I was in the Vietnam border town with China.

[GRG55]

Re: I was in the Vietnam border town with China.

Correct, reserve currencies do not collapse they fade away.....

Wrong. They get displaced by the currency of a stronger nation [economically and militarily] over time. And so far there seems at best modest danger of any other economy with a currency that can displace the US Greenback in a big way anytime soon...

[touchring]

Re: I was in the Vietnam border town with China.

ATMs in Cambodia give US dollars. Unreal -- we stocked back up.

I agree, dollars *never* had a problem throughout our trip in Asia. The only issue we had was on the quality of the bills -- some vendors won't accept damaged bills (especially Myanmar) and many others try to give you their damaged bills.

At least one vendor was honest about this telling me that as an American I could get full value for the bill where she could not.

Touchring -- were you in Lao Cai? We crossed into China there after travelling around northern Vietnam. I agree, very few Americans (we've had many discussions on this) -- we often got questioned on our trips because we were a reasonable rarity.

Oh yes, I'm referring to Lao Cai. But actually even Hanoi uses the dollar.

There's a lot of hyping by the MSM, but the 3rd world country folks know what is best when it comes to the real crunch. Even gold is not secure because it maybe subject to government controls as it the case of Vietnam.

[gnk]

Re: I was in the Vietnam border town with China.

It's already being displaced by non US dollar denominated bilateral agreements.

Historically, yes, the emerging power or existing power dictated the terms to the rest of the world.

US gdp through out most of the 1900s was a large, dominating share of the world economy, especially its manufacturing and agricultural sector (what I call "real life gdp", as opposed to paper being pushed across desks.) Today, as a percentage of the world economy, it is shrinking. Add Triffin's Dilemma to the mix, and what we have is something we have never seen before.

Global Trade using the US dollar as we know it peaked. I see a long process of global balkanization occurring due to peak oil and the process of the de-dollarization of global trade.

What does this mean to the average American? The exorbitant privilege de Gaulle once complained of may be over.

[BadJuju]

Re: I was in the Vietnam border town with China.

What does this mean to the average American? The exorbitant privilege de Gaulle once complained of may be over.

I think that privilege has mostly been enjoyed by the multinational capitalists than the average American as of the last 30 years. Perhaps its end, although it will be a certain shock to our economic system, will actually be a boon in the long-term.

[raja]

Re: I was in the Vietnam border town with China.

It may not seem obvious, but the US dollar is in actual fact the safest currency in the world that will exist even 50 years from today. The US is the most politically stable country, has the most natural resources and has secure borders protected by oceans, safe from all World Wars, safe from annexation.

I second everything c1ue said . . . .

Most of the things you list about the U.S. are true, and they are all factors that contribute to faith in a currency. But the main determinant of a currency's value is its buying power, and the dollar has lost a lot on that score . . . and it's on course to lose a lot more. Six years ago, it took $500 to buy an ounce of gold; today it takes $1700 . . . and you can't even eat gold

The more the government prints, the lower the dollar will fall. It's a law of the Universe. The government's printing presses never cool down; thus inflation never sleeps. The problem will only worsen as the global economy continues to slow, and the government tries to create value out of paper in order to keep its voters fed and clothed. It just won't work.

Who wants to store their hard-earned savings in something that's losing value, and that means all Fiat. It won't be a question of the Euro or the Yuan vs. the Dollar, it will be All Fiat vs. gold, land, food, businesses and real items.

Those who think they are investing in gold because it's going up are mistaken. What they are actually doing is repudiating the Dollar as a store of value. Gold isn't doing anything but just sitting there like the nearly useless lump of metal that it is, while it's the Dollar that's actually changing.
This repudiation will spread to the whole world as All Fiat Dies.

And that death could come very suddenly . . . at the speed of thought . . . because Fiat's value is only what we decide it is. When the Dollar's funeral pyre starts to burn out of control, no one wants to be the last one out of the Exit.

[ProdigyofZen]

Re: I was in the Vietnam border town with China.

Wrong. They get displaced by the currency of a stronger nation [economically and militarily] over time. And so far there seems at best modest danger of any other economy with a currency that can displace the US Greenback in a big way anytime soon...

GRG, I think that was implied in my comment above. Obviously they get displaced by a stronger nations currency and they fade away..........

For example before WWI it was apparent that the pound sterling was being displaced not only by the US Dollar but by the German Mark and French Franc. After WWI and during the 1920's the US dollar gradually increased its percentage of foreign exchange transactions.

My point was and still is reserve currencies fade away as the pound did from early 1900's to 1944 when the death knell was hammered in with Bretton Woods. Obviously it was because of the rise of the US and two world wars that took its toll on the British economy, finances and the pound.

It usually is not apparent to most observers until way after the fact.

I believe we are in agreement I just didnt elaborate on my original statement.

[jpatter666]

Re: I was in the Vietnam border town with China.

I second everything c1ue said . . . .

Most of the things you list about the U.S. are true, and they are all factors that contribute to faith in a currency. But the main determinant of a currency's value is its buying power, and the dollar has lost a lot on that score . . . and it's on course to lose a lot more. Six years ago, it took $500 to buy an ounce of gold; today it takes $1700 . . . and you can't even eat gold

The more the government prints, the lower the dollar will fall. It's a law of the Universe. The government's printing presses never cool down; thus inflation never sleeps. The problem will only worsen as the global economy continues to slow, and the government tries to create value out of paper in order to keep its voters fed and clothed. It just won't work.

Who wants to store their hard-earned savings in something that's losing value, and that means all Fiat. It won't be a question of the Euro or the Yuan vs. the Dollar, it will be All Fiat vs. gold, land, food, businesses and real items.

Those who think they are investing in gold because it's going up are mistaken. What they are actually doing is repudiating the Dollar as a store of value. Gold isn't doing anything but just sitting there like the nearly useless lump of metal that it is, while it's the Dollar that's actually changing.
This repudiation will spread to the whole world as All Fiat Dies.

And that death could come very suddenly . . . at the speed of thought . . . because Fiat's value is only what we decide it is. When the Dollar's funeral pyre starts to burn out of control, no one wants to be the last one out of the Exit.

Never forget EJ's admonition that the US gold reserves exist to prevent a total destruction of the dollar.

[c1ue]

Re: I was in the Vietnam border town with China.

What about all of the currency debasement being pursued by other countries out there? Aside from being the most prominent, how is the US really any different?

Show me any other nation whose currency, or even 2 or 3 nation's currencies, that is piling up $1trillion plus every year in debt.

The other nations are printing primarily in response to the US - the printing isn't some abstract physical law.

[jpatter666]

Re: I was in the Vietnam border town with China.

Show me any other nation whose currency, or even 2 or 3 nation's currencies, that is piling up $1trillion plus every year in debt.

The other nations are printing primarily in response to the US - the printing isn't some abstract physical law.

Agreed, although I guess you'd have to think in GDP % rather than a fixed number to really compare apples to apples?

I do wonder -- although I'm sure this is overly simplistic -- if the major powers all debase (and the EU will debase in time....or dissolve) to where inflation rises enough to make most debts manageable; isn't that the plan? They all keep relatively stable to each other?

But it's a thin tightrope they are walking.....and no one is quite sure what happens if they fall off it.

[BadJuju]

Re: I was in the Vietnam border town with China.

Agreed, although I guess you'd have to think in GDP % rather than a fixed number to really compare apples to apples?

I do wonder -- although I'm sure this is overly simplistic -- if the major powers all debase (and the EU will debase in time....or dissolve) to where inflation rises enough to make most debts manageable; isn't that the plan? They all keep relatively stable to each other?

But it's a thin tightrope they are walking.....and no one is quite sure what happens if they fall off it.

That's how I see it. As a matter of proportion, a lot of the major currencies are being debased in a similar manner. The US isn't the only one out there playing funny money games with their monetary system. They just do the most of it because it is the world's largest economy and substantially larger than the next guy.

[Bundi]

Re: I was in the Vietnam border town with China.

Wrong. They get displaced by the currency of a stronger nation [economically and militarily] over time. And so far there seems at best modest danger of any other economy with a currency that can displace the US Greenback in a big way anytime soon...

I'm not sure if I intend this question to be taken seriously or not but sometimes I wonder. What would happen if the Saudis announced the sale of oil in dollars OR yuan? Maybe a better question is why would they?

[c1ue]

Re: I was in the Vietnam border town with China.

Agreed, although I guess you'd have to think in GDP % rather than a fixed number to really compare apples to apples?

Often that's true, but not in this case.

Why? Because this debt is increasingly owed to foreigners. And the foreigners can only support so much debt, and will only support so much debt, before they decide the US dollar isn't better than their own banana republic currency.

This is the essence of EJ/iTulip's crash scenario.

As for debasing enough to make debts manageable - that will work for the EU - their debt vs. GDP isn't really all that bad, even though it is bad in a few of the smallest EU members.

The US, on the other hand, the federal debt is not the only black hole. There's the state/local, there's Medicare, there's the War on Terra' vet obligations, the huge mortgage debt overhang, the energy deficit, the trade deficit ex. energy, and so on and so forth.

As a matter of proportion, a lot of the major currencies are being debased in a similar manner.

You really should look at some numbers before stubbornly reasserting wrong information.
Has the EU issued 800 billion euros in debt every year for the past 5 and will it for the foreseeable near future (5 years)?

The overall EU GDP is higher than that of the US.

Has China issued 6.25 trillion RMB in debt every year for the past 5 and will it for the foreseeable near future (5 years)?

China's GDP is comparable to the US.

I'm not sure if I intend this question to be taken seriously or not but sometimes I wonder. What would happen if the Saudis announced the sale of oil in dollars OR yuan? Maybe a better question is why would they?

Why would China bother when they have tons of dollars to buy oil with? And the RMB is essentially pegged to the dollar?

If it talks like a duck, and walks like a duck, and quacks like a duck...

[Bundi]

Re: I was in the Vietnam border town with China.

Originally Posted by Bundi
I'm not sure if I intend this question to be taken seriously or not but sometimes I wonder. What would happen if the Saudis announced the sale of oil in dollars OR yuan? Maybe a better question is why would they?

Why would China bother when they have tons of dollars to buy oil with? And the RMB is essentially pegged to the dollar?

If it talks like a duck, and walks like a duck, and quacks like a duck...

I don't know, maybe its a case of meet the new boss, same as the old boss. I assume China sees the same limitations on the existing system that the US does. Saudi too?

[GRG55]

Re: I was in the Vietnam border town with China.

I think that privilege has mostly been enjoyed by the multinational capitalists than the average American as of the last 30 years. Perhaps its end, although it will be a certain shock to our economic system, will actually be a boon in the long-term.

Seems to me the "average" American has done quite well over the 4 decades prior to the global financial crisis. More and bigger homes, more and bigger cars, bigger big-box stores, more stuff, bigger granite kitchens at the same time as they are eating out more, more airplane flights to ever more holiday destinations, and on it goes. Well beyond a chicken in every pot and a car in every garage.

One might argue about whether these are durable or even desirable changes, but one cannot deny the statistics that the majority of US citizens are "better off" by many, many measures compared to one or two generations earlier. But like most things in life, done in moderation it was beneficial, but taken to excess it proved fatal...and now the piper is insisting to be paid...

[touchring]

Re: I was in the Vietnam border town with China.

Why would China bother when they have tons of dollars to buy oil with? And the RMB is essentially pegged to the dollar?

If it talks like a duck, and walks like a duck, and quacks like a duck...

Sure, the dollars will be useful in the Vietnam border town with China.

lol