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Bernanke: The Dollar System Is Flawed


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Ever since the Euro it's just been a matter of time. With the current global crisis that timeline has shortened by decades. I would not be surprised to see it in our lifetime.

 

T

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The Euro is badly flawed, and may well collapse. (I hope).

 

All that will do is strengthen the US$.

 

Whist the latter has some problems, mainly due to profligate US spending, I dont see it being replaced in the foreseeable future.

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are not china and the other shanghai group (i forget, is it brazil and others) deciding now to replace the dollar. its probably all part of a grand plan and a rattlesnake would be more trustworthy than bernanke.

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er, if the euro doesnt work, how can a world currency?

 

and doesnt the currency exist already? its called gold.

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Tom in Texas

Yes........ a new World Currency will soon be delivered to the World Bank... delivered by a squadron of Black Helicopters... owned by the Trilateral Commission shitstormretarded.gif

 

........................ and is it just a coincidence that this is playing out at the very time a new form of life is discovered on earth shocked.gif

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Bernanke is just pissed off because his quantitative easing measures aren't working to devalue the Dollar against the Chinese Yuan. He wants the Dollar to be worth less, so they they can pay off the their debt quicker.

 

Andrew

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JohnFromTexas

There won't be a global currency, and if nothing else the Euro is exactly why. It has shown that one currency for many countries can be a disaster. There have been multiple international currency systems since the start of the 20th century, and we are probably on the verge of a new one. But it is more likely to be a basket system of multiple currencies including the dollar than one global currency. A global currency would be doomed to the same problems of the Euro.

 

Realistically, the current economic situation is the only reason there is a move away from the dollar. Were the US economy and following it the dollar to return to it's previous state, the fuss over changing currency systems would go away too, except by Russia and China who like to make the US look bad whenever they can :biggrin_01:

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Steve;

 

I'm with you. I personally believe that Obama was hoping for this along. Remember how he has already given money and influence over to the UN? Call me a conspiracy nut all you want but I really do believe it.

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JohnFromTexas

One other comment on the Bernanke article. His main supposition is that China has an unfair advantage over the US based on its exchange rate. There is an easy solution to this problem that does not require changing currencies. It's called no more free trade. His point is that on top of the favorable excange rate, the chinese market doesn't have our regulations, unions, or standards of pay. This is very true, and something free trade opponents have been talking about for years. It is hard for me to say this as I've generally been a free trade advocate, but the easy solution is to stop supporting free trade with countries that don't share our standards of regulation, pay, free floating currency, etc. Keep free trade with countries that have an equitable production system like the european nations, south korea, etc. China and other countries that forego all that should have penalties on their imports to make them closer to market prices in developed nations. Then there would be no problem.

 

Of course this can never happen for the same reason the chinese can't let their currency float against ours. If their products had to compete at fair rates, they would lose their markets, their economy would crash, and the close economic ties that have kept them from being more belligerant towards their neighbors and starting wars would be broken.

 

Even if Bernanke does get the system changed, it won't matter because China will always do everything it can to protect it's favorable trade conditions. The only thing that will fix this mess is if the US and other western countries impose these changes without china's agreement - but then there is much less reason for china not to start a war or use it's large currency reserves and bond holdings to destabilize our economy. It's a catch-22 situation we've created for ourselves. Hate to say it but the anti-free trade people were 100% right.

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While ALL currencies are having difficulty the one element that is very new which is directly affecting ALL of us and is rapidly bringing the world together as never before imagined. Remember, the Internet makes this the smallest sphere in history. Events are posted on line before most news agencies even hear of them. Sit back and mull over the big picture. The Euro was BEFORE the internet, Gold is not practical in your pocket. All major financial players are on line. Those who buy gold MUST buy REAL SOLID gold, not just a marker. Also, it fluctuates A LOT.

 

T

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One other comment on the Bernanke article. His main supposition is that China has an unfair advantage over the US based on its exchange rate. There is an easy solution to this problem that does not require changing currencies. It's called no more free trade. His point is that on top of the favorable excange rate, the chinese market doesn't have our regulations, unions, or standards of pay. This is very true, and something free trade opponents have been talking about for years. It is hard for me to say this as I've generally been a free trade advocate, but the easy solution is to stop supporting free trade with countries that don't share our standards of regulation, pay, free floating currency, etc. Keep free trade with countries that have an equitable production system like the european nations, south korea, etc. China and other countries that forego all that should have penalties on their imports to make them closer to market prices in developed nations. Then there would be no problem.

 

Of course this can never happen for the same reason the chinese can't let their currency float against ours. If their products had to compete at fair rates, they would lose their markets, their economy would crash, and the close economic ties that have kept them from being more belligerant towards their neighbors and starting wars would be broken.

 

Even if Bernanke does get the system changed, it won't matter because China will always do everything it can to protect it's favorable trade conditions. The only thing that will fix this mess is if the US and other western countries impose these changes without china's agreement - but then there is much less reason for china not to start a war or use it's large currency reserves and bond holdings to destabilize our economy. It's a catch-22 situation we've created for ourselves. Hate to say it but the anti-free trade people were 100% right.

 

 

But you're forgeting about consumers and inflation. If richer countries traded only with those whose trade regimes were similar wouldn't the price of traded goods go up? Consumers would not be amused with higher prices. Inflation would increase resulting in higher wage demands. And so everything cost-wise would spiral up. Higher wages would drive greater efficiency and higher productivity and jobs would be lost. Would politicians really go along with this?

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Everybody knows already that the US$ will eventually collapse, so will the Euro, let the printing presses run like crazy until then. A new currency will be the exit out of this mess and a control of all countries, just like the ongoing "experiments" with the smaller Euro countries show.

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Everybody knows already that the US$ will eventually collapse, so will the Euro, let the printing presses run like crazy until then. A new currency will be the exit out of this mess and a control of all countries, just like the ongoing "experiments" with the smaller Euro countries show.

 

Yes, sure the printing presses are running like crazy. But what is happening to all of the money?

 

Put quite simply, the US government is lending it cheap to the banks who buy US bonds at a higher interest rate.

 

So little extra money is actually being created. All that is happening is that the US government is giving a few tens of billions to the banks to keep them in business. Rough calculation: if you lend USD 1 trillion at 1%, and borrow back at 3% your giving away 20 billion. Hey, you cant even equip an army with rifles for that sum.

 

This is chump change to the US. This is why despite the QE inflation is not taking off.

 

And my goodness, now that the list of companies/banks who borrowed money at the height of the liquidity crisis has been published, it's clear that the US Government literally saved the world a couple of years back. God bless America.

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While ALL currencies are having difficulty the one element that is very new which is directly affecting ALL of us and is rapidly bringing the world together as never before imagined. Remember, the Internet makes this the smallest sphere in history. Events are posted on line before most news agencies even hear of them. Sit back and mull over the big picture. The Euro was BEFORE the internet, Gold is not practical in your pocket. All major financial players are on line. Those who buy gold MUST buy REAL SOLID gold, not just a marker. Also, it fluctuates A LOT.

 

T

 

All currencies cannot have difficulties, or at least not the same difficulties at the same time. Its a zero sum game.

 

You dont need physical gold in your pocket. All you need is paper money backed by gold, though if my memory serves me correctly, throughout the Great Depression the USD was fully backed by gold.

 

The euro started in 1999. Im not sure this could be called before the Internet.

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