Posted on 03/09/2006 8:39:46 PM PST by Flavius
Articles like this is why one of my college profs always called Economics the Dismal Science. Harder to read than stereo instructions.
Taking us off the gold standard is going to bite us in the butt, in the end.
Fiat money is worthless. Far better to have Ferrari or Lamborghini money.
Except for the one in Philadelphia. Full of shops, now.
More Franco-Dollar-Hegemony nonsense (the French were the first to start this talk under deGaulle).
Foreigners holding US dollars buy US Treasury bonds for two reasons:
One, because it is an extremely low-risk investment (Check out any textbook on financial risk analysis and you will read that US Treasuries are considered "base-line" ZERO risk investments. All risk analyses begin from that baseline). Would you rather invest in Venezualan securities?
Plus the market is extremely large, and extremely liquid meaning that you can sell even large quantities of Treasuries for cash without seriously and negatively impacting the market price.
Plus, since Volcker, the moneterist policies of fighting inflation first have guarenteed a positive net return.
Two: What else are you going to do with dollars? Few countries have the knowledge and expertise to come into the US and make wise business investment decisions. Counter-examples are Japan and Germany in the auto industry, France in the hair-care industry, Switzerland and Great Britain in the Pharmaceuticals industry.
Japan learned the hard way that it didn't know enough about the US to invest wisely in Manhatten real-estate or Hollywood entertainment.
In short, what makes US Treasuries so attractive is that people around the world have more confidence in the economy of the US than they do in the economies of their own countries. This is (yes, F-16s help. F-22s help better) in part due to the belief that the US will, in fact, defend its economy and its interests and that it won't fall apart and declare bankruptcy.
Until some other country does it better than we do, dollars will remain the de facto currency standard around the world.
Fiat money...
Yoddity, yoddity, yoddity...
Nobody requires any country to stock dollars.
End of Thread.
End of Thread.<<....Ouch!
Guess i missed your point...
Your use of the Socio-communist pseudo-economic term "fiat currency" suggests that you are
a) French
b) Ignorant of economics
No one forces any country to stock dollars as a reserve currency. They do so because the alternatives are worse.
Period.
Did you say somewhere that you are a broker? And thus have a vested interest in promoting what you say even though it's so outdated in the face of new realities that either you have failed to keep up with world events - other than mainstream press - or you don't want to discourage your clientele with the fact that Iran could and is about to crash all their investments.
Hmmmm...No response........
End of thread!!!!!....smart ass!...LOL...Whoops!....sorry in advance!..(it's a chr***** thing))
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