pimpjui

Understanding The Dollar's Decline

There is no bad publicity. I find it a bit strange that we are defining honest money as non- US Dollar. So let me get this straight, Euro, Pound, Yuan, Yen and Ruble are honest money. US Dollar, worthless fiat currency.

I guess if any currency were to knock USD of its perch, it'd be EUR. But does EUR really have the track record to become the world reserve currency? Considering Europe was at war with itself less that a generation ago, I can't imagine that we can extrapolate that it is now the supreme example of federal stability. I'd still take the CHF over the EUR any day. The Swiss have at least proved that their currency can withstand war all around them. Granted, though, the Swiss simply do not have the size to handle world reserve currency status.

Pound might be the next best bet. But it too does not have the size in order to handle this role. It's run up over the last couple of years has been basically against USD. Go to the UK. Outside of London, there is not much happening. Granted, the UK does have a huge amount of legitimacy in the area of soft power. Unfortunately, a reserve currency needs hard power behind it (e.g. USD has big guns/ships/nukes; CHF has (or had) lots of gold).

Yen? C'mon. The Japanese are xenophobic, the country is stagnating, and the US still occupies it with army and naval forces. The minute the US pulls out of Japan, they will re-militarize, which will cause huge instability as well as a drain on finances.

What's left? Yuan and Ruble. Oh yes, these two governments are beacons of transparency and honesty. Yep, that's where I'll keep my money. Russia has a male mortality rate lower than Africa. Russia exports weapons and commodities--that's it. China's government is desparately holding to power by giving it's poor citizens the hope of upward mobility. All of the problems they face (great domestic wealth disparity, pollution, corruption, poor healthcare, large standing army, etc.) suggest some type of civil or foreign war coming soon.

It's great that we have the freedom and inclination to bash the USD (and the US), because it still means we care. Otherwise we'd be sticking Yuan under the mattress. Indeed, the alternatives to the USD are not as great as would seem.