Anyone willing to bet on a devaluation of the dollar when all the debt bubbles burst?

[Kinser79]

(05-21-2016, 05:14 AM)Galen Wrote: The world reserve status of the dollar depends on oil being sold only in dollars.  This is the main reason for the hostility towards Iran.  For those of you who doubt this take a look at the reasons for invading Libya even though Ghaddifi ended his nuclear weapons program.  This is been a one of the main reasons for the recent wars in the Middle East.  Consider for a moment that the Food for Oil program sold oil for Euros.

I'd definitely agree on both Iraq and Libya. It was a major controversy in my circles when I bluntly said that the whole point of messing around with Libya was not Ghaddifi (if they really wanted to just take him out they could do so at any time), rather it had to do with Libyan oil accounts. Wanting to substitute Euro with Gold Dinars as the backing for the CFA franc though would definitely hurt the Euro that is for sure, it would also probably eat into the need for dollar reserves as well.

That being said I don't look for the Euro to take international reserve status, the Germans don't want that, and Germany is the linchpin of the EU.

Quote:Like it or not, all of the recent wars in the Middle East with the possible exception of Afghanistan have been fought to maintain the petrodollar system.

Not surprising.

Quote:Clearly, you are a right smart vertebrate which I can't say about many of the people here.

I view the business media as propagandists just like all other media. In their particular case their job is to get the suckers to buy in before a crash--so it is a good time to sell when they say buy. Occasionally they happen to be wrong but as long as one profits selling short is no big deal.

Quote:Russian and China are buying as much gold as they can.  Putin may be an authoritarian but by the usual Russian standards he is positively benign.  Please keep in mind that Russia is now pricing oil in Rubles which will help to end the petrodollar system.

Certainly explains why the Neo-cons are wanting the US to involve itself in the internal affairs of Ukraine on the side of some right nasty figures.

Quote:  It is not if but rather a matter of when the petrodollar system will end.  While Trumps foreign policy is uncertain in many respect the fact that the neocons support Hillary suggest that if she is elected then the wars will continue.

I believe I said on the old forum at least once that HRC's policy is supported by those same people and as such anyone else would be a better choice.

Quote:Truth is that people like Eric the Obtuse and Odin couldn't care less as long as the current welfare state is maintained which in the face of a collapse of the petrodollar system is unlikely.  The GIs and Lost that I knew were grateful that they wouldn't live to see this day.  They knew it would happen and spoke of it from time to time and I paid attention to what they said.  It has served me well through the years.  Perhaps there are some here who will benefit from their wisdom as well.

The problem is the welfare state is dependent on reserve currency status. Other countries that have welfare states can afford to have them because they import raw materials and export finished goods. Trying to import finished goods and export raw materials and have a welfare state as the same time results in Zimbabwe if you don't have a reserve currency, or Greece if you have a currency that isn't under the direct control of the national government.

Given the current balance of imports to exports any attempt to maintain the welfare state as it currently exists without the petrodollar in place results in hyperinflation. Once the US loses reserve status all those checks suddenly come due all at once.

As for which currency will likely replace the Dollar I expect it will be the RMB, China is already the largest trading country and the second largest economy, though the Rupee is looking pretty good because China's held it's One Child Policy a bit too long. The Chinese seem likely to grow old before they grow rich.