Tick Talk

Will Emerging Currencies Undermine the Dollar?

Dave, thanks for chiming in. Let me bring you up to speed. The U.S. has no incentive to default because it can simply have the Federal Reserve print more money to satisfy payment. In effect, the U.S. is indirectly debasing its currency by increasing the medium denominated in its debts. In fact, the tactic just mentioned is the one that prompted the summit. The outcome is the same in either case: As inflation proceeds, all permanent relations between debtors and creditors become so chaotic as to become almost meaningless (example: Post WW1 German retribution payments and the now non-existant mark and more recently, the Argentinian currency crisis).

Regarding wars, right-minded or ill-conceived, and regardless of nations victorious or defeated, they are an integral part of the global economic landscape. It was mentioned because a financially unified EurAsia is the greatest threat to North Atlantic economies ever invented. It is only through a "divide and conquer" strategy that the influence of the North Atlantic nations has succeeded. So it follows history to mention that when finance is frustrated, war ensues.


On Jun 16 07:20 AM Dave Wrixon wrote:

> And like most Americans, you seem to have the debt issue arse about
> face. It is you that are likely to be the defaulting debtors. I think
> the Chinese would stoically write the debt off, but don't expect
> too many favors from them going forward.
>
> As for declaring War, you cannot even sort out Afganistan or Iran.

Will Emerging Currencies Undermine the Dollar?

Drew, -Agreed. That is why the possibility of a 10 year liquidation plan was offered in the article. The psychological impact of an accord by these countries would have immediate implications for the dollar. The actual process of unloading the assets would have long term effects.


On Jun 16 01:55 PM Drew Arnold wrote:

> Keep in mind, though, that dropping the US dollar would amount in
> a massive and immediate loss of wealth for those who hold US treasuries.
> Given China's stake in treasuries, they are extremely unlikely to
> sign on to any currency agreement that flushes out their own reserves.