IMF calls for dollar alternative

By Ben Rooney, February 10, 2011: 4:37 PM ET


NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system. SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies...

Read more: IMF discusses plan to replace dollar as reserve currency - Feb. 10, 2011

When the International Monetary Fund calls for replacement of the dollar as the world's reserve currency there can be no denying that this will ultimately happen. What does that mean for Americans? It means that the cost of living will increase and the American standard of living is going to decline. No ifs, ands, or buts about it.

Crude oil is priced in US Dollars. If it ceases to be priced in dollars the price of gas at the pump will skyrocket.

Inflation is coming. Look at fuel and food prices.

Egypt Crisis Puts Spotlight on Weakness in US: El-Erian

"The lack of a flight to the US dollar and Treasurys during the crisis in Egypt is a warning sign that investors are moving away from traditional American safety plays, Pimco's Mohamed El-Erian told CNBC...

"Had you asked me 19 days ago what happens to the dollar if we have the sort of developments we had, I would have told you the dollar would be stronger," said El-Erian, co-CEO at the company that runs the largest bond fund in the world. "With the exception of three days, the dollar has weakened during that period. You are seeing a reassessment of the standing of the US dollar and the US Treasury market has the flight to safety, the flight to quality..."

Read more: News Headlines


The Reckoning for the Dollar is coming.

I think this whole idea of replacing the dollar is silly. What will it be replaces with.....the Euro? The Yuan? The Ruble? One of those is having worse problems than the dollar, and other is control by valuation cheaters.

If you don't own a wheel barrow you might want o buy one now, because it take one full of dollars to buy a loaf of bread if this takes place.

This has more to do with the printing of money for failed bailout schemes than any other single act.

2012 is going to be the most important election in our history, and if we fail to dump Obama and get rid of the idea of redistribution we are screwed for ever.

American said:

I think this whole idea of replacing the dollar is silly. What will it be replaces with.....the Euro? The Yuan? The Ruble? One of those is having worse problems than the dollar, and other is control by valuation cheaters.

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Imo the US Dollar will ultimately be replaced by a basket of currencies similar to Special Drawing Rights. The bottom line is that international investors can't count on the American Govt. or economy any more.

Albert Di Salvo said:

By Ben Rooney, February 10, 2011: 4:37 PM ET


NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.

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Thanks George W. Bush, we couldn't have done it without you.

hazlnut said:

Thanks George W. Bush, we couldn't have done it without you.

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Fault lies with so many that their numbers are legion. The decline of the US Dollar will be felt most fiercely by the young.

Albert Di Salvo said:

When the International Monetary Fund calls for replacement of the dollar as the world's reserve currency there can be no denying that this will ultimately happen.

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I agree. Ultimately it is inevitable that the dollar will be replaced by a basket of currencies. I don't see this as a bad thing though...it means that poorer countries are becoming more wealthy and are developing their economies to the point where they truly have some international clout. American declinism is highly overrated...the US is improving, just not as quickly as developing countries.

Albert Di Salvo said:

What does that mean for Americans? It means that the cost of living will increase and the American standard of living is going to decline. No ifs, ands, or buts about it.

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How do you figure?

Albert Di Salvo said:

Crude oil is priced in US Dollars. If it ceases to be priced in dollars the price of gas at the pump will skyrocket.

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If crude oil ceases to be priced in US dollars, then there will be less demand for US dollars. This will reduce the price of our currency relative to others, causing an increase in the price of our imports (including oil) and a decrease in the price of our exports. That's not necessarily a bad thing. Sure, it would cause some problems in the short term, but in the long term the main effect is to reduce our dependence on oil and accelerate the R&D of alternative energies. It would cause some short-term inflation since most prices partially include the cost of energy...but it would also result in a short-term economic boom as our international trade soared.

Anyway, the dollar isn't going to be replaced as the world's reserve currency for many years.

Albert Di Salvo said:

Inflation is coming. Look at fuel and food prices.

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All the money we give to corn farmer, we should get have the supermarket for free.

Kandahar said:

I agree. Ultimately it is inevitable that the dollar will be replaced by a basket of currencies. I don't see this as a bad thing though...it means that poorer countries are becoming more wealthy and are developing their economies to the point where they truly have some international clout. American declinism is highly overrated...the US is improving, just not as quickly as developing countries.



How do you figure?

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There is a symmetry in nature. Life is a zero sum game imo. There are winners and losers. If foreigners get American money from oil sales they get richer and America gets poorer. You and I have discussed this before my friend.

Albert Di Salvo said:

There is a symmetry in nature. Life is a zero sum game imo. There are winners and losers. If foreigners get American money from oil sales they get richer and America gets poorer. You and I have discussed this before my friend.

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Life is not a zero sum game; the global standard of living is far better today than 50 years ago. Most places are far richer, and even the ones that aren't are generally stagnant rather than worse off. Our wealth does not come at the expense of others. Mercantilism was discredited long ago.

To illustrate: If I'm a farmer and you're a teacher, and you agree to educate my kids in exchange for enough food for the year, which of us "wins" the economic exchange? We both do.

Kandahar said:

Life is not a zero sum game; the global standard of living is far better today than 50 years ago. Most places are far richer, and even the ones that aren't are generally stagnant rather than worse off. Our wealth does not come at the expense of others. Mercantilism was discredited long ago.

To illustrate: If I'm a farmer and you're a teacher, and you agree to educate my kids in exchange for enough food for the year, which of us "wins" the economic exchange? We both do.

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The global standard of living is better now than it was fifty years ago? Do you realize that the era you have just outlined ran concurrently with the era of Pax Americana?

Albert Di Salvo said:

The global standard of living is better now than it was fifty years ago?

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Yes, absolutely. Fifty years ago, most of the world lived in desperate poverty. Now that's mainly confined to parts of Sub-Saharan Africa and South Asia...and the latter is rapidly lifting itself out of poverty. Western countries are not improving their standards of living nearly as quickly...but they ARE improving or at least not getting any worse.

Albert Di Salvo said:

Do you realize that the era you have just outlined ran concurrently with the era of Pax Americana?

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It also ran concurrently with the era of widespread economic growth, the explosion of international trade, and the development of many new technologies.

Kandahar said:

Yes, absolutely. Fifty years ago, most of the world lived in desperate poverty. Now that's mainly confined to parts of Sub-Saharan Africa and South Asia...and the latter is rapidly lifting itself out of poverty. Western countries are not improving their standards of living nearly as quickly...but they ARE improving or at least not getting any worse.



It also ran concurrently with the era of widespread economic growth, the explosion of international trade, and the development of many new technologies.

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There is some truth in that. However, the fastest and greatest rate of economic growth, elimination of poverty and increase in education has occurred during the last thirty years under the auspices of the Chinese Communist Party. They manipulated globalization to achieve their objectives.

The dollar has been on the decline for a while IMO. It should be replaced with a basket of currencies as it helps to lower the ripple effects of what happens if the US economy screws up.

So SDR's are essentially an aggregate of participating members currency valuation. My question is: An aggregate of what, exactly?

Tim-

Hicup said:

So SDR's are essentially an aggregate of participating members currency valuation. My question is: An aggregate of what, exactly?

Tim-

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It will be an Aggregation of Pretense with everybody participating in the charade until some point in the future when some polity distinguishes itself and provides a currency that is universally respected.

I think even the North Koreans have stopped forging $100 Supernotes.

Councilman said:

If you don't own a wheel barrow you might want o buy one now, because it take one full of dollars to buy a loaf of bread if this takes place.

This has more to do with the printing of money for failed bailout schemes than any other single act.

2012 is going to be the most important election in our history, and if we fail to dump Obama and get rid of the idea of redistribution we are screwed for ever.

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Yes because November 2008 was the beggining of the American decline :coffeepap

You wanna know why this is happening? Why you're power is declining? It's not Obama's fault, oh no, no if you wanna know why this is happening, why you will not be the only number 1 anymore, look in the mirror.

Look at the country you have created, a country where entire families are the size of busses, and where the idea of giving kids at school healthy meals is considered "communism and control" by the talking heads you all bought into, polarising your country into a "Us and Them" mentality that will ultimately destroy you. No longer is it acceptable to believe in an idea, without subscribing to all that negatives that idea MIGHT entail. But the other side of the coin is, the majority of Americans, DO NOT CARE. They're too busy jacking off to internet porn, reading about brangelina, or simply banging the secretary to care, all while the world goes to hell in a hambasket, and they all get home just in time to catch the 6 o clock news where some jackass tells them that either Bush and Obama are evil doers who are destroying the country...

Oh no, the fault doesn't lie with Bush, Reagan, Obama, Clinton or even Mr. Magoo, nope. The fault is yours.

I don't wanna be an American basher.

I have to say all this to put things in perspective, and I will try and do so now.

Many say America was built on the foundations of freedom and liberty, kinda fail to mention the genocide of a native people...

If a country were established today in such a manner, the world would not accept it. So you better remember that, while at the same time remembering this, it is done. The past is the past, America has done wonderful, good, but also terrible things. The only country to date to use a nuclear weapon against another country, and at that, against two civillian cities. Now I'm not gonna argue about whether it was the right thing to do, that's for another day.

But America is also a beautiful place, with beautiful people. I love visiting, you are a good people, I do not believe America is a force for bad in this world, but just like people do in their every day lives, sometimes you **** up. So what? We all do.

But the idea that a country that has stood for so long, against so much, could be brought down by one president, is not only absurd, but shows a complete lack of faith in your own country, and countrymen.

When the market crashed in the 20's, do you not think people went "That's it".

When Pearl Harbour was attacked, and everything prior to Midway, some people thought "that's it".

When the Capital was attacked, and the white house burned, do you not think some people went "that's it".

If you wanna say "that's it". Feel free to do so. But all that means is, you will talk yourself into failure, and failure, is not something America was built on.

This has been Jets incorrent rant of the day, perhaps some of you will find something in this.

hazlnut said:

Thanks George W. Bush, we couldn't have done it without you.

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You have sources to back this up, right?

Councilman said:

If you don't own a wheel barrow you might want o buy one now, because it take one full of dollars to buy a loaf of bread if this takes place.

This has more to do with the printing of money for failed bailout schemes than any other single act.

2012 is going to be the most important election in our history, and if we fail to dump Obama and get rid of the idea of redistribution we are screwed for ever.

Click to expand...

Oh my, the sky is falling. Wow, I blew off a day at the office to grab a little skiing and the world ends. I knew I would pay a price for cheating on my responsibilities.

The dollar falling in value is not a bad thing. Most countries respond to local recession by devaluing the currency. It encourages foreign investment and keeps jobs at home. There isn't anything that we are importing that either we can not live without or it would be good for us to find alternatives.

That all said, other than the English Pound, the dollar remains the most dependable of all international currency for a variety of reasons.

The American decline began long before September 2008. When I consider things in retrospect the decline began when America first became irreparably divided.

Kandahar said:

Life is not a zero sum game; the global standard of living is far better today than 50 years ago. Most places are far richer, and even the ones that aren't are generally stagnant rather than worse off. Our wealth does not come at the expense of others. Mercantilism was discredited long ago.

To illustrate: If I'm a farmer and you're a teacher, and you agree to educate my kids in exchange for enough food for the year, which of us "wins" the economic exchange? We both do.

Click to expand...

If only you knew that the Chinese are playing a new version of the mercantlist game... too bad too many people are too blind to recognize this...