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The Threat To The Dollar As The World’s Primary Reserve Currency
Submitted by Patrick Barron via Mises Canada blog,
(Following is the text of a speech given today at Drake University at the annual convention of the Iowa Association of Political Scientists.)
The Threat to the Dollar as the World’s Premier Reserve Currency
…but does it really matter?
My answer is that, “Yes”, it really matters. And that is why we need to take action today to protect all of our interests. The source of the threat may surprise you.
We refer to the dollar as a “reserve currency” when referring to its use by other countries when settling their international trade accounts. For example, if Canada buys goods from China, China may prefer to be paid in US dollars rather than Canadian dollars. The US dollar is the more “marketable” money internationally, meaning that most countries will accept it in payment, so China can use its dollars to buy goods from other countries, not solely the US. Such might not be the case with the Canadian dollar, and China would have to hold its Canadian dollars until it found something to buy from Canada. Multiply this scenario by all the countries of the world who print their own money and one can see that without a currency accepted widely in the world, international trade would slow down and become more expensive. Its effect would be similar to that of erecting trade barriers, such as the infamous Smoot-Hawley Tariff of 1930 that contributed to the Great Depression. There are many who draw a link between the collapse of international trade and war. The great French economist Frederic Bastiat said that “when goods do not cross borders, soldiers will.” No nation can achieve a decent standard of living with a completely autarkic economy, meaning completely self-sufficient in all things. If it cannot trade for the goods that it needs, it feels forced to invade its neighbors to steal them. Thus, a near universally accepted currency is as vital to world peace as it is to world prosperity.
However, the foundation from which the term “reserve currency” originated no longer exists. Originally the term “reserve” referred to the promise that the currency was backed by and could be redeemed for a commodity, usually gold, at a promised exchange ratio. The first truly global reserve currency was the British Pound Sterling. Because the Pound was “good as gold”, many countries found it more convenient to hold Pounds rather than gold itself during the age of the gold standard. The world’s great trading nations settled their trade in gold, but they might accept Pounds rather than gold, with the confidence that the Bank of England would hand over the gold at a fixed exchange rate upon presentment. Toward the end of World War II the US dollar was given this status by treaty following the Bretton Woods Agreement. The US accumulated the lion’s share of the world’s gold as the “arsenal of democracy” for the allies even before we entered the war. (The US still owns more gold than any other country by a wide margin, with 8,133.5 tonnes to number two Germany with 3,384.2 tonnes.) The International Monetary Fund (IMF) was formed with the express purpose of monitoring the Federal Reserve’s commitment to Bretton Woods by ensuring that the Fed did not inflate the dollar and stood ready to exchange dollars for gold at $35 per ounce. Thusly, countries had confidence that their dollars held for trading purposes were as “good as gold”, as had been the British Pound at one time.
However, the Fed did not maintain its commitment to the Bretton Woods Agreement and the IMF did not attempt to force it to hold enough gold to honor all its outstanding currency in gold at $35 per ounce. During the 1960’s the US funded the War in Vietnam and President Lyndon Johnson’s War on Poverty with printed money. The volume of outstanding dollars exceeded the US’s store of gold at $35 per ounce. The Fed was called to account in the late 1960s first by the Bank of France and then by others. Central banks around the world, who had been content to hold dollars instead of gold, grew concerned that the US had sufficient gold reserves to honor its redemption promise. During the 1960’s the run on the Fed, led by France, caused the US’s gold stock to shrink dramatically from over 20,000 tons in 1958 to just over 8,000 tons in 1970. At the accelerating rate that these redemptions were occurring, the US had no choice but to revalue the dollar at some higher exchange rate or abrogate its responsibilities to honor dollars for gold entirely. To its everlasting shame, the US chose the latter and “went off the gold standard” in September 1971. (I have calculated that in 1971 the US would have needed to devalue the dollar from $35 per ounce to $400 per ounce in order to have sufficient gold stock to redeem all its currency for gold.) Nevertheless, the dollar was still held by the great trading nations, because it still performed the useful function of settling international trading accounts. There was no other currency that could match the dollar, despite the fact that it was “delinked” from gold.
There are two characteristics of a currency that make it useful in international trade: one, it is issued by a large trading nation itself, and, two, the currency holds its value over time. These two factors create a demand for holding a currency in reserve. Although the dollar was being inflated by the Fed, thusly losing its value vis a vis other commodities over time, there was no real competition. The German Deutschemark held its value better, but the German economy and its trade was a fraction that of the US, meaning that holders of marks would find less to buy in Germany than holders of dollars would find in the US. So demand for the mark was lower than demand for the dollar. Of course, psychological factors entered the demand for dollars, too, since the US was the military protector of all the Western nations against the communist countries.
Today we are seeing the beginnings of a change. The Fed has been inflating the dollar massively, reducing its purchasing power and creating an opportunity for the world’s great trading nations to use other, better monies. This is important, because a loss of demand for holding the US dollar as a reserve currency would mean that trillions of dollars held overseas could flow back into the US, causing either inflation, recession, or both. For example, the US dollar global share of central bank holdings currently is sixty-two percent, mostly in the form of US Treasury debt. (Central banks hold interest bearing Treasury debt rather than the dollars themselves.) Foreign holdings of US debt currently total $6.154 trillion. Compare this to the US monetary base of $3.839 trillion.
Should foreign demand to hold US dollar denominated assets diminish, the Treasury could fund their redemption in only three ways. One, the US could increase taxes in order to redeem its foreign held debt. Two, it could raise interest rates to refinance its foreign held debt. Or, three, it could simply print money. Of course, it could use all three in varying amounts. If the US refused to raise taxes or increase the interest rate and relied upon money printing (the most likely scenario, barring a complete repudiation of Keynesian doctrine and an embrace of Austrian economics), the monetary base would rise by the amount of the redemptions. For example, should demand to hold US dollar denominated assets fall by fifty percent ($3.077 trillion) the US monetary base would increase by eighty percent, which undoubtedly would lead to very high price inflation and dramatically hurt us here at home. Our standard of living is at stake here.
So we see that it is in America’s interest that the dollar remain in high demand around the world as a unit of trade settlement in order to prevent price inflation and to prevent American business from being saddled with increased costs that would derive from being forced to settle their import/export accounts in a currency other than the dollar.
The causes of this threat to the dollar as a reserve currency are the policies of the Fed itself. There is no conspiracy to “attack” the dollar by other countries, in my opinion. There is, however, a rising realization by the rest of the world that the US is weakening the dollar through its ZIRP and QE programs. Consequently, other countries are aware that they may need to seek a better means of settling world trade accounts than using the US dollar. One factor that has helped the dollar retain its reserve currency demand in the short run, despite the Fed’s inflationist policies, is that the other currencies have been inflated, too. For example, Japan has inflated the yen to a greater extent than the dollar in its foolish attempt to revive its stagnant economy by cheapening its currency. Now even the European Central Bank will proceed with a form of QE, apparently despite Germany’s objections. All the world’s central banks seem to subscribe to the fallacious belief that increasing the money supply will bring prosperity without the threat of inflation. This defies economic law and economic reality. They cannot print their way to recovery or prosperity. Increasing the money supply does not and cannot ever create prosperity for all. What is more, this mistaken belief compounds a second mistake; i.e., that savings is not the foundation of prosperity, but rather spending is the key. This mistake puts the cart before the horse.
A third mistake is believing that driving their currencies’ exchange rate lower vis a vis other currencies will lead to an export driven recovery or some mysteriously generated shot in the arm that will lead to a sustainable recovery. Such is not the case. Without delving too deeply into Austrian economic and capital theory, just let me point out that money printing disrupts the structure of production by fraudulently changing the “price discovery process” of capitalism. Capital is allocated to projects that will never be profitably completed. Bubbles get created and collapse and businesses are suddenly damaged en mass, thus, destroying scarce capital.
Because of this money-printing philosophy the dollar is very susceptible to losing its vaunted reserve currency position to the first major trading country that stops inflating its currency. There is evidence that China understands what is at stake; it has increased its gold holdings and has instituted controls to prevent gold from leaving China. Should the world’s second largest economy and one of the world’s greatest trading nations tie its currency to gold, demand for the yuan would increase and demand for the dollar would decrease overnight.
Or, the long festering crisis in Europe may drive Germany to leave the eurozone and reinstate the Deutschmark. I have long advocated that Germany do just this, which undoubtedly would reveal the rot embodied in the Euro, the commonly held currency that has been plundered by half the nations of the continent to finance their unsustainable welfare states. The European continent outside the UK could become a mostly Deutschmark zone, and the mark might eventually supplant the dollar as the world’s premier reserve currency.
The underlying problem, though, lies in the ability of all central banks to print fiat money; i.e., money that is backed by nothing other than the coercive power of the state via its legal tender laws. Central banks are really little more than legal counterfeiters of their own currencies. The pressure to print money comes from the political establishment that desires both warfare and welfare. Both are strictly capital consumption activities; they are not “investments” that can pay a return. In a sound money environment, where the money supply cannot be inflated, the true nature of warfare and welfare spending is revealed, providing a natural check on the amount of funds a society is willing to devote to each. But in a fiat money environment both war and welfare spending can expand unchecked in the short run, because their adverse consequences are felt later and the link between consumptive spending and its harm to the economy is poorly understood. Thus, both can be expanded beyond the recuperative and sustainable powers of the economy.
The best antidote is to abolish central banks altogether and allow private institutions to engage in money production subject only to normal commercial law. Sound money would be backed one hundred percent by commodities of intrinsic value–gold, silver, etc. Any money producer issuing money certificates or book entry accounts (checking accounts) in excess of their promised exchange ratio to the underlying commodity would be guilty of fraud and punished as such by both the commercial and criminal law, just as we currently punish counterfeiters. Legal tender laws, which prohibit the use of any currency other than the one endorsed by the state, would be abolished and competing currencies would be encouraged. The market would discover the better monies and drive out less marketable ones; i.e., better monies would drive out the bad or less-good monies.
We need to look at the concept of a reserve currency differently, because it is important. We need to look at it as a privilege and a responsibility and not as a weapon we can use against the rest of the world. If we abolish, or even lessen, legal tender laws and allow the process of price discovery to reveal the best sound money, if we allow our US dollar to become the best money it can - a truly sound money - then the chances of our personal and collective prosperity are greatly enhanced.
We all have the same interest. We all want to have the highest standard of living for ourselves and our families. A sound money reserve currency offers us the best chance of achieving our shared goal; therefore, we should rally around every effort to make it so.
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" The pressure to print money comes from the political establishment that desires both warfare and welfare. Both are strictly capital consumption activities; they are not “investments” that can pay a return"
This sums up a complex situation in a couple simple sentences. The overall wealth of a nation gets no return or boost in productivity by the massive warfare and welfare spending. Take the USA for example, we need to print one new fiat dollar for ever 2 dollars we spend, because the tax base can not support more than 50% of the warfare and welfare bills due every year. That is why the reserve currency is the rock foundation of America, if every nation on earth did not need and want and accept dollars for trade, then the phoney Fiat Nation we have become will collapse in an instant. Just let the paychecks of the CIA, NSA, Armed Forces, and all federal agencies bounce, because the world has refused to accept fiat $ in payment for wealth transfered to America from the world, and it is all over.
The hybrid parasites at the top live using capitalist warfare and socialist welfare as tools to preserve their position.
Yes these cost but somehow they made us believe that the primary reason for this was our benefit.
YOU GOT TO HAND IT TO THEIR DEVIOUSNESS.
[ Just let the paychecks of the CIA, NSA, Armed Forces, and all federal agencies bounce,...]
Tyrannical regimes have always found ways to compensate the worst of the worst.
Talk about threatening. The masks of EVIL are coming off and to no ones surprise, lo and behold, the criminals of warmongering Inc are being EXPOSED!
"The Iraqi forces said they have retrieved four foreign passports, including those that belonged to American and Israeli nationals and one that belonged to the national of a Persian Gulf Cooperation Council (PGCC) member-state, from ISIL's military advisors.
The foreign advisors were arrested in a military operation in Tal Abta desert near Mosul city.
Last year, a senior aide to Russian President Vladimir Putin accused Mossad of training ISIL terrorists operating in Iraq and Syria.
Alexander Prokhanov said that Mossad is also likely to have transferred some of its spying experiences to the ISIL leadership, adding that Israel’s military advisors could be assisting the Takfiri terrorists."
http://english.farsnews.com/newstext.aspx?nn=13931216000838
Extra Credit.:
http://xrepublic.tv/node/12507
Some of us have abandoned the idea of saving in any currency.
Ultimately every currency is diluted in value as the population demands easier money to repay their debts. It has been that way forever and it will not change.
Saving timber or grain or even silver deprives the producers of the world the inputs they need to make their products.
Gold alone preerves wealth and yet deprives the rest of the population of nothing useful.
That is the one use of gold and the reason the world uses it to preserve wealth for generation.
Periodically its price is reset after periods of price suppression. I'm waiting for that.
To save timber, you must pay tax on the land that the trees grow upon, or you must pay tax on the building you store the milled lumber in.
hey crazytech I bought some silver dimes the other day. I didn't weigh them, or test them for purity. I'm pretty sure they are authentic. let me guess, your mom told you, you were really smart ,when you were a little boy. how did I get way down here?
i guess it's a sat. tradition around here - they come in and start pushing a golden world central bank and some bitcoin digital currency... gonna hand out apple watches to the tribes in africa or mountains in peru i guess... in a heart beat they would to take ultimate control of the world!!!! :-)
China is probably near the US level of 8,000 tonnes...if the US even has 8000 tonnes.
The Chinese are almost ready to unveil the new gold backed Yuan.
Until there is an independent pubic audiit that gold does not exist, ussa or China.
The first central bank to stop inflating its currency?
Not possible by anyone there are no financially self sufficient nations and those that CTRL-P know this.
The biggerst stumbling block for any change to the global economic policy though and lets be quite clear here is WALL STREET entitlement -> J P Morgan, Goldman Sachs, Rothchild ... etc. the big players who will never give up any of their entitlement achieved partly through owning the FED.
Those tentacles permeate through every other trading system globally.
They will create as many dollars as necessary to preserve themselves and that would include a direct attack on any alternative currency because any start of an alternative global currency would reveal the rest of the abuse of the dollar by these people.
The FED will never open its books to declare how many dollars are created through leverage each year so you can only wonder at the total hidden and visible like 80 billion month on month is being created.
THAT IS THE FUNDAMENTAL PROBLEM and it will persist as long as they can make it keep going.
Only total global revolt then a move to an alternative reserve currency for those that are left alive.
in a digital world what need is there for a reserve currency?
there will soon be a way to make a transaction in the most advantageous currency at the moment, your own, without any consequence of foreign exchange simple because the means for immediate conversion whether in cash or credits is there and all that is needed is a means to tie all currencies to a basket of commodities and currencies, an effective bailout mechanism.
gold has always been king but was thrown into the dungeon by svengali promoting the virtues of plain paper. at some point, the usa will have to show its gold and prove it is not titanium. that is the real danger to the usa and the dollar.
I would say "repost", but I'll jut say, "yeah, you read right."
Gold, copper, loam.. all simple commodities based on the price of taking them from the environment, entirely dependent on the cost of what produces the enrgey to do the work... oh, maybe you mean a "sun based" currency?
not far from the future reality. most people forget their anthropology class where early human settlement was always focused on the prevalence of resources, mostly water for energy, trade and sustenanace. that is why even in the last great human emigration to the americas the greatest cities are still ports or on major rivers. even the smallest towns are near a natural water source.
only oil interrupted traditional migration patterns existing since the beginning of man. now it is possible to set up a city in the middle of nowhere with people living so far from their food source they have to drive to buy the food that was transported from thousands of miles away so they can cook it on a stove powered by oil delivered from halfway around the world.
the sun is the perfect substitution for oil. with modern transmission technology there is the possibilty to set up internationally distributed solar energy from the "sun belt" near the equator to the usa or europe in sun energy "pipelines". the sun could certainly become the most important commodity.
the future is already here in hawaii. we pay 50 cents/kw. the cost of centralized electricity distribution is now butting heads with the cost of site specific enrgy generation from new efficient petro generators to hybrid fuels to wind and solar power generation. the local power company is freaking out because of the demand for home solar systems that they have bureaucratically tied the industry up and just recently changed the rules for cogeneration energy credits from retail prices(100% cost offset) to wholesale pricing(about a third of retail) and doubled the minimum grid hookup fee.
my response is to go completely offgrid because battery technology is cheaper as a cost function and musk's new battery factory should make lithium batteries cheap enough to work economically.
i know your question was rhetorical but i just finished my saturday morning coffee. lol.
<<in a digital world what need is there for a reserve currency?>>
If we maintain the World Reserve Currency but back it with gold and transfer its power to other criminals, then we are simply postponing the next leg of this Great Global Depression. (Or 'GGD' to fit into the fucking 3- and 4-letter Bankster jargon trend.) The crime at the top has created its own self-perpetuating chaos, which is eating away our ordered currency system faster and faster now. We can no longer cling to centralised 'order' for protection anymore, no matter how much fascism we resort to. Either we are prepared for growing worldwide chaos, or we will be consumed by it. The days of order and trust are over.
World Reserve Currency must be abolished, along with central banks, as a slave paradigm. Whether or not gold-backed. Gold is of course the best form of money, and of course not the only one. I look forward to a chaotic future full of competing scrips, of greater or less value depending on one's circumstances. Money is simply a transactional tool agreed on by two or more business parties. Caveat emptor at any claims for a scrip beyond this basic one; better do your homework before agreeing to use any scrip despite how 'used to it' we may be.
Today, at the end of Phase 1 of this Global Depression, I see no reason to trust or use any government fiat more than I would trust or use bitcoin.
<<gold has always been king but was thrown into the dungeon by svengali promoting the virtues of plain paper. at some point, the usa will have to show its gold and prove it is not titanium. that is the real danger to the usa and the dollar.>>
hehehe - many of us look forward to that day despite the uncomfortable truth it will reveal, that most western economies are insolvent. I expect there are many more preparing for that time than will ever admit it. (In a fascist, spying economy, anyone who self-publishes their preps for government insolvency is simply telling that same gov where to start confiscating.) The smart preppers are going to have to learn how to sound surprised.
Hey Zero Hedge, if you're listening do yourselves and all your readers a favor. Nix all that god damned flash content over to the right. That kind of volume of that shit is ridiculous. Your website is barely usable anymore.
You mean the stuff that blocks half of the WB7 artistic content to most users... yeah, that shit is old, not as in old school, but as in Depends undergarments.
I'm glad someone else noticed that that fuckwad 'tard retread tripe that should "splash" only on the open page is akin to floating shit when I want to see fish, dirt, and cons at the bottom of the pool.
Ad block will get rid of that shit
Yeah, I just installed it now as a type of last resort effort to help my fairly powerful computer deal with Zero Hedge. It works great and my computer no longer freezes thanks to Zero Hedge.
The Internet was supposed to bring the information revolution, instead its turned into a big advertizing billboard.
I have never personally purchased any of the junk nor have I clicked on anything on purpose.
AdBlock is good,,,, for now but even they have decided to allow advertizing if it is non invasive, they get to choose. You can override but they will return after awhile.
Soon the Internet will only be a digital sales platform.... Information will be next to impossible to find.
Instead of
The Threat To The Dollar As The World’s Primary Reserve Currency
the title should more factually be
The Threat Of The Dollar As The World’s Primary Reserve Currency
We need to look at the concept of a reserve currency differently, because it is important. We need to look at it as a privilege and a responsibility and not as a weapon we can use against the rest of the world. If we abolish, or even lessen, legal tender laws and allow the process of price discovery to reveal the best sound money, if we allow our US dollar to become the best money it can - a truly sound money - then the chances of our personal and collective prosperity are greatly enhanced."
A pretty good piece about the basics, even if important and historic details were omitted (such as a self-serving devaluation of gold by FDR during the Great Depression).
The solution isn't going to be as simple as some kind of reserve currency marketplace. There really can be only ONE reserve unit of exchange. Gold is often thought of as that ultimate unit precisely because it is limited and not corruptible. It can be revalued...and, therefore, manipulated to serve parochial or specific national interests. In and of itself, gold is not a solution.
If we have learned anything about global trade and economics since WWII, it's that a single reserve can only work IF the purveyor of that currency is above reproach. No games. No self-serving manipulations. No excessive debt or unearned growth. A frugal, law abiding nation of law abiding citizens who save, live within THEIR productive means (not at the expense or at the behest of the world's poor), and, who do not seek unfair advantage over others.
That nation also defines its national security interests narrowly, so as to mind its own business most of the time. It offers an example national rectitude without seeking to remake the globe in its own image.
In other words, the dollar is ultimately only as good as is its originator, America.
And America is only as good as its citizens are worthy of the world's esteem, which it once held without much reservation.
At the end of the day, we may find that a new reserve currency isn't what we need, but rather a new commitment to the integrity, self-sacrifice, and virtue our Framers knew to be indispensable.
Honor and integrity, once lost, are extremely difficult and painful to get back.
They are the real things of value.
If we want to enjoy the privilege of being the provider of the world's trusted means of exchange...we have a lot of internal work to do.
m
A reserve currency is always a competitive advantage and therefore will always be manipulated.
Fizz Au... Nuff said.
All one has to do is look up Brenton Woods and read what Nixon said about going off the gold standard and to trust the Fed.
DISGUSTING LYING POS.
Temporarily as in ...42, 43, years, and counting. But when it gets serious, you know, ask good old Junk-er...
So buy gold or don't buy gold? every week there's a new concept and theories about sound money here. If I'm confuse just imagine Joe the plumber.
This is probably the most complete examination regarding the dollar and gold.
The US still owns more gold than any other country by a wide margin, with 8,133.5 tonnes to number two Germany with 3,384.2 tonnes.
That means we have 344Trillion dollars!?
Be careful when you deal...
Your pic tell it all
A Joke
USA is a Bankrupt nation which thrives on looting others
Wild Wild West again
Ugh, Austrian doomsday 101: Yer dollars are going to be worth nothing!
Its the one economic analysis thats easiest to understand and has most surface plausibility, so it wins. And cult-like, it has everyone awaiting hyperinflation like some hoped-for second coming.
Any economic system that isn't explicitly values-based or ethics-based, is going to come under capture and monopolistic manipulation, and that can certainly happen with sound money as well. I don't even believe sound money actually existed in the periods where it supposedly did, thats another government ruse. Notice how France called America's dollar-gold-standard bluff, rather than the US coming out and admitting that it couldnt hold enough reserves. In other words, the reserve ratio had been off for some time before it was revealed. At what precise point in time did US gold holdings dip below outstanding treasury note reserve requirements? 1969? 1965? 1955? We dont know because until you have a bank-run or an audit, there is no way of knowing who is actually solvent. And the political will to do an independent audit is and was in much shorter supply than gold, actually.
I just don't believe any of it.
Interesting take.:
http://rt.com/shows/crosstalk/238281-bibi-iran-war-peace/
Of you that have managed to make it this far during your reading, does what "crazytechnician" remind anyone of what any penny stock pumper gets on-line and does? Extols all the virtues of said "stock" and resorts to ad hominen attacks dare you challenge his "view". Ultimately he sounds too much like one of those that bought at the last top, and is now left, at least in his case, holding the virtual bag.
Normally, I would have expected him to come out and say, these are my bitcoins buy and sell points, this is what I purchased with bitcoin, etc., etc. But the fact that it's the weekend and he chose to devote a good deal of his time to praising the wonders of bitcoin makes him immediately suspect. Seriously, the weekends are meant for a bit of de-compression and fun.
I'm signing off now to take the dog for a walk.
The professor says, that a “reserve currency” is one that is “use[d] by other countries when settling their international trade accounts.”
Professors are really good at obscurantism, aren’t they.
He really missed the real definition: a reserve currency is one that is used as collateral by other countries to issue local currency and bank reserves – as gold once was used.
Check the balance sheet of any central (or national) bank. Under assets they will list dollar denominated receivables; on the other side, under liabilities, they list currency and bank reserves they have issued, partly or totally collateralized by dollars. Ergo¸the dollar serves as a reserve currency.
And, is it important? It means that, if the dollar fails, most or all major banking and monetary systems across the planet will simply evaporate. Is this a possibility? I would say that it is a certainty.
You see, the dollar and American bank reserves are issued into economic existence IN EXCHANGE FOR US Treasury securities (directly or indirectly. Such securities have value only as the Treasury can collect confiscatory taxes from following generations of Americans. And such taxes are impossible to collect either practically or constitutionally.
The dollar, in other words, is on the verge of total collapse.
What will happen next? Let your imagination run wild.
Author:
Please explain clearly what in hell your readers are supposed to do so that what you say needs to happen will happen?
Do you think it'll happen if we all vote for the right people? That hasn't worked since I was a baby 70 years ago, so what else could help?
If you or anyone else has a plan for how this is going to happen, you'd better reveal it, because it hasn't happened for 70 years!
If you don't have a plan then blabber is useless.
And by the way, who is this almighty "WE" that you speak of?
[ There are two characteristics of a currency that make it useful in international trade: one, it is issued by a large trading nation itself, and, two, the currency holds its value over time...]
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1950 dollar equal $9.84 according to the Minn. Fed. Add in the lies and bullshit it's probably more like $15. Store of value???????
Notice he says a large trading nation? Why,,, Because the only thing america makes besides bombs, missiles and bullshit are those dollars he's so concerned about.
What a joke. No fiat is a store of value. These morons know what's going to happen when they can no longer print to infinity and all those store of value dollars come home.
NO country's currency should be the worlds currency. That's what Gold and Silver are meant for.
You can't audit gold and silver publicly. Gold and silver are useless as a reserve currency.
Hunh, another goldbug, another wizard.
The currency should ebb and flow upon demand- as it has. If that doesn't fit your paradigm, OK.
Now that the global economy is in decline, it's kinda obvious that credit can't be money in the long run.
The dollar is at question, not just by me, but by the rest of the wprld
What is painfully apparent is that so many have not taken the time to understand what is a "monetary sovereign". The PRIMER (below), which if one were to take the time (rather than shout over the top of each other--which, by the way, is by design) to comprehend the explanation, as well as the the benefits of fiat currency (MMT), as it CAN be applied to a COOPERATIVE PARTICIPATORY DEMOCRACY, so as to help solve the pressing issues of this century (whatever a sincere democracy determines those to be)...the value is determined of said currency(s) on an traded exchange, relative to other sovereign currencies on a daily basis (fx markets).
The debt hysteria or notion that it will will lead to a socialist "nanny" state, destroy the benefits of market-based competition, eliminate the motivation of merit-based rewards, and destroy the special human capacities for creative entrepreneurship, self-actualization and personal achievement needs to be straight-up debunked (much of current inflation and duplicitous extraction from charges, fees, swaps and usury is being created by mega-corporations...because they can.
At the very least, just be aware, if one chooses not to partake in this dialogue. The is a school of economics blog that is headed up by William K. Black and the Levy Institute. If you do not have prior knowledge of WKB than someone has spent a great deal of time and effort hiding the facts from you. Please start at The Millennial's PART 1 (the first several paragraphs are unimportant) and scroll for The Millenial's Part 2, which begins to shed some illuminating light on the current "arcane" way, which benefits the 22 primary dealers (think Goldman, BAC, Chase, CITI, Wells etc.) Read it twice if you should have to, then share it....the sooner the better, for the whole of civilization (not to mention we no longer have to be exposed to assbaggery of the current fear induced, faux narrative).
http://neweconomicperspectives.org/2015/02/the-millennials-money-pt-1.html
http://neweconomicperspectives.org/2015/03/the-millennials-money-pt-2.html
Bitcoin is the only true form of money.
It's the reserve currency of the ones who got sick of the banker mafia.
Theoretical article as no one will voluntarily give up their fiat currency. It brings politicians and oligarchs too much power to return to engaging ''in money production subject only to normal commercial law".