The Ultimate Destruction of the US Dollar Will Not Happen

Discussion in 'Economy' started by konkon, Mar 26, 2011.

  1. konkon
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    konkon Member

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    This is pretty much in response to Damon Vickers' 15 day devastation scenario on world markets, triggered by China not buying US bonds which subsequently collapses the US dollar. He claims the Dow will even drop around 3,000 points in a single day, and there will be carnage in all types of markets around the world. He also claims the Fed will be forced to increase interest rates by up to 6% in a day, to desperately entice investment in the US. The net result from all this devastation will be a creation of a single world currency by a unified world order.

    The following is from A New World Order – Two Weeks After The Dollar Crashes

    "This begins with a Chinese choice to not buy any more U.S. Treasuries. That single day will be the death nail in the dollar’s coffin. Over the next two weeks, events will spin out of control in financial markets the world over....Vickers lays out scenes of chaos and rioting, looting of grocery stores, empty ATM machines, and shootings around the world."

    The following is from Glen Beck's segment on the dollar's decline and it's well worth a watch: The diagrams are to the point.

    I don't see this scenario playing-out like this. Do you? Pressure is definitely mounting on the Fed to further protect the USD. QE3 may be an option mid year. Bill Gross has done an about face by not buying treasuries and this has alarmed many. Vickers is saying the Chinese will be next. Maybe, but this will do more harm to China as it still will peg its currency, the yuan, to the US dollar. If China breaks free form the USD its currency will appreciate so much in such a short amount of time that it will do long term damage to its economy. Even if China pegs the yuan to the euro, it will still appreciate. The Chinese played their hand and used the USD to take advantage of markets and it has to live with this. Vickers doesn't seem to account for this dynamic. He makes it out that China can easily stop buying US bonds. They might but go ahead and see which country benefits the least. This will be more devastating for the Chinese and other Asian countries.

    The US dollar is destined to fall further but I don't see it eventually being replaced by a unified world currency. This is something all governments would want to avoid especially the US government (military etc too). A unified currency for the world just won't work. It will eliminate the necessary (competitive) dynamics that all countries need to function.

    There's nothing intrinsically wrong with any type of currency, like the USD, itself. The practices associated with lending, trading, speculating etc are the problem. A single world currency won't 'fix' these flawed practices and newer, less predictable (at the outset) problems would surface.

    Vickers talks about debt resets which is an interesting concept, but can still work with the set of world currencies we have today.

    Just look at Europe with the euro. Countries like Greece and Ireland have lost their freedom to print money in times of trouble and have gone to the European Central Bank for loans. the EU setup has made the ECB a big bank that will lend money to countries that were destined to go to it for loans. This was bound to happen and it did!

    A creation of a central world currency will dish-out pretty much the same headaches for countries, because you will eventually have a (new) world order operating as a big bank to nations. How many people want this to happen? Give me the system we have and let's go after those that want to destroy this free market system, even with all it's imperfections.


    Here is Damon Vickers' video on his theory, but the Glen Beck one above is excellent:
    The Day After the Dollar Crashes
     
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  2. Terral
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    Terral Terral Corp CEO

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  3. konkon
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    konkon Member

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    The US dollar is tied into nearly all asset classes around the world, to some extent. It's 'destruction' or even possible destruction will to some extent rip through these asset classes.

    Is this the plan by those that want to establish another reserve currency or seek to debunk the USD? The US dollars' collapse might (will, I think) cause all kinds of problems around the globe.

    And at the end of this possible carnage we have another 'little' problem: The ones that own your debt end up owning you!
    :eusa_shhh:
     
  4. konkon
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    konkon Member

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    Here's another point that is important even with all the problems in the US and abroad. There will always be support for the US dollar as long as the US keeps controlling the world markets, the money supply and keeps its status as the number one military force, which it will. The supply and demand dynamic of valuing the USD, is just one side of an argument. There are many latent forces which makes the US dollar the world's reserve currency.

    I think that a modern day dynamic that has to go hand in hand is: you won't have the number one military force if your currency is not the world's reserve currency. Sure logically the two don't have to be united in the way stated, and I'm well aware of this. But I think that the two must go together considering the times we live in. The US will not give up its number one military status. Period. It needs to have the most widely used and influential currency too. The two dynamics reinforce each other to some extent. And they will support one another in the long run.
     
  5. editec
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    editec Mr. Forgot-it-All

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    The question is NOT will the USD EVER fail, because we all know that it will eventually.

    The real question is WHEN will it fail?

    Frankly, I have no idea and neither does anybody else.

    Conditions wll change-- that we know for sure-- but nobody really has a crystal ball.

    Who'd have predicted for example, that much of the Islamic world would be in revolt this year?

    And things that monumental have a way of effecting everything including the US economy and USD, too.
     
  6. Douger
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    It has already failed. I know how many pesos I can buy for the useless dollar.A hell of a lot less than I could 7 years ago.The dollar is cheap right now.........and I wouldn't touch it with a ten foot shit stick.
     
  7. editec
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    editec Mr. Forgot-it-All

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    Well certainly in my lifetime the USD's purchasing power has declined.

    What's even more troubling is that most people's salaries haven't remotely kept up with the rate of inflation, too.

    But still, that does not mean that the USD is in danger of eminent collapse.

    I can easily envision natureal events or complex affairs of finance that might cause that to happen, but really nobody can predict that such events will actually happen.

    Folks, we had inflation even when the whole world was on the gold standard.

    Sometimes inflation is a good thing.

    Other times it is catastropic thing for most of us.
     
  8. sparky
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    sparky VIP Member

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    the article bables on about curency valuation , while convienitly leaving out the Chinese bond raters

    yeah, the Chinese are into us for big $$$'s , and they're actively pursuing an Asian monetary consortium , even have the IMF convinced to knock the USD off as a global benchmark

    the typical canard here is, they loose if they do, which is propaganda in it's usual guise of horesh*t rhetoric

    valuation and debt can be inversely proportional konkon, so allow me to forward an anology in order for you to comprehend this in simplest terms

    let's say you owe me $100 USD

    but because you owe everybody & their uncle, i'm going to convince my fellow lenders that USD in your pocket is worth 80% of what you say it is

    Now, you owe me $120 USD


    get it yet?
     
  9. KissMy
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    Pimco's Gross Sees Little Value In Treasurys As US Debt Grows
     
  10. bigrebnc1775
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    bigrebnc1775 Diamond Member

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    When a country's only commodity left is producing paper money their money currency begins to lose value.
     

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