The American Empire Is Bankrupt

nearlynew

bluey890 wrote: »

The economy is designed to work in an inflationary environment.

I know. And it hasn't arisen by accident.

Inflation doesn't happen by accident. It is a deliberate policy designed to steal your money and is a direct result of a debt based money system.

Generali

From the article:

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.”

Interestingly I can't find anything on the FT's website about this article.

Masomnia

nearlynew wrote: »

What, you mean.....................

......................like a bank?


Great idea.

Just don't, whatever you do though, allow them to create money out of thin air.
That just leads to trouble.

A bank! Yes, that'll do it.

Inflation works. It creates an incentive to invest your money, which creates jobs, and leads to competition, which gives better products and services. Without inflation rich dynasties just put all their gold in a vault and do nothing with it. Wealth isn't moved around, and that benefits no one excpet those who had it in the first place.

If you ask me, that's worth the odd blip now and again like we're seeing at the moment.

Masomnia

Generali wrote: »

Interestingly I can't find anything on the FT's website about this article.

Funny, that :rolleyes:

I'm interested, though, Gen, what would replacing the Dollar as a reserve currency actually mean in practical terms? In your view. What would it be replaced with? Are these SDR things that the Chinese apparently want actually workable?

nearlynew

Masomnia wrote: »

A bank! Yes, that'll do it.

Inflation works. It creates an incentive to invest your money, which creates jobs, and leads to competition, which gives better products and services. Without inflation rich dynasties just put all their gold in a vault and do nothing with it. Wealth isn't moved around, and that benefits no one excpet those who had it in the first place.

If you ask me, that's worth the odd blip now and again like we're seeing at the moment.

Inflation is not a pre-requisite for a healthy economy.

Inflation is theft.

Masomnia

nearlynew wrote: »

Inflation is not a pre-requisite for a healthy economy.

No, but it helps.

Inflation is theft.

Mmm, fingers crossed the price of tin-foil hats doesn't spiral out of control.

Generali

Masomnia wrote: »

Funny, that :rolleyes:

I'm interested, though, Gen, what would replacing the Dollar as a reserve currency actually mean in practical terms? In your view. What would it be replaced with? Are these SDR things that the Chinese apparently want actually workable?

You hit the nail squarely on the head - if you're going to get rid of the USD, what will you replace it with? The article dodges the question and it's a biggie. Not so much for Central Bank reserves as that would be easy to rebalance so that fewer dollars are held over time. The real headache is how would you price oil, copper and other commodities?

If it's with a 'basket of currencies', who decides the make-up of the basket? The buyer and seller of the commodities are going to have very different ideas about what should go into the basket. Who rebalances it? How can you borrow it or lend surpluses? Who polices the inevitable attempts to forge it? Whose face goes on the front of the notes (the French won't want anyone except de Gaulle and the Algerians won't be keen on that.....). How do you stop all this extra money being produced causing inflation? Who controls the supply of the money?

Headlines like this are pretty exciting - Wow! It's the End of 90 years of USian Hegemony. If you look into the boring detail behind the story, things are a little more complex.

Sure a policy to replace the USD in international trade is workable in theory. The practice is going to be very, very hard to make work if it ever happens. My guess is that the only way it could happen would be if it was forced to happen by crisis.

nearlynew

Big guns are what have kept the dollar as reserve currency.

Curious_Moose

nearlynew wrote: »

.... debt based money system.

Ah, fractional reserve banking. Create money out of thin air, charge interest on that money, but don't create the interest to pay on the debt. When the money supply stops expanding, the chickens come home to roost.

sabretoothtigger

LydiaJ wrote: »

Not, I think, immobile assets like houses. It's very difficult to sell a house in Britain for anything other than Sterling, or a house in the US for anything other than USD, etc. To take advantage of currency changes you need to be able to buy something in one currency and then sell it in another currency.

If the cash was for spending then buying a house would be bad but if retaining the wealth was the priority then being out of currencies while they change value helps alleviate that risk.

The asset price should adjust to its value in any currency, cash can only relate directly to sterling.
Im sure theres more profitable thing to be done like buy canadian dollar or australian or japan but unless you know those countries or have an interest in assets there its surely a bigger risk then buying something here that is useful