I have an idea that when the dollar crashes we will see a GIGANTIC trade surplus as foreigners holding US dollars try to unload them on us. Does that make sense?
What do we have that they want?Originally Posted by Madison320
Bridges, tollroads, used cars for scrap metal, prime farmland. That's all i can think of off the top of me head but basically any tangible assets.
Oil, coal, copper, timber, a variety of crops, etc.
The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.
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Come on, we're one of the most resource rich nations in the world. Why do we live realitivly high standards of life? Because we got all the stuff.
Our strong women, our good looking men, and our above average children.
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Well i didnt say we didn't have anything, I asked a question to would help answer the OPs question. But if you think we have a high standard of living because "we got all the stuff", then I'd suggest that you haven't looked into it very deeply.
Sure does. And since the rule has always been, "You can have all the paper you want, just not the stuff," a near future trick for another President is to step up and pull a Roosevelt/Nixon variant, as he effectively closes even the bull$#@! fiat paper convertibility window.
Ah, you want to buy American? No problem. One bottle of American whiskey, coming right up. That'll be $32.50 for the whiskey, and with export and other go-pound-sand-you-foreigner fees, that comes to a modest total of $564.78. Thanks for browsing, stop by again!
"Why do I pay you and your brother Clem, and not give the money to old Chang directly?"
"That money is for us to hold old Chang down. He don't go for that $#@! either."
Last edited by Steven Douglas; 10-12-2012 at 02:37 PM.
Hey America. China called, they said they want all their $#@! back.
The dollar losing viability will also result in a major loss to the creditworthiness of the USA. That will force the USA and it's corporations to export GOODS rather than DOLLARS.
This will only occur when the dollar loses it's reserve status - which MAY NOT occur. The USD as it currently stands is toast, BUT, it is definately possible that as the petropeg becomes less viable, a gold peg will be introduced.
Quite frankly, the US holds most of the worlds gold reserves. When push comes to shove, the long side bonds will be paid out and the short UST bills may be written down and settled in physical gold with the new gold backed currency providing the stability required to keep interest rates down (and the solvency of the USG afloat).
The long side bonds are much more stable. The Chinese know this. They are not and will not dump their long dated UST. It's these recent short term bonds (which are what is financing this exponential rise in debt levels) that the Chinese are not touching (setting the stage for The Fed buying up 70% or UST issuance of debt).
The Chinese WILL become buyers of US Bonds once the USG pegs its currency/debt to gold.
In short, if American elite want things to remain peaceful and productive, they have a choice. Export gold or export goods.
That or a systemic breakdown/WW3.
Fun times.
Last edited by Seraphim; 10-12-2012 at 03:43 PM.
"Like an army falling, one by one by one" - Linkin Park
As long as there are legal tender laws, it's all nothing but odius debt in my eyes. Every bit of it created on a banking cartel oligopoly gameboard I never would have agreed to play on, and which my government never had the Constitutional authority to force me onto in the first place.
What $#@!? The Americans have all the $#@!, the Chinese have all the paper.
"Like an army falling, one by one by one" - Linkin Park
I am not quite convinced the dollar will crash. Allow me to explain.
Firstly, the manipulations of the currency have almost certainly been carried out with the goal of enriching the few at the expense of the many - this is the standard model for sapping wealth away from the mundanes. It is pretty difficult to refute this theory, given the unequivocal results of monetary structure and policy.
If this is so, and I believe it to be, then crashing the dollar may not make sense because no matter what happens the elites will still require a currency system in place in order to do business. Establishing a new currency system carries with it some stiff risk, whereas maintaining as well tested system may carry far less. If we accept this as the case and that the elite are in no mood for assuming unnecessary exposure, then keeping the dollar afloat so to speak, makes all good sense.
Now tie that in with the printing of the countless trillions. Where has it all gone? Nobody seems to be able to account for a very large percentage of it. If we assume it is mostly in the hands of elite factions, it means that without any work having been done they have had transferred to themselves what is effectively some huge proportion of OUR wealth. The way in which this $#@!s us in real daily terms lies in price inflation. Assume for argument's sake that everything doubles tomorrow. Gasoline is $8/gallon and so forth. Note how unlike in times past, wage inflation is keeping almost zero track with that of prices. Yes, wage inflation has always lagged - that was the elites' way of stripping away our wealth in small bites, but today they appear to be very much emboldened and are poised to start taking HUGE bites by ELIMINATING wage increases altogether. So back to the example - everything is doubled, but if income remains steady in terms of the number of dollars earned per unit of work, the purchasing power of the individual has been slashed by 50% - DEVASTATION! The elites do not give a rat's ass if the value of the dollar has slipped because the slip is far smaller than the gains made by the grants of dollars made them by the Fed. They are greatly enriched, the system remains stable, the rest are impoverished greatly, and the world keeps turning to the same old tune.
This is what I suspect may be afoot here. I may be wrong, but the logic of it makes strong sense. It appears to me to deliver all the advantages without carrying nearly as great a level of risk. This is what I would call the closest thing to a free lunch that anyone will ever see.
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It appears that artificial intelligence is at least slightly superior to natural stupidity.
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Convincing the world he didn't exist was the Devil's second greatest trick; the first was convincing us that God didn't exist.
To an extent yes, especially if the devaluation happens quickly. But our dollar has lost plenty of value over the last couple of decades and we are running larger and large deficits. Look at Japan, their currency is getting stronger and stronger, yet their still are having large trade surpluses(though the tsunami altered this). Just because our currency is cheaper doesn't mean we will produce more goods, but like I said, if almost overnight our currency is devalued, people will buy up all of our hard assets, so there will be a large spike in trade.
I think you're over complicating it. Printing money and debt have always been the path of least resistance for a democracy. The "elites" that you mention can't stop the laws of economics once too much money has been printed and too much debt accumulated.
http://dailyreckoning.com/fiat-currency/
http://www.caseyresearch.com/editori...worth-one-word
Here's how I'm looking at it. When you run a trade deficit using fiat currency (not real money) the cumulative effect is that foreigners will be stockpiling pieces of paper that they think have value. As soon as they think their pieces of paper might start to lose value there's going to be a rush to unload them and trade them for something concrete. The only place you can ultimately redeem those pieces of paper is in the fiat currrency's home country.
It occured to me that the cumultive trade deficit is similar to the cumulative budget deficit. If we run a budget deficit every year the cumulative number is our total debt. If we run a trade deficit every year the cumulative number is the amount of fiat currency accumulated by foreigners. I think they are both bad but not too many people talk about the "cumulative" trade deficit like they do with the debt.
So is there a major upturn in the Chinese purchasing "real property" in the US?
we sell them the printing press used to make the papers?
rewritten history with armies of their crooks - invented memories, did burn all the books... Mark Knopfler
I'm sure IBM can manufacture a USB key that reads "International currency creator" on it.
Then, A chinese hacker wiz-kid will find an encrypted message on it: "Thanks for the trinkets, enjoy your pixel money"
"Like an army falling, one by one by one" - Linkin Park
so long, and thanks for all the fish?
rewritten history with armies of their crooks - invented memories, did burn all the books... Mark Knopfler
Ironically enough, I think Chinese leadership would enjoy our humour.
They aren't dumb. They are saving gold and other hard assets for a reason.
This world needs China and the USA to stand together. There is no greater alliance for world harmony and prosperity. It is rife with problems, but thats what problem solvers are for.
A gold strengthened Chinese/American alliance would lead to the Silk Road reopening (would take a few decades to fully develop).
From Munich down to the southern European peninsula, across the Balkans and into the Middle East leading all the way to Shanghai - a road of prosperity. Perfection? Hardly. But maybe, just maybe - the diseased skin of Nationalism will be shed, allowing markets to function across what was and will once again be a trading route that is the foundation for (relative) world peace.
It may take 4 thousand years (it won't), but it will happen.
Get your silver before it hits and surpasses 50$ an ounce.
Gold will be used to back multinational corporate bonds and Soverign bonds. Silver for the laymans currency.
The peg to oil for currency and debt is nearly over. Gold will reclaim it's position. It is an unstoppable fate.
Last edited by Seraphim; 10-13-2012 at 08:18 AM.
"Like an army falling, one by one by one" - Linkin Park
You can't export things like bridges and farmland so foreigners buying them won't effect the trade deficit. But you are right that a weaker dollar encourages US exports and discourages us from importing things.
History repeats itself.
"Life, Liberty and the pursuit of Happiness"
we can export our political and financial leaders to China for disposal as they see fit - I humbly suggest wood chippers
Manure spreader might be more appropriate...
Not until the Chinese realize that the dollar is headed for collapse.
I have a feeling this is going to be more dramatic than just an uptick in US exports. My guess is when the $#@! hits the fan we're going to see huge price increases, maybe 50-100% in one year along with a huge trade surplus, maybe several trillion dollars in one year.
If there is a sharp collapse, all purchasing will decline sharply. Imports as well as domestically produced goods. It takes time to get domestic production up to replace foreign production of goods (same applies to countries the US would be exporting to) so any transition to a positive balance of trade would take a long time.
http://useconomy.about.com/od/tradep...Components.htm
What Does the U.S. Export?:
The U.S. is the world's third largest exporter, after China and the European Union. In 2011, it barely surpassed Germany in the dollar value of exports. (Source: CIA World Factbook, Exports Rank Order
Two-thirds of U.S. exports are material goods. The largest sub-category (25%) is capital equipment, such as computer equipment, semiconductors and medical equipment. The second largest (20%) is industrial machinery and equipment, including plastics, chemicals and petroleum products. Only 5% of exports are automotive, while 6% is food and beverages. Despite being such a large exporter, the U.S. exports less than it imports.
The remaining third of exports are services. In addition, the U.S. exports more services than it imports. That's because of U.S. success in exporting intellectual property, such as technical information. The three largest export categories in services are royalties and license fees, travel services and financial services.
What Does the U.S. Import?:
The U.S. imports more than it exports. As a result, it's the world's largest importer. More than 80% of U.S. imports are goods. The largest category ($756.6 billion in 2011) is industrial machinery and equipment, which includes plastics and chemicals. Within this, the largest category is oil and related petroleum products. In 2011, the U.S. imported $439.3 billion of petroleum products, the highest level since 2008.
The second largest sub-category is consumer goods, which totaled a record of $513.7 billion in 2011. It imported $107.4 billion of food, feeds, and beverages. In addition, the U.S. imported $254.1 billion in automotive vehicles. For updated numbers, see U.S. Trade Deficit.(Source: U.S. Census, Exhibit 6 - Imports by End-Use Category)(Article updated May 18, 2012)
I think it's the difference between reorganization and outright bankruptcy. One overriding M.O. in the process of 'saving' any large currency from an all-out crash is to simply create a new fiat currency, whereby every existing currency holder is forced to take a haircut; forced to sell their existing currency at a fraction of its value, real or nominal.
We saw this with the Euro. European fiat currencies joining the Euro had to be converted into Euros by a drop-dead date, beyond which they were worthless. The drop-dead date from gold and silver certificates, and other notes said to be backed directly by gold and silver, was just an act of legislation (or worse yet, an executive order) with no notice given and no other currency to turn to for refuge. Even with the "Dollar", however, was a case of one type of currency being converted to another, with every currency holder forced to take a loss. Our counterfeiters-in-charge have managed this coup in phases, so that the same basic UNIT never changed -- only what that unit represented. But they could have changed the name in the process, and still can.
The US government, through the Treasury and Fed, could still create a new fiat currency, virtually overnight, with a fixed exchange value (with or without a drop dead date) for convertibility from one fiat currency to another. The Fed could call this new worthless fiat paper EAGLES, on the spurious claim that they are "backed" by gold, even though they are not convertible into gold.
One of the biggest of the many lies unloaded onto us is in trying to say that any irredeemable fiat currency is "backed" by something, simply because it can be exchanged for something. For example, many say that the dollar that was once backed by gold went to being a "petrodollar" that was backed by oil instead, once an agreement was reached with oil producing nations. BULL$#@!. If the dollar was truly "backed" by oil, it would be denominated in a fixed quantity of oil. That was never the case. No currency can be said to be BACKED by anything that it floats against in exchange value.
In an emergency (e.g., WWIII breaks out, and normalcy in international trade is shut down anyway) the US government could pull a China, as they restrict the circulation of EAGLE notes abroad, and limit the number of EAGLE NOTES that can even be exported or owned by non-ally foreigners, the way China has done with its RMB all along. Now you really have bankrupted the dollar for most of the world, albeit selectively. Who takes the haircut? Anyone who is not fer us is agin us. The haircut is enjoyed by anyone but our war/trading allies who have favored nation status. Fed note dollars at home only become fodder for a new domestic-only counterfeiting machine. To prevent Eagles from being hoarded, legal tender status is transferred (overnight) from the Fed Dollar to the Fed Eagle, demand for the Eagle skyrockets. With a fixed rate of exchange initially effect, a distorted mutation of Thier's Law takes over, as "the bad" Fed Dollars are driven completely out of circulation. Now you're forced to accept Eagles in payment of debts, but you're no longer forced to accept dollars -- so bye bye dollars, as they are sold en masse while they still can be. They are hyperinflated globally overnight as everyone else attempts to sell theirs at once, until they finally, rapidly vaporize, going the way of the Continental.
Last edited by Steven Douglas; 10-13-2012 at 03:26 PM.
Britain didn't join the Euro and the Pound is still in use so they did not have any "drop dead" date beyond which the currency would have no value.We saw this with the Euro. The British Pound and other European fiat currencies had to be converted into Euros by a drop-dead date,
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