The dollar standard is ending

[Nicky_G]

So if the gold standard is used to trade, how would it affect our country? Surely being one of the largest gold producers in the world would be a major advantage to us. If thats the case then nationalisation of mines would be a good thing. But with a government like ours, the citizens would not see the rewards.

 

[empirex]

So if the gold standard is used to trade, how would it affect our country? Surely being one of the largest gold producers in the world would be a major advantage to us. If thats the case then nationalisation of mines would be a good thing. But with a government like ours, the citizens would not see the rewards.

Punch in world gold reserves in google. Here's wiki's count World Gold Holdings.

We're 29th on the list with 125 tonnes. Hopefully we've been hoarding more than that though...

In reality you can expect China's real tonnage to be double those figures.
Word is that America's has a lot less than indicated... cleaned out by the Fed.

 

[alloytoo]

What?

Yeah the Chinese must be pretty pi$$ed, investing all that money in the dollar never thinking the US would deliberately devalue their currency, now they're avoiding it like the plague and bypassing the petro-dollar altogether.

This is old news. The high dollar has been driving China's economic growth for the last decade, and the Americans have been trying to lower it for about the same period. Problem is the US have no levers left to pull. Their interest rates cannot go any lower, and there's no gas left in tank for real stimulus spending, so basically nothing left to do but print money.

'QE infinity' will fail, and will only postpone the inevitable and make it even worse. They should've taken their cue from Iceland, but no they pile "good money" onto bad.

QE does have the effect of lowering debt (as a percentage of currency in circulation), but at the expense of the value of savings. On top of that Americans seem to eschewing personal debt. The real problem with American seems to be a lack of cohesive visionary leadership.

 

[alloytoo]

So if the gold standard is used to trade, how would it affect our country? Surely being one of the largest gold producers in the world would be a major advantage to us. If thats the case then nationalisation of mines would be a good thing. But with a government like ours, the citizens would not see the rewards.

If for example Zimbabwe held equal reserves of gold as SA (and equal monetary supply), would that mean that their currency should equal SA's despite the fact that their economic activity is an obscure fraction of SA's?

 

[empirex]

This is old news. The high dollar has been driving China's economic growth for the last decade, and the Americans have been trying to lower it for about the same period. Problem is the US have no levers left to pull. Their interest rates cannot go any lower, and there's no gas left in tank for real stimulus spending, so basically nothing left to do but print money.

It might be old news, but it's huge news. Russia has also said it will sell all the oil China wants without the dollar.

Combine that with China, Brazil, Undia, UAE, etc. and you have a lot of unwanted dollars. It's the perfect storm when combined with many other factors. This has been in the works for a while and when those trillions of unwanted dollars come home, a collapse of the US dollar is inevitable. This is not a conspiracy theory it is simple economics.

 

[Nicodeamus]

So if the gold standard is used to trade, how would it affect our country? Surely being one of the largest gold producers in the world would be a major advantage to us. If thats the case then nationalisation of mines would be a good thing. But with a government like ours, the citizens would not see the rewards.

It would be more expensive for us to go over now, because you will have to exchange all your currency for gold first. However it would have been beneficial to stay on it, or another commodity standard (silver maybe). The problem with fiat comes in with its centralization. The printing presses either prints too much or too few.

Here is a good article on the history of gold in South Africa

http://www.mises.co.za/2011/12/a-short-history-of-gold-in-the-south-african-monetary-system/

 

[empirex]

One thing we musn't forget is that the gold standard need not be fixed at 100%.

The US had their currency at 40% up until 1970.
While the UK had theirs as low as 20%.

 

[alloytoo]

It might be old news, but it's huge news. Russia has also said it will sell all the oil China wants without the dollar.

Combine that with China, Brazil, Undia, UAE, etc. and you have a lot of unwanted dollars. It's the perfect storm when combined with many other factors. This has been in the works for a while and when those trillions of unwanted dollars come home, a collapse of the US dollar is inevitable. This is not a conspiracy theory it is simple economics.

Which basically means the US doesn't have to print the dollars needed to devalue it's currency.

The US needs to lower it's labour costs and make homegrown industries more competitive, a lower currency is needed to reverse jobs going to India or China.

 

[WilD_CaT]

Source

This news is simply huge. Don't know what to think about this. Also today I see that central banks across the world have been buying gold like its going out of fashion. Gold purchases by central banks is up 138% which seems to imply that governments the world over are converting their dollar reserves into hard currency (gold).

I'm starting to think that the world leaders already are planning for the collapse of the dollar and are quietly preparing for that eventuality. This oil move by China and Russia is huge yet the news has been dead quiet about it. The last time this happened was when Iraq passed a law saying they would sell oil in other currencies. They where invaded shortly thereafter and the first law the new Iraqi puppet government revoked was that one. Iran has been threatening to sell oil in gold and the result has been the current Iranian crises. Seriously, I am starting to think its time to put the tinfoil hat on.

It is significant but that doesn't many the dollar has been replaced. We sell to foreigners in ZAR all the time. Hasn't resulted in a Rand currency collapse.

I think the effects will be long and drawn out and the reason I don't think you'll see anything as the FED and US will do whatever it can to mitigate the potential (if any) effects of this Chinese move.

 

[empirex]

It is significant but that doesn't many the dollar has been replaced. We sell to foreigners in ZAR all the time. Hasn't resulted in a Rand currency collapse.

I think the effects will be long and drawn out and the reason I don't think you'll see anything as the FED and US will do whatever it can to mitigate the potential (if any) effects of this Chinese move.

It's a combination of factors.
You cannot keep on printing 40 billion dollars every month and not expect any consequences thereof -- remember they are printing money out of thin air.

Ask yourself the question; what would happen to any other countries currency if they done the same?
The only reason they can get away with it is because the dollar is the world's reserve currency.

But what happens when no one wants dollars anymore? When the dollar is no longer the reserve currency.
What happens when all those trillions of dollars make their way home; and this has been building over months already..

 

[alloytoo]

It's a combination of factors.
You cannot keep on printing 40 billion dollars every month and not expect any consequences thereof -- remember they are printing money out of thin air.

You can, but only if your economy is growing by 40 billion dollars every month, otherwise it simply dilutes your currency resulting in inflation.

Thing is, all of the US debt is denominated in US dollars, if the dollar halves in value, so does all the cash and savings in the economy, but not only that, so does the debt. Fixed plant, land and buildings however retain an intrinsic productive value.

If you feel, as I have, that the Dollar has been overvalued for some time, then an adjustment is in order. Lower domestic costs will reverse outsourcing and bring production jobs back to the US, reducing unemployment.

-- remember they are printing money out of thin air.

Everyone prints money out of "thin air" (or rather paper ) the mandate of most central banks is to ensure that the money supplied into the economy does not significantly outstrip economic growth, if you do, inflation results.

 

[Nicodeamus]

You can, but only if your economy is growing by 40 billion dollars every month, otherwise it simply dilutes your currency resulting in inflation.

Thing is, all of the US debt is denominated in US dollars, if the dollar halves in value, so does all the cash and savings in the economy, but not only that, so does the debt. Fixed plant, land and buildings however retain an intrinsic productive value.

If you feel, as I have, that the Dollar has been overvalued for some time, then an adjustment is in order. Lower domestic costs will reverse outsourcing and bring production jobs back to the US, reducing unemployment.




Everyone prints money out of "thin air" (or rather paper ) the mandate of most central banks is to ensure that the money supplied into the economy does not significantly outstrip economic growth, if you do, inflation results.

Now the question is, it it always possible for them to print just enough? In most cases they always print to much..

 

[empirex]

You can, but only if your economy is growing by 40 billion dollars every month, otherwise it simply dilutes your currency resulting in inflation.

Thing is, all of the US debt is denominated in US dollars, if the dollar halves in value, so does all the cash and savings in the economy, but not only that, so does the debt. Fixed plant, land and buildings however retain an intrinsic productive value.

If you feel, as I have, that the Dollar has been overvalued for some time, then an adjustment is in order. Lower domestic costs will reverse outsourcing and bring production jobs back to the US, reducing unemployment.

Everyone prints money out of "thin air" (or rather paper ) the mandate of most central banks is to ensure that the money supplied into the economy does not significantly outstrip economic growth, if you do, inflation results.

There are so many other factors though, such as America's massive debt: 16 trillion dollars.
The only way America can afford to pay of the debt is by borrowing more money.

So the Fed lends 40 billion a month to the big institutions which in turn go and buy treasuries! The circle is complete, and the status quo (mess) continues.

The people in charge are not moving toward a financial cliff, they are racing toward it.

 

[Nicodeamus]

There are so many other factors though, such as America's massive debt: 16 trillion dollars.
The only way America can afford to pay of the debt is by borrowing more money.

So the Fed lends 40 billion a month to the big institutions which in turn go and buy treasuries! The circle is complete, and the status quo (mess) continues.

The people in charge are not moving toward a financial cliff, they are racing toward it.

before they pay the debt, they should probably stop more debt from occurring, by cutting spending! (good lack with that if you have a democrat promising everyone free healthcare and an increase in social security).

 

[empirex]

before they pay the debt, they should probably stop more debt from occurring, by cutting spending! (good lack with that if you have a democrat promising everyone free healthcare and an increase in social security).

Not to mention unnecessary wars around the globe...

 

[alloytoo]

Now the question is, it it always possible for them to print just enough? In most cases they always print to much..

Printing a little too much, which results in low single digit inflation is preferable to deflation which stifles economic activity.

 

[alloytoo]

There are so many other factors though, such as America's massive debt: 16 trillion dollars.
The only way America can afford to pay of the debt is by borrowing more money.

So the Fed lends 40 billion a month to the big institutions which in turn go and buy treasuries! The circle is complete, and the status quo (mess) continues.

The people in charge are not moving toward a financial cliff, they are racing toward it.

Which is why the US is trying to devalue their currency.

If the US$ halves in value that $14 Trillion is effectively 'only' $8 Trillion in todays money. The consequence is that people's cash savings are also wiped out.

The big consequence of the high dollar is that is simply cheaper to import goods and services than to provide them in America. A weaker dollar make importing expensive, local industry would step into the consumption gap and we could see an upsurgeance in manufacturing.

The question is, will China allow the US dollar to collapse?

 

[Polymathic]

The USA is a crumbling empire, what I fear is that if the USA stops being a super power too soon, there might be a power vacume and Iran might try something funny.

 

[agerbon]

The USA is a crumbling empire, what I fear is that if the USA stops being a super power too soon, there might be a power vacume and Iran might try something funny.

Iran? Why Iran? Imo it's the USA that tends to do 'funny' things.

 

[empirex]

Which is why the US is trying to devalue their currency.

If the US$ halves in value that $14 Trillion is effectively 'only' $8 Trillion in todays money. The consequence is that people's cash savings are also wiped out.

The big consequence of the high dollar is that is simply cheaper to import goods and services than to provide them in America. A weaker dollar make importing expensive, local industry would step into the consumption gap and we could see an upsurgeance in manufacturing.

The question is, will China allow the US dollar to collapse?

That is one dangerous game they are playing, given the scale and significance of the dollar. The consequences could (and will be IMO) dire.

We obviously approach this from differing angles. My contention is that much of this is engineered, rather than the bungling errors of economic halfwits, which I suspect is how you approach this.

The question is, will China allow the US dollar to collapse?

What action could they take to prevent the collapse?