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Bernanke: The Dollar System Is Flawed


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Yes, the US did make funds available to various foreign banks - I guess those with some significant interests in the US itself. But where did the contagion of 2008 start?

 

Who really knows which direction currencies will move in? The US $ has just had a a very good month. A few weeks ago quite a few forum members seemed to think it would be 40 pesos to the dollar by now. But the dollar bounced. Don't get me wrong here - I'm not American but I wouldn't write the US economy or the dollar off that easily. The great strengths of the US are its ability to adapt and innovate, and its young population profile. Any move towards a single international currency is likely to take decades. The US$, like it or not, is the only feasible and truly international currency.

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JohnFromTexas

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?

 

No I didn't forget about that, I just figured it as implied :biggrin_01: Yes the price of goods will go up resulting in inflation, but the inflation will mainly be contained to non-essential goods, not stuff you have to live on. The main result would be a great increase in manufacturing within the US as manufacturing here would again be competitive with the prices of international goods. That was always the tradeoff with free trade. Jobs vs. standard of living. Which is more important? Right now I think most people would choose jobs and long term that is the going to be more beneficial to the economy than people being able to buy a TV, iphone, or a toy for 30% less. But like I said, the powers that be would never let it happen. They'd rather try to play with the currency or try other workarounds than drop free trade. And right now the free market (or what's left of it) is taking care of unions as more and more companies move jobs away from union locations.

 

The US will NEVER accept a global currency as a dollar replacement. The only way it would ever get through is if one party had a supermajority in congress and the presidency like the democrats had and were willing to be voted out of power the next election for it... even then it might not pass a legal challenge.

 

If the economy turns around all the dollar talk is irrelevant. Of course the current powers that be aren't exactly implementing pro-growth policies, as evidenced by their attempts to increase taxes right now to 'get the rich'. Whether you believe they aren't paying their fair share or not, raising taxes is not a pro-growth policy.

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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?

 

No I didn't forget about that, I just figured it as implied :biggrin_01: Yes the price of goods will go up resulting in inflation, but the inflation will mainly be contained to non-essential goods, not stuff you have to live on. The main result would be a great increase in manufacturing within the US as manufacturing here would again be competitive with the prices of international goods. That was always the tradeoff with free trade. Jobs vs. standard of living. Which is more important? Right now I think most people would choose jobs and long term that is the going to be more beneficial to the economy than people being able to buy a TV, iphone, or a toy for 30% less. But like I said, the powers that be would never let it happen. They'd rather try to play with the currency or try other workarounds than drop free trade. And right now the free market (or what's left of it) is taking care of unions as more and more companies move jobs away from union locations.

 

The US will NEVER accept a global currency as a dollar replacement. The only way it would ever get through is if one party had a supermajority in congress and the presidency like the democrats had and were willing to be voted out of power the next election for it... even then it might not pass a legal challenge.

 

If the economy turns around all the dollar talk is irrelevant. Of course the current powers that be aren't exactly implementing pro-growth policies, as evidenced by their attempts to increase taxes right now to 'get the rich'. Whether you believe they aren't paying their fair share or not, raising taxes is not a pro-growth policy.

 

I'm with you on the jobs point but the reality is as soon as anyone has discretionary spending power they want to consume and what they consume these days tends to be cheaper foreign imports from China or some other Asian country for the most part. And what are the newly rich of China doing? They are in places like Hong Kong buying up luxury branded goods from Europe. What do people really need to live? A roof over their heads, clothes and food. But in the US and many richer countries housing markets have seen massive asset price bubbles - now bursting or burst - and clothes and other consumer goods are mainly imports from Asia. Food is the tricky area in free trade negotiations as both the Europeans and US continue to subsidize their farming industries and do their best to keep out low cost imports from developing economies. The fact is we're all on the merry-go-round and there's no politician anywhere that has the guts to call time on this. Cheap imports help to make us feel richer and a happy electorate is what they want.

 

I don't know enough about economic and tax policies in the US to comment but working in Hong Kong where I pay 15% flat rate tax on income, where there are no sales taxes or taxes on investment income certainly has its attractions.

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eggnoggin

its all about the guilds....trying to get a handle on patent and intellectual rights and process patents...without it currency and trade is superfluous..qe is was just a loan to eurosuckpeons..just like our soldiers..ww1..ww2..cold war..current americans with balls and smarts on the ground everwhere to deter raghead.. russian and chink sexually dysmorphic projection.........like the "new ruble" strategy ...the new currency(its already out there..(can you say.... deeeerivertivees)..... will run parallel to individual currencies...monitoring trade by modulating acceptance factors against process rights and accountability...this is always the crux of emerging economies percieved stilting.... the inevitable shift in archetypical reflexives...and the hollographic limbic projection of reptilian brain stem coupling metamorphosis into war and the consequent sublimity of scale and perception...everything does it....man ..plant ...animales...its a major evolutionary fulcrum..a glimpse into the face of god...and a major green wheenie for everything that gets in the way.... :biggrin_01: one of my kicks in school was to set up and x ray students for fun and credits...one guys film kept coming back with just a bright haze and knot the size of a plum on his brain stem...not even an inkling of a brain ...just a lot of fluid...no 3 in his class...football and track standout...acceptance of whats not there... sublimated with what we cant quantify is the edge of reality and the portal into madness and creativity.... :morn::paul::wt-hell::shit_stirrer:

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broden

if anyone has any flawed dollars they would like to get rid of let me know and i'll send someone round to collect them

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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.

 

It goes to banks who need it because of consumer/company default, to lend it to companies and private people, a lot of money is being destroyed, the fed is also giving loans and credits to big companies directly, they are buying government bonds (a lot) because the government is basically bankrupt, what does the government need the money for? - mostly paying back interest on the old bonds (China is holding a lot), paying wages and doing all the neat stuff a government does. (i.e. building roads, fighting wars etc.)

 

The question is, how is it possible that the US government has so much debt and making more (and more and more) and the world still hasn't defaulted it's currency?

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Look to where the power is and that is the safe place. The US is still the largest economy, by far, as well as the only military superpower. Things may be slowly changing, but will remain this way for some time. If the US dollar collapses, so will the rest of the world economy. The US is still the haven of choice in troubled times, and the US dollar the currency of choice. It may not be this way forever, but it is right now.

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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.

 

It goes to banks who need it because of consumer/company default, to lend it to companies and private people, a lot of money is being destroyed, the fed is also giving loans and credits to big companies directly, they are buying government bonds (a lot) because the government is basically bankrupt, what does the government need the money for? - mostly paying back interest on the old bonds (China is holding a lot), paying wages and doing all the neat stuff a government does. (i.e. building roads, fighting wars etc.)

 

The question is, how is it possible that the US government has so much debt and making more (and more and more) and the world still hasn't defaulted it's currency?

 

Well Im not sure I agree (in fact I disagree) with the points you're making but to answer your question:

 

People are still buying US bonds because they believe they will get repaid. Once doubt creeps in (which is happening in the Euro zone - its not a sudden worsening of a country's financial position) interest rates will rise dramatically and then the trouble really starts.

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JackJohnson

This is scary because Helicopter Ben is supposed to be defending the dollar.

It looks like dollar hegemony is over.

They are getting away from dealing in petrodollars,

and China and Russia are teaming up to no longer use the greenback.

Most of this is the Fed's fault, for allowing Wall St. to screw over the country.

The BIS already has a world currency, some kind of SDR based on a basket of the world's currencies.

The SDR is already there as a backup should the dollar totally crash.

You can scoff at tin foil hatters and conspiracy theorists, but never in the entire history of the USA

(and perhaps the world) has there ever been so much looting of a nation's treasury, right under the noses

of the clueless citizens.

The USA is rapidly becoming a third world country, replete with a strong military and no middle class

to speak of.

When you look at the Fed's actions of the last two years, there can be no doubt in anyone's mind

as to who really runs America; the Fed acts without any oversight or control and answers to no one.

Oh sure, Ron Paul chews 'em out once in a while and it's an entertaining spectacle, but Bernanke

shrugs it off and does whatever is best for the banks and Wall St., and to hell with the citizens of the USA.

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  • 5 weeks later...
shortsell33

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

 

 

 

 

 

 

 

AGREED!

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Stranded Shipscook

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.

 

Sorry to correct you, 1999 is only the starting date for the public, but it was prepared many many many years before by the individual central banks.

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Stranded Shipscook

Look to where the power is and that is the safe place. The US is still the largest economy, by far, as well as the only military superpower. Things may be slowly changing, but will remain this way for some time. If the US dollar collapses, so will the rest of the world economy. The US is still the haven of choice in troubled times, and the US dollar the currency of choice. It may not be this way forever, but it is right now.

 

mmh, this isn't entirely correct ..

 

The USA is ranked after the European Union in GDP, followed by China which is catching up with enormous speed. predictions are, that China surpasses everybody in the next few years.

 

as well as the Euro has surpassed the US $ in circulation

 

but i agree with the rest of it, if the US economy/dollar collapses, the world economy would collapse too. The same would apply if any of the big economy collapses.

 

This is why the nations bail out each other in times. And that is a good system.

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easy44

Look to where the power is and that is the safe place. The US is still the largest economy, by far, as well as the only military superpower. Things may be slowly changing, but will remain this way for some time. If the US dollar collapses, so will the rest of the world economy. The US is still the haven of choice in troubled times, and the US dollar the currency of choice. It may not be this way forever, but it is right now.

 

mmh, this isn't entirely correct ..

 

The USA is ranked after the European Union in GDP, followed by China which is catching up with enormous speed. predictions are, that China surpasses everybody in the next few years.

 

as well as the Euro has surpassed the US $ in circulation

 

but i agree with the rest of it, if the US economy/dollar collapses, the world economy would collapse too. The same would apply if any of the big economy collapses.

 

This is why the nations bail out each other in times. And that is a good system.

That statement is deceiving also. The European Union is made up of individual countries who still maintain some control over their local economies, therefore you can't compare it to the USA. Individual failures like Greece, Ireland etc. threaten the integrity of the whole Euro system. Problems within the individual US states, such as the budget deficits in California, have little overall impact compared to what is happening in Europe. You are comparing a union of individual countries, each with their own interests at heart although with a common currency, to the USA and China which have more control. I don't think the Euro will succeed in becoming a dominant currency because those countries will always be in competition with each other.

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Stranded Shipscook

Look to where the power is and that is the safe place. The US is still the largest economy, by far, as well as the only military superpower. Things may be slowly changing, but will remain this way for some time. If the US dollar collapses, so will the rest of the world economy. The US is still the haven of choice in troubled times, and the US dollar the currency of choice. It may not be this way forever, but it is right now.

 

mmh, this isn't entirely correct ..

 

The USA is ranked after the European Union in GDP, followed by China which is catching up with enormous speed. predictions are, that China surpasses everybody in the next few years.

 

as well as the Euro has surpassed the US $ in circulation

 

but i agree with the rest of it, if the US economy/dollar collapses, the world economy would collapse too. The same would apply if any of the big economy collapses.

 

This is why the nations bail out each other in times. And that is a good system.

That statement is deceiving also. The European Union is made up of individual countries who still maintain some control over their local economies, therefore you can't compare it to the USA. Individual failures like Greece, Ireland etc. threaten the integrity of the whole Euro system. Problems within the individual US states, such as the budget deficits in California, have little overall impact compared to what is happening in Europe. You are comparing a union of individual countries, each with their own interests at heart although with a common currency, to the USA and China which have more control. I don't think the Euro will succeed in becoming a dominant currency because those countries will always be in competition with each other.

 

mmmh, i admit it complicated. And yes, one can not compare the European Union in all matters. But economically and currencywise it is quite similar to the US model.

i made some Internet researches which explain it better than i do.

 

About the individuality of the countries, we were talking about money, right? :

 

The euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the eurozone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Eurosystem participates in the printing, minting and distribution of notes and coins in all Member States, and the operation of the eurozone payment systems. (Wikipedia)

 

about the circulation :

 

As of June 2010, with more than

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smokey

Question???? why do all the forum members who say...... I WILL STAY HERE TILL I DIE... care anything about the dollar or anything outside of the philippines for that matter.... This is your home ,,, this is the place you choose to live in till your last breath... so get over the rest of the western world its a who cares...

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