Death of the USD!

[dmens]

The thing is though, that the problem is being fixed already. Deficits are falling. There is absolutely no need for the Shutdown BS and it's freaking out Investors in the $US.

Falling in the short term due to the recent bailouts and the supposed wind-down of QE does not mean the deficit is falling in the long term, as the CBO demonstrates:

http://www.cbo.gov/publication/44172

The reality will be worse than those rosy projections, because the government has an amazing knack for spending more money than expected.

 

[dmens]

No. Its technically impossible for the US to go bankrupt due to our debts unless we did something unimaginably stupid, like just not pay them. We control our own currency.

So far everything you have said is completely wrong.

Sure, the Treasury can monetize the debt and pay it all off. Technically not bankrupt but no one will ever lend to the federal government again and the currency will be ruined. Bankrupt enough.

 

[dmens]

You haven't explained the attraction of a real negative rate of return for those people, at all, nor likely can you within the parameters of your belief system.

The Chinese government want to continue growing their economy and currently they depend on US debt-driven consumption. The RMB is artificially kept undervalued to that end. Eventually the Chinese people and other emerging markets will pick up the slack and the Chinese government will cut their losses.

Keep staying classy, as always.

 

[sandorski]

Falling in the short term due to the recent bailouts and the supposed wind-down of QE does not mean the deficit is falling in the long term, as the CBO demonstrates:

http://www.cbo.gov/publication/44172

The reality will be worse than those rosy projections, because the government has an amazing knack for spending more money than expected.

It still doesn't warrant a Shutdown and it has nothing to do with the nervousness of $US Investors.

 

[dmens]

It still doesn't warrant a Shutdown and it has nothing to do with the nervousness of $US Investors.

Yes, the debt ceiling should be abolished.

 

[LegendKiller]

The Chinese government want to continue growing their economy and currently they depend on US debt-driven consumption. The RMB is artificially kept undervalued to that end. Eventually the Chinese people and other emerging markets will pick up the slack and the Chinese government will cut their losses.

Keep staying classy, as always.

There isn't enough cheap energy on the planet to allow for that. They simply cannot bootstrap up that many people to the per-capita GDP of the US, not even close. They have effectively ruined their ecosystem to get to this point, they can't go any further. Combine that with the demographic issues they have and you have a pretty nasty mix.

 

[dmens]

There isn't enough cheap energy on the planet to allow for that. They simply cannot bootstrap up that many people to the per-capita GDP of the US, not even close. They have effectively ruined their ecosystem to get to this point, they can't go any further. Combine that with the demographic issues they have and you have a pretty nasty mix.

If the Chinese planners want to slowly taper off their growth to more sustainable levels, why would they continue to invest in US treasuries? They've already started their own domestic Keynesianism, like Japan. Expect that trend to continue.

 

[LegendKiller]

If the Chinese planners want to slowly taper off their growth to more sustainable levels, why would they continue to invest in US treasuries? They've already started their own domestic Keynesianism, like Japan. Expect that trend to continue.

They have to buy USTs, or other US assets. It's the only way to keep the trade balance the way it is. Otherwise you force tens of millions of Chinese into unemployment.

QE is exporting our inflation to them in a huge way. This will slowly rob them of jobs.

 

[dmens]

They have to buy USTs, or other US assets. It's the only way to keep the trade balance the way it is. Otherwise you force tens of millions of Chinese into unemployment.

QE is exporting our inflation to them in a huge way. This will slowly rob them of jobs.

Their own and other emerging markets will relieve them of that need in the long term.

 

[shady28]

Looks like the rest of the world is finally getting jack of picking up the USA's economic tab.

http://news.xinhuanet.com/english/china/2013-10/15/c_132801626.htm

Wonder what the usd will be worth this time next year?

Irrelevant. The US dollar is based on the price of oil, not manufactured goods, and has been for 40 years :

http://en.wikipedia.org/wiki/Petrodollar

"A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country.[1] "

http://realmoneyusa.com/the-end-of-the-petrodollar-could-end-the-u-s-dollar/


Other countries need US dollars on hand in order to purchase oil. This is because OPEC only sells oil in US Dollars.

This keeps the value of the dollar artificially inflated due to artificially inflated demand.

Middle eastern countries that start to sell in another currency oddly end up being invaded or otherwise destroyed.

October 2000 CNN :

http://edition.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/

"A U.N. panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency..."


Iran started taking Euro's for oil in 2003. They've been a target of economic sanctions ever since.

Bush wasn't lying when he said Iraq and Iran have WMDs. But these aren't your grandfather's WMDs, they're oil exchanges denominated in Euros.

 

[Agent11]

Chicken Little Currency Tards at it again. The Yuan is pegged against the Dollar, and the US is China's biggest trading partner by far. They're hooked on Dollars, use them to buy everything they need in the world economy.

It's a truly devious plot to destroy the value of their own currency & the purchasing power of their chief trading partner, obviously. Just... Because. For real. Honest.

It's truly remarkable how right wing fringe whacks project their own irrationality onto others, as if US govt securities weren't so highly sought after as to provide a real negative rate of return.

Rub a few of those propaganda addled grey cells together to see if you can figure out what that means.

They like to poke us in the eye occasionally, it builds face for them.

 

[DucatiMonster696]

They have to buy USTs, or other US assets. It's the only way to keep the trade balance the way it is. Otherwise you force tens of millions of Chinese into unemployment.

QE is exporting our inflation to them in a huge way. This will slowly rob them of jobs.

You think the Chinese don't realize this? They have openly stated that they are working toward internalizing more and more of their trade with themselves. They have been making more and more strides are opening up and removing hurdles from their financial services industries and banking sector to better facilitate this desire to unhinge themselves as being dependent on global exports. Whether it will succeed or not is another argument but it is and will occur at some point and this is the direction they are heading towards.

In the end these things don't happen overnight but they will happen given the current path and course of events. Just as once upon a time in the early 90's no one ever thought that a barely industrialized China would ever supplant the US in manufacturing, or that US jobs would be out-sourced to developing nations like China on a massive scale or that there would be a massive gulf of trade exports and import imbalances between China and the US on a global level, yet "the times they are a changin" and they wont stop changing because some people don't like it.

 

[DucatiMonster696]

Irrelevant. The US dollar is based on the price of oil, not manufactured goods, and has been for 40 years :

http://en.wikipedia.org/wiki/Petrodollar

"A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country.[1] "

http://realmoneyusa.com/the-end-of-the-petrodollar-could-end-the-u-s-dollar/


Other countries need US dollars on hand in order to purchase oil. This is because OPEC only sells oil in US Dollars.

This keeps the value of the dollar artificially inflated due to artificially inflated demand.

Middle eastern countries that start to sell in another currency oddly end up being invaded or otherwise destroyed.

October 2000 CNN :

http://edition.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/

"A U.N. panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency..."


Iran started taking Euro's for oil in 2003. They've been a target of economic sanctions ever since.

Bush wasn't lying when he said Iraq and Iran have WMDs. But these aren't your grandfather's WMDs, they're oil exchanges denominated in Euros.

True the petro-dollar hegemony won't end until there is a solid offensive against the "dollar for oil" exchanges but then again technological advances have a weird way of doing an end around such confrontational necessities. For example Africa's cellular phone communication revolution that has occurred despite their woeful land line telephone infrastructure development has allowed for masses of Africans to be able to communicate with each other on unprecedented levels never seen before for just the cost of a miniscule amount of resources and infrastructure development by private cell phone firms.

 

[Jhhnn]

The Chinese government want to continue growing their economy and currently they depend on US debt-driven consumption. The RMB is artificially kept undervalued to that end. Eventually the Chinese people and other emerging markets will pick up the slack and the Chinese government will cut their losses.

Keep staying classy, as always.

There isn't enough cheap energy on the planet to allow for that. They simply cannot bootstrap up that many people to the per-capita GDP of the US, not even close. They have effectively ruined their ecosystem to get to this point, they can't go any further. Combine that with the demographic issues they have and you have a pretty nasty mix.

So we move from the OP's projection of the sky falling suddenly RSN to they'll catch up someday/maybe if they're lucky scenario.

The truth is that buying US treasuries is already the mechanism employed by dollar holders to cut their losses. Safe negative returns are better than no returns, and certainly better than catastrophic losses in shaky market investments.

 

[dmens]

So we move from the OP's projection of the sky falling suddenly RSN to they'll catch up someday/maybe if they're lucky scenario.

Implying I said anything about the sky falling. Always with the strawman.

The truth is that buying US treasuries is already the mechanism employed by dollar holders to cut their losses. Safe negative returns are better than no returns, and certainly better than catastrophic losses in shaky market investments.

No return > negative return > catastrophic loss. US treasuries are bought to prevent the third case. That is not a viable long term strategy.

Also, this is the first post I've seen from you where you don't insult someone to prop up your ego. Bravo.

 

[Jhhnn]

Implying I said anything about the sky falling. Always with the strawman.

I referenced the OP, and he's not you, right? He certainly offered a Chicken Little scenario, predicting Doom next year.

No return > negative return > catastrophic loss. US treasuries are bought to prevent the third case. That is not a viable long term strategy.

Also, this is the first post I've seen from you where you don't insult someone to prop up your ego. Bravo.

I apologize for the imprecision of that last post. I should have said "real negative return against inflation", although I'm sure you understood it anyway, despite being deliberately obtuse atm.

real negative return> no return. Earning 2.2% against 2.5% inflation beats sitting on the money, for example. That's what holders of US Treasuries are doing ATM, just paying for safe parking.

 

[lozina]

Noticed this relevant article today in the telegraph: http://www.telegraph.co.uk/finance/...sed-world-with-renminbi-replacing-dollar.html

China has overtaken the US as the world’s largest oil importer and goods trading nation. Over the next five years, it will surpass the rest of the world combined in its consumption of base metals.

Given the scale of the country’s consumption of fossil fuels and raw materials, it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources such as crude oil and iron ore.

 

[poofyhairguy]

You really aren't very knowledgeable as to why and how the US can get away with using a fiat currency, and basically create it out of thin air at will, are you?


China and Japan don't want a rapid decline in the USD, because then all of their USD holdings would take a huge loss.

We control the IMF. We control the UN. We control NATO. We just became the #1 producer of energy in the world again. We have much of the world's gold reserves. We have the #1 economy.

I agree, fiat currency ALWAYS will fail eventually. We cannot continue forever the way we are going, but for the foreseeable future, the USD will be the world standard.

See I hate posts like this because it always reminds me why I get all chickenhawk deep down about the role of the US military.

 

[Darwin333]

That is buying our bonds. Not giving handouts.

Sorry, did we threaten to bomb creditors if they didn't buy us bonds?

You asked who was picking up the tab, I answered. I didn't realize the question was "who are we forcing at gunpoint to pick up the tab"

 

[Jhhnn]

Noticed this relevant article today in the telegraph: http://www.telegraph.co.uk/finance/...sed-world-with-renminbi-replacing-dollar.html

Half of that is because we became the world's largest energy producer, so of course we import less.

http://www.reuters.com/article/2013/10/15/us-oil-pira-idUSL1N0I51IX20131015

The rest is merely speculation based on motivated reasoning.

 

[Gintaras]

We control the IMF. We control the UN. We control NATO. We just became the #1 producer of energy in the world again. We have much of the world's gold reserves. We have the #1 economy..

Maybe, good Thing is...Is not 1933 yet....OCGuy does sound like some guy in Germany...in 1933....

 

[Gintaras]

They are still buying bonds......

They're buying YOU - OCGuy, into Slavery...

Put yourself into position of people, who are spending money?
Do you think, it's all done for joke?
Would you do the same - for a joke?

It's easier to WRITE OFF - morons, like OCGuy than let Fairy Tale last forever....

That's what Bond Buyers will do: Either you'll work - for "bonds"...or we'll "write you off"...

 

[shady28]

Irrelevant. The US dollar is based on the price of oil, not manufactured goods, and has been for 40 years :

http://en.wikipedia.org/wiki/Petrodollar

"A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country.[1] "

http://realmoneyusa.com/the-end-of-the-petrodollar-could-end-the-u-s-dollar/

...[/b]

Hate to quote myself, but it turns out this thread may be prophetic after all, just not for the reason the OP stated.

So who is the dog and who is the tail in this relationship? Why did the peace loving Obama want so badly to go after Syria?

Take note of the petrodollar above, then take note of this :

http://www.pbs.org/newshour/bb/world/july-dec13/saudi1_10-22.html

"JEFFREY BROWN: The apparent rift became public late last week, following a vote in the United Nations that elected Saudi Arabia to the Security Council, the seat the Saudis had long coveted.

Then came the stunning response on state television.

MAN (through interpreter): The kingdom has no other option but to turn down Security Council membership until it is reformed and given the means to accomplish its duties and assume its responsibilities in preserving the world's peace and security.

JEFFREY BROWN: Today's Wall Street Journal reported it's part of a broader message. The account said the head of Saudi intelligence, Prince Bandar, a former Saudi envoy to Washington, is trying to distance the kingdom from the U.S.

RELATED INFORMATION

News Wrap: Saudi Arabia rebukes UN Security Council
It cited Saudi anger at a perceived lack of support for Syrian rebels and the U.S. decision not to attack after the Assad regime's apparent use of chemical weapons.

...

SECRETARY OF STATE JOHN KERRY: We know that the Saudis were obviously disappointed that the strike didn't take place and have questions about some of the other things that may be happening in the region."


Saudi Arabia warns of shift away from U.S. over Syria, Iran

http://www.reuters.com/article/2013/10/22/us-saudi-usa-idUSBRE99L0K120131022


"The shift away from the U.S. is a major one," the source close to Saudi policy said. "Saudi doesn't want to find itself any longer in a situation where it is dependent."


This kind of thing could mean the end of the petrodollar.

 

[LegendKiller]

LOL. SA's rift is slight and illusory. All we have to do is pull our troops out of SA and tell them to defend themselves from Iran and they'll come back like a whipped dog. The only thing they fear more than their own people is Iran.

 

[woolfe9998]

It's like talking to a wall. No matter how many times you try to explain it, their views never change.

Didn't you hear, it's all about "government spending." Always. It's all going to come crashing down, any day now. Economic Armageddon!