Home › Forums › Financial Markets/Economics › Day of reckoning looms for the U.S. dollar
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May 23, 2009 at 2:14 PM #405542May 23, 2009 at 2:47 PM #404854patientrenterParticipant
partypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
May 23, 2009 at 2:47 PM #405101patientrenterParticipantpartypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
May 23, 2009 at 2:47 PM #405337patientrenterParticipantpartypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
May 23, 2009 at 2:47 PM #405399patientrenterParticipantpartypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
May 23, 2009 at 2:47 PM #405547patientrenterParticipantpartypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
May 23, 2009 at 7:33 PM #404879barnaby33Participantpatientrenter, you should know by now not to stop partypup when he gets wound up. Is entertaining.
We’re fucked, everyone else is fucked worse. The yuan/renmimbi is not about to become a global currency, though gold may increase in value. I have my doubts about that. If bond yields ramp/prices fall, the actual dollar (as in green paper) will strengthen. Inflation is more than likely our future, but we are still strongly in deflationary territory.
Josh
May 23, 2009 at 7:33 PM #405126barnaby33Participantpatientrenter, you should know by now not to stop partypup when he gets wound up. Is entertaining.
We’re fucked, everyone else is fucked worse. The yuan/renmimbi is not about to become a global currency, though gold may increase in value. I have my doubts about that. If bond yields ramp/prices fall, the actual dollar (as in green paper) will strengthen. Inflation is more than likely our future, but we are still strongly in deflationary territory.
Josh
May 23, 2009 at 7:33 PM #405362barnaby33Participantpatientrenter, you should know by now not to stop partypup when he gets wound up. Is entertaining.
We’re fucked, everyone else is fucked worse. The yuan/renmimbi is not about to become a global currency, though gold may increase in value. I have my doubts about that. If bond yields ramp/prices fall, the actual dollar (as in green paper) will strengthen. Inflation is more than likely our future, but we are still strongly in deflationary territory.
Josh
May 23, 2009 at 7:33 PM #405424barnaby33Participantpatientrenter, you should know by now not to stop partypup when he gets wound up. Is entertaining.
We’re fucked, everyone else is fucked worse. The yuan/renmimbi is not about to become a global currency, though gold may increase in value. I have my doubts about that. If bond yields ramp/prices fall, the actual dollar (as in green paper) will strengthen. Inflation is more than likely our future, but we are still strongly in deflationary territory.
Josh
May 23, 2009 at 7:33 PM #405572barnaby33Participantpatientrenter, you should know by now not to stop partypup when he gets wound up. Is entertaining.
We’re fucked, everyone else is fucked worse. The yuan/renmimbi is not about to become a global currency, though gold may increase in value. I have my doubts about that. If bond yields ramp/prices fall, the actual dollar (as in green paper) will strengthen. Inflation is more than likely our future, but we are still strongly in deflationary territory.
Josh
May 23, 2009 at 9:02 PM #404904ArrayaParticipanthttp://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html
The Chinese yuan is preparing to overtake the US dollar as the world’s reserve currency, economist Nouriel Roubini has warned.Professor Roubini, of New York University’s Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan’s ascendance.
http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.
May 23, 2009 at 9:02 PM #405151ArrayaParticipanthttp://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html
The Chinese yuan is preparing to overtake the US dollar as the world’s reserve currency, economist Nouriel Roubini has warned.Professor Roubini, of New York University’s Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan’s ascendance.
http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.
May 23, 2009 at 9:02 PM #405388ArrayaParticipanthttp://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html
The Chinese yuan is preparing to overtake the US dollar as the world’s reserve currency, economist Nouriel Roubini has warned.Professor Roubini, of New York University’s Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan’s ascendance.
http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.
May 23, 2009 at 9:02 PM #405449ArrayaParticipanthttp://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html
The Chinese yuan is preparing to overtake the US dollar as the world’s reserve currency, economist Nouriel Roubini has warned.Professor Roubini, of New York University’s Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan’s ascendance.
http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.
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