Glenn Beck: How stable is the Dollar?

[EmptyTimCup]

Originally Posted by Tilted

The global economic structure would have pretty much collapsed before the U.S. dollar went the way of the Zimbabwean dollar. Though, I suppose that is possible.

Why would the world care ?

really ......


from what I have read the Euro Trash would like to be done with Dollars, Euros in their place

Yugo Chavez and his middle eastern sycophants are / were planing some sort of dollar replacement scheme


he thats it monetary certificates based on OIL


I pulled this off of the Survival Blog:

Letter Re: Abandonment of the Dollar is a Premature Rumor

Dear Jim and Family,

I wanted to comment on the alleged threat of the Saudis to decouple the US Dollar from Oil sales. They've been saying that for a decade. The Iraqis promised to do it, one of the primary reasons for the invasion. The Iranians did it, but nobody cares because they're an oil importing nation so they don't actually matter much. The Venezuelans have been trying to get the rest of OPEC to do it since we nearly got Chavez ousted in a coup backed by the US. Pity that failed, but there will be a next time for him. With 16% annual inflation and 18% unemployment, talk is VERY cheap in Iran. Money is measured in Oil, and with the US Dollar as the reserve currency for Oil, we are in an unprecedented position.

This currency change threat has been going around for years, more and more often since 2006 when we were close to peak oil production. It is nearly inevitable except for one important fact: all the OPEC nations are loaded in US Dollars right now, and the USA is a stable country they like to invest in, both in Bonds and in real estate, the commercial variety in particular. Our stock market is where most of the Oil Sheiks put their investments so they really can't afford to dump dollars without taking a savage hit to their fortunes. While that may seem bearable for ideologues, the fact that their fortunes stave off violent revolution and pay their secret police and informants means they literally can't afford to dump the dollar. It would mean their lives would be forfeit in the resulting coups and revolutions.

Things are slightly less dire in China, where most of the nation's wealth is in US bonds. Dumping the dollar there has been requested since 2006 there, as well, but they don't dare for fear of abruptly ending the economic prosperity that's lifting the standard of living there for the first time in 50 years. They now have a middle class. Revolution is started by the Middle Class. They really can't afford a civil war in a nation of 1.3 billion people and counting. They can't dump the dollar.

And the Japanese, the other big holder of Dollars? We feed Japan with our rice, our Kobe beef (a special breed of cattle raised here in California and shipped across the ocean), and they buy our bonds because the national bank system of Japan is less than effective. Japan is also occupied by US bases since Japan is unable, legally, to more than defend itself within its own borders. Threats by North Korea means we, as their allies, are their defense abroad from a real and determined foe. A hundred million Japanese can't afford to dump the Dollar.

This means the rumor is probably just that: yet another rumor. Markets move on rumors, but they don't stay moved for long. Expect renewed stability rather than actual dollar collapse. Our current Post-Oil transition is [occurring in]slow motion. It will likely continue that way for the foreseeable future too. Sincerely, - InyoKern

[Tilted]

Originally Posted by EmptyTimCup

Why would the world care ?

really ......


from what I have read the Euro Trash would like to be done with Dollars, Euros in their place

Yugo Chavez and his middle eastern sycophants are / were planing some sort of dollar replacement scheme


he thats it monetary certificates based on OIL


I pulled this off of the Survival Blog:

Because the world holds so many dollar denominated assets and has so much invested in dollar dependent concerns. Extreme inflation of the U.S. dollar would destroy a lot of people's accumulated wealth. Additionally, it remains the trading platform of the world - and that just couldn't change overnight, even if there was a suitable alternative.

The world wants us to be more fiscally responsible and protect the value of the dollar - it doesn't want to get rid of it as the global value translator.

[Tilted]

NY Fed: Testing Exit Tool, Not Using It Yet

The Federal Reserve Bank of New York said on Monday that it is testing one of its tools for withdrawing cash from the banking system, but stressed this should not be taken to mean that it is about to use it.

The Federal Reserve -- the U.S. central bank -- has said that so-called "reverse repos" could be one way to drain excess reserves when the time comes to reverse the massive cash injections it has made into the banking system.

"This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening," the New York Fed -- the U.S. central bank's operational arm -- said in a statement.

The debate over when the Fed should rein in its support is growing louder. U.S. policy-makers have stressed that now is not the time to tighten monetary policy, but there have been differences about what rules of thumb to use to determine how soon the first rate hike should come.

This is inane - we should be pulling the extra liquidity out right now (we never should have injected it), not planning for how we might pull it out sometime in the future. Let's have a real economy, not one that is artificially propped up. Let's behave like responsible adults living in the real world, not recklessly negligent children living in our dreams and pretending things are as we would like them to be. Let's live lifestyles that are commensurate with what our actual productivity levels can support, and stop living within this group delusion, which is entirely unsustainable and will necessarily lead to incredible pain and hardship in the future.

It is just plain ridiculous that, in the face of the economic turmoil we've seen recently (and the rather obvious causes thereof), our government is still willing to foster and perpetuate the lie, and we are still willing to believe it. It remains unfathomable to me that humans can be this collectively stupid, yet individually most are entirely capable of tying their own shoes - those two realities seem incompatible to me. Individually many humans are incredibly capable and intelligent, but collectively we behave like 3 month olds - incapable of understanding anything beyond the immediate reality of, 'I'm hungry, I cry, I'm not hungry anymore.'

This is the problem with (un-safeguarded) Democracy. Our leaders do stupid, immature, improper, and irresponsible things - because that is what we want them to do. Policy that seems good in the short term takes priority over policy that actually is good in the long term. Effective governance gets lost in the shuffle because, frankly, it doesn't matter when it comes to being selected as a governor - being a good leader has nothing to do with whether or not you get selected to be a leader. It's like picking football coaches based on how well they paint portraits. I bet Van Gogh could do wonders with Redskins.

[Tilted]

Why Dollar's Continued Slide May Undermine Global Status

[Tilted]

Reducing Deficit Key to US Rating: Moody's

The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday.

The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances.

The White House has forecast deficits of more than $1 trillion through fiscal 2011.

"The Aaa rating of the U.S. is not guaranteed," said Steven Hess, Moody's lead analyst for the United States said in an interview with Reuters Television. "So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy."

Moody's has a stable outlook on the U.S. rating, which indicates a change is not expected over the next 18 months.

While these statements by Mr. Hess aren't particularly earth-shattering, they aren't exactly insignificant either. That the U.S. could lose its Triple-A sovereign credit rating is unthinkable. Well, except that, apparently it isn't. If it ever were to, that would be problematic, to say the least.

[Tilted]

China Expert Urges FX Reserves Shift; Dollar Falls

The dollar should remain the principal currency in China's $2.27 trillion stockpile of foreign exchange reserves, but the share of the euro and yen should increase, according to an opinion piece in Monday's Financial News, a paper published by the People's Bank of China.

The dollar fell to a 14-month low as word of the report spread before recouping some of its losses after the author, Zhou Hai, told Reuters he was only expressing a personal opinion.

"It is purely my personal view," Zhou, a division chief with the financial research department of the central bank's branch in Harbin, capital of the northeastern province of Heilongjiang.

Other researchers have expressed similar views to Zhou, whose piece appeared on the "Theoretics Weekly" page of the paper.

The composition of China's currency reserves is a state secret, but bankers estimate that at least two-thirds of the holdings are invested in dollar-denominated securities.

[EmptyTimCup]

Originally Posted by Tilted

China Expert Urges FX Reserves Shift; Dollar Falls

so what do you think will be the end result ....


inflation, less buying power of the dollar ( globally ) ....

[Tilted]

Originally Posted by EmptyTimCup

so what do you think will be the end result ....


inflation, less buying power of the dollar ( globally ) ....

The effect of China reducing the amount of dollars (or dollar denominated assets) it holds in its reserves in preference to other currencies? It would have to cause the dollar to have less value (relative to other currencies) than it would have otherwise (all other things being equal).

The dollar is subject to the same supply and demand dynamics as most things. The less demand for them, the less they are worth. The dollar has traditionally benefited from the fact that people hold it as a reserve currency. It's a kind of 'artificial' demand that helps to prop up its value. That's not unlike how the value of gold is propped up by the 'artificial' demand that is created by people wanting to hold it as an inflation hedge - though the value adding effect for gold is probably much more pronounced.

[Tilted]

By the way, the dollar has been having a really good day since about 11 am.

[EmptyTimCup]

Originally Posted by Tilted

The dollar is subject to the same supply and demand dynamics as most things. The less demand for them, the less they are worth. The dollar has traditionally benefited from the fact that people hold it as a reserve currency. It's a kind of 'artificial' demand that helps to prop up its value. That's not unlike how the value of gold is propped up by the 'artificial' demand that is created by people wanting to hold it as an inflation hedge - though the value adding effect for gold is probably much more pronounced.

how is this accomplished ?
...dollars on deposit ?
...buying Treasury Notes ??