Currency wars

Flight2quality

Rickards, who argues in his new book, "Currency Wars," that government attempts to devalue their currencies and inflate away their debts could set the stage for the mother of all financial crises, complete with a dollar collapse and the breakdown of all civil order.

The book reads in places more like a post-apocalyptic nightmare story than a book on international finance. In Rickards' worst-case scenario, "a person's net worth would consist of those things she can carry on her back."

http://gata.org/node/10711

dealer_wins

That is almost as bad as a 10 mile wide asteroid hitting Earth, and almost as likely to happen

Flight2quality

dealer_wins wrote: »

That is almost as bad as a 10 mile wide asteroid hitting Earth, and almost as likely to happen

Its already happening. There is a race to debase all currencies. The race is to the bottom the first currency to have a crisis is the winner. They are all trying very hard. The first currency to collapse has all their debts wiped out

purch

Its already happening

It's been happening for nearly 100 years.

Under the Gold Standard the GBP/USD exchange rate equated to $4.86

The Gold Standard ended as nations inflated their economies and money supply in preparation for WW1

By the end of WW1 the GBP/USD rate equated to roughly $3.50.

Ever since then there have been repeated attempts to restore monetary order, but all those attempts have failed.

The Gold Exchange Standard dreamt up at the Genoa Conference in 1922 allowed currency to be exchanged only for 400 Troy Oz Bars, which meant it wasn't a real Gold Standard at all. Only the U.S. allowed their currency to be easily redeemed for Gold, but that only lasted until 1934.

At the start of WW2 the GBP/USD exchange rate was set at $4.03.

In 1949 the GBP/USD exchange rate was revalued to $ 2.80 under BW.

The Bretton Woods agreement after WW2 was just the same mistakes of the 1926 Gold Exchange Standard repeated, but with the U.S. as the reserve currency instead of the GBP.

In 1945 the U.S. had over $ 25,000,000,000 of Gold Reserves. By 1968 these reserves had dropped to only $ 9,000,000,000 due to the mechanics of the BW system, that allowed everyone else to devalue and spend USD, that the US had to create for them.

In 1967 GBP was devalued to $ 2.40

Bretton Woods collapsed because even though the price of Gold remained fixed at $ 35, the true value of the USD had collapsed over the 27 year period.

They tried to maintain some semblance of order via the Smithsonian Agreement which "revalued" Gold at $ 38, and later $ 42, but it could never last, and the USD finally collapsed in value during 1973, as it finally caught up with the reality of the hugely inflated money supply.

The Currency War is not a new phenomenon.

The current War has been in progress for close to 100 years, but over history for as long as currency has existed,the war to devalue it has been raging.

Why this muppet thinks that today is somehow different to other times in history is not apparent.

Repapsiyenom

so you disagree with Rickards??

He says the currency wars started in2008. Why do you think you know more than he does?

FTBFun

Repapsiyenom wrote: »

so you disagree with Rickards??

He says the currency wars started in2008. Why do you think you know more than he does?

So you've started not one, but two new logins today? Christ you must be bored.

purch

Whoever it is, doesn't seem to like me :eek:

Euphoria1z

so what happens when the dollar collapses? will they introduce a new currency? will the U.S no longer be the power house it currently is? when do we think this is likely to happen?

matbe

Euphoria1z wrote: »

so what happens when the dollar collapses? will they introduce a new currency? will the U.S no longer be the power house it currently is? when do we think this is likely to happen?

4th March 2012 @ 10.22 am preciseley.

sabretoothtigger

dealer_wins wrote: »

That is almost as bad as a 10 mile wide asteroid hitting Earth, and almost as likely to happen

Its more likely then that unfortunately. Thanks to one being down to natural events and the other is dependent on the ingenuity of man for self destruction

Rickards is more credible then he first appears though it sounds wild its feasible scenarios he talks through.
A fair few interviews are online with him over the years

so what happens when the dollar collapses? will they introduce a new currency? will the U.S no longer be the power house it currently is? when do we think this is likely to happen?

I imagine its not that far from what happens when the sterling collapses. Its pretty much done that over the last 100 years, I guess it wasnt that dramatic.

The world will switch to other forms of exchange, currently its based around dollars but it used to be sterling in Queen Vic's day

purch

The world will switch to other forms of exchange, currently its based around dollars but it used to be sterling in Queen Vic's day

Certainly.

Everything is relative, and when you sell something, you will be buying something else.

The need for an anchor or reserve, to value everything else against is paramount. There hasn't been a true anchor for nearly 100 years, and the manufactured anchors of the last century have been failures.

In the period of the Gold Exchange Standard, the British, due to our arrogance and desire to cling to our imperialistic past valued GBP at it's old Gold Standard value of $ 4.86, when in reality it was worth no more than $ 4.00 or maybe less. Under this scheme GBP was the reserve currency, but as it was so overvalued compared to everything else, anyone holding overvalued GBP wanted to exchange it for undervalued Gold. When the UK said no way, the whole thing collapsed.

Exactly the same thing happened with the Bretton Woods fantasy. This time USD was the reserve, but this time it was hugely undervalued against all other currencies at the outset. This was deliberate, as it drove demand for USD, which was essential for the Marshall Plan to work effectively. However, it was inevitable that the USD would become overvalued in time, which along with other nations devaluing their currencies happened during the late 1960's. Eventually the US Gold reserves were falling too fast, as nations converted their overvalued USD to undervalued Gold, and convertability to Gold was stopped.

Without a realistic reserve to value currency against, there will be nothing to stop nations devaluing their currencies ad infinitum. :eek: