What will happen...

[chiak47]

Please explain the ramifications to the US in the event that nations systematically begin to dump the US dollar as the global trading note for something such as the Yuan or Euro.

I have been reading that this is a good possibility in the near future as G20 members have voiced concern due to the past few administrations printing money as if it were toilet paper.

Will the US dollars overseas be sent back here and we inevitably get swamped with our own currency?

If OPEC decides to use the Yuan or Euro as the standard then will that decision ultimately send the price of petrol through the roof?

What other detrimental problems do you foresee with the "dumping" of our currency.

[L1A1Rocker]

I'm thinking very bad things. Hyperinflation type of bad things.

[Lysander]

All everyone else dumping the dollar will do is devalue it more. The problem is, they can't. Everyone has so much invested in the dollar they stand to lose too much. The process of them dumping the dollar would force a run on whatever other currency(ies) they picked, causing even more chaos in the market. In fact, it would probably artificially generate a bubble on that currency (until levels stabilized) that would devastate that country's economy.

Remember, the value of a Dollar, Yuan, Euro, etc is based on two things; faith, and scarcity.

[Oswald Bastable]

Please explain the ramifications to the US in the event that nations systematically begin to dump the US dollar as the global trading note for something such as the Yuan or Euro.

I have been reading that this is a good possibility in the near future as G20 members have voiced concern due to the past few administrations printing money as if it were toilet paper.

Will the US dollars overseas be sent back here and we inevitably get swamped with our own currency?

If OPEC decides to use the Yuan or Euro as the standard then will that decision ultimately send the price of petrol through the roof?

What other detrimental problems do you foresee with the "dumping" of our currency.

In order for them to 'dump' dollars, someone has to be willing to buy them with some other currency. If countries started suddenly dumping, pretty soon, no one would be willing to buy them, meaning they would be worthless. And yes, that would mean that not only gas but everything else here would skyrocket in price. Think of weimar germany or zimbabwe and folks running wheelbarrows of cash down to the market, just to buy a loaf of bread.

[imanaknut]

If I understand the voodoo world of economics correctly, it would raise the cost of everything we import to the point of it being unaffordable, and since the US is the biggest importer for most countries, the stopping of our buying their stuff would collapse their economies.

World trade is a fine balance and obama-messiah, with the help of congress and the fed, and things done by Bush, but forced by economic policies of clinton that they don't want us to know about, we are facing tough times. This is one of those times where governments doing nothing would probably be the best, and letting the people slowly buy the way back to prosperity.

[Kadmos]

Sounds like people are confusing the question here a bit.

The answer is we would lose a bit of respect as the worlds premiere currency.

We might experience a very very slight devaluation of the dollar as a result of the status loss, and that's about it.

I'm confident saying this because its essentially whats been happening for the last 30 years.

30 years ago we were the premiere hands down currency with only really the UK as a competitor on that issue.

Now it really doesn't much matter, we have our hands in so much of the worldwide pie that we are able to deal in whatever currency is local and then exchange it at good rates whenever the company in question desires, at good rates.

Think about it, Pepsi, McDonalds, Ford, etc are all "American" worldwide companies that deal in every local currency out there. In the end they exchange it for whatever they want.

It really doesn't much matter, it's mostly a pride and status thing.

It does help to get us better prices by having the status, but plenty of other countries have currency with much lower status and still have stable currency.

I think a couple people are answering the question of what would happen if foreign countries started to cash in our bonds (the debt they bought from us)

[Oswald Bastable]

Sounds like people are confusing the question here a bit.

The answer is we would lose a bit of respect as the worlds premiere currency.

We might experience a very very slight devaluation of the dollar as a result of the status loss, and that's about it.

I'm confident saying this because its essentially whats been happening for the last 30 years.

30 years ago we were the premiere hands down currency with only really the UK as a competitor on that issue.

Now it really doesn't much matter, we have our hands in so much of the worldwide pie that we are able to deal in whatever currency is local and then exchange it at good rates whenever the company in question desires, at good rates.

Think about it, Pepsi, McDonalds, Ford, etc are all "American" worldwide companies that deal in every local currency out there. In the end they exchange it for whatever they want.

It really doesn't much matter, it's mostly a pride and status thing.

It does help to get us better prices by having the status, but plenty of other countries have currency with much lower status and still have stable currency.

I think a couple people are answering the question of what would happen if foreign countries started to cash in our bonds (the debt they bought from us)

Perhaps I misunderstood the intent of his question.

I thought he was asking what would happen if everyone started trying to sell dollars for whatever is decided to be the 'premier' currency...a run on the bank type of scenario...

[chiak47]

I'm thinking very bad things. Hyperinflation type of bad things.


The price of food is slightly rising along with the price of gold and other precious commodities but what other signs are pointing to hyper-inflation?





Remember, the value of a Dollar, Yuan, Euro, etc is based on two things; faith, and scarcity.

OK, I understand that but why in the world is the Yuan trading at .15 to our dollar?


Think of weimar germany or zimbabwe and folks running wheelbarrows of cash down to the market, just to buy a loaf of bread.

But doesn't this look like fun?
http://1.bp.blogspot.com/_cvdgPlEKW9k/TI7tZh5KN3I/AAAAAAAABaE/2996cwXtIes/s1600/children-playing-with-money.jpg

In all seriousness..How long before we see this in our neighborhoods?


This is one of those times where governments doing nothing would probably be the best, and letting the people slowly buy the way back to prosperity.

I'm in total agreement; even if we as a nation has to struggle for a bit.


Sounds like people are confusing the question here a bit.

I think they interpreted my gibberish just fine.
:o




It really doesn't much matter, it's mostly a pride and status thing.

So if China threw all their billions of US dollars on the market at once to be bought up in Euro's or other currency then in your mind, we would be ok?



It does help to get us better prices by having the status, but plenty of other countries have currency with much lower status and still have stable currency.

Are they involved in the world on a scale that we are involved in? Does their economy revolve around the global marketplace?


Perhaps I misunderstood the intent of his question.


I'm trying to get a clear picture of what "dumping" really is.

[Lysander]

The price of food is slightly rising along with the price of gold and other precious commodities but what other signs are pointing to hyper-inflation?

People have been screaming hyper-inflation for one reason or the other since the 30s. Not saying that it can't happen, but it isn't very likely compared to a lot of other things.


OK, I understand that but why in the world is the Yuan trading at .15 to our dollar?

Because the Chinese government artificially pegs the Yuan to the Dollar, thus keeping their exports (and labor) artificially inexpensive (relatively). That's one of the reasons why they're screaming so much over our devaluation of the Dollar. It really, really messes with them.

Why we haven't called them on it before is beyond me. Nixon should never have gone there in the 70s, and we never should have opened trade with them until they agreed to float the Yuan on the free markets.

[chiak47]

Because the Chinese government artificially pegs the Yuan to the Dollar, thus keeping their exports (and labor) artificially inexpensive (relatively). That's one of the reasons why they're screaming so much over our devaluation of the Dollar. It really, really messes with them.

Why we haven't called them on it before is beyond me. Nixon should never have gone there in the 70s, and we never should have opened trade with them until they agreed to float the Yuan on the free markets.

Wait...Are you saying that the devaluation of the US dollar is a grand idea and makes the global trading market a little more even?
I take it this is why the reds are pissed and making threats towards us.
BUT...BUT....what if their threats aren't hollow?

Also...You would think that the Chinese would benefit from an even playing field as far as more buying power for their average citizen.

[Lysander]

Wait...Are you saying that the devaluation of the US dollar is a grand idea and makes the global trading market a little more even?

No, it has its good and bad points, though I don't think that it is the best idea at this juncture for a multitude of reasons. There are excellent reasons, economically, to devalue a currency. None of them really apply in our current situations.


I take it this is why the reds are pissed and making threats towards us.
BUT...BUT....what if their threats aren't hollow?

They'd have to find a buyer...and they won't. It's the MAD principle, just using economics, not nukes.


Also...You would think that the Chinese would benefit from an even playing field as far as more buying power for their average citizen.

Your statement is predicated on the assumption that the Chinese could care about the buying of their average citizen. They don't.

[L1A1Rocker]

The price of food is slightly rising along with the price of gold and other precious commodities but what other signs are pointing to hyper-inflation?


I did not say that that IS happening. I was responding to your "What if" question. The "What if's" have not happened. IF they do, then I suspect we would THEN see hyperinflation do to the market being flooded with unwanted dollars.

[Kadmos]

So if China threw all their billions of US dollars on the market at once to be bought up in Euro's or other currency then in your mind, we would be ok?


Yes.

Because either

1. they would trade them to someone else for whatever, which is basically fine with us, we have no problem when people make transactions using our currency.

or

2. they make a big pile and light them on fire

[Lysander]

2. they make a big pile and light them on fire

Would be nice if our own Gov would pick option #2 for a couple of trillion dollars.

[Kadmos]

Would be nice if our own Gov would pick option #2 for a couple of trillion dollars.

True dat.

But if China does it, I propose raising a glass to them and writing a very sincere thank you note!

[Lysander]

True dat.

But if China does it, I propose raising a glass to them and writing a very sincere thank you note!

Hell, at this point, it is in their own best interest.

[O.S.O.K.]

This is all very interesting but the burning question is: "are the bullets and beans still worth something?" :D

[Mark Ducati]

Hyperinflation as mentioned above.... we will NEVER see wheelbarrow fulls of money like the above picture. Why? Because our country won't allow it... they will ban currency of coin/paper for plastic. Everyone will have to have a US Govt. debit type card so that you never have to handle large amounts of paper/coin currency.

Not long after (decades?) we are forced to use plastic... THEN, you'll have to have a computer chip implanted into your hand or forehead... "For no man shall be able to buy, sell, or trade without the mark".

[raxar]

Hyperinflation as mentioned above.... we will NEVER see wheelbarrow fulls of money like the above picture. Why? Because our country won't allow it... they will ban currency of coin/paper for plastic. Everyone will have to have a US Govt. debit type card so that you never have to handle large amounts of paper/coin currency.

Not long after (decades?) we are forced to use plastic... THEN, you'll have to have a computer chip implanted into your hand or forehead... "For no man shall be able to buy, sell, or trade without the mark".


I agree with the first paragraph, though I haven't thought of the whole gubmit debit card dealy (which sounds really likely given the current adminstration)

as for the second paragraph I'll give it a maybe. I'm starting to think of the end or the world Beast dealie to be a taliban style of islam where they get rid of a lot of technology, hence why everyone's riding around on horses towards the end.

[Lysander]

*sigh*

My money is on BP drilling for oil so deeply they awaken Dread Cthulhu and then we can feast on the souls of you unbelievers.

CTHULHU FHTAGN!

[weevil]

*sigh*

My money is on BP drilling for oil so deeply they awaken Dread Cthulhu and then we can feast on the souls of you unbelievers.

CTHULHU FHTAGN!




I just hope he puts an end to the fucking Disney Channel.



:biggrina"