Exploring Hydrocarbon Depletion
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FloridaGirl wrote:What I believe this means, is that there aren't enough buyers in the world that are willing or can afford to buy $1.7 Trillion per year to fund the US deficit. That means that the Fed can't stop printing for any length of time. I expect that will lead to higher and higher inflation and at some point, the collapse of the dollar.
tex123 wrote:It boggles the mind how our financial system and dollar hasn't collapsed already.
My question is whether this is a temporary phenomenon, or whether it will become a permanent, systemic fixture? If this is permanent, then it is a very dire development.
One way to make this temporary is for our government to eliminate the deficit. I've watched in frustration at the government debates on the budget where even the Republicans' proposal fall way, way short of doing what is needed to save us.
One way to make this temporary is for our government to eliminate the deficit.
I feel like I have written the Pelican Brief.
tex123 wrote:This just doesn't make any sense to me. How can we keep going at this rate?
I think they can keep this up longer than you might expect because most dollars are actually held outside the US. So as we inflate the dollar, we're spreading that inflation out all over the world.
What was needed, they said in a statement, was "a broad-based international reserve currency system providing stability and certainty" -- thinly veiled criticism of what the BRICS see as Washington's neglect of its global monetary responsibilities.
The BRICS are worried that America's large trade and budget deficits will eventually debase the dollar. They also begrudge the financial and political privileges that come with being the leading reserve currency.
FloridaGirl wrote:But the BRICS (Brazil, Russia, India, China and South Africa) have noticed and are doing something about it now. See the article: http://www.cnbc.com/id/42584565
The U.S. dollar is the world's foremost reserve currency. In addition to holdings by central banks and other institutions, there are many private holdings, which are believed[by whom?] to be mostly in one-hundred-dollar banknotes (indeed, most American banknotes actually are held outside the United States).
All holdings of U.S.-dollar bank deposits held by non-residents of the United States are known as "eurodollars" (not to be confused with the euro), regardless of the location of the bank holding the deposit (which may be inside or outside the U.S.).
Economist Paul Samuelson and others (including, at his death, Milton Friedman) have maintained that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to readjust. But Samuelson stated in 2005 that at some uncertain future period these pressures would precipitate a run against the U.S. dollar with serious global financial consequences.
One thing is for sure.. precisely because there are SO MANY dollars held overseas, when the dollar does collapse it's going to be brutal on Americans.
dsula wrote:what do you mean "when"? The $$ is collapsing as we speak. Check out dollar vs swiss franc exchange rate for the last 50 years.
sparky wrote:One should keep in mind that the federal treasury is sitting on 300 millions Oz of gold
as the U.S. $ sink ,flushing foreign investors savings down the toilets , this appreciate daily
not a bad rip off actually
That's worth about 463 billion dollars. Don't know off the top of my head mow many dollars are in worldwide circulation.. something crazy like 30 trillion. So anyhow 463 billion in gold doesn't back up trillions.. it only backs up 463 billion.
Geithner told Bloomberg Television there was no need to reassure foreign buyers of U.S. debt in the wake of S&P's revised outlook, noting investors still had confidence in U.S. debt and the growth prospects of the U.S. economy.
"You can see that in the price at which we borrow every day, but we have to earn that confidence," he said.
If you would have bought treasuries this january you are already looking at a loss of 20% on exchange rates. And there are no signs that that is going to reverse soon.
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