How long Till the Dollar gets dropped as the "World Reserve Currency?"

[JerryBaumchen 1,048]

Hi 71,

Quote

It costs Intel $1 billion more to build a factory in the United States than it does in China

Intel has a number of factories located in Hillsboro, OR; just down the road from me. And they are currently building more.

http://www.intel.com/content/www/us/en/jobs/locations/united-states/sites/hillsboro.html

They are the largest employer in this state.

JerryBaumchen

[ShcShc11 0]

jgoose71

***There are NO alternatives to the U.S currency as World Reserve Currency.

At best, there will be a new "SPG" currency by 2040-2050, but nothing can match the U.S currency in terms of size and stability.

Also, I don't know why this notion of "hyperinflation" keeps coming up. Last time I checked, there aren't any French troops in our economic heartland stealing our coal like 1920s Germany.

...
> Euro: The Euro is completely unstable in its current form
> South Korean Won: Far too small and unstable.
> the Chinese Yuan Renminbi: The Chinese are the ones who most need a "world currency". Their choices are limited to U.K Pound, Japanese Yen and U.S (mostly U.S because U.K and Japan are too small)


p-s: I wouldn't consider the U.K as a "world reserve currency" at all in the 1900s; let alone the 1960s lol... unless if by "world", you mean India.



Cheers!
Shc

Once again, the reasons you listed above are why the other countries have not dumped the dollar. That is also the biggest factor for our country not going into hyperinflation.

But we do have inflation. The price of milk, gas, and especially gold is going up. Pumping $ trillions into an economy with nothing to back it has consequences, and also does have other countries starting to look for alternatives.

No.
We had borderline DEFLATION and not inflation.
Inflation must be measured based on price excluding energy and food.

We BARELY pumped sufficient money to fill the 2008 Lehman Brother gap of 2.5 trillion $. Our 10 years bond are at an all-time low indicating that we need to put MORE money into the economy in order to have a normal economy.

Remember that we were on zero-bound economy and this whole notion of hyperinflation is nonsense


(unless you can show me French troops are about to invade us, take our economic resources and force us to pay war reparations ).



See my previous posts on economics.
Cheers!
Shc

[jgoose71 0]

ShcShc11

No.
We had borderline DEFLATION and not inflation.
Inflation must be measured based on price excluding energy and food.

We BARELY pumped sufficient money to fill the 2008 Lehman Brother gap of 2.5 trillion $. Our 10 years bond are at an all-time low indicating that we need to put MORE money into the economy in order to have a normal economy.

Remember that we were on zero-bound economy and this whole notion of hyperinflation is nonsense


(unless you can show me French troops are about to invade us, take our economic resources and force us to pay war reparations ).



See my previous posts on economics.
Cheers!
Shc

I had to read your post a couple of times. I think you are getting a few thing mixed up. Let me see it I can clear it up:

Inflation of the dollar has never stopped as far as I can remember. If you see the price of beer go up, that is inflation. Remember, this thread is primarily on the worth of the dollar.

When the market crashed in mid 2005-2006, what we had was "Stagflation." Which was inflation of the dollar at a rate above the GDP of the U.S. This was a clear sign of Deflation of the economy, not the dollar. The dollar was still inflating.

Our "Zero-Bound economy" means that the Fed has set interest rates as zero or near zero. The Fed controls the interest rates based on the economy to keep a slow and steady growth. Not the other way around. The wall street does not control the interest rate.

The "Saving of the Economy" by the Obama administration happened like this:

The Fed reduced the interest rate to zero, so the rich could borrow money cheap to save wall street. This kept the confidence in the dollar strong so the world would not dump the dollar as the world reserve currency and help check inflation.

Because the dollar is retaining it's value like no other currency is able to because of it's special status, the Fed can now continue to print money and hand it out to the poor via welfare programs.

Eventually, printing money at this rate will saturate the world with the dollar. When the world economies have enough dollars to equal their GDP's, or they stop trading in the dollar, our unique status will be used up. Inflation will take off again and the poor's handouts won't cover their cost of living any more.

Any nation that hopes to maintain at least a break even economy must produce at least as much as it consumes. It's really that simple.

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[jgoose71 0]

JerryBaumchen

Hi 71,

Quote

It costs Intel $1 billion more to build a factory in the United States than it does in China

Intel has a number of factories located in Hillsboro, OR; just down the road from me. And they are currently building more.

http://www.intel.com/content/www/us/en/jobs/locations/united-states/sites/hillsboro.html

They are the largest employer in this state.

JerryBaumchen

I know, good on them. If you read the full article I linked above you will see that they made that conscious decision.

They did that because they can charge more because they provide a product that people associate with quality, compatibility, and being cutting edge. In difference to, say, AMD...

Unfortunately this doesn't work all through the market place. If you want a plane white t-shirt, people typically go to the cheap section of the store, where everything is made in china.

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[kelpdiver 2]

jgoose71

***

Total nonsense on the 93T. Trade deficit != debt. They hold less than one trillion in Treasuries.

No, not nonsense. I got that number from the US department of commerce who started tracking trade around 1985...
http://www.census.gov/foreign-trade/balance/c5700.html
While the entire debt may not be in treasuries, they have a vast expanse of the U.S.'s former wealth in their banks.


Again - utter nonsense. How many people would prefer to live in China than in the US? BTW, why pretend you were seeking other opinions when you created this poll/thread?

Quote

And keep in mind, while the Chinese record on human rights is abysmal at best, their financial system isn't that bad. The average joe is not a crook, just the politicians. As I stated earlier, they keep their currency in check by not publicly trading it.

More fantasy land. In the absence of any enforcement, the average joe is quite the crook. Investing in China remains a crapshoot because of it. And we're ignoring the complete disregard for IP and just talking about financial irregularities.

[kelpdiver 2]

Iago

I like a different inflation/COL measure called the 'six pack index.' I go to the standard supermarket and see what they're charging for a six back of Budweiser.

Does that factor in the change in quality since InBev took over and started "cost cutting." I recall someone recently trying to file a class action suit as the ABV dropped 10%, and I understand they're using cheaper water sources and hops as well.

(though speaking as an IPA drinker - how could one discern a drop in flavor?)

Energy is generally a poor measure of a nation's inflation as its pricing is driven by global demand, irrespective of what's going on internally. It's certainly relevant to consumer spending power.

Food, otoh, is a better measure as not all products travel as well as oil. But with so many price supports and subsidies, it's hard to track real change. And if a bad storm ruins the OJ harvest and prices triple, again is that a meaningful measure of the national economy's performance?

Although if including food could motivate the feds to end our terrible corn+ethanol policy, it would have a great benefit to nearly all of us.

[swisschris62 0]

Intel built a HUGE factory in Chandler Az recently...

[Bignugget 0]

jgoose71

***
No.
We had borderline DEFLATION and not inflation.
Inflation must be measured based on price excluding energy and food.

We BARELY pumped sufficient money to fill the 2008 Lehman Brother gap of 2.5 trillion $. Our 10 years bond are at an all-time low indicating that we need to put MORE money into the economy in order to have a normal economy.

Remember that we were on zero-bound economy and this whole notion of hyperinflation is nonsense


(unless you can show me French troops are about to invade us, take our economic resources and force us to pay war reparations ).



See my previous posts on economics.
Cheers!
Shc

I had to read your post a couple of times. I think you are getting a few thing mixed up. Let me see it I can clear it up:

Inflation of the dollar has never stopped as far as I can remember. If you see the price of beer go up, that is inflation. Remember, this thread is primarily on the worth of the dollar.

When the market crashed in mid 2005-2006, what we had was "Stagflation." Which was inflation of the dollar at a rate above the GDP of the U.S. This was a clear sign of Deflation of the economy, not the dollar. The dollar was still inflating.

Our "Zero-Bound economy" means that the Fed has set interest rates as zero or near zero. The Fed controls the interest rates based on the economy to keep a slow and steady growth. Not the other way around. The wall street does not control the interest rate.

The "Saving of the Economy" by the Obama administration happened like this:

The Fed reduced the interest rate to zero, so the rich could borrow money cheap to save wall street. This kept the confidence in the dollar strong so the world would not dump the dollar as the world reserve currency and help check inflation.

Because the dollar is retaining it's value like no other currency is able to because of it's special status, the Fed can now continue to print money and hand it out to the poor via welfare programs.

Eventually, printing money at this rate will saturate the world with the dollar. When the world economies have enough dollars to equal their GDP's, or they stop trading in the dollar, our unique status will be used up. Inflation will take off again and the poor's handouts won't cover their cost of living any more.

Any nation that hopes to maintain at least a break even economy must produce at least as much as it consumes. It's really that simple.


Not what is happening.

Inflation is driven by the money supply, but more specifically the money in circulation.

Take a look at the Feds balance sheet and you will start to get a better idea of why we don't see the inflation you are so worried about.

the vast majority of the money that has been added to the system has stayed inside the banks. If it never gets outside the central banking system, its very easy to control the inflation problem.

The Fed isn't handing it out to poor people, they are buying MBS for the most part, and banks are holding tons in reserve, for which they are paid interest by the Fed.

When the amount of cash held on reserve starts to approach 2007 levels again, then we can start to talk about inflation risk.

As a side note, inflation is preferable to deflation, and is a by-product of stable growth...and is something the Fed keeps a very close watch on.

The dollar will not lose status as the reserve currency in our lifetime.

Also, USA does not actively control exchange rates like China does for example. The US central bank (the fed) has decided to focus on domestic interest rates instead. By controlling those rates, they do affect exchange rates, but not directly. China does the opposite. China NEEDS dollars. They need them so they can depreciate their currency and remain globally competitive. China has a fixed exchange rate for a number of reasons, global competitiveness, increased security for foreign investment are a couple big ones, but their domestic interest rates are highly volatile because of this. the way China controls their exchange rate is through FX. The US is more focused on stable domestic interest rates.

Here is a couple Fed balance sheets to show you what I mean.

Current

http://www.federalreserve.gov/releases/h41/current/h41.htm

See the cash in circulation at 1,204,496 M

Reserves held at the Fed 2,278,603 M

and in 2007


http://www.federalreserve.gov/releases/h41/20071129/

You see cash in circulation of 821,992 M

Reserves held at the fed of 8,887 M

So while the money supply has increased, the vast majority of that money has never left the Fed, and as such is extremely easy to control.

[JerryBaumchen 1,048]

Hi 62,

Quote

Intel built a HUGE factory in Chandler Az recently...

And I hope that they keep on doing so. Those are fair paying jobs.

JerryBaumchen

[jgoose71 0]

kelpdiver

******

Total nonsense on the 93T. Trade deficit != debt. They hold less than one trillion in Treasuries.

No, not nonsense. I got that number from the US department of commerce who started tracking trade around 1985...
http://www.census.gov/foreign-trade/balance/c5700.html
While the entire debt may not be in treasuries, they have a vast expanse of the U.S.'s former wealth in their banks.


Again - utter nonsense. How many people would prefer to live in China than in the US? BTW, why pretend you were seeking other opinions when you created this poll/thread?

Quote

And keep in mind, while the Chinese record on human rights is abysmal at best, their financial system isn't that bad. The average joe is not a crook, just the politicians. As I stated earlier, they keep their currency in check by not publicly trading it.

More fantasy land. In the absence of any enforcement, the average joe is quite the crook. Investing in China remains a crapshoot because of it. And we're ignoring the complete disregard for IP and just talking about financial irregularities.

Yes, I wanted to know what people thought was going to happen to the dollar. Trade deficit is one of the factors that effect it. You can either choose to believe what the U.S. department of Census puts out, or you can claim it's a government lie. The choice is yours.

And no, I don't want to live in China. Unlike a lot of Liberals, I don't believe chairman Mao is a hero.

I do believe that a very harsh and corrupt government though will keep it's people in line. The average person will not step out of line for fear of repercussions.

When i was in Iraq, a local I befriended told me "Things were better under Sadam. When he was in power, there was only one crook. Now that he is gone, everyone is a crook."

Think about that for a while.

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[jgoose71 0]

Bignugget

******
No.
We had borderline DEFLATION and not inflation.
Inflation must be measured based on price excluding energy and food.

We BARELY pumped sufficient money to fill the 2008 Lehman Brother gap of 2.5 trillion $. Our 10 years bond are at an all-time low indicating that we need to put MORE money into the economy in order to have a normal economy.

Remember that we were on zero-bound economy and this whole notion of hyperinflation is nonsense


(unless you can show me French troops are about to invade us, take our economic resources and force us to pay war reparations ).



See my previous posts on economics.
Cheers!
Shc

I had to read your post a couple of times. I think you are getting a few thing mixed up. Let me see it I can clear it up:

Inflation of the dollar has never stopped as far as I can remember. If you see the price of beer go up, that is inflation. Remember, this thread is primarily on the worth of the dollar.

When the market crashed in mid 2005-2006, what we had was "Stagflation." Which was inflation of the dollar at a rate above the GDP of the U.S. This was a clear sign of Deflation of the economy, not the dollar. The dollar was still inflating.

Our "Zero-Bound economy" means that the Fed has set interest rates as zero or near zero. The Fed controls the interest rates based on the economy to keep a slow and steady growth. Not the other way around. The wall street does not control the interest rate.

The "Saving of the Economy" by the Obama administration happened like this:

The Fed reduced the interest rate to zero, so the rich could borrow money cheap to save wall street. This kept the confidence in the dollar strong so the world would not dump the dollar as the world reserve currency and help check inflation.

Because the dollar is retaining it's value like no other currency is able to because of it's special status, the Fed can now continue to print money and hand it out to the poor via welfare programs.

Eventually, printing money at this rate will saturate the world with the dollar. When the world economies have enough dollars to equal their GDP's, or they stop trading in the dollar, our unique status will be used up. Inflation will take off again and the poor's handouts won't cover their cost of living any more.

Any nation that hopes to maintain at least a break even economy must produce at least as much as it consumes. It's really that simple.


Not what is happening.

Inflation is driven by the money supply, but more specifically the money in circulation.

Take a look at the Feds balance sheet and you will start to get a better idea of why we don't see the inflation you are so worried about.

the vast majority of the money that has been added to the system has stayed inside the banks. If it never gets outside the central banking system, its very easy to control the inflation problem.

The Fed isn't handing it out to poor people, they are buying MBS for the most part, and banks are holding tons in reserve, for which they are paid interest by the Fed.

When the amount of cash held on reserve starts to approach 2007 levels again, then we can start to talk about inflation risk.

As a side note, inflation is preferable to deflation, and is a by-product of stable growth...and is something the Fed keeps a very close watch on.

The dollar will not lose status as the reserve currency in our lifetime.

Also, USA does not actively control exchange rates like China does for example. The US central bank (the fed) has decided to focus on domestic interest rates instead. By controlling those rates, they do affect exchange rates, but not directly. China does the opposite. China NEEDS dollars. They need them so they can depreciate their currency and remain globally competitive. China has a fixed exchange rate for a number of reasons, global competitiveness, increased security for foreign investment are a couple big ones, but their domestic interest rates are highly volatile because of this. the way China controls their exchange rate is through FX. The US is more focused on stable domestic interest rates.

Here is a couple Fed balance sheets to show you what I mean.

Current

http://www.federalreserve.gov/releases/h41/current/h41.htm

See the cash in circulation at 1,204,496 M

Reserves held at the Fed 2,278,603 M

and in 2007


http://www.federalreserve.gov/releases/h41/20071129/

You see cash in circulation of 821,992 M

Reserves held at the fed of 8,887 M

So while the money supply has increased, the vast majority of that money has never left the Fed, and as such is extremely easy to control.

You see part of it, but you don't see all of it. Yes, the Fed is giving the money to the banks, so the banks can make cheap loans to business to keep them and Wallstreet afloat. This is a bail out of the rich so the world doesn't loose faith in the dollar.

Keep in mind, the interest rates are below inflation rates. Banks sitting on money is banks loosing money.

Also remember, we are a consumer nation. The cash levels are dropping because we are trading it away to foreign nations for goods. So we just print more and keep giving it away. Last year we printed over a trillion dollars, and then traded it to foreign countries.

Any other country would require something to back up there currency, whether it be goods or services. We do not because we are the U.S. of A. and it's my opinion (along with anyone else, it seems, that has dove head long into the market for a while) that it's going to eventually bite us in the ass. We still have some time to change course, but I doubt we will. It's only a matter of time until we are just like Greece.

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[Bignugget 0]

Well I am glad you see all of it, being as you just started trying to learn.

You are probably right, 2 years away from being Greece.

I had no idea we were the only nation with a fiat currency, I am glad you mentioned that. I am getting rid of my dollars ASAP and buying a currency that is asset backed.

Do you have a good recommendation for me?? Wiki says NO ONE uses the gold standard in 2013?????? WTF!@#@!#

[billvon 2,400]

>It costs Intel $1 billion more to build a factory in the United States than it does in
>China -- and it is not because of cheap labor. Ninety percent of the difference
> comes from the Chinese government providing Intel with capital grants, equipment
> grants, tax holidays and incentives.

Ah. So our problem is not enough government involvement in our industries.

[jgoose71 0]

Bignugget

Well I am glad you see all of it, being as you just started trying to learn.

You are probably right, 2 years away from being Greece.

I had no idea we were the only nation with a fiat currency, I am glad you mentioned that. I am getting rid of my dollars ASAP and buying a currency that is asset backed.

Do you have a good recommendation for me?? Wiki says NO ONE uses the gold standard in 2013?????? WTF!@#@!#

Whoooo, calm down there...

We are not the only nation that is on the Fiat system. We are the nation that's capital is traded as the World reserve currency. That world wide demand is what gives our currency special privileges.

We can get away with printing a Trillion a year, for now. The question that I wondering is how much longer can our government get away with it? Or do you think they can just keep going for ever?

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[Bignugget 0]

Well, as forever as everyone else and then some, yes.

For the above mentioned reasons.

Most of the 'printed' money (im sure you know we dont actually print all that currency) is held in the central bank, under easy control of the central bank.

Currently emerging nations like China and India, to name just a couple, benefit from a strong dollar (relative to their own currency) because it makes exporting more profitable, and helps grow their economies.

Just those things alone should be enough to assuage most of your concerns about hyper-inflation.