How Long Does The Dollar Have?

Subject is the Dollar. I goofed up the post title.

Listening to conservative talk radio and liberal media kinda left me in the dark as the truth of the current circumstance of the USA. Going between foreigners hating us because they hate our freedom, way of life and apple pie to us being greedy capitalist pigs I think I stumbled across the truth.

It seems us having the world's reserve currency is serious business. Didn't know Saddam Hussein demanded Euros for petrol before we dispatched him and am seeing that this Iranian Kish International Oil Bourse is pretty much selling petrol currency other than the dollar.

Is this what it's all about? If so why is something so important not being reported? Why are we going through the pretense of them having weapons when they likely don't? What will be the next plan if they comply and still want to sell their oil in a non dollar currency?

Here's where I found my info just in case some of you might not know wtf I'm talking about. I sure didn't know this Kish Oil Bourse existed.

Also if you google the works Iran and threat you get everything from them having long range missiles to nukes but no mention of this.

http://www.chrismartenson.com/forum/iran-oil-bourse-fall-dollar-and-third-great-war/8045

We already know the American dollar is in decline, and it's the government's fault for printing up more paper without worth to keep its citizens happy.

I read that in the 60s and 70s hard money countries started asking for their dollar holdings in gold. That pretty much caused us to default by not paying in gold anymore. So why is the rest of world still so willing to hold our money? Is there anything other than the fact we install friendly governments in the middle east who ask for oil payments in dollars? Like say replacing gold with oil?

I don't really know where you're getting this; almost no country wants to use Dollars anymore. But you're right, at the moment, the country has an ever larger deficit because of the current reliance on credit and paper money. The refusal to pay back in Gold only dug a deeper hole.

I think it's because we're the biggest consumer of foreign goods. If we belly up, the whole world takes a substantial hit.

Also, in a more economic note, what Zic said :o

I had nearly forgotten how much impact the U.S. has on foreign nation economy.

I haven't made a study of this, but what makes gold so special, that it has a value over say, paper money? It seems like we assigned value to both just because we "like" them, or it was convenient. Gold isn't particularly useful, outside of making superconductors, which I don't think predates man's fetishistic attachment to the element.

It can't just be because it's a rare element, fiberglass condoms are rare as ***, that didn't make them valuable.

Ugh this all makes me want to go buy a shotgun and buy some organic seeds. Maybe build a chicken coop in the back yard or something.

I wouldn't worry about it none too much. These cycles happen all the time. America is still a very young country, and we weren't even an economic powerhouse until every other industrialized nation in the world had their infrastructure annihilated sometime in the early-mid forties.

What some people think:

If you watch the video on youtube, called Petro Dollar. Think it is by Ron Paul or something. Talks about the monopoly the US dollar has on oil sales. Can only buy oil with the US dollar. Iraq started trading in Euro's, this broke the deal the US had with everyone.
Remember this is youtube. (prob alot of conspiracy in that video)



Currency and Gold = Gold Standard. Means your money is worth something. Supposed to mean a country can't print more than the value they have in gold.

Lmao i saw that same show :p

Exactly what I'm getting at. I don't trust the media anymore. Either side. Can't a politician come out and say "Look, we're running an empire here. Get over it." It's not like if the people knew the truth that they'd up and revolt. At least not here. I wonder if most Iranians are generally supportive of their governments crusade against Imperialist America.

The dollar is not going away unless the U.S. as a whole collapses. Not going to happen unless we have a nuclear war or similar.

The funny part is, we CAN fix our debt, though it's by making hard decisions. But it can be done, the politicians choose not to. Why, I have no clue. Life is hard?

As to why the world tolerates it, that's because we are a Big(tm) economy. There's a lot of people, that buy a lot of stuff, and despite our issues, we've been pretty stable in the last 150 years. That means everyone plays by our rules unless something (civil war, etc.) changes the status quo about our stability.

America has always been a Mercantile Empire, I think anyone who pays attention knows already.

Trade is really the only thing that keeps the world stable. Europe spent the better half of the last two-thousand years killing each other over who had the biggest rats. Now, fighting hurts the bottom line, and nobody wants to take a profit cut for a goode olde wor.

So once Middle Eastern nations threaten our stranglehold, we have to come out and show them what an M1A2 tank does to a house constructed of donkey ***and sticks.

The dollar acts as a standard. Values fluctuate, EU has plenty of problems with their own currency, China keeps theirs artificially low.

Dollar will remain the standard for the forseeable future. It will take some rather large scale unlikely event (US default) for it to change anytime soon.

Controlled inflation isn't a bad thing. A gold standard creates far more problems than it fixes which is why we left it in the first place.

If oil is ever globally priced in anything other than USD, our economy will collapse. As long as it is priced in USD, we are technically unbreakable.

The economy is facing unprecedented changes and rapid changes in structure.
That makes money-grubbers anxious, and it creates volatile market fluctuations, seemingly dependent on the day of the week, the moon phase, and which direction you're facing.

Ultimately, the US dollar is not a strong as it used to, for several reasons. Other nations' economies have improved over time (most notably, Great Britain, Denmark, and Germany, among others). The population growth rate worldwide is staggeringly-high. People are living longer lives, in general. The continual siphoning of wealth into the bank accounts of the wealthiest 1% of the population, over the past 20 years. Stagnant middle-class wages in the USA over the past 30 years. And more.

Despite all that, until there comes an age where human civilization no longer requires currency for trade, the American dollar will still be a measuring stick for wealth, worldwide. Maybe not the only one, but certainly one of the only ones.

the dollar is NOT in decline. this is proven very simply by the fiasco last summer. if you'd like to put on a tinfoil hat and prepare for the gold standard or the rise of the euro, no one will stop you, but it's insanity. especially if you think the euro will become the reserve currency.

Dude as long as strip clubs are around, will never lose the dollar lol.

People talk of weak currency as bad, however, it can also pose as a good thing. This happened to be one of the biggest problems of the Gold Standard as the currency gets pegged too high for a country and they can't compete anymore (Britain post World War 1 is a prime case study for anyone interested). With a lower currency your goods are cheaper so they (theoretically) have a higher demand and can compete better in the foreign markets.

I'm not by any means saying the U.S. economy is doing awesome cause we have a weak dollar though, just putting in a different view. This is also one reason why the U.S. and other countries are quite angry at China for pegging their exchange rates low without letting it inflate to their natural rates.

To answer the reason why the U.S. dollar is so highly kept is because of the U.S. Treasury Bonds. They are pretty much a "guaranteed" investment in the bonds market.

a) Currency is any item that can be exchanged for items and other currencies. It's something that is used in lieu of bartering.

Originally items like silver and gold were used because they could be minted, control of the supply was possible for governments and because it was readily accepted by others due to it's intrinsic value.

b) the problem with gold and silver is that they had limited amounts and growth. Economies were small several centuries ago, but by the mid 19th century the world economy was out growing the use of gold and silver. If you can't mint enough, then people can't use it to buy and sell, so we end up bartering more and more.

c) the reason first the pound sterling and then the dollar became the accepted standard rather than gold was because 1) people HAD to have something to trade, 2) people agreed that the British and then the US governments were the most stable and least likely to fail, 3) they were the actual largest economies in the world and 4) they were free 'open' markets. So, if someone sold something in dollars, the buyer knew they could trade the dollars.

The US has very low inflation and that has been so for years which contradicts any idea that the US is 'printing' lots of money. A government can borrow money to finance deficits or print money (or both of course) and the US is borrowing money (mostly from China, Japan, Canada and Mexico.)

It's obvious that the holders of US dollars are not willing to devalue or stop using dollars because they would have a problem exchanging it for anything else.

So the answer is:

the US dollar will continue to be the defacto world currency as long as the US is the largest economy, the US is stable and the US has an open economy. China's economy is still 20-30 years away from becoming larger than the US, so this may change, but China will have to have an open economy (which means it has to change.)

Gold is fiat money like paper money is to a degree in that you're correct about its intrinsic value. Of course if you take such a broad view of things any money (as opposed to barter economies) can be considered fiat. The value gold has over the dollar is that it's a fair deal more stable. Sure someone may find a new gold mine and flood the market with gold driving prices down, but the supply of gold can more or less be thought of as fixed. Paper currency on the other hand is subject to government manipulation to pay off debts by devaluing its currency. That's why gold is valuable.

Also anyone who says no one wants to hold US currency any more is full of crap. I think things will change in the next 20 years but at least for now there is a reason why we're still the world reserve currency and why foreign governments are so fond of buying t-bills.

Also ninja edit in response to Vodou: all of what you say would have been correct up until about 2 years ago, but inflation actually has been pretty horrible lately due to several rounds of quantitative easing. Just look at what commodity prices have done relative to the massively devalued dollar in the last couple years.

The 1% do not have the majority of their money in banks. That would be stupid.

well 5 of them gives you a foot long so 12/5 = 2.4 inches

so a dollar gives you 2.4 inches.

/had to

I assume you're using the CPI, which is a crappy measure because many of the goods are quite different over time. A car was a car both last year and 50 years ago but they're clearly different products. Same with TVs, computers, etc. You're correct that if you look at prices just relative to oil, food, etc then you don't know if you're capturing inflation or changes in production of that commodity. On the other hand, if you look at the dollar relative to a basket of commodities; i.e., oil, gold, silver, etc, it's clear that it's been rapidly losing value in recent years. This shouldn't be surprising since the fed thought it would be a brilliant idea to have several rounds of quantitative easing and and hold interest rates artificially low.

Sounds like the perfect time to go bumping that thread about a world without currency!

It's very simple actually.

The budget is like a potato in that game hot potato. No politician wants to be the one holding the potato when they have to make budget cuts. So they keep passing it on to the next person.

Whenever a politician wants to make budget cuts, the opposing side always accusing that person of hating whatever they are trying to cut.

Want to reform social security? You hate old people. Want to reform welfare? You hate poor people. Want to make our military smaller? You support terrorists. Think the EPA is out of the control and want to reform that? You love pollution and want the earth to burn.