socrateazz

G20 Could Surprise Currency, Gold and Bond Markets

One of the problems looming on the horizon for the US is their currency being the world's reserve currency. The US balance of trade has been negative for so long because everybody wanted more dollars to spend. I think a real intenational money should be developed denominated in $1,000, 000 actual dollar chunks accepted by all leading nations. and released into the economy in large chunks, say 100 billion (maybe a different level would be good) a month! It would be acceptd as reserve currency and smaller chunks would have to trade between current monies. Any money devauation or revalation would have to be supported by their previous three months balance of trade. and all would be reevaluated relative to the reserve currency. If the money value is great enough then every unit can be followed and accounted for under some kind of system and counterfieting would be minimal

The U.S. Trade Deficit and the Dollar

Those explanations are very good as to why the dollar has held up so well. The value of anything is an arbitrary number based on how many think an item is worth more or less than the current value. and the supply and demand of that item. Those who continue to think any one way will not effect the market. The people who change their opinion on any value are the folk who will effect the market direction. If the majority believe the dollar is a good value, and more net value goes toward such , then the dollar will increase in value. If belief is the opposite then the dollar will decrease in value. Most extreme moves in any commodities follow extended moves in one direction. example stock market....2002-2007, 1992-2007, 1974-2007, and 1932-2007 are examples. notice the time frames vary but all are extended moves upward. Now the dollar has had extended moves upward over 50 years. the correction will come. The fact is it will only appear drastic on a long term chart with a few quick drastic moves. Since values are belief based the movements are subject to mostly human foilbles and needs the real movements in markets can not be predicted. In the 1980's I kept hearing Gold was ready to explode upwards in price. That continued into the early 1990's. The real movement began after most everybody seemed to discount gold as a good buy. Now folk are often saying how good of buy gold is. I do not see a long term explosion in price because too many folk think it will act that way. I do admit many people think it is over valued. The price will go the direction of greatest change in belief.