Safest Currency?

Wookster

Generali wrote: »

That trade relies on credit means that countries with big trade deficits will be forced to import less at some point - basically that will be when China stops lending people money to buy from her. That moment is very close as unemployment rises.

Ultimately, trade has to come into balance (as you say) as you can no more finance a trade deficit indefinitely than you can a budget deficit or even a household one (aka spending more than you earn).

That'd be armagedon wouldn't it? How about when China needs to sell US$ to fund some of its own stimulus packages?

Generali wrote: »

I still think that the Euro is the riskier of the three reserve currencies mentioned as there is a big political dimension. Italy has been steadily devaluing since the 1950s to remain competitive, Germany is a strong believer in a strong currency. It's just not possible to reconcile those policies.

Yup - indeed there are very serious problems with the Euro - Germany has worked hard to stay competitive while all of the Mediteranian countries have steadfastly refused to reform. It will have to come to a head at some point.
Withdrawal would be extremely painful wouldn't it?

indianropetrick

purch wrote: »

At least until the "Apocalypse" is upon us......


...which by the sound of that website the loony was linking to will be around about 4.30 this afternoon (GMT not EST !!!)

Purch, I am currently sat in an office in London surrounded by at least half a dozen people who called me exactly the same name 3 years for claiming the UK housing market would inevitably drop by at least 30%. These people are now very sheepish about the issue.

Bounding around names like 'loony' is really just a short cut to thinking. I'd be interested to know why you think I'm a 'loony'. If you think that the article I've linked to has fundamental flaws then I'd be interested to hear your views.

Generali

Wookster wrote: »

That'd be armagedon wouldn't it? How about when China needs to sell US$ to fund some of its own stimulus packages?

Well that's the next step pretty much. My guess is that China will try some stunt like trying to pay people in US dollars or in some kind of secondary currency 'backed' by US bonds.

China is planning to spend (I think) USD500,000,000,000 this year as a stimulus to her economy, basically to mop up young male unemployment in the cities. The rural people will be widely dispersed back to their villages so don't represent a political headache or a risk of rebellion.

Wookster wrote: »

Yup - indeed there are very serious problems with the Euro - Germany has worked hard to stay competitive while all of the Mediteranian countries have steadfastly refused to reform. It will have to come to a head at some point.
Withdrawal would be extremely painful wouldn't it?

It could be worse. At least each country still issues it's own debt.

If Scotland were to break away from the UK, sorting out who owed what would be a nightmare. Do you do it on a per capita basis or a GDP basis or using the Barnett formula in reverse? Or does England as the 'colonial power' take the lot?

purch

If you think that the article I've linked to has fundamental flaws then I'd be interested to hear your views

(which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)

It was written and posted yesterday !!!!

P.S. You really shouldn't be so touchy about being called a loony. If I were you I'd take it as a compliment, but then again I'm not you, which is a blessing.

Generali

purch wrote: »

P.S. You really shouldn't be so touchy about being called a loony.

It would also be correct to say that the poster you refer to doesn't want to be compared to the Canadian Dollar.

jago25_98

Thanks for the info. Did some more searching.

Swiss Banker Tells How Gold-Backed Currency Hinders Wars

Degenerate: What has prompted me to research this is the devaluation of the pound by the Bank of England aka
`Quantitative Easing`.

`This always happens before some kind of major calamity.
So I expect inflation to rise in the same way as it did in Iceland where they are forced to then join the Euro.`


This thread was really supposed to be just finding out which currency is the most independent from things like
Quantitative Easing just for interests sake, because such a place would be least impacted by the global economic situation.
Not really so interested in any of the stuff moving offtopic.

`From what I've found; India, Russia, China, Agentina; all slightly gold backed. Gold, not very platable but appears to be what the world has chosen.`

That's what I found so far.

http://online.wsj.com/article/SB123440593696275773.html

1echidna

Using Monopoly money you can still buy Liverpool Street for £200, must be the safest currency. Back in the real world of course it is all speculation which smarter people than me indulge in and often get it all wrong. Rightly or wrongly I have some exposure to the US dollar and the Japanese Yen banking that these large economies have the most potential dynamism and social cohesion and will ultimately be the engines which get us out of this mess.

purch

It would also be correct to say that the poster you refer to doesn't want to be compared to the Canadian Dollar

To be fair, it was only a month or so ago that he was telling us that the centre of the earth contained a hard boiled egg (or something similar)......so 'loony' is clearly inappropriate.

Generali

jago25_98 wrote: »

Thanks for the info. Did some more searching.

Swiss Banker Tells How Gold-Backed Currency Hinders Wars

Degenerate: What has prompted me to research this is the devaluation of the pound by the Bank of England aka
`Quantitative Easing`.

`This always happens before some kind of major calamity.
So I expect inflation to rise in the same way as it did in Iceland where they are forced to then join the Euro.`


This thread was really supposed to be just finding out which currency is the most independent from things like
Quantitative Easing just for interests sake, because such a place would be least impacted by the global economic situation.
Not really so interested in any of the stuff moving offtopic.

`From what I've found; India, Russia, China, Agentina; all slightly gold backed. Gold, not very platable but appears to be what the world has chosen.`

That's what I found so far.

http://online.wsj.com/article/SB123440593696275773.html

A gold standard isn't without significant risks and short comings of its own. It is useful to have money creation taken out of the hands of the Government. The main problem with an international gold standard is that it means you have effectively a system of fixed exchange rates which is A Bad Thing and carries massive economic and social costs.

Wookster

Generali wrote: »

The main problem with an international gold standard is that it means you have effectively a system of fixed exchange rates which is A Bad Thing and carries massive economic and social costs.

Artificial exchange rates have caused some of the most serious trade imbalances to build up and it seems that there is no incentive for these to start being re-mediated.