Hitting the ceiling

I hope that calmer minds will try and steer things in another direction.

A mass selling of dollars would be bad for everyone not just the US, there isn’t much else to turn to -this goes back to the mistakes the US made at Bretton Wood, where the US rejected the Bancor (a type of world currency) as ‘reserve currency’ and instead tried to make the Dollar take its place, which did much damage to the US economy and world trade.

Here is some background –

http://en.wikipedia.org/wiki/Bretton...ayments_crisis

http://www.monbiot.com/archives/2008...-up-this-mess/

So to me the most sensible thing would be after the crisis is to have a new ‘Bretton Wood’ were the mistakes having been learnt, the ideas Keynes proposed were adapted and adopted.

 

Destroying the US$ would be bad for everyone, but in the long term, it would be in the best interest of the world. Well, except for the US, of course. It is inevitable. The question is simply whether or not the world will be able to agree on an alternative world currency, or whether it will be another superpower's currency, which will just lead to the exact same issue all over again when that superpower's economy goes to shit.

But clinging to the US$, trying to keep it as the dominant global currency, keeping other currencies pegged to it rather than physical resources, can not be justified when the US government shows itself to be so inept and is racking up so much debt, applying band aid solution after band aid solution (raising the debt ceiling) while the real problem goes unaddressed.

Had the US leaders been more sensible, the dollar could have lasted much longer. But it was always going to fail, as all world currencies have done before it, and all that follow will surely do unless a far superior system is established.

 

The U.S. dollar(s) are just a pieces of paper with numbers printed on them, by law made legal for the payment of all debts, and unlike gold and silver, can be created with little effort at all.

 

Of course ignoring is also just another form of evasion.

 

Jimmy

Can you clarify?

 

Individual just made note of the bona fide issue. No gold backing. QE ie. keynesian economics is the biggest Ponzi scheme since Socialist Security. that's the real problem. Debt ceiling is nothing. Why should we care about foreigners? Gold is gold.

 

Because you are 300 million living amongst 6 billion, and you trade with them necessarily. You also don't have the gold to back this all up. Do you propose ending all trades with outside countries?

 

Oh RIP you are so boring – all you ever do is assert and there is no point asking you anything about what you say because you haven’t a clue - as your posts make all too clear.

As to Indie, he is a serial evader, who can’t address the many many many outstanding criticisms of his ideas

As to gold maybe you should read up on why it was dropped and here is a hint it again goes back to the bad decisions of the US at Bretton Wood.

 

Pretty much. Isolationism is in our own interest. global interaction has overall resulted in the demise of the American middle class.

 

case in point - not a clue.

 

Sure, super-mod.

 

LOL Yes I’m sure - because I’ve read your posts and they are pretty clueless.

 

What is it that gives you the intellectual authority to be that judgemental?

 

Hi pot. I'd like you to meet my friend kettle....

 

Oh I just read you posts is all and all you ever do is assert and when asked to give more you are clueless. Go and read your own posts and you’d notice it as well.

Zzzzzzzzz and another boring cheap shot from Sig, the man who’s too frightened to debate.



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Come on have either of you the gumption to actually discuss things in a rational or reasonable way?

 

Isolationism will not work and is not practical.

However in the long term I don't see how creating a global currency solves economic collapse scenarios akin to what is happening now.

Keynesian economics work, but once times are good the politics cannot hesitate to raise taxes and start paying back principle debt that was necessary to acquire in the past.

The political environment of the USA is too fickle and they mess up the budget and worry about symbolism to their bases for reelection.

People need to realize and accept that sometimes you lose in politics, meaning you get nothing you want politically this time around.

 

Neither do we have an adequate supply of fiat currency to back up a run on the banks if one were to occur.

 

Gladly.
The US is buried in an insurmountable mountain of debt.
The value of the US dollar has no physical backing, no collateral to account for its value. Fort Knox is obviously a hoax, and even if it wasn't, there wouldn't be nearly enough gold in there to account for every dollar in circulation. The Fed creates money out of thin air, and the lie falls on its own ridiculousness as they raise the debt ceiling over, and over, and over..

Accepting a suitcase full of US dollars for gold in a weight currently valued equivalent to said suitcase, or even a lesser value.. no one in their right mind would make that trade. Unlike all previous dominant currencies, the physical dollar is completely worthless. Roman, Spanish and English coins all had an inherent value as they were made from gold or silver. Indeed, losing their physical gold in trade and the inflation that resulted when they started minting the coins with less precious metals, was a big contributor if not the deciding factor in the fall of the Roman empire.

In order for the dollar to remain the world currency, it needs to prove its credibility. The world won't forever have faith in its value unless something miraculous happens.

It seems we are safe for a few more months as they apparently are raising the debt ceiling. But how long can they go before they default? How long before bankruptcy must be declared? And the ever-present threat of other nations deciding enough is enough and cashing in their $ bonds.

 

Actually , Jimmy , those are good questions. Questions the financial right has been inquiring about for years. Yes, Gold is the answer. NOT more keynesian easement.

 

And the concept of bank-runs, is addressed by the creation of FDIC, and in fact I am a proponent of raising the FDIC insurance requirement to 1M + the rate of inflation for each person.

That right there would solve the fear of bank-runs.