Dumping the Dollar! - the ultimate Act of War?

Vlad Plasmius said:

How they dispose of that $300 billion is something I don't know.

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Tackling the ever-increasing environmental damage to the country would be an excellent investment. Build lots and lots of wind turbines, fit more efficient boilers to coal-fired power stations, build more water and sewage treatment plants - the possibilities are endless.

This is a pleasing response

Just for the record though, I doubt if anybody is deliberatly trying to wreck the US economy by these moves and it would be in America's interest to work with a graduated petrocurrency adjustment. The real trouble is that the US is a petrodollar junkie and like all junkies is reacting violently when anybody tries to stop its fix.

Iran principally wants this move,because of US inspired difficulties in receiving their dollar currency oil transactions via the Western banking system (Irans own banks all being targeted in the War on Terror, for alledged terorist funding. Hence it wants to remove the US'sability to try and stop its oil revenues reaching it.

Overall, if over the next decade or two between a third and a half of oil transaction swere undertaken in currencies other then the dollar, than the current bubbles would be deflated, excess liquidity reduced, Carbon emmissions curbed and the US forced to seriously tackle its deficit and all done in respect of achieving a managable soft landing. It is ironically the current belligerent US stance that might actually percipitate the dollar crisis, that they are so desperate to avoid.

Fu says

Tackling the ever-increasing environmental damage to the country would be an excellent investment. Build lots and lots of wind turbines, fit more efficient boilers to coal-fired power stations, build more water and sewage treatment plants - the possibilities are endless

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Well you might be pleasently surprised yet.

FuManChu said:

Tackling the ever-increasing environmental damage to the country would be an excellent investment. Build lots and lots of wind turbines, fit more efficient boilers to coal-fired power stations, build more water and sewage treatment plants - the possibilities are endless.

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That would be nice a thing to do, except its 300 billion USD, not RMB, unless the central bank convert those dollars into yuan, China can only fund sewage treatment plants in the US:rofl:

alwaysfresh said:

Let's say the dollar gets dumped world wide. I wonder if there is a solution to prevent alot of problems for the US.

I do not know that much about the whole money system. What would happen if the US could shut the doors on its own dollars from foreign countries re-entering the country and then ask say Canada (their biggest trading partner, who also relies on the US economy greatly) to switch US dollars(dollars only within the US) for Canadian dollars from Canada? Would this prevent the economy from crashing?

If I was the president this would be a hard decision. Who would want their country to crash and everyone to starve within their country? I actually do believe what is in this article is true. Number one reason: where is "Bin Laddin" and what happen to the 9-11 thing, isn't that how all the troops got to Iraq(they frist when to afganistan then to Iraq)?

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No, you get screwed. The whole point of the USD is that you have a commodity that you control freely, and you trade it for goods that have a relatively fixed utility. If you shut your door on your own money, well first it doesn't work because you're effectively giving up control of your own currency, and second, now you have absolutely nothing to offer.

I would also like to point out to kunmingen that while domestic spending using ForEx is not possible given China's intentions, they can feasibly purchase US equipment, which is a win win situation. You don't get the TradSec breathing down your neck, and you get some good investments for a change.

eecsmaster said:

I would also like to point out to kunmingen that while domestic spending using ForEx is not possible given China's intentions, they can feasibly purchase US equipment, which is a win win situation. You don't get the TradSec breathing down your neck, and you get some good investments for a change.

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haha, i guess you are right about one. But suppose the chinese do need the money for domestic spending, how would they convert those USD into RMB?

There will always be a demand for dollars for some transactions, so spending your stockpile should always be possible. The problem here is the continued mass circulation of the dollar, which means that as dollars find themselves repatriated to the states via various transactions, that there are ever fewer buyers willing to buy them again.

Think about it, just think about how the world economy has grown in the last 30 years. All this growth is funding by increased energy usage, the increased demand for which pushed the oil price upwards. In order to satisfy the increasing demand for oil, the world has to sell more to the USA in order to generate the required quantity of dollars etc.

In short, world growth is now outstripping the ability of the US economy and consumer to fund and so massive deficts are being generated. By breaking the petrodollar monopoly and introducing the petroeuro, the cost of financing continued global growth is being shared out amongst the worlds other richest developed nations, which is far more sustainable into the medium term.

Really these people are trying to do the US a favour.

SampanViking said:

There will always be a demand for dollars for some transactions, so spending your stockpile should always be possible. The problem here is the continued mass circulation of the dollar, which means that as dollars find themselves repatriated to the states via various transactions, that there are ever fewer buyers willing to buy them again.

Think about it, just think about how the world economy has grown in the last 30 years. All this growth is funding by increased energy usage, the increased demand for which pushed the oil price upwards. In order to satisfy the increasing demand for oil, the world has to sell more to the USA in order to generate the required quantity of dollars etc.

In short, world growth is now outstripping the ability of the US economy and consumer to fund and so massive deficts are being generated. By breaking the petrodollar monopoly and introducing the petroeuro, the cost of financing continued global growth is being shared out amongst the worlds other richest developed nations, which is far more sustainable into the medium term.

Really these people are trying to do the US a favour.

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Not to mention the fact that this would majorly free the US up geopolitically and force innovative solutions to enviromental problems because the oil system would be broken. However, how would it be possible to prevent massive inflation? Remove the dollar-oil connection and the US Dollar is suddenly just another currency. There needs to be a way to prevent a recession or depression in the US if this is going to be a positive for the United States. At least it would let the US pay off its national debt in "monopoly money".

petty officer1 said:

Propanganda people.

No one, I mean NO ONE dump US dollar. At this point, dumping dollar will do more harm than good, in 10 more years maybe. Why, because america said so...

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Correct. As some who has traveled extensively I know I can get on a plane right now and go to say Singapore and spend my USD. I can do it in the Gulf states. Even in Saudi Arabia. But come to the US or Mexico or Japan or Singapore and try to spend a Euro. Ain't gonna happen.

Most merchants in East/SE Asia don't accept USD directly, you must go to money changer to convert to local currency first. I travel to Asia 2-3 times/year. There are countries that use USD as legal tender, like Panama. Tourist trap locations are also more likely to take USD currency.

Never change your USD at the airport, except for a small amount to pay for taxi and tip. You get much better rates at money changers in the malls.

In emergencies, you can insert your US ATM card into ATM's overseas and withdraw in local currency. It doesn't work with all ATM's, look for the ones with Star or Plus logo. The exchange rate isn't always good but it's easy.

USD has depreciated by quite a bit since 2000. Had you deposited your $ in Euros, Canadian dollars, or Gold/Silver coins, you'd have came out ahead. If you're taking USD overseas, your money ain't getting you as far as it used to. i.e. in Malaysia it used to be RM 3.8 : 1 USD, now it's RM 3.5 : 1 USD I think.

If you don't want to play currency, you can still buy mutual funds that invest in European, or at least global stocks. They did very well in recent (2003-2006) years, much better than US domestic stock funds in most cases, except for some sector funds like REIT's.

I'll be visiting the Philippines this year... the exchange rate was around PHP 55 : 1 USD last year. Right now it's PHP 49 : 1 USD. It's like losing 12% of your money's value before you even arrive in Manila.