The coming collapse of the US dollar

Lord Anubis

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Consequence 1 : Interest rates ala 1997 (22%+)! and $1 = R 20-00+ (i.e. we go down in flames with big brother)

Consequence 2 : Interest rates ala EU (2-4%) AND $1 = R1 (i.e. emergening market economies become a choice place to stash reserves and investments e.g. property market for example)

There is off course another school of thought, do some research on google on the 'Fibonacci market crash' and you'll see we are pretty much in the cr@p in 2007 if you consider 1997 and 1987 and the theory of 3's
 

mky

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not so much

america has so much reserved. emerging markets, while a great place to invest and line your fold, will never be a stable for any 1st world country. Its like saying, "no one ever goes in my garden shed, i'll stash all my cash there". The theory of the high interest rates and even higher exchange: not so much, SA is currently in a down cycle, but you might wanna watch Tito's hands... with the surge in food prices world over, and a sudden OPEC "wobble" we might too be forced to bump up our inflation targets (currently w/in range) and too the interest rates. Despite all of this, we have twice in the last twenty years not gone down w/ the US. Think 2003, despite ludicrous exchanges, we did not fall into recession: something more important than the exchange.

A fall to equal is also highly unlikely ,with the bulk of our FOREX being in USD. But who knows, a few small plays on any intelligent persons' part can see you making massive ROI's over the next few months. Matter of fact, i'm off to my brokers.
 

StrongTurd

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But who knows, a few small plays on any intelligent persons' part can see you making massive ROI's over the next few months. Matter of fact, i'm off to my brokers.
So how 'bout some trading tips for the less intelligent amongst us? * NUDGE, NUDGE, WINK, WINK *
 

StrongTurd

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BTW. mky, I'm no economist but AFAIK the USA has got very little reserved. They moved away from the gold standard in the 70s and their strategic oil reserves are at the lowest point in decades. The only thing they've got going for them is the fact that the de facto trading currency for the entire planet is the US$. If this ceases to be the case the dollar becomes essentially worthless.
 

Xarog

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BTW. mky, I'm no economist but AFAIK the USA has got very little reserved. They moved away from the gold standard in the 70s and their strategic oil reserves are at the lowest point in decades. The only thing they've got going for them is the fact that the de facto trading currency for the entire planet is the US$. If this ceases to be the case the dollar becomes essentially worthless.
That's more or less my understanding. Partially why the US goes apopleptic whenever anyone threatens to trade oil in Euros.
 

BobbyMac

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Bush's successor is going to have a tough time on his hands, but I doubt the US$ will collapse unless Crude is traded in Euros.
 

Claymore

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The only thing they've got going for them is the fact that the de facto trading currency for the entire planet is the US$. If this ceases to be the case the dollar becomes essentially worthless.
That's a problem for them too. Because much of the world currency is linked to the dollar via exchange rates, it limits what the US can do vs. other currencies.
 

Xarog

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I don't remember the specifics anymore because I read the article about a year ago, but apparently the brits were in the exact same position more or less 100 years ago.

However, they were operating with a TRADE SURPLUS and they still suffered. Goodness knows how much worse it's going to be for us all this time around.
 

Syndyre

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The Euro effectively created a viable alternative to the dollar for a lot of the world as a reserve currency, which didn't really exist before.

At the moment most of Asia, especially China, is effectively financing the US's excess consumption, mainly through the purchase of treasury bonds, obviously this is unlikely to continue forever though.

The major difference between the US and say Zimbabwe though is that their debts are denominated in a currency which they control the value of so they could effectively wipe out the value of the dollar and the value of their debts at the same time. How it'll all play out we'll have to wait and see, it certainly won't be good for the rest of us though.
 

StrongTurd

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An interesting observation: The various wars that the US is fighting is costing roughly 100 billion dollars a year. At the same time, the US national debt is growing at a very similar yearly figure.

Unless my logic is flawed this means that the US taxpayer is in effect not footing the bill for these wars but that the Chinese are actually paying for this by continually purchasing US dollars (through the purchase of treasury bonds)! The end result is that the US national debt now hovers just shy of 9 TRILLION dollars. That's a debt burden of $30 000 for every single person in the USA! Put another way, the US foreign debt almost equals the US GDP!

Surely this situation is unsustainable?
 

Nanfeishen

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StrongTurd;That's a debt burden of $30 000 for every single person in the USA! Put another way said:
Well considering a debt burden of $30 000 per person, and an estimated 37 Million who live below the poverty line in America, plus many of the health and welfare cuts undertaken to support the War in Iraq, i would say that they have some serious problems.
Those numbers have probabily increased since this 2006 article though.

http://observer.guardian.co.uk/world/story/0,,1712965,00.html

Poverty in the United States:
http://en.wikipedia.org/wiki/Poverty_in_the_United_States
 
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