printAs has been lamented on this space time and again, the trashing of the dollar by the Bush/Barack soul mates has resulted in the currency’s demise as “the bedrock of world trade.”
It’s a slow and sad demise: “The latest sign of the ground shifting beneath our feet is [the report by the Independent today] of plans by Gulf states, China, Russia, France and Japan to end their practice of conducting oil deals in US dollars, switching instead to a diverse basket of currencies.”
“It is not hard to see the motivation for oil exporters to move away from the dollar. The value of the US currency has fallen sharply since last year’s meltdown. And fears are growing, in the light of a spiralling US government deficit, that a further depreciation is likely. They do not want to sell their wares in return for a currency with an uncertain future.”
“It is also easy to see why China would like a world trading system that is underpinned by other currencies as well as the dollar. For the past decade Beijing has been recycling the proceeds of its giant national trade surplus into purchases of US government bonds and other dollar-denominated assets. China too stands to make a significant loss if the value of the dollar falls. For China, however, the timing is much more sensitive. Beijing needs to reduce its dollar holdings, but if it does so too quickly it will bring about the very devaluation it fears. This explains why Chinese officials appear to want this transition to take place gradually over the next decade.”
[SNIP]
The usual tele-Demopublicans will depict this economic impetus as an act of political treachery. But what else can these nations do? Fall on their proverbial swords for the US?
Update (Oct. 7): “Stop printing money,” “We don’t care what you think,” and “You’re a moron”: This is a sweet sample of the heckling that greeted Rep. Steve Israel (D-Huntington), during a healthscare townhall meeting. It’s always encouraging when protesters associate a massive new government program with the debt (dah!), the demise of the dollar, and ultimate economic ruin. I know; this seems obvious to readers on this space, but signs that such basic comprehension is spreading are to be celebrated.
All we had to do was be honest and responsible and liberty loving and we could have been the world’s new Swiss bankers. Perhaps we still can.
The solution is liberty; the thing that made America great. Just because Greenspan and Bernanke can’t do money and banking properly does not mean it can’t be done.
We should abolish legal tender laws and allow free banking and money creation. Why don’t we have this already in “the land of the free”? eh?
That’s an excellent call on the reasons that everyone wants it done slowly. And it’s not just China. The Gulf States are holding upwards of a Trillion in Dollars. Russia holds less than others but it still runs into the billions. The writing’s on the wall for all who hold dollars. They all expect to take a loss, it’s just a matter of how much? A slow conversion will will help limit it, but eventually the collapse must come.
The inflationary schemes of the Fed have been well-documented. No one can say they didn’t see the devaluation of the dollar coming or that they don’t understand why it’s losing its value. But they will say that. And they will blame the free market somehow for the dollar’s demise. To statists, freedom is always the problem.
Of course, a mixture of multiple socialistic fiat money is only slightly more secure than one single denomination of paper garbage.
Outside the US, the news reports how the dollar is being devalued, but in the US the president’s popularity is improving because the media is telling the people that the president has fixed the economy. Amazing what?
Robert – isn’t it that when an animal is “fixed” – it cannot reproduce anything? Maybe that is what is meant by Obama “fixed” the economy.
ilana Mercer writes
“It’s always encouraging when protesters associate a massive new government program with the debt (dah!), the demise of the dollar, and ultimate economic ruin. I know; this seems obvious to readers on this space, but signs that such basic comprehension is spreading are to be celebrated.”
Very astute observation , we all must do our part to get the real info out in the public, whether it is talking to your neighbor,calling a talk show, showing your politicians at all levels of Gov. what is really going on ( you might be surprised how little they really know if challenged) it is important now that peeps are waking up, to keep the focus on the policies that have fouled up this Nation and Educate them on the solutions to the problems
http://www.downsizinggovernment.org/
From The FT: “Gold prices continued to surge on Wednesday, hitting a fresh record close to $1,050 a troy ounce”
The attempts to “slowly” drop the dollar as the world’s reserve currency is beginning to fail. The minute the story got out the rush was on. Investors see the writing on the wall and being the last one to leave the dollar isn’t good for one’s financial health. The process will soon be out of anyone’s control.
Myron: A line from the movie ‘Hud’ comes to mind but without getting too earthy, a ‘fixed animal’ normally gains weight and becomes slovenly. Do you see a correlation here. I think I might.
In my reply to Myron above, I was referring to the article “Life in the Oink sector” on the right side of Ilana’s main page and how many new employees Obama has hired since he fixed the economy. Todays Yahoo news though has a much larger joke. They accused the other nations of “attacking the US Dollar. “http://news.yahoo.com/s/politico/20091008/pl_politico/28091” Like it wasn’t our fault that we devalued our money until it was worthless, those evil Middle Easterners did it. Almost dropped my laptop, laughing.