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Thread: Why Will The US Dollar Lose its Reserve Status?

  1. #61

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    Quote Originally Posted by Carpenter View Post
    Our standard of living will decline as the ability to live beyond our means evaporates with reserve status.



    In order to maintain the purchasing power of a national currency one must produce as much as they consume.

    Dollars held in reserve status by others reduce the requirement to maintain equilibrium in our balance of trade payments.

    In other words, our trade partners' willingness to hold dollars in reserve, rather than cashing them in, enhances the dollar.

    Increasingly foreign nations are finding reasons to move away from the dollar.

    The implementation of FATCA on July 1st may be one more of those reasons.

    ​.
    .
    Maybe so, but there are plenty of countries that run negative trade balances and do not have reserve currency status. Their quality of life still seems to be fine. Why should we be so concerned?
    The answers are in the data

  2. #62

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    Quote Originally Posted by IceAged View Post
    HI Chopper,
    Thanks, Very good video indeed.
    Much better the all of the gloom and doom porn with all of the ominous music dubbed in.
    Factual and based on data
    Thanks Again
    IceAged
    OMG! This guy was so BORING . . the ominous music was badly needed. . .
    No his mind is not for rent
    To any god or government
    Always hopeful, yet discontent
    He knows changes aren't permanent
    But change is

  3. #63

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    Quote Originally Posted by Ryanferr View Post
    Maybe so, but there are plenty of countries that run negative trade balances and do not have reserve currency status. Their quality of life still seems to be fine.

    Why should we be so concerned?

    $10 trillion parked in foreign Central Bank reserves not competing for US assets.




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    Last edited by Carpenter; 05-21-2014 at 05:13 PM.

  4. #64

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    Quote Originally Posted by The Sage View Post
    OMG! This guy was so BORING . . the ominous music was badly needed. . .
    Hi Sage,

    I guess it depends on what information your looking for.

    For entertainment: (and I do listen to the following mainly for entertainment BTW)

    Gerald Celente / Jim Rogers / Pete Schiff / Jim Sinclair / Mike Maloney / Jim Willie
    (although Willie does have a lot of tibits that I do not pick up elsewhere, he tries to do what Bass is doing tying everything togther worldwide but Kyle Bass is alot more organized)

    But with these guys it really just the same story over and over. Don't get to much new info

    • US Fed Printing too much
    • Hyperinflation Inevitable
    • Death of the dollar
    • Global Economic Collapse
    • Buy Gold, Buy Silver


    Kyle Bass Covered
    • QE and ZIRP (and June / July FED policy thoughts
    • US Balance of Trade
    • USD vs other currencies.
    • Getting short on JPY (seriously thinking about analizing this further and look for an opportunity to get short)
    • Abenomics (If your think Ben/Janet are QE masters they are mere ammetuers when it comes to Abe-San)
    • For numerous countries
    • -Fiscal Account Deficits
    • -Capitol Account Deficits
    • -FX reserves
    • China and social finaincing (look into the ghost cities and the housing bubble in China)
    • Chinese Debt Bubble
    • Canadian House Prices vs. US House Prices (currently 9:1 vs 7:1 when US was at it's worse during the subprime)
    • And this response was spot on "He whose holds the largest blue water navy rules the world"
    • https://www.youtube.com/watch?v=VBPZ58dzjfE#t=2282
    • Europe
    • https://www.youtube.com/watch?v=VBPZ58dzjfE#t=2298





    In short my takeaway is

    1) Investigate getting short JPY and look for an entry point
    2) Investigate getting short EURO and look for an entry point
    2) Investigate Vodafone (It has been beaten down bad lately) and look for an entry point


    And to stay on topic with the initial thread
    "Why will the dollar loose it status as world currency reserve" - It will not be b/c of any one particular reason and it is not likely to happen anytime in the near future IMHO. With that, one day it will come to an end.


    IceAged
    Last edited by IceAged; 05-21-2014 at 08:00 PM.
    Disclaimer: DYODD (Do your own due diligence). Any information in these posts are my own personal opinions and not investment advice

    ------------------------------------------------------------------------------

    There's always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they DO NOT KNOW ABOUT IT! - "K"

  5. #65

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    Quote Originally Posted by GopherGold View Post
    I'd like to examine the real value of the US "reserve status". Is this really as important as we make it out to be? International commerce represents roughly 15% of GNP, and despite our current trade deficit, it roughly an even game. Meaning, if all international commerce were to halt, the exports and imports would essentially balance out. The US could still function, independent of other countries, and the de******** of currency would essentially become an internal problem.

    The US has plenty of energy reserves, ample food production, an educated populace, and a strong military. So, despite our internal wranglings, we could essentially give the world the finger, and go it alone.

    Of course, I'm playing devils advocate. I'm worried about the reserve status, but I'm questioning my ingrained loyalty to the dollar. Can someone offer a valid reasoning as to why this all matters.
    Having the "reserve status" may hold multiple advantages but I think the main one is amount of international wealth that one country accumulates. I don't know what is considered within such concept as the "international commerce" but I believe that the foreign wealth that came to the USA along the time is now much higher than 15% of its GNP.

    As long as the USD continues to hold the "reserve status", the USA has 2 big advantages over the other world economies:
    1 - The huge amount of foreign wealth that has been accumulated inside of the USA in exchange for dollars that are kept outside of it.
    2 - The lesser need for surplus on the USA's economy in every year.

    These very 2 points are also the main threats in case the USD loses its "reserve status":
    2 - The USA would have to learn how to live without an "artificial" surplus evey year.
    1 - If the other countries turn back their dollars to the USA, a huge amount of wealth would live the country (drastic economic contraction) while provoking a very severe inflation (or even hiper-inflation). The USA would be in hell and a lot poorer.

    Of course the country could recover over time, if becoming more disciplined and with the help of its natural resources and educated population (you're right on that one). But it would never return to the same properity as before (when they had no big crisis, no hiper-inflation, no leak of wealth and a lot of international support).

    I'm a newbie in these kind of subjects so feel free to criticize my logic or point out anything wrong that I could have said, as I would like to learn more about all of this too.

  6. #66

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    Loss of use in its previous lock strong grip on use in global trade regardless of what two countries were trading has already (a) begun; and (b) progressed significantly. This and general loss of confidence in USD has led numerous treasuries to convert balance of their reserve composition in 2 ways: (1) increase composition of gold; and (2) add initial positions in Chinese yuan.

    Once 50%+ of international trade is no longer in USD then there would be significant need to rebalance reserves into more diverse compositions eg., yuan, gold, etc.,

    An improvement in alternatives to current USD does not need to arrive or be created. Continued diminished use of USD in global transactions alone will provide the tail that wags the dog the USD has become.

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