Is The Us$ Destined To Collapse?

[Misty]

People seem to have it all wrong with Japan. Japan is a creditor nation with its own debt held domestically. The US is a debtor nation with no debt held domestically other then the treasurys the fed prints money to pay for to keep interest rates down.

Yet Japan's public debt is 170%+ of GDP (placing the country second only to Zimbabwe). No matter who it's owed to, that amount of debt must have some effect on the country's future growth, demand for its currency, etc...

Sokal is right and you are mistaken. it does matter who is indebted to whom!

Sorry that wasn't clear let me try again: Yes, I agree that it matters to whom the debt is owed. What I meant was: Nevertheless that debt exists, and it definitely has an impact on the long term economic outlook for the country. Potentially also an impact on the demand for the country's currency by outside parties--at least indirectly.

[Naam]

People seem to have it all wrong with Japan. Japan is a creditor nation with its own debt held domestically. The US is a debtor nation with no debt held domestically other then the treasurys the fed prints money to pay for to keep interest rates down.

Yet Japan's public debt is 170%+ of GDP (placing the country second only to Zimbabwe). No matter who it's owed to, that amount of debt must have some effect on the country's future growth, demand for its currency, etc...

Sokal is right and you are mistaken. it does matter who is indebted to whom!

Sorry that wasn't clear let me try again: Yes, I agree that it matters to whom the debt is owed. What I meant was: Nevertheless that debt exists, and it definitely has an impact on the long term economic outlook for the country. Potentially also an impact on the demand for the country's currency by outside parties--at least indirectly.

Misty, being a pragmatic, having never attended nor belonged to any "school of economics" i am answering with facts.

take a look at JP¥ vs. the two other major currencies in existence (no offence meant Brits! ). one is USD, the other one is €UR:

[Naam]

People seem to have it all wrong with Japan. Japan is a creditor nation with its own debt held domestically. The US is a debtor nation with no debt held domestically other then the treasurys the fed prints money to pay for to keep interest rates down.

Yet Japan's public debt is 170%+ of GDP (placing the country second only to Zimbabwe). No matter who it's owed to, that amount of debt must have some effect on the country's future growth, demand for its currency, etc...

Sokal is right and you are mistaken. it does matter who is indebted to whom!

I suspect that the currency the debt is denominated in is even more important. Both Japan and the US can repay their debts (not to mention prop up their own stock and other markets), largely in their own fiat currencies.

correct CH! my mistake not to mention that fact.

[Naam]

no need for higher taxes. my fellow Americans ... tell your congressmen to withdraw the boys from Iraq, Afghanistan and where ever they might be hanging around wasting tax dollars by throwing cluster bombs, shooting depleted uranium or wasting cruise missiles for 1.8 million dollar a piece to kill a wedding party and/or maim a few dozen innocent civilians. the boys will be grateful!

That is the simple answer I always think of too.

the figures speak for themselves and if you add the figures which are normally suppressed (disability or pension to a widow/family of a killed soldier) the amount is staggering. unfortunately this is only a dream as the puppeteers in the background have been and will be always successful in pushing through their own agenda

[Naam]

I'm so tired of worrying about it that I am going to force myself to stop. If I had financial reserves which I needed to protect or invest, that would be different but I don't.

Reality is I am powerless to protect the value in Thailand of my U.S. Social Security income. If the $USD collapses, I'll be left twisting in the wind and there's no avoiding it.

Whatever will be will be - no more worrying. I've had it.

you are doing the right thing LB99. i've heard during the last 35 years too often "the dollar's collapse is imminent!" as you draw social security you must be at least my age. as a consolation i can offer "a collapse of the dollar during your and my remaining statistical lifetime is highly unlikely!"

chok dee!

[teletiger]

I'm so tired of worrying about it that I am going to force myself to stop. If I had financial reserves which I needed to protect or invest, that would be different but I don't.

Reality is I am powerless to protect the value in Thailand of my U.S. Social Security income. If the $USD collapses, I'll be left twisting in the wind and there's no avoiding it.

Whatever will be will be - no more worrying. I've had it.

you are doing the right thing LB99. i've heard during the last 35 years too often "the dollar's collapse is imminent!" as you draw social security you must be at least my age. as a consolation i can offer "a collapse of the dollar during your and my remaining statistical lifetime is highly unlikely!"

chok dee!

But more likely presently, than at any other time within the last 35 years. ( Reset, default, currency crisis....whatever)

If, in your lifetime, the US leaves Afghanistan, please feel free to park your dogs at my house, to defaecate at their leisure (would we notice ) whilst you take the lovely Mrs Naam on a tour of the verdant hills and valleys of that region.

Regards.

[badge]

Interesting interactive global public debt comparison

http://buttonwood.economist.com/content/gdc

[losworld]

The U.S. will not collapse but it is in for a long rough ride. The printing presses have started. Local and State governments already in a tight spot will find themselves worse off as income tax revenues decline. This will lead to new and "inventive" forms of taxation and cutting of services. Obama has failed miserably to adopt a single payer health care system that would make U.S. business more competitive as well as help insured and uninsured Americans. It's a real mess.

As the U.S. continues to print money inflation is inevitable. The only thing preventing mass inflation right now is the fact no one is spending and the fact that during the false oil rally to $170 per barrel there was a large round of price increases in food and commodities that were never rolled back. This cannot last forever. Spending will return albeit slowly. However, there is a dark horse in all of this that is quite disturbing. It is the coupling of the U.S. dollar with unregulated offshore trading of oil. In short it is once again Goldman Sachs vs. the U.S. Gov't. Goldman appears to be winning once more. As the dollar continues to sink there will be more and more dollars placed in commodities as a hedge. As the dollar slides it will require more and more dollars to buy a barrel of oil. As oil continues to rise in an unregulated market commodities will rise correspondingly. These factors will spark inflation. It is not more than one year away in my opinion.

Edited September 21, 2009 by losworld

[Lancelot]

Increased borrowing helping to create a strong $USD is reverse logic but it makes some sense in that limited borrowing would create demand for dollars. Interest rates would probably rise as well and that would reinforce the demand for dollars. I agree that "over" borrowing causing lenders to be uncomfortable with the US fundamentals would hurt the dollar.

My hunch is the so called improvement in the world's economy has reversed the "flight to safety" and the dollar weakened accordingly.

The US is like the rich country gentleman farmer that can still borrow considerable funds from the local county lenders. Sometimes he sells a bit of land off to raise cash, but his lands are considerable and so far the lenders advance funds. They sometimes grumble but the gentleman buys so much from them that they are hesitant to deny credit.

How long can the party last? Time will tell

[YankeeVet]

no need for higher taxes. my fellow Americans ... tell your congressmen to withdraw the boys from Iraq, Afghanistan and whereever they might be hanging around wasting tax dollars by throwing cluster bombs, shooting depleted uranium or wasting cruise missiles for 1.8 million dollar a piece to kill a wedding party and/or maim a few dozen innocent civilians. the boys will be grateful!

As a combat vet I am not concerned with the wasted money as much as I am the wasted lives of my fellow soldiers dying for "Iraqi" freedom or "Afgan" freedom. I can't stand that these brave men and women keep coming home in body bags every day for a cause that is questionable to our national defense and a government and Congress that could care less about them and their families.

[henryalleman]

There seems to be an awful lot of discontent in views towards the US$, both at home and as a global default currency.

Ive seen various reasons for a supposed collapse, and in recent years its arguable that the collapse has happened.

What reasons do people have - however obvious they may seem - to believe the US$ will collapse, or crash, or even just continue going down?

IMHO its an unneccesary poll, simply because the US collapsed already.

Why?

Look at the rate of the dollar

the internal market represent 85% of the BNP and the unemployment rate is rising to more than 15% in some states

No social security safety.

The refusal to regulate the banking world whit all his ecsesses

A few vert costly wars on their hand, and there is no end in sight.

The biggest car producer have to sell his crown jewel to the Russians.

a gigantic trade deficit

a gigantic debt who is mainly owned abroad

A few major countries amongst them China are sugesting a new currency to replace the dollar.

Do I realy have to go on?

I'm not an economist but an historian, and we see exactly the same happend in other superpowers in the past. But they have been superpowers for centuries while the US domination will only last a few decades.

Edited September 21, 2009 by henryalleman

[britmaveric]

Doom/Gloom is always popular however we will be sitting here decades from now debating the same thing... when will their be a demise of yankland?

[flying]

I am sure they can pull the rabbit from the hat.

Just look at the resulting market today the result of their inflating the monetary base.

But what is the long term solution? Is this it? I hope not as the result from their supposed fix

is even now starting to be felt. The next rabbit they pull may be DOA

[Naam]

As a combat vet I am not concerned with the wasted money as much as I am the wasted lives of my fellow soldiers dying for "Iraqi" freedom or "Afgan" freedom. I can't stand that these brave men and women keep coming home in body bags every day for a cause that is questionable to our national defense and a government and Congress that could care less about them and their families.

i fully agree with you!

[hhgz]

"As a combat vet I am not concerned with the wasted money as much as I am the wasted lives of my fellow soldiers dying for "Iraqi" freedom or "Afgan" freedom. I can't stand that these brave men and women keep coming home in body bags every day for a cause that is questionable to our national defense and a government and Congress that could care less about them and their families."

Absolutely true, and it seems as though many Americans - including TVers, thought that the Iran war should have been extended for several more years. John McCain based part of his presidency on his desire to continue the war, at the then current level, through 2013.

During the US presidential debates, John McCain based his appeal to continue the war, based partially on the fact that a mother of a dead soldier gave him a bracelet. Mc Cain pleaded to the TV audience with, "Don't let these soldiers die in vain."

During the same debate, Obama mentioned he also had a bracelet from a fallen soldier's mother. Obama related her verbal plea as, "Don't let any more boys die like my son." Obama continued (paraphrasing), "No soldier dies in vain, as he is carrying out the direct orders of his Commander-in-Chief, and it's time to end the war."

[Naam]

Absolutely true, and it seems as though many Americans - including TVers, thought that the Iran war should have been extended for several more years. John McCain based part of his presidency on his desire to continue the war, at the then current level, through 2013.

ahemmm...

[hhgz]

"Do I realy have to go on?"

Please don't. It's obvious that you lack perspective, and the ability for logical discourse...not to mention your frequent spelling errors.

Yur brief analysis is right down there with the frequent poster who claims incessantly "all property in Thailand is worthless".

[flying]

...not to mention your frequent spelling errors.

Yur your brief analysis

Those in Glass houses shouldn't throw stones

[flying]

it seems as though many Americans - including TVers, thought that the Iran war should have been extended for several more years. John McCain based part of his presidency on his desire to continue the war, at the then current level, through 2013.

During the US presidential debates, John McCain based his appeal to continue the war, based partially on the fact that a mother of a dead soldier gave him a bracelet. Mc Cain pleaded to the TV audience with, "Don't let these soldiers die in vain."

During the same debate, Obama mentioned he also had a bracelet from a fallen soldier's mother. Obama related her verbal plea as, "Don't let any more boys die like my son." Obama continued (paraphrasing), "No soldier dies in vain, as he is carrying out the direct orders of his Commander-in-Chief, and it's time to end the war."

First of all the US troops build up was in Iraq not Iran and never officially declared a war.

Secondly we still have 125,000 troops there...So much for Obama's promise to leave.

Secondly we have started a build up in Afghanistan 65,000 that will ultimately outnumber the troops in Iraq. BTW the Afghanistan... errm skirmish? is also not a declared war, Just another...policing? action by the worlds hall monitor.

Also didn't Obama also promise to close the torture chambers at Guantanamo ?

Still open

Finally I did not see folks supporting staying in Iraq anymore than I see folks support moving into Afghanistan or keeping Gitmo open.

McCain & Obama both suck

Edited September 22, 2009 by flying

[Abrak]

What genuinely puzzles me most is the rationale. I understand the reason to takeover a country for its strategic oil reserves. I raq almost certainly has the largest oil reserves in the world. Presumably production could be increased, reconstruction financed and due to increase supply US consumers could benefit (maybe to a factor that would justify the cost of the war in the first place.)

I mean the numbers are pretty staggering here. Off the top of my head Iraq reserves are 30% higher than Saudi Arabia but Iraq is producing 2.5m barrels a day verses their 12m. Or they are 7 times the US that is producing over twice as much. Iraq is producing less oil today than before 2003. I believe that over the last 5 (at least) years of occupation oil production has increased less than 30%.

It just seems very strange. In 5 years Iraq could have increased production to say 7m barrels a day, financed its own reconstruction, reduced oil prices to US$40. The general production to reserve ratio is 30 years, in Iraq it is 158.

I mean I thought this whole thing was about oil. So how come there is no exploitation of their oil reserves?

[flying]

What genuinely puzzles me most is the rationale. I understand the reason to takeover a country for its strategic oil reserves.

It just seems very strange. In 5 years Iraq could have increased production to say 7m barrels a day, financed its own reconstruction, reduced oil prices to US$40. The general production to reserve ratio is 30 years, in Iraq it is 158.

I mean I thought this whole thing was about oil. So how come there is no exploitation of their oil reserves?

Of course the US does not take over countries....openly

We went to control elections & the same timing appears in Afghanistan.

Of course Iraq could increase production & probably would have left to their own vices but, As they were starting to demand payment in Euro's it all came tumbling down. Of course that is not the official version

[flying]

As for the USD...I am interested to see if 76 holds. If not it could be a fast drop to 72 no?

[Naam]

What genuinely puzzles me most is the rationale. I understand the reason to takeover a country for its strategic oil reserves.

It just seems very strange. In 5 years Iraq could have increased production to say 7m barrels a day, financed its own reconstruction, reduced oil prices to US$40. The general production to reserve ratio is 30 years, in Iraq it is 158.

I mean I thought this whole thing was about oil. So how come there is no exploitation of their oil reserves?

Of course the US does not take over countries....openly

We went to control elections & the same timing appears in Afghanistan.

Of course Iraq could increase production & probably would have left to their own vices but, As they were starting to demand payment in Euro's it all came tumbling down. Of course that is not the official version

when did Iraq demand EUR for crude???

[Naam]

I mean I thought this whole thing was about oil. So how come there is no exploitation of their oil reserves?

HOW DARE YOU Abrak?! iraqi oil never played any role! the Greatest Nation on Earth™ and the "coalition of the willing" invaded the country to bring democrazy, freedom and peace to the people of Iraq. now they enjoy not only peace but even many pieces. Shias and Sunnis who slaughtered each other during Saddam's rule are now happy fellows who socialise and frolic in market places, discotheques, nudie bars and mosques.

a minor role played that Saddam Hussein could have bombed Tony B. Liar in Downing Street No. 10 with weapons of mass destruction which needed a preparation time of only 45 minutes.

[Naam]

for the record and for Abrak:

-proven oil reserves Iraq = 112 billion barrels

-proven oil reserves Saudi Arabia = 260 billion barrels

[teletiger]

" Nowhere has the vulnerable condition of the PetroDollar been more pronounced than in the year 2000 when Saddam Hussein demanded payment for oil in euro currency. Probably near the top in reasons why Iraq was annexed and its oil reserves commandeered"

http://www.marketoracle.co.uk/Article803.html

Here's a good article on the petrodollar from 2007. Jim Willie.

http://www.321energy.com/editorials/willie/willie042107.html

Regards.

Edit: forgot the url.

Edited September 23, 2009 by teletiger

[flying]

when did Iraq demand EUR for crude???

2000

edit: oops just read the next posts & see teletiger has shown already

Edited September 23, 2009 by flying

[Naam]

when did Iraq demand EUR for crude???

2000

that was just nonsensical propaganda of Saddam. the restrictions imposed after "desert storm" made sure that whatever crude he was allowed to sell and what products he was allowed to buy was invoiced in USD.

[khunjake]

As for the USD...I am interested to see if 76 holds. If not it could be a fast drop to 72 no?

Which would put the EUR back up to 1.55-60 and the THB to 30.

Gold seems to a non-believer under 1035 though which is a concern.

Yes, Interesting to watch to say the very least...

[flying]

when did Iraq demand EUR for crude???

2000

that was just nonsensical propaganda of Saddam. the restrictions imposed after "desert storm" made sure that whatever crude he was allowed to sell and what products he was allowed to buy was invoiced in USD.

I could have sworn I read somewhere he did & actually profited after initial loss.

Too lazy to look but I did see this on a quick google...

"Saddam sealed his fate when he decided to switch to the euro in late 2000 (and later converted his $10 billion reserve fund at the U.N. to euros) -- at that point, another manufactured Gulf War become inevitable under Bush II. Only the most extreme circumstances could possibly stop that now and I strongly doubt anything can -- short of Saddam getting replaced with a pliant regime

At the time of the switch many analysts were surprised that Saddam was willing to give up approximately $270 million in oil revenue for what appeared to be a political statement. However, contrary to one of the main points of this November 2000 article, the steady depreciation of the dollar versus the euro since late 2001 means that Iraq has profited handsomely from the switch in their reserve and transaction currencies. Indeed, The Observer surprisingly divulged these facts in a recent article entitled: `Iraq nets handsome profit by dumping dollar for euro,' (February 16, 2003).

http://www.ratical.org/ratville/CAH/RRiraqWar.html