Gladiator

What if the US devalues the dollar?

The Gold standard was abolished by the US in 1971.

When will the US devalue the Dollar? Where will your money be when the US Devalues the Dollar? Would you be better off transferring your Savings money to a Euro based bank, before the US devalues the US Dollar?

Can you cite an example of a backfire of oil producers switching to a more stable currency?

The reality is that the US Fed has over-printed the dollar to support an unbalanced budget caused by financing tax breaks for the rich, and programs to be popular, like Education and Perscripton drug plans, and the Iraq-Afghanistan War

Euros are safer than the Dollar. This is not an Iranian plot to hurt the US. It is a plot by savvy oil producers not to get stuck with US Dollars, when the US devalues the US Dollar.


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oldreliable67

Ummmm, how does a country devalue its currency when it trades freely without any exchange rate controls whatsoever? The value of the dollar is determined daily in the marketplace.

At its simplest, the value of a currency is determined by the success (or lack thereof) of a country's fiscal and monetary policies. These successes (or failures) are reflected in the old currency market axiom that has yet to be dis-proven over the long run: "Strong economy, strong currency; weak economy, weak currency."

Gladiator

Dear Old Reliable,

The tenor of my remarks was unintentionally exaggerated.

I was thinking in terms of pre-1971, in which the US could simply lower the amount, or weight, of Gold or Silver, that the US Treasury, in theory, would repay for one US Dollar. So you are correct that the US cannot simply devalue the US Dollar, by a policy decison, on a single day. I therefore retract the concept of a US Government devaluation of the US Dollar at a set date or time.

However, over time:

"It is clear U.S. economic 'policy' actually encourages a continual devaluation of the international value of the very currency in which its citizens earn and save - - the U.S. dollar. It is clear this 'policy' transcends both political parties. What is this policy: it is one that encourages consumption (instead of savings) beyond the earnings and beyond ability to manufacture its own goods - - meaning it encourages expanding debt and assets owed to foreign interests, and it does so by pushing extra low interest rates to encourage debt based consumption and inflation"

Grandfather Foreign Exchange Rate Report - summary page - by MWHodges


As Illustrated:


Inflation Continues:

Grandfather Inflation Report - by MWHodges



US Dollar savings are eroded by increasingly higher US government debt:

America's Total Debt Report - summary page - by MWHodges


and US Dollar savings are eroded by artifically low interest rates set by the US Federal Reserve:

"Beginning in 2001, the Federal Reserve reduced short-term interest rates 13 times, dropping the federal funds rate 84% (from 6.5% to a 1% rate, the lowest in generations) and injected massive amounts of liquidity into the monetary system - - all aimed at subsidizing existing debt in all sectors, and promoting even more debt, much more debt - - believing that the U.S. economy and its government cannot function without more and more debt injections, just like a drug junkie needs higher doses each week.

These actions devastated interest income from savings upon which seniors depend to pay their cost of living in food, property taxes, prescription drugs, dental care, etc. Such causes health and economic angst for many seniors. (Although the funds rate moved to 2% recently, its still down 70%)."

FSO Editorials: "Financial Terrorism Against Seniors" by Michael W. Hodges 11/20/2004

Michael W. Hodges

Grandfather Economic Report - Home Page - by MWHodges

I looked for info to discredit Michael Hodges, but just found quotes for his authority.

Market Traders Report.

The Market Traders Message Boards :: Mish's Global Economics Blog Discussion

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Red_Dave

The U.S military is already struggleing in Iraq and Afganistan what makes yout think it could take on one of the largest armys in the world at the same time?

oldreliable67

The same way that it took on another of the world's largest armies. At the time, Saddam's army was rather large in '91, and look what happened to it. Remember the vaunted Republican Guards divisions? Of course, we didn't have commitments in Iraq and Afghanistan at the time, but if it became necessary, there is no doubt that US military power could overwhelm Iran's military. Not in a war that resulted in a post-conflict occupation, mind you, we admittedly don't have the manpower for that, nor do we have any strategic interest in doing so. Nonetheless, the US military is still capable of inflicting extreme devastation should the need arise, even with our Iraq and Afghanistan commitments.

NoMoreDems-Reps

All the more reason to push hard on new Alternative Fuel car industry!

http://www.debatepolitics.com/war-te...terrorims.html

Up, up and away – the hydrogen car is here - Times Online

Gladiator

Dear No More Dems or Reps,

The problem of hydrogen cars is that additional Hydrogen is made from propane. If you are getting Hydrogen from hydrolysis, from clean electricity, then hydrogen cars make environmental sense. Why not just burn propane, instead of Hydrogen? Mercedes has had test Hydrogen cars for years.

US Government investments have developed Hydrogen gas stations, but propane is safer and cheaper. After cracking off the Methane from Propane, to make Hydrogen, what will be done with the left over Methane? It will be sold and burned, so the C02 will go into the air anyway. So the Carbon will be going into the atmosphere anyway, why not just be honest, and burn the propane directly in vehicles?

The economic question is how can a pricing structure be created to actaully make Hydrogen affordable, or realistically competitive in true price?

Similarly, ethanol, takes 1 2/3 gallons to make one gallon of Ethanol.

Ethanol

Ethanol only makes sense because of US Government subsidies for making Ethanol.

Another Dilemna is that one way to make Hydrogen more competitive in price, is tax Gasoline at a higher rate. For US security interests, it is better to tax US produced oil at a higher rate, so that foreign oil will be burned first. By conserving oil from US oil fields, national security and independence is increasesd. How can a tax basis for oil be formulated to save US Oil for the future, and just burn foreign oil, that is a less reliable source?


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American

Maybe, but it's even better politics. But who cares really?

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It's Obama's fault!

Hundebolg

In fact the idea of pulling out of the dollar is as old as the euro itself and has huge democratic support in the middle east. Saddam Hussein was one of the big proponents of that idea, another important reason why he had to be eliminated. Given the US's state of public finance, economic and social instability, as well as lack of democracy, rejecting the dollar is a good idea. It would force the USA towards democratization and responsible financial (and foreign) policies.

stevenb

Holy ****.

Just when I thought I heard it all, I get another gem from someone.

So let me get this straight, because Sadam Hussein, leader of a sovereign nation... decides to change his oil exports to another currency other than the USD... that gives us a free ride in to take him out?

What about Europe? They switched to the Euro... lets go take them all out....errr.......

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