lol... no doubt... Matt Drudge is a moron...

    from Wiki:

    "Fisking"

    The blogosphere term fisking[28] refers not to what Fisk does but to what is done to him, and others; the fisker begins by copying text from the fiskee, and then produces an interlinear critique pointing out flaws and raising doubts. "The fisker can without too much trouble make the fiskee look ridiculous."[29] The term originated from partisan attacks on Fisk's credibility,[30] but has been extended to others, even the Archbishop of Canterbury.[31]
  7. sdaniels7114

    sdaniels7114 Rookie

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    Next the Russian Ruble's going into this basket of currencies? What comes after that? Haitian Penny Stocks or Confederate money? The Ruble's one of the most unstable currencies out there.

    I'd also point out that anyone who stoops to hinting that the reason for our 1990 attack on Iraq was because Saddam stopped trading his oil in dollars has character issues.
  8. tanked_as_usual

    tanked_as_usual Banned

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    maybe we should just have another cash for clunkers program

    nobody has the guts to do what has to be done which is to eliminate our dependence on foreign energy

    nuclear power(interim), hydrogen fuel cells (long term), green energy forms to go along with a new attitude about energy consumption that we are all guilty of abusing now

    you want to put americans to work and world economy tailspin since american demand for foreign oil is the only thing that drives the cost of it......without american consumption of foreign oil, it would destroy the revenue stream of every OPEC country and in no time, the middle east would destroy itself.
    Last edited: Oct 6, 2009
  9. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Gold hit 1032/oz this am, here we go.
  10. Real World

    Real World Rookie

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    I'm glad everyone is doing as I pleaded, and is explaining what they think the ramifications would be. Nice going all.

    So we got an attack on Matt Drudge, an attack on capitalism, and the price quote for an ounce of gold. Sweet. I feel so much smahtah now.


    So, anyone want to discuss what the ramifications would be?
    Last edited: Oct 6, 2009
  11. STFarmy

    STFarmy Rookie

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    I don't really know, I guess. PR would be a good voice to chime in; where are you bud?

    I guess the ramifications would depend - do you mean a flat out collapse where no one touches it because it's worthless? Or is it supplanted with a world currency?

    For the first scenario, that would obviously be devastating for us, as we don't seem to make much here any more to barter with. But we buy other people's stuff, so you'd think that means it's in other countries' best interests to keep us able to buy this (yes, that's you China). I know some here have disputed that other countries need our consumption though.

    As for being supplanted by a world currency, I would think that the equalization process would cause a pretty significant standard of living drop. But there's too many variables in that scenario to really know what the outcome would be.

    Sorry RW, I tried. I'm just not so good at macroeconomics.
  12. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Gov will print money interest rates will explode, the economy will suffer from stagflation. Think the late 70'd on steroids. Due to demographics another Reagan would have a much tougher time fixing the problem.
  13. PressCoverage

    PressCoverage Banned

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    That's a lovely pink font.

    Onward... With a little help from an economist friend of mine:

    If these countries all dumped the dollar and started using their own currencies for foreign trade, than their currencies would obivously gain in value and the US dollar would lose value.

    And if some of these countries decided to create a new currency out of a basket of the old currencies, then yes, there would be demand for this new "currency" and its value would increase.

    The only real difference is the wages that are paid to the workers. so the only way that a weaker currency makes exports cheaper is because the workers get paid less, making the goods cheaper to produce. For example... if a country like Canada exports its oil, it doesn't matter what the Canadian currency is worth. The oil will sell at the global market price, regardless of what the Canadian dollar is worth. But if Canada devalues its currency, that will just mean that the workers get paid less, and therefore, the oil companies would be able to produce the oil for cheaper, while still selling the oil at the global market price. also, Canaidan citizens would not be able to afford as much oil, so more oil is exported. but this is not a good thing for the Canaidan people or the Canadian economy... it's a good thing for the oil companies making bigger profits, but it's hurting the Canadian people who are now poorer and cannot afford to consume as much as they once did.... and therefore are forced to live a lower standard of living. but the whole idea is to rebalance global trade... which can only be accomplished though revaluations in currencies.

    Right now, Americans are over-consuming... and the rest of the world therefore is under-consuming. So when these other currencies become worth more, than the people of these countries get richer, and that will stimulate domestic consumption.

    A country should want a strong currency because that means that the country is producing a lot of goods, and that its citizens are therefore able to consume a lot of goods. The global economy will be much stronger if this happens because trade will be rebalanced to the correct levels, domestic consumption will be stimulated, and the citizens of these countries will enjoy a higher standard of living which should be the goal of an economy.

    It's going to be America that is in trouble, because our currency will be worth much less, which means that Americans will be consuming a lot less and their citizens will have a much lower standard of living.

    Past threats of trading oil off the dollar is what led to the failed coup in Venezuela, the two invasions of Iraq, and the nuclear rhetoric about Iran. Our obnoxious, arrogant leadership doesn't like this kind of talk.

    "the American way of life is NOT negotiable." -- some murderous traitor to the U.S. Constitution.
    Last edited: Oct 6, 2009
  14. Holy Diver

    Holy Diver Rookie

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    It is in the best interest of those who currently are in debt in dollars to inflate the currency. This is exactly what will happen. If you owe $1Million to china, wouldn't it be nice to pay that back when its value is less?

    I'm sure you are all aware of the fading fdollar in favor of the continental currency, the AMERO...if not...

    get the fukc up to speed!

    Our dollar was fun while it lasted.
  15. alvinnf

    alvinnf Rookie

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    I think it would be expensive for us. More expensive than it would be now. Our dollar maintains a higher value than it's actual worth because of necessity to use it. If you took that necessity away, we would be dealing in straight cost basis. All those other monies mentioned are worth more than our dollar. But this is more about control, they see this as an opportunity to shift power to themselves and away from the US. However, you have to ask yourself why would they want that power shift other than the obvious answers. Simple we have something they want and they are trying to find a way to get it cheaper. As long as we have something they want, we have a bargaining position. But, in the interim everything will get more expensive for us if the shift were to occur.
  16. sdaniels7114

    sdaniels7114 Rookie

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    Seems to me that the end game, for China anyway, is to kill off their best customer. Won't factories sprout up here in the USA to supply Wallmart, to the detriment of the existing Chinese factories? Sam Wallmart doesn't buy all his stuff from China because he hates his fellow Americans. He buys there because its cheaper. What's he and about 100,000 other American companies going to do when its not cheaper to import?
  17. PressCoverage

    PressCoverage Banned

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    Leading article: The end of the dollar spells the rise of a new order - Leading Articles, Opinion - The Independent
  18. maverick4

    maverick4 Banned

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    This was news back in.... 2006.

    Now it's hitting the masses, after everything is too late to pull your savings out, they've already been massively devalued.
    Last edited: Oct 6, 2009
  19. maverick4

    maverick4 Banned

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    The ramifications were already discussed on this board for years, what more do you want? They are all easily search-able, the old threads.

    Ramification is that the US in under 3 years will be unable to print MONOPOLY money, to foreign nations, in exchange for products, goods, and services.

    This means either *massive* hyper-inflation coming very soon, meaning $10-15 gallon of milk, or severe reduction in government spending, which includes military and wars.

    Either way we're screwed and bound to drop from #1. There is no stopping it.

    The fed is doing its best, but increasing or decreasing the rates, at this point, are BOTH lose-lose situations. They can only slow the downfall as best they can.
  20. maverick4

    maverick4 Banned

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    Despite all the constant demonization of China by the US, China has actually done everything it can to prevent a US financial collapse, they have been one of our strongest economic allies over anyone else in the world. On top of subsidizing our way of life for the past 15 years, allowing us to live way above our means in a quality of life we haven't earned, China is also taking huge hits to their own economy and savings, just to keep the US Titanic afloat.

    As for Wal-Mart, none of this really matters because when it becomes cost-effective to use local US labor, that will mean the US is no longer #1. Another myth is China's export-dependent economy. I heard a Bain managing director talk about this last spring: China relies on the US for less than 1/4 of its GDP - it was never really hit by the global financial crisis, and was the first to get out of it. The media is throwing out mis-truths on this, the same way they completely distorted the dollar reserve currency issue for years.
  21. PressCoverage

    PressCoverage Banned

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    +1..... spot on.

    not bad for a guy no one here seemed to ever listen to for years. I got/get the same reaction. Bad news is unpleasant, and the human condition is to reject it, despite all evidence . ... Evidence that seems to compound itself on a weekly basis the past 2-3 years.

    As I have said since I joined: Deny the geopolitical signs of collapse at your own peril. It's the first and toughest stage of grief. ... We'll be over here at "acceptance," and planning to adjust accordingly.
  22. maverick4

    maverick4 Banned

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    The rest of the world knows this as well. China and Japan, with their multi-trillions in US dollar reserves, are keenly aware of this fact.


    HOWEVER, the moment we try to do this, we screw ALL our foreign investors (not just the Japanese or Chinese), and the dollar and US government immediately lose credibility, and thus their value.

    Our currency is based on smoke and mirrors. The moment we try to get out of our debt by trashing our own currency, it becomes even more problematic, because no one will want to buy debt or trust the US government anymore. Look at Argentina.

    Also, you would be screwing over the American people as well.
    Sure, it'd be nice to pay back China's trillion+ with money that was worth 1/3 as much. But, that also means that it would costs Americans 3 times as much to buy anything foreign, traveling would be extremely expensive, and we wouldn't be able to import as much since no one would want our monopoly-money export anymore.
    Last edited: Oct 6, 2009
  23. Holy Diver

    Holy Diver Rookie

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    Here is how I know its about to all go to $#!T....


    The people who I know who traded derivatives, and managed hedge funds, are currently all investing HEAVILY that the price of the dollar will go down.


    there is twice as much money being traded than actually exists on Earth. Something has to give, and unfortunatly for US, its the debt riddled dollar.


    Hope you all enjoy getting dikked-over by your own countrymen!
  24. PressCoverage

    PressCoverage Banned

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    Some good hard-to-deny perspective regarding con men, and their hypocritical joy over this news from Fisk, whom they always hated until yesterday:

    Dollar in trouble? Yippie, says the right - How the World Works - Salon.com

    What I find most interesting is how this story proves a fundamental law about current right-wing partisan politics. If you're considered "anti-American" while a Republican is president, you must be pilloried at every instance. During the Bush years, Robert Fisk was so hated by the right for his anti-Iraq war reporting and pro-Palestine stance that his very name, "fisk," became Internet slang for the process of demolishing the inaccuracies of someone's reporting via line-by-line online analysis.

    But under a Democratic president, anything that can be considered "anti-American" -- such as a supposed worldwide push against the dollar -- must be promoted and lauded and celebrated, simply because it might make Obama look bad. This is the Chicago Olympics theory of the dollar. Thus, a big push from Drudge, as well as links from RedState and Instapundit.

    Instapundit! Where proprietor Glenn Reynolds once wrote: "Robert Fisk: Indistinguishable from Islamist propaganda."

    The notion that a cold shoulder to the dollar by the world is a specific reproach aimed at Obama's policies, instead of the accumulated irresponsibility of American administrations helmed by both parties over the last 30 years, is just nuts. Watching the right-wing blogosphere embrace one of their most hated foes, simply because his latest scoop can be employed to critique Obama, would be embarrassing and sickening, if it wasn't just so predictable.​
    Last edited: Oct 7, 2009
  25. Real World

    Real World Rookie

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    Coke & Pepsi pal. A guy the left loves during the Bush years, is chastised by the right. Now, that same guy is being pimped by the right, to the dismay of the left. The more things change, the more they seem the same.
  26. Wildo7

    Wildo7 Totally Full of It

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    That's a really great attempt at symmetry, but "to the dismay of the left" is meaningless, let alone the same thing as "chastised by the right."
  27. Real World

    Real World Rookie

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    Trying to compare us to Argentina is a stretch. Argentina is a 3rd world country without the world's #1 economy under it's hood. I think inflation is a given. The one caveat in all this, is that it's a global economic problem. So while we're in the pooper economically, so isn't everyone else. My question in this thread, is not what's going on with the economy. My question is what a switch from the dollar would mean, with respect to the trade of oil. Obviously we would have to buy oil in Currency X, which would push the cost to us higher, since the dollar is so weak. So it would clearly mean an inflationary reaction to all things petroleum. That's not good, since petroleum is used to make, transport, and deliver so many goods and services. From bringing people to work by way of fuel, to building products in manufacturing, to being the key component to all things plastic, to heating homes, to transporting goods across the globe, etc. So a spike in the cost of oil would be a certain negative. Think of when gas was $4 a gallon, but figure on it being that way more permanantly. Not good.

    The benefits would be there though. Not short term, but long term. We'd have more pressure to become energy independent. We'd be forced to become more fiscally responsible. We'd have to withdraw all of our forces from across the globe. We would no longer be able to give away billions of dollars in foreign aid, and we could finally become isolationist. While this would take time, and would be difficult in the short term, it could be a net benefit over the long haul.
  28. maverick4

    maverick4 Banned

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    I mean, not even sure where to start with the response.

    Did you never read any of the say, half dozen threads here already in the past, about petrodollar?


    The world IS going to shift away from the dollar in buying oil, and multiple things are going to sh*t for us the second that happens.

    Luckily, we have nukes and have extreme leaders in certain departments probably crazy enough to use it.... so our decline will likely be slow and gradual rather than quick.

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