Posted on 10/06/2009 9:35:47 PM PDT by americanophile
The U.S. dollar continued its six-month slide Tuesday amid a growing international chorus that wants the dollar replaced -- or at least supplemented -- as the world's reserve currency, a move that would end the greenback's six decades of global dominance.
The dollar has come under attack from abroad as the economic crisis has played out, thanks to the Federal Reserve's decision to flood a seized-up financial system with liquidity last fall. The central bank's moves likely staved off deflation, but the massive influx of new dollars has devalued existing ones. Foreign nations are worried that the massive U.S. national debt and rising deficits are not being addressed. And though inflation is not yet a concern in the United States, a prolonged slide in the dollar's value could lead to higher prices for consumers.
Further, large emerging economies -- such as China, Russia, Brazil and India -- are tired of kow-towing to the American buck, and sense an opportunity to knock a weakened dollar off its imperial perch.
"The U.S. dollar is headed for also-ran status, and it will continue to lose its value against many other currencies and assets," Miller Tabak equity strategist Peter Boockvar said. "The rest of the world wants the U.S. dollar to lose influence, but no one wants it to be abrupt, as it's in no one's interest. An evolutionary process is what is wanted."
The question is: When will that happen?
"In the next two to three years, it is highly unlikely to see the dollar replaced," said Eswar Prasad, an economics professor at Cornell University and a senior fellow at the Brookings Institution in Washington. "Over the next decade, though, we would expect to see other currencies play a much more significant role."
(Excerpt) Read more at washingtonpost.com ...
Dollarrhea will do that to ya.
Even if only one gram of SIlver per dollar. But Hard Silver Money and Silver Certificates (in denominations of $50 or more).
....it would be nice if it were backed by something.
It is. GNP. Just like when it was backed by gold, when you print money that isn't backed by GNP, it's value goes down.
Why people have this thought that gold backed currencies are somehow more stable baffles me. When most currencies were backed by gold reserves, the same thing happened. Countries began printing money without having the gold assets to back it up.
That is what happened in the late 20's and helped kick off the depression, countries began printing money without the gold reserves to support it.
...but you're making the point that it wasn't really backed up gold.
Yes it was. During the gold standard monetary system years, paper notes were freely convertible into pre-set, fixed quantities of gold on demand.
But as I mentioned, the gold standard still relied on the honesty and integrity of governments, which failed miserably, and is why it's no longer used.
But, for arguments sake, Lets say all currencies today were gold and silver coinage of a set weight agreed to by international law.
There wouldn't be enough gold and silver in the world, and countries with large gold resources would have a monopoly, they'd be able to smelt all the money they wanted.
Mining it would be a huge capital expenditure however, because gold and silver wouldn't be worth a whole lot, probably well under $100 an ounce. In the 1933 when the dollar was tied to gold, it was worth $20.67 per troy ounce. The pressure from all currencies being tied to gold would have a suppressing effect on any gold price hikes, t wouldn't be free to trade on the open markets like it is today.
...that’s cool
Own stuff. Land, buildings, apartment blocks. Otherwise there just aren't any guaranties in life, and there never were. One of the hardest things about having wealth is hanging on to it, it seems.
But if you are relatively poor, you just roll with the times. Those things don't matter. As long as you have a roof over your head and food on the table and your family safe around it, you are a rich man.
...I meant systemically, but your point is taken.
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