China could collapse the US Dollar

[JayM]

Apologies for the typo - I won't be so kind as to help you out with your spelling and grammar though, as that would detract from the debate here.

If you're trying to make a point, don't exaggerate and stop being so vague. Put specific numbers (or ranges) down, and let's see if you're right. I can see what's going to happen already - the dollar is going to devalue 1.2% against the yen in 20 years and you're going to say "aha! it collapsed!". So please, give us the numbers - I'd like to know exactly what your statement "house of cards WILL fall" means.

 

[BTTB]

The DOW

One of the main reasons The DOW has climbed so much is that the DOW Companies have experienced good Dollar returns exporting their products.
I doubt those Companies wish the Dollar to strengthen any time soon.
See this commentary on the Dollar and The DOW by Adam Hewison of Market Club.

 

[milomak]

A weak dollar, though the US will never admit it, is exactly what that economy needed. And those in power know it.

 

[Xarog]

If you're trying to make a point, don't exaggerate and stop being so vague.

Economics is inherently vague. You have to deal with nasty unquantifiables such as "investor confidence" and so forth. That's why you get so many economists disagreeing as to what's going to happen.

You're asking me to adhere to a standard that no professional economist would, given the nature of the prediction.

Put specific numbers (or ranges) down, and let's see if you're right.

No need. I'll simply say what I said in the beginning : That the dollar will be devalued as a result of it no longer being the defacto currency for international trade, and foreign governments having dollar reserves only because they *want* those reserves and not because they need them.

I can see what's going to happen already - the dollar is going to devalue 1.2% against the yen in 20 years and you're going to say "aha! it collapsed!".

For one who bemoans exaggeration you sure like to make use of it yourself.

Seeing as the Dollar has already devalued substancially against all other currencies in the last few years (more than 1.2%), and given the fact that I DO NOT consider this to be a collapse (I would be claiming that the dollar HAD collapsed), how can what you said NOT be considered hyperbole?

So please, give us the numbers - I'd like to know exactly what your statement "house of cards WILL fall" means.

I've already explained that.

 

[Xarog]

http://www.counterpunch.org/roberts08102007.html

 

[JayM]

I said "in 20 years", not "over 20 years".

Regarding the house of cards falling - I don't necessarily disagree with you, because still I don't know what that means in your eyes at all (in terms of the $, US economy as a whole, or for the economies of other countries).

When you say "do something drastic about debt", do you mean wipe it out, achieve a yearly surplus (even slight), or just not let it grow bigger? Or do you mean something else? My thoughts are that if even a small yearly surplus was achieved for consecutive years, that the $ will start on an upward trend. If Clinton could do this, I'm sure someone else can.

 

[JayM]

One thing which is contradictory from China's POV - they have stated they could liquidate their USD holdings, and cause a collapse of the USD. This would mean an effective strengthening of the Yuan vs USD - exactly what the US wants, and the reason why they have threatened sanctions. This would make the US suffer, but would make China suffer even more, because their exports to the US would become less competitive.

 

[Syndyre]

One thing which is contradictory from China's POV - they have stated they could liquidate their USD holdings, and cause a collapse of the USD. This would mean an effective strengthening of the Yuan vs USD - exactly what the US wants, and the reason why they have threatened sanctions. This would make the US suffer, but would make China suffer even more, because their exports to the US would become less competitive.

It would be an effective strengthening but a collapse of the US$ is very different to a slight appreciation.

 

[JayM]

It would be an effective strengthening but a collapse of the US$ is very different to a slight appreciation.

Correct, but that is the point - a massive appreciation of Yuan to $ could mean completely non-competive exports to US (China's biggest customer), so it would possibly hurt China even more than the slight appreciation which the US wants.

 

[Syndyre]

Correct, but that is the point - a massive appreciation of Yuan to $ could mean completely non-competive exports to US (China's biggest customer), so it would possibly hurt China even more than the slight appreciation which the US wants.

True, a collapse of the US$ would have ramifications far beyond China and the US anyway, China's more dependent on exports than almost any other economy so there's no way they'd want to do anything to upset the global economy. I think they're just trying to make the point that they do have a lot of power and want to be respected, its a political as well as an economic statement.