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Effervescent
The Swiss Franc could never support the globalization of the money. There is more to it then that. The US will not buy Swiss Franc to trade goods nor the Yen. The US being the biggest consumer will by default allow it to be the global currency. The only currency to rival the dollar is the Euro. The Euro is in no position by today market to take advantage. Thus you must have a market to emerge that will consume products to make it dominate on the globe. The US says you will take our dollar or go sell your goods somewhere else. There is no where else to sell so they are forced to take the dollar.

So unless their is a swing in who buys what and how much then the dollar will stay the norm.

 

You're right, but there is going to be a swing. In modern society we have the false notion that money is actual wealth. A country can print trillions of dollars, but the fact remains they are not more wealthy. The US is a huge trade centre, but why should it remain so? What is in the US that is not in Russia? Russia has more resources and more land. China has the human labour to transform those resources into manufactured goods and export them. There is no reason for China/Russia/EU to not rework the trade routes and stop accepting US IOU's. The US in running a huge trade deficit, they are importing and not exporting. The countries will not keep accepting US pieces of paper while exporting their real value goods there. They could be exporting to Russia and taking energy, metals etc. Russia wants all the cheap things made in China and access to Chinese and Indian cheap labour just as much as Americans. If they can actually offer real valuable resources and not just pieces of debt paper in return then why should people not trade with them.

Look what is happening with the Russian oil pipelines being constructed. They are being constructed to send oil to China. Look who's oil Russia recently shut off and forced them to renegotiate and accept UN oversight. There are only 2 forms of real wealth, and all other forms come from them. Land and human labour. Money was created to represent these things and to facilitate the trade of these REAL forms of wealth. Money itself is not a form of wealth, as money without land/resources or human labour is just paper.

At one time the US was a staggering leader in technology and infrastructure. This is what made its currency and exports valuable. Those days have passed. There are other countries that can provide the same things, and others that have surpassed the US in areas of technology. There are dozens of countries that can do the same things as the US like build nuclear reactors, cars, put satellites into space, build computers, superconductors, cloning. There is no need for the US to be the trade hub of the world and it is being replaced.

This does not mean that the US will be insignificant, but instead it will just be joined by other equals. That is what will happen with the currency, the US $ will not disappear, but there will be other currencies and export countries that will be just as favoured. This will mean that the US $ will take a hit in value, as it will not be the defacto world currency so its demand will decrease. When demand for a currency decreases, so does its perceived value.

I believe we are seeing this shift in trade routes taking place now. The US companies once held in high value are failing. This realization that the infrastructure in manufacturing countries like Korea, Japan, Taiwan, China, and India are now comparable to the US is what is making everyone reevaluate US industry. If China now exceeds the us at exporting manufactured goods why should the US still import and use 1/3 of all of the worlds oil and such a disproportionate amount of the worlds manufactured goods?

This reevaluation of the system is what has shattered the worlds confidence and has led to this global economic crisis. When the crisis ends I think global trade and currency values will be much different.

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GoneAsiatic
We are in global failure now, just many would tell you otherwise I think. The countries, and therefore their currencies, that will survive the global failure are those that are without debt. The US debt is like a ball and chain that it must always drag around, and pay for. No matter how hard everyone is hit from the global recession the countries carrying large debts will always be the first to default. Every country must pay its bills, but a debt laden country must pay all of its bills, plus its debt interest. Even having payed that interest, it is still has not reduced its debt. Money is just paper and ink (not even that now) and the only thing that gives it value is our belief that it will be worth something more than just paper. If this global depression gets to the state where countries and currencies are brought into doubt, than it is without a doubt that those seeking to protect their wealth will invest in debt free countries. I think it is appropriate to compare countries to businesses in this sense. No one would choose to invest in a business that is laden with debt compared to one that is not, especially when they are witnessing so many going under.

 

When debt is ranked as a percentage of a country's GDP, that currently (pre-stimulus bailout) places the U.S. 27th from the top. http://en.wikipedia.org/wiki/List_of_count..._by_public_debt

 

I don't know that any country is without debt, but if you want to invest in the country with the lowest debt ranking, then Equatorial Guinea is your best bet. Any takers?

 

Chile is near the lowest but it is highly dependent on copper sales, and that is usually the commodity that gets hammered first in a recession. And that is exactly what has happened to Chile right now.

 

Things get further convoluted by investment restrictions that many countries, like Saudi Arabia, impose on foreigners. If there were such simplistic answers to these complex questions, I would be rich instead of poor.

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Effervescent
When debt is ranked as a percentage of a country's GDP, that currently (pre-stimulus bailout) places the U.S. 27th from the top. http://en.wikipedia.org/wiki/List_of_count..._by_public_debt

 

I don't know that any country is without debt, but if you want to invest in the country with the lowest debt ranking, then Equatorial Guinea is your best bet. Any takers?

 

Chile is near the lowest but it is highly dependent on copper sales, and that is usually the commodity that gets hammered first in a recession. And that is exactly what has happened to Chile right now.

 

Things get further convoluted by investment restrictions that many countries, like Saudi Arabia, impose on foreigners. If there were such simplistic answers to these complex questions, I would be rich instead of poor.

 

The countries which will form defacto world currencies will obviously be large industrial manufacturing countries. Just as the US was when it took the role of defacto currency. There is no point us looking at the small little islands that have no resources or infrastructure that can compare to any of the world powers. But we can see from that chart that China, South Korea, Australia, Russia and many EU countries all have lower debt than the US. We see that their currencies are in fact undervalued. The US has long complained that the Chinese Yuan is undervalued. These countries are attracting investment, when previously they never did. If people are investing there, then they are not investing in the US. China is building massive infrastructure and has all the signs of building a massive military also. Russia is returning also with is huge energy supply and resources. I think everyone sees a change in the balance of power.

No one cares about Chile in terms of a global balance of power. Small countries like that will always be at the mercy of the larger. Chile will never be a trade hub and will never have a far reaching military. But if you look at the shipyards outside of Shanghai/Beijing/HongKong/Guangzou and the factories you easily see they out produce anyone else in the world. It is China that has some 3 trillion dollars or US money. China has a trade surplus, they have money to pay their debt. The US has a trade deficit, they have to keep borrowing just to survive.

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GoneAsiatic
You're right, but there is going to be a swing. In modern society we have the false notion that money is actual wealth. A country can print trillions of dollars, but the fact remains they are not more wealthy. The US is a huge trade centre, but why should it remain so? What is in the US that is not in Russia? Russia has more resources and more land. China has the human labour to transform those resources into manufactured goods and export them. There is no reason for China/Russia/EU to not rework the trade routes and stop accepting US IOU's. The US in running a huge trade deficit, they are importing and not exporting. The countries will not keep accepting US pieces of paper while exporting their real value goods there. They could be exporting to Russia and taking energy, metals etc. Russia wants all the cheap things made in China and access to Chinese and Indian cheap labour just as much as Americans. If they can actually offer real valuable resources and not just pieces of debt paper in return then why should people not trade with them.

Look what is happening with the Russian oil pipelines being constructed. They are being constructed to send oil to China. Look who's oil Russia recently shut off and forced them to renegotiate and accept UN oversight. There are only 2 forms of real wealth, and all other forms come from them. Land and human labour. Money was created to represent these things and to facilitate the trade of these REAL forms of wealth. Money itself is not a form of wealth, as money without land/resources or human labour is just paper.

At one time the US was a staggering leader in technology and infrastructure. This is what made its currency and exports valuable. Those days have passed. There are other countries that can provide the same things, and others that have surpassed the US in areas of technology. There are dozens of countries that can do the same things as the US like build nuclear reactors, cars, put satellites into space, build computers, superconductors, cloning. There is no need for the US to be the trade hub of the world and it is being replaced.

This does not mean that the US will be insignificant, but instead it will just be joined by other equals. That is what will happen with the currency, the US $ will not disappear, but there will be other currencies and export countries that will be just as favoured. This will mean that the US $ will take a hit in value, as it will not be the defacto world currency so its demand will decrease. When demand for a currency decreases, so does its perceived value.

I believe we are seeing this shift in trade routes taking place now. The US companies once held in high value are failing. This realization that the infrastructure in manufacturing countries like Korea, Japan, Taiwan, China, and India are now comparable to the US is what is making everyone reevaluate US industry. If China now exceeds the us at exporting manufactured goods why should the US still import and use 1/3 of all of the worlds oil and such a disproportionate amount of the worlds manufactured goods?This reevaluation of the system is what has shattered the worlds confidence and has led to this global economic crisis. When the crisis ends I think global trade and currency values will be much different.

 

Have you ever looked at the significant drop in the stock prices of virtually all companies worldwide?

 

It is apparent that you have never lived or probably even visited China, or you would know of its poor infrastructure and enormous internal problems. The facade put on to showcase the Olympics is not the real China. I could say more about that but the fact that another one of my bike's got stolen in China again today might skew any logic I might still have. Not to mention that Big Brother checks my computer regularly and I could easily become persona non grata. I have already pushed things a bit far in other areas.

 

The U.S. DID buy a disproportionate amount of world goods and that is what enriched export-driven countries. Now how is that going to help the world economies if the U.S. stopped? (Actually it already has slowed, and so has the rest of the world.)

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USMC-Retired
Have you ever looked at the significant drop in the stock prices of virtually all companies worldwide?

 

It is apparent that you have never lived or probably even visited China, or you would know of its poor infrastructure and enormous internal problems. The facade put on to showcase the Olympics is not the real China. I could say more about that but the fact that another one of my bike's got stolen in China again today might skew any logic I might still have. Not to mention that Big Brother checks my computer regularly and I could easily become persona non grata. I have already pushed things a bit far in other areas.

 

The U.S. DID buy a disproportionate amount of world goods and that is what enriched export-driven countries. Now how is that going to help the world economies if the U.S. stopped? (Actually it already has slowed, and so has the rest of the world.)

 

 

No country is close to emerging as a major importer of goods. Until that happens my point stands that the world will have to use the dollar. So for the near future 5 to 10 years the US will continue to dominate the market. The world would have to readjust the thinking and importation for it to change. The only thing that could speed this up is an utter collapse then commodities may take over as the currency of choice.

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GoneAsiatic
The countries which will form defacto world currencies will obviously be large industrial manufacturing countries. Just as the US was when it took the role of defacto currency. There is no point us looking at the small little islands that have no resources or infrastructure that can compare to any of the world powers. But we can see from that chart that China, South Korea, Australia, Russia and many EU countries all have lower debt than the US. We see that their currencies are in fact undervalued. The US has long complained that the Chinese Yuan is undervalued. These countries are attracting investment, when previously they never did. If people are investing there, then they are not investing in the US. China is building massive infrastructure and has all the signs of building a massive military also. Russia is returning also with is huge energy supply and resources. I think everyone sees a change in the balance of power.

No one cares about Chile in terms of a global balance of power. Small countries like that will always be at the mercy of the larger. Chile will never be a trade hub and will never have a far reaching military. But if you look at the shipyards outside of Shanghai/Beijing/HongKong/Guangzou and the factories you easily see they out produce anyone else in the world. It is China that has some 3 trillion dollars or US money. China has a trade surplus, they have money to pay their debt. The US has a trade deficit, they have to keep borrowing just to survive.

 

I will agree with you that India and China may become dominant economic powers in the future, that is if India can control it s population growth and China does not implode due to its need to continually raise the bar to provide jobs for its population. And it is not doing well in that respect. I could say more but it would probably land me either in jail or on the next plane out. Hmm the latter option is sounding pretty good right now. At least I would save on bike replacements.

 

Incidentally, have you seen the reports of the riots over closed toy factories in Dongguan, which is in one of those prosperous areas you just mentioned?

And guess who is not buying those toys?

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Effervescent
Have you ever looked at the significant drop in the stock prices of virtually all companies worldwide?

 

It is apparent that you have never lived or probably even visited China, or you would know of its poor infrastructure and enormous internal problems. The facade put on to showcase the Olympics is not the real China. I could say more about that but the fact that another one of my bike's got stolen in China again today might skew any logic I might still have. Not to mention that Big Brother checks my computer regularly and I could easily become persona non grata. I have already pushed things a bit far in other areas.

 

The U.S. DID buy a disproportionate amount of world goods and that is what enriched export-driven countries. Now how is that going to help the world economies if the U.S. stopped? (Actually it already has slowed, and so has the rest of the world.)

 

Yes, and as I said this is part of the restructuring. Did you see the drop of the WORLDS stocks during the great depression and then see the rise of the US? That is the form that this restructuring takes.

 

I in fact have been to China, no need for your personal assumptions and/or attacks. If you can't just use logic for an debate please don't bother.

 

China is a facade in many ways, but the truth is I've been robbed in Toronto and also Vancouver. These places are not really unsafe nor does that make the economic system. The streets of Chinas cities are just as safe or safer than the cities here. China does have a big brother watching, but that is a meaningless point. It has produced a economic and industrial powerhouse no matter if it is big brother or the boogey man.

 

It will help the worlds economies because they will not be trading disproportionate amounts of goods for paper. If it is instead trading resources for resources then, and only then, do you have a sustainable economic system. The system is failing because this is obviously not fair trade, I would think this is obvious that people would not like that. And now it will continue to slow just as you have said because exporting countries do not want to continue this unfair trade. This slowing will affect the world, but just like the 1929 depression it will not last forever. When it is reformed it will be a different balance of power just like after the Great depression.

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Effervescent
I will agree with you that India and China may become dominant economic powers in the future, that is if India can control it s population growth and China does not implode due to its need to continually raise the bar to provide jobs for its population. And it is not doing well in that respect. I could say more but it would probably land me either in jail or on the next plane out. Hmm the latter option is sounding pretty good right now. At least I would save on bike replacements.

 

Incidentally, have you seen the reports of the riots over closed toy factories in Dongguan, which is in one of those prosperous areas you just mentioned?

And guess who is not buying those toys?

 

Don't get into any type of trouble over a simple debate here. We both know that who ever is right doesn't matter in the long run. We are both going to be part of the new or continued system whether we like it or not. I understand your concerns about China, but I must also say that we have concerns about civil unrest here too. We have poverty here, we have homeless here and unemployment. We have a great place to live here (Canada) and I'm not complaining as it isn't going to be easy anywhere. But we have our own facades also, even if they seem minor to you. In 2010 Vancouver is hosting the winter olympics and the city is looking where to ship the 5000 drug addicts so no one sees them. That will not be seen on TV, but ask someone who has been to Vancouver East side. No matter how bad the economy gets your welcome to come to Canada even though we have 7% unemployment right now. There are many Chinese(still mostly cantonese speakers) and they are good conversation, and many would agree with you.

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GoneAsiatic
Yes, and as I said this is part of the restructuring. Did you see the drop of the WORLDS stocks during the great depression and then see the rise of the US? That is the form that this restructuring takes.

 

I in fact have been to China, no need for your personal assumptions and/or attacks. If you can't just use logic for an debate please don't bother.

 

China is a facade in many ways, but the truth is I've been robbed in Toronto and also Vancouver. These places are not really unsafe nor does that make the economic system. The streets of Chinas cities are just as safe or safer than the cities here. China does have a big brother watching, but that is a meaningless point. It has produced a economic and industrial powerhouse no matter if it is big brother or the boogey man.

 

It will help the worlds economies because they will not be trading disproportionate amounts of goods for paper. If it is instead trading resources for resources then, and only then, do you have a sustainable economic system. The system is failing because this is obviously not fair trade, I would think this is obvious that people would not like that. And now it will continue to slow just as you have said because exporting countries do not want to continue this unfair trade. This slowing will affect the world, but just like the 1929 depression it will not last forever. When it is reformed it will be a different balance of power just like after the Great depression.

 

Good that you have been to China; I can see you have learned a lot. You don't need to appoint yourself as the arbiter of what is and what is not relevant in my posts, even if you are from Canada, which incidentally could be construed as irrelevant too. I have a job to do so I

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welcome to the forum Effervescent, So you think China will emerge as a great world power? Welcome to the club...folks have been pondering the sleeping giant for at least a century or more. And we all know she ain't asleep anymore... Is the USD Dollar on a precipice...well many many investors (read nations) who bet with their money and not their mouth tend to dissagree at the moment. As the Global financial crisis has strenghtend so has the USD..Why is that? Perhaps its because the worlds investors know that US will never let its loans go into default. Perhaps they need to USD to trade amongst themselves not only with US..2/3 of dollars are held outside the US... even with the US in its weakend economic stature, she is still a HUGE HUGE Economic Engine coupled with a vibrant and strong democracy down to the city/ precinct level and is still the worlds greatest military power. Would the worlds investors put their faith in the Yuan? or the Ruble ? They might if it wern't for that pesky dictator thing..whereby policies change at the whim of the Red Army or in the Ruble?...again..Dictator watch alert....with a fragile democracy where the folks on the street yearn for the good ol' Soviet era. lets see now, if I want a safe haven for my money and China and Russia are off my list...lets see.. Korea..nope Crazy Kims to the North messes with that equation... Taiwan, nope, see Red Army above... ...Japan oh Japan...yeah looks good...very stable, industrialized, lots of cash reserves and their military is well hmm lets see i dont know???? guarding their Whalers rights somewhere i guess.. Oh how about Australia..great as long as the world demands its commodities.... Mideast countries.. now thats stable... (ok you get the picture... the US still is a very safe bet and most likely will be even after this mess is over) After this mess is over though like you say... The need for a safe house will dissapate and most likely (caveat thrown in....) the Dollar will lose value in the relativity game... because as we know all currencies are relative... As I peer into my Crystal Ball...the only currency I see replacing the USD is the EUR... when? I dunno....but it will happen so says my Crystal Ball.. bout the time the UK dumps the pound ...

 

A great and studious read on the shift in Global powers is Paul Kennedy's The Rise and Fall of Great Powers... Still very pertinent and relevant after 20 years . Think I will go back and reread it if I can dig it out one those Balikbayan boxes still unopened... cheers.

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Effervescent
Good that you have been to China; I can see you have learned a lot. You don't need to appoint yourself as the arbiter of what is and what is not relevant in my posts, even if you are from Canada, which incidentally could be construed as irrelevant too. I have a job to do so I’d like to say it has been fun. Adios.

 

USMC makes some good debate threads it seems.

 

I'm certainly not the arbiter of any conflict. What is going to happen in the world is for a large part out of your and my hands as individuals. I just prepare for my future as best I can, and many others are are doing the same. Canada is in fact mostly irrelevant in world affairs that is true, and that is a standing joke of many Americans lol. Always good to hear the other side. Zia jian.

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GoneAsiatic
USMC makes some good debate threads it seems.

 

I'm certainly not the arbiter of any conflict. What is going to happen in the world is for a large part out of your and my hands as individuals. I just prepare for my future as best I can, and many others are are doing the same. Canada is in fact mostly irrelevant in world affairs that is true, and that is a standing joke of many Americans lol. Always good to hear the other side. Zia jian.

 

Evervescent, I have rarely heard an American consider or speak condescendingly of the country of Canada; usually the reverse has been true. You said many of my comments about China had no validity, when you apparently misunderstood I was trying to tell you I could have written much more about the situation here but am not free to do so. Some of my "irrelevant

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At times threads wander off in a different direction naturally. Especially one like this because even though the guvment here will try and tell you they are isolated and insulated, we know it ain't so. So as long as the OP does not complain or things get out of hand, we try to let things take their own course.

 

It's not like someone jumping in the middle of a thread on Philippine tourist destinations ranting about the price of tea in China. LOL

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Effervescent
Evervescent, I have rarely heard an American consider or speak condescendingly of the country of Canada; usually the reverse has been true. You said many of my comments about China had no validity, when you apparently misunderstood I was trying to tell you I could have written much more about the situation here but am not free to do so. Some of my "irrelevant” remarks about China were meant in a lighthearted vein, but you took them seriously. Geez, lighten up; life is too short to be so intense.

 

So my reference to your mentioning Canada as possibly also being irrelevant had nothing to do with denigrating Canada. Conversely, right or wrong, I got the impression that your main theme is that "America is going to hell in a hand basket". Granted, many from other countries would revel in that possibility, and America still might, but the jury is still out in that one.

 

When the world's greatest economic minds admit they have no clue as to what will happen in this worldwide crisis, I don't take seriously dogmatic claims that anyone makes who states they have all the answers.

 

I think we have about taken this topic off-topic about as far as any thread I have seen.

 

Actually it is quite common for Americans to speak of Canada in a condescending way. The 51st state etc. No idea where you got the opposite opinion from. Many say the opposite also though, and in fact many Americans own land and live here. The city I live in is a popular destination for them. Canadians are the same, of split opinion about the US, China, etc.

I have no idea which of your comments were meant as light hearted. The internet does not transmit emotion, an emoticon perhaps would help if you are meaning to be sarcastic or facetious. My comments about Canada were to show that anyone can speak ill of another country, and that all governments have a facade to some extent.

I don't feel that I need lightening up or that I am overly tense. This is who I am and I don't believe it is affecting my lifespan. :welcome: Your concern is noted though.

I don't see how you got this "to hell in a handbasket" frame of mind. I said quite clearly that the United States and the US dollar would remain. There will be a readjustment is all. Nothing so dire as hellfire or that the rapture is imminent. I made numerous comparisons to the 1929 crash and as we know most of us in fact survived.

I agree that the jury is still out, and it has already been said by many that trusting the "experts" is pointless. As I said earlier it makes little difference what we think we are not going to change the outcome.

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