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BigAl-sa
Executive Member
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http://www.fin24.com/articles/defau...1518-2385-2396_2436296&IsColumnistStory=False
Come on, let's hear it...
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Is the dollar dead?
- Thread starter BigAl-sa
- Start date
http://www.fin24.com/articles/defau...1518-2385-2396_2436296&IsColumnistStory=False
Come on, let's hear it...
Hmmm let's see believe the Japanese PM or believe some guy from Investec..... lol.... such a hard choice.
So you're saying that Europe is more stable than the US? You've been following what's going on over there plus the bleak prospects for Europe's future?
No I am merely saying that because it is more spread it is less likely to take big hits like the dollar
For the euro to take a big hit it will need bad conditions in 4 or 5 countries or atleast in 3 of the larger countries, but for the dollar to take a hit there has to only be a problem like now with the banks and all the bad debt.
Never said Europe is more stable than the US
No I am merely saying that because it is more spread it is less likely to take big hits like the dollar
For the euro to take a big hit it will need bad conditions in 4 or 5 countries or atleast in 3 of the larger countries, but for the dollar to take a hit there has to only be a problem like now with the banks and all the bad debt.
Never said Europe is more stable than the US
EURO is mostly dependent on GERMANY. GERMANY is by far the largest and most dominant economy in Europe. The introduction of the EURO to the poorer West (Spain and Portugal) brought a major credit and contruction crisis
to these countries, proving that not all is equal in Eurozone. GERMANY is nice and big but the Japanese economy is much larger and the US is even bigger and therefore has more inertia.
The fundamentals are also better in the US. Socialist, worker depleted, Europe
is hardly the choice for a world leader.
The US is like 2-3 Europes.
So where would we look for the new major currency. British Pound?
... or even the Chinese Yuan?
Lol, the euro 10-1, but atm no other currency has really put its hand up (that I know of)
What is?
So where would we look for the new major currency. British Pound?
... or even the Chinese Yuan?
There is talk of the Yuan becoming depreciated even more.
There isn't really a lot of options out there - its going to stay with the dollar - or probably move to the Yen, Pound or Yuan ...
Apart from the US, China and Japan, the rest of the world's strongest 10 economies are mostly from the EU.
Apart from the US, China and Japan, the rest of the world's strongest 10 economies are mostly from the EU.
The Rand gets "pegged" to the Dollar or to the Euro and switches sides often, several times a year. If you read iAfrica.com money, it depends on who SA's largest trading partner of the moment is. Schizoid really.
I think a separate independent world currency is needed. I wonder how much dollar reserves major countries retained in the aftermath. If the dollar is not the world trading currency i wanna see how they maintain their military, power and influence.
UglyKidJoe
Well-Known Member
- Joined
- Jul 3, 2006
- Messages
- 243
The Rand gets "pegged" to the Dollar or to the Euro and switches sides often, several times a year. If you read iAfrica.com money, it depends on who SA's largest trading partner of the moment is. Schizoid really.
The Rand is not pegged to any currency.
supersunbird
Honorary Master
- Joined
- Oct 1, 2005
- Messages
- 60,152
The truth
OK, here's my understanding of all of this (could be wrong...)
The dollar has been the dominant currency in the world for one main reason - America has been the most dominant trading nation.
As for dollar stability, America has done much to undermine the stability of their own currency. The budget deficit and current account deficit means that as soon as financial flows reverse out of America, the dollar will take a hit (as it has recently done). Anyone using dollars is of course affected by such changes, even though they had nothing to do with them. This can make the dollar less attractive as a trading currency: if it is volatile, people will avoid holding dollars for too long.
After World War II and the Bretton Woods conference, the world financial system used the gold standard which was pegged to the dollar. This system gave the Americans a lot of power over the world economy. They caused a lot of damage by effectively printing too much money, causing the agreed dollar-gold exchange rate to become unrealistic, and the dollar to be effectively overvalued. When the system was discontinued, the dollar lost about half it's value (as it had been overvalued for some time). The Latin American economies had pegged their currencies to the dollar and so they also lost half their currency's values. America had effectively exported its inflationary financing to other countries!!!
This is the problem with having a universal currency - the first thing you need to ask is who is going to be in charge of the money supply and controlling inflation, as it can otherwise be abused. A currency's value is determined by these factors.
If America's financial woes continue and American trade declines, there will certainly be a decline in demand for the dollar - but never count the Americans out. Hopefully they get their act together very soon!
The dollar has been the dominant currency in the world for one main reason - America has been the most dominant trading nation.
As for dollar stability, America has done much to undermine the stability of their own currency. The budget deficit and current account deficit means that as soon as financial flows reverse out of America, the dollar will take a hit (as it has recently done). Anyone using dollars is of course affected by such changes, even though they had nothing to do with them. This can make the dollar less attractive as a trading currency: if it is volatile, people will avoid holding dollars for too long.
After World War II and the Bretton Woods conference, the world financial system used the gold standard which was pegged to the dollar. This system gave the Americans a lot of power over the world economy. They caused a lot of damage by effectively printing too much money, causing the agreed dollar-gold exchange rate to become unrealistic, and the dollar to be effectively overvalued. When the system was discontinued, the dollar lost about half it's value (as it had been overvalued for some time). The Latin American economies had pegged their currencies to the dollar and so they also lost half their currency's values. America had effectively exported its inflationary financing to other countries!!!
This is the problem with having a universal currency - the first thing you need to ask is who is going to be in charge of the money supply and controlling inflation, as it can otherwise be abused. A currency's value is determined by these factors.
If America's financial woes continue and American trade declines, there will certainly be a decline in demand for the dollar - but never count the Americans out. Hopefully they get their act together very soon!