The dollar could be replaced as the world’s reserve currency

The Spectator (UK) ^ | 10/16/2003 | Simon Nixon

[Feldkurat_Katz]

ping

[RS]

"If the euro replaces the dollar as the world’s reserve currency — and reports from Russia last week suggest it might "

Like the Russians are the ones who make such decisions.....

[NYFriend]

Bretton Woods BUMP

[ThanhPhero]

The budget deficit has no bearing on the value of the dollar and the trade deficit is a fiction invented by the out party to harrass the in party in good economic times because in boomtimes the trade deficit, which is a number that measures only one side of the dollar flow, is always present during a booming economy, and even in a bad economy if the rest of the world's economies are worse. The only thing that affects the value of the dollar is how many dollars there in circulattion compared to the demand for those dollars. If they are being created wholesale then the dollar weakens and inflation is the manifestaton.

[ladtx]

I don't see this happening. Go anyplace in the world and offer someone a handful of Euros or a handful of American dollars, which one do you suppose they would take?

[Orangedog]

ping

[NYFriend]

Right, inflation lowers the cost of exports and raises the cost of imports, triggering growth. This didn't work in the 70's (stagflation) where inflation continued by didn't affect prices enough to turn the economy back around.

[Fyscat]

"I don't see this happening. Go anyplace in the world and offer someone a handful of Euros or a handful of American dollars, which one do you suppose they would take?"

What happens when we add the gold dinar to this question?

[A. Pole]

The US current account deficit now stands at some $600 billion a year and America now needs to attract more than $1.5 billion every day from foreign investors to fund its debts.

The benefits of "free" trade.

[ladtx]

Everything being equal I think most would still take the American dollars.

[fishbabe]

if the euro is strong,doesn't that mean that all the jobs will come here because it will be cheaper to do business here? gee,the french aren't gonna like that.oops ,my mistake , i forgot the french don't work.....

[Dead Dog]

finance the cost of the war and George Bush’s tax cuts.

I was fallowing it until this line. The cat shows it's stripes.

[Jason_b]

What happens when we add the gold dinar to this question?

Probably nothing. The dinar is just a piece of paper that promises gold is backing it in some vault. The dinar is intended to be for international payments between islamic nations, not for carrying around in one's pocket. The Prime Minister of Indonesia hopes that a gold linked dinar would prevent the sort of currency crisis that happened in 1997.

There are real gold dinars being minted today, but I've never seen one, and I imagine people put them away just as they do their Krugerrands.

That said, I'm aware that many opponents of central banking and gold bugs have high hopes for the Dinars success. But long as the "bad" central bank money circulates, the gold will remain hoarded. Greshem and all that.

[Finalapproach29er]

They do if they price teir oil in euros. This is serious. The estimate is that the dollar's value could fall 25-30%. Its no longer a pipe dream of our enemies.

[arete]

Everything being equal I think most would still take the American dollars.

Outside the US, the average man in the street is fairly savvy. They would take the Euros. Almost guaranteed 20 to 30% appreciation in the next year.

Richard W.

[Fyscat]

I definetly see your point, however, I must point out this quote from the latest article on the IDB.

"He said the IDB would continue to be actively involved in the promotion of Islamic financial products and to make Islamic financial instruments accepted not just in Islamic countries but also in the rest of world."

Full Article:

http://biz.thestar.com.my/news/story.asp?file=/2003/10/16/business/6502990&sec=business

[Prodigal Son]

Go anyplace in the world and offer someone a handful of Euros or a handful of American dollars, which one do you suppose they would take?

Any place? I think if you were in Europe and did that, someone would take the Euros. It's their currency after all.

[ladtx]

Most places I have been in Europe and the Orient I have had no problem using dollars in place of the local currency. Some would rather have the dollar.

[Alberta's Child]

Where do you think that $1.5 billion comes from every day? Do people in India, Malaysia, and China have dollars stuffed in their mattresses that they are now looking to invest in the U.S. just to fund our debts?

I've got news for you: there's no such thing as a "current account deficit" . . . that money is simply our trade deficit coming back home. Anyone who exports a product to the U.S. for $1 has to find a way to use that dollar. He can't eat it, so there's really nothing else to do with it but re-invest it in the U.S.!