Comments for Global Reserve Currency: Little Real Alternative To Dollar »
Posted By jovial 9 months, 1 week ago in Business & FinanceCalls by China and Russia for a new global reserve currency – possibly based on the IMF’s special drawing rights (SDRs) – reflect Beijing’s and Moscow’s concerns about a potential decline in the US dollar, and by extension, the value of their own substantial dollar holdings. Indeed, yesterday was the second time in as many weeks that China has adopted this line – previously it expressed concerns about the safety of its investments in US government securities.
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jovial9 months, 1 week ago
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A lot of gloom and doom is being heard in the blogosphere about the demise of the dollar as the reserve currency. China and Russia are the biggest callers for this changeabout, but are they really ready? What currency will they use and what will it be based on? If the dollar loses too much value what happens to all the billions or in China's case trillion dollars it holds in treasury notes. Yes, China and Russia want a strong dollar, because they have so much money invested in us. It doesn't make them too happy to see their nest egg losing value.
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hyperbola9 months, 1 week ago
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Not only the Chinese and Russians.
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After almost a half century of continuous massive debt by the US, the world is tired of financing our profligacy, especially our imperialism. Remember that we have been the world's biggest debtors ever since Reagan engineered the Savings and Loan scam and that Bush sonny accomplished that the US now pays more out to foreigners than we earn from our overseas investments.
Seen from a world perspective, Obama's prodigious spending to "correct" massive corruption in our financial system (which the world has been complaining about for at least 8 years now) looks hypocritical on two fronts: (1) because Obama's "plan" is based on borrowing money from foreigners (we don't have the money), he wants the world to pay for our corruption, and, (2) the result is more or less an attempt to finance our failings at the world's expense through devaluation of the dollar.
Less than 100 years ago, the pound sterling was the world's reserve currency. It lost that role within a period of 10-15 years. It would not surprise me to see the same happen with the US dollar. Already new bond issues in Euros are comparable (or greater) than those in dollars.
The replacement is likely to be of the same kind that Europe used prior to the Euro: a weighted basket of different currencies.-
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jovial9 months, 1 week ago
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I know the world is angry with America for letting this happen, but I really don't think that they can do anything about it in the short term. Maybe I'm wrong. The foreigners are letting Obama borrow the money, because it's in their interest to see the dollar succeed. The dollar has been steadily losing value for sometime now. The Euro was trading at 92 cents to a Euro in 2002. Now it's a $1.35. That's a fifty percent increase in value. It was even higher than that at times. If the dollar loses too much value we will see a great deal of foreigners coming in and buying up our companies, real estate. We are already seeing Chinese investors buying up real estate in Southern California.
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dissent9 months, 1 week ago
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buying up our companies and real estate is one smart way for them to get rid of their dollar holdings. stockpiling commodities like oil and steel bought in dollars while they're cheap right now is another. selling the dollar is about the must stupid way to get rid of it. hanging onto dollars is not in their interests anymore. getting rid of it is. it's the albatross around their necks. this is why they're looking for an alternative.
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DarkWizard9 months, 1 week ago
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Can't change the game in mid-stream without upsetting the apple cart. With the global economy so financially intertwined it is a bad idea to try and move away from the dollar as the standard of currency exchange. However, once the economy starts to level out, I wouldn't be surprised if China, Russia, and other countries didn't entertain a global reserve currency again. Of course, this would be contingent upon the strength or weakness of America's economy in comparison with competing economies. Yes, even though economies have become intertwined, each economy has a niche that gives it leverage in the global market. The projected sustainability and growth of competing markets will determine if a change is even feasible.
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agellerComment removed: Retracted by user
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CHAM9 months, 1 week ago
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Would not a "World Exchange Standard" be the goal of the New World Order? I have thought since the beginning of this economic fiasco that it was basically allowed to happen so that the super rich and their ilk could migrate to any part of the world they desire and then leave the debts ( spell that United States" ) behind.
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And Hyper, the last time I wrote an article ( two or three years ago) about America being a debtor nation I was called a Psycho Bubble Head.-
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jovial9 months, 1 week ago
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I hear ya, Cham. This has been happening for awhile and I'm fairly sure it's been that way for a few past administrations. The gravy train was so big that everyone just hopped aboard and starting sopping biscuits, Now the gravy has turned sour and the gravy eaters are looking for a new pot of gravy.
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jovial9 months, 1 week ago
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(Bloomberg)
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18 March 2009
DUBAI - The single currency that Gulf Arab states are planning will be linked to a basket and is possible by 2020 rather than next year’s deadline, the Economic Intelligence Unit said.
“The GCC countries will peg their common currency to a trade-weighted basket of currencies by 2020, although one or two states may opt out of this initiative,” the Economic Intelligence Unit said in its 2020 outlook report.”
Most of our interviewees thought it feasible that the GCC would have monetary union by 2020, though ?not by 2010.”
Gulf Cooperation Council members Saudi Arabia, the UAE, Kuwait, Bahrain and Qatar agreed in December to a 2010 deadline for monetary union.
The countries have yet to decide on a location of a central bank ?and convergence criteria.
Bahrain central bank Governor Rasheed Al Maraj said last week the 2010 deadline would have to be revisited. “Assuming that oil is still being traded in dollars in 2020, a GCC currency basket is likely to be heavily weighted toward the dollar, as is already the case in Kuwait,” the EIU said.
So it appears that that like they are waiting for stabilization before they make the shift. In the meantime the dollar will continue to fluctuate on the world market but the overall trend will be down as it has been for quite many years. -
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rally-monkeyComment removed: Abusive2 Replies
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calitennflo9 months, 1 week ago
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I personally agree with anything that can remove the power from the individuals overpowering us...the US is a place that had a good start...(a righteous one)...and it is going for the worst ending I have ever seen. After 200 plus years...you would think we would see some progress...and by that, I mean for the individual people here within the US.
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Who likes being subjected by someone that has such a history?
??Not I. We are embodied with laws that are dictated by nature...and reading the same declaration in the Constitution...grants us the privilege to choose to enjoy that right. We are entitled and endowed by the Creator to enjoy these certain and unaliable rights...rights that are the just claim to act and carry out our actions as well.
It would not matter if they stacked 2 million articles of law on top of the original ones...abrogation is unlawful when done in the manner, as they did...and abrogation is not the proper or correct procedure of protocol, nor do they have that right...we all share in this place...a Democracy...with the powers of government vested in all the people...and the ways and means of the people shall not be controlled by anything other than the shared, concurring votes. Money has no vote, nor does any company or corporation...only we live human beings have this right.
Why? It's dictated by Nature...we possess the facilities for thought and reasoning...It's our responcibility to govern the contents of this abode...and do it giving full attention to the rocks, the water and all the contents.
Money will always put a man on his knees, and a complete man, a mon as once was used in the English language has disappeared due to the ability of others to force control with money.
Its a breath of fresh air...when one realizes the results from money's removal...and a focus on the neccessities. -
yyww2008Comment removed: Hard Banned
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peter23451Comment removed: Hard Banned1 Reply
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willottica9 months, 1 week ago
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I don't know if it will. If cheap oil (the grease that lets us be a "global village") runs out before one is adopted, then there will be little use for one.
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I, for one, think that a return to local economies (with trade still existing for exotic goods) will be of benefit to the planet and the people on it. I don't see how Americans buying carrots from China can be much good to anyone.
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SandmonsterComment removed: Hard Banned
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fjgalt9 months, 1 week ago
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There was a global currency for a long time: Gold. With it, no country could inflate its currency and thereby steal the value of its citizens.
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About 20 years ago, someone said that a $20 gold coin could support a family of four in the year 1900, and that same coin (worth about $1,000 inflated paper dollars today) would still support a family of four now.
The governments today won't return to a gold standard because they would no longer be able to rob us with the printing press. -
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willottica9 months, 1 week ago
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I find it interesting that the author spends so little energy in refuting the Euro (which, on first thought, would seem the most likely) as a possible alternative.
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Could it be that the arguments against it just aren't strong enough, and the author just couldn't do it with a substantial argument?
Dismissal out-of-hand can be an effective tool to persuade those who don't delve beneath the surface... but unless the notion is absurd, this technique often highlights a major weakness in an argument. Often-times the lack of argument for dismissal indicates that such an argument is either quite weak or doesn't really exist. -
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