Sinergy
Posts: 9383
Joined: 4/26/2004
Status: offline
|
quote:
ORIGINAL: UtopianRanger
It's bad enough if you're an individual and you get into this kind of trouble, but what happens to a nation with the dominant reserve currency in this kind of trouble? Well.... it's creditors eventually decide to cut their losses and divest themselves out of that currency until that currency is virtually worthless because its only relevance is that its tied to massive debt.
I agree with what you have written, UtopianRanger, but if you read books like "The Best Democracy Money Can Buy" and "Confessions of an Economic Hit Man" it becomes fairly obvious why the US Government has done what it has done.
Saddam Hussein, while not a particularly nice man, was not in anybodies cross hairs until he refused to enter into an agreement with the United States similar to the one we have with Saudi Arabia, to whit, a requirement that they sell their oil in US dollars. So he got invaded and presumably if the country ever gets fixed by us, they will sell their oil for US dollars. If we pull out and let somebody else fix it, I suspect it will be sold for Euros, which is one of the few relatively stable currencies on the planet at this point. Say what you want about having resolve to rebuild Iraq, but the only reason Monkeyboy gives a flying whatever about that entire country is the fear that we would have to buy the oil for something that is not dollars.
The Saudis are who they are, but they do know that if they ever try to sell their oil for something other than US dollars, they will go the way of Saddam.
Chavez, in Venezuala, has been basically sitting on his oil, refusing to borrow money from the World Bank (which would make his country a debtor nation subject to having loans called in, etc), and refusing to sell his oil for US dollars. So the media in the United States has now decided this popularly and democratically elected, and much beloved ruler is an evil man who must be overthrown.
In the United States, we no longer have a gold standard, we have an oil standard. The ultimate goal of joining our currencies with Canada and Mexico is to increase the reserve money we can use to stabilize our economy. I will use the loaf of bread analogy posted earlier to describe the problem Monkeyboy and his ilk are having with our currency.
If you have a loaf of bread as your standard, similar to gold or oil, and you print the $1.00 the loaf of bread costs. Your $1.00 bill is worth exactly $1.00 and is tied to the value of the loaf of bread. If you print $5.00 worth of money, your loaf of bread now costs $5.00 since the intrinsic value of the goods you can purchase with it remains stable.
Lets say you print $2.00 worth of currency, and loan Joe $3.00 worth of credit. Again, it now costs $5.00 to buy that loaf of bread since the standard worth holding up your currency (both loaned and printed) has remained the same.
Monkeyboy dropped interest rates specifically to increase the amount of money borrowed, thereby creating inflation in the United States. This is lovely for him, since the $1,000,000,000,000 dollar debt we have to pay, if money is worth 50% what it was before, is now easier to pay off since the net worth of each individual dollar was cut in half.
Of course, then he proceeded to borrow another $1,000,000,000,000 from people like China that we would rather not owe money to. This works until the day the Chinese debt collector shows up at 1600 Pennsylvania Avenue with an order to pay, and forces Monkeyboy to sign a new debt contract requiring payment in something like Euros.
Just me, could be wrong, but there you go.
Sinergy
_____________________________
"There is a fine line between clever and stupid"
David St. Hubbins "This Is Spinal Tap"
"Every so often you let a word or phrase out and you want to catch it and bring it back. You cant do that, it is gone, gone forever." J. Danforth Quayle
|
RE: Our Falling Currency - 
Profile
New Messages
No New Messages
Hot Topic w/ New Messages
Hot Topic w/o New Messages
Locked w/ New Messages
Locked w/o New Messages
Post New Thread