Is the US dollar the next bubble to burst?

[dre]

No it wasn't...it was just abandoning BW and punishing West Germany for currency manipulation. The US is not bankrupt then or now despite your pleadings and wishful thinking. If the US was bankrupt, how did it go on to dominate the IMF? Why didn't the US default like Russia?

Nice NON ARGUMENT. I explained this to you in absoltely stark and accurate terms and you simply choose to ignore it.

[bush_cheney2004]

Nice NON ARGUMENT. I explained this to you in absoltely stark and accurate terms and you simply choose to ignore it.

The only thing that is stark is your ignorance of the gold standard's international history and flawed logic in some naive attempt to paint the US as bankrupt according to the non-applicable American Bankruptcy Code, all while ignoring the obvious association that would make many other nations "bankrupt" and "unsolvent" [sic] as well.

Edited November 6, 2010 by bush_cheney2004

[dre]

The only thing that is stark is your ignorance of the gold standard's international history and flawed logic in some naive attempt to paint the US as bankrupt according to the non-applicable American Bankruptcy Code, all while ignoring the obvious association that would make many other nations "bankrupt" and "unsolvent" [sic] as well.

Another NON ARGUMENT.

attempt to paint the US as bankrupt according to the non-applicable American Bankruptcy Code

And an outright strawman/lie.

Again... the suspension of convertability was a text book bankruptcy in every sense of the word. The US had traded printed dollars for economic goods based on the promise that nations could redeem those printed dollars for gold, and when those nations wanted to redeem those dollars the US was unable to come up with the gold.

Heres a good analogy to help you understand it...

Lets say that on a certain date Im supposed to make a mortgage payment... but I dont have any money. So I show up at my lenders office with a bunch of "dre certificates" which I printed myself. Thats exactly what the US did. They defaulted on their first payment on August 15, 1971 and havent really made any payments on their debt since then.

[bush_cheney2004]

....Heres a good analogy to help you understand it...

Lets say that on a certain date Im supposed to make a mortgage payment... but I dont have any money. So I show up at my lenders office with a bunch of "dre certificates" which I printed myself. Thats exactly what the US did. They defaulted on their first payment on August 15, 1971 and havent really made any payments on their debt since then.

You very flawed analogy is easily slain by logic: Why is the USA still "solvent" after all these years of "bankruptcy"? Non-convertibility was a common occurrence in the 20th century. So which other countries are "unsolvent" [sic]?

The US has made payments on its debt....to me.

[dre]

You very flawed analogy is easily slain by logic: Why is the USA still "solvent" after all these years of "bankruptcy"? Non-convertibility was a common occurrence in the 20th century. So which other countries are "unsolvent" [sic]?

The US has made payments on its debt....to me.

You very flawed analogy is easily slain by logic: Why is the USA still "solvent" after all these years of "bankruptcy"?

. All youve slain is yourself.

Go back and read what I said. I said the US got the same kind of protection from creditors that a company gets when they declare chapter 11 bankruptcy. In a chapter 11 the entity still exists and operates after bankruptcy proceedings, but its creditors are prevented from demanding payment. Just like the countries that wanted to redeem their US paper back into gold under bretton woods. In contrast to a chapter 7 where the entities assets are liquidated.

You can squirm all you want but you can avoid the facts. The US under bretton woods was obligated to buy back US paper with gold, from other governments... But when countries demanded payment the US had NOWHERE NEAR enough gold to honor its obligations. THAT is bankruptcy, and THAT is why convertability was abolished.

[bush_cheney2004]

. All youve slain is yourself.

...but I know how to spell "insolvent"...you didn't.

Go back and read what I said. I said the US got the same kind of protection from creditors

It's even funnier the second time around, as neither apply. What should I do about my silver certificates....sue the government which is "bankrupt" since 1971? LOL!

You can squirm all you want but you can avoid the facts. The US under bretton woods was obligated to buy back US paper with gold, from other governments... But when countries demanded payment the US had NOWHERE NEAR enough gold to honor its obligations. THAT is bankruptcy, and THAT is why convertability was abolished.

Convertibility has been "abolished" many times....has nothing to do with being "bankrupt". The US wasn't suppose to invade Iraq either....tough titties.

[dre]

...but I know how to spell "insolvent"...you didn't.

It's even funnier the second time around, as neither apply. What should I do about my silver certificates....sue the government which is "bankrupt" since 1971? LOL!

Convertibility has been "abolished" many times....has nothing to do with being "bankrupt". The US wasn't suppose to invade Iraq either....tough titties.

Youre not even trying to present an argument at this point. Iv explained you exactly why the US suspended convertability. This isnt even contraversial... you wont find a single person on earth that claims the US had enough gold in its treasury to redeem all its paper. It was unable to satisfy its finiancial obligations, and it defaulted on its payments.

It's even funnier the second time around, as neither apply.

Who said they apply? Rufus the stunt-bum that lives inside your head? Youre being willfully dishonest... What I said was that the US got the "same kind of protection from creditors" that entities get when they file for chapter 11... which is essentially the ability for you to settle your debt to a creditor for less than what its worth.

The US had promised the rest of the world that it would buy back its paper with gold, and it DEFAULTED, leaving its creditors stuck with paper certificates locked in a never ending inflationary spiral.

If you dont want to take my word for it... try it yourself. Lose all your money somehow, and then when your mortgage is due and you dont have the money to pay it, show up at the bank and try to pay it with "Bush Cheney" dollars which you print yourself... and try telling them youre not bankrupt.

Thats EXACTLY what the US did on august 15 1971.

What should I do about my silver certificates....sue the government which is "bankrupt" since 1971? LOL!

Again... you dont know a thing about how bankruptcy works or what it is. Theres no reason you cant sue an entity thats gone bankrupt, provided it has protection from its creditors and a scheme to continue operating.

You arent even trying at this point. You have no argument... no case... no understanding of the subject at hand... nothing. This has essentially left you putting your fingers in your ears and screaming "LA LA LA LA IS NOT! IS NOT!", and trying to cling to a spelling mistake by bringing it up 5 times.

This guys lays it out in terms even easy enough for you to understand.

The US declared bankruptcy in 1971. The MSM simply says we "went off the gold standard," or "closed the gold window." Not true. We changed the rules, because under the old rules, we were bust.

[bush_cheney2004]

If you dont want to take my word for it... try it yourself. Lose all your money somehow, and then when your mortgage is due and you dont have the money to pay it, show up at the bank and try to pay it with "Bush Cheney" dollars which you print yourself... and try telling them youre not bankrupt.

You just stabbed your own ignorant argument....why would the bank accept printed "fiat" money for the mortgage?

You arent even trying at this point. You have no argument... no case... no understanding of the subject at hand... nothing. This has essentially left you putting your fingers in your ears and screaming "LA LA LA LA IS NOT! IS NOT!", and trying to cling to a spelling mistake by bringing it up 5 times.

This doesn't take much effort...clearly you have no understanding of what happened then or now. The United States is not bankrupt any more than Canada is bankrupt.

[dre]

You just stabbed your own ignorant argument....why would the bank accept printed "fiat" money for the mortgage?

This doesn't take much effort...clearly you have no understanding of what happened then or now. The United States is not bankrupt any more than Canada is bankrupt.

This doesn't take much effort...clearly you have no understanding of what happened then or now. The United States is not bankrupt any more than Canada is bankrupt.

Again. Total non argument. You proclaim "YOURE WRONG" but then you wont address a single thing Iv said or even try to challenge my account. Thats because every single thing Iv claimed is true, and a matter of historical record.

You just stabbed your own ignorant argument....why would the bank accept printed "fiat" money for the mortgage?

Good question (That youd know the answer to if you had even done a LITTLE bit of research on this subject). In the case of US's creditors they simply had no choice. They already HAD all that paper in their posession. Under Bretton Woods currency was pegged to gold BUT US dollars were the reserve currency, so Bretton Woods signatories were already sitting on a mountain of paper. They had no choice but to accept it.

[bush_cheney2004]

Again. Total non argument. You proclaim "YOURE WRONG" but then you wont address a single thing Iv said or even try to challenge my account. Thats because every single thing Iv claimed is true, and a matter of historical record.

How many times do I have to type that the United States is not "bankrupt" until it can no longer finance debt? Your "account" is a fantasy based on ignorance.

Good question (That youd know the answer to if you had even done a LITTLE bit of research on this subject). In the case of US's creditors they simply had no choice. They already HAD all that paper in their posession. Under Bretton Woods currency was pegged to gold BUT US dollars were the reserve currency, so Bretton Woods signatories were already sitting on a mountain of paper. They had no choice but to accept it.

Good...because you just stabbed your argument again. Keep going...at this rate...blood loss will be so severe that even gold can't save you from yourself. If the USA can agree to a BW system of monetary order, it can most certainly walk away as well.

Edited November 9, 2010 by bush_cheney2004

[dre]

How many times do I have to type that the United States is not "bankrupt" until it can no longer finance debt? Your "account" is a fantasy based on ignorance.

Good...because you just stabbed your argument again. Keep going...at this rate...blood loss will be so severe that even gold can't save you from yourself. If the USA can agree to a BW system of monetary order, it can most certainly walk away as well.

How many times do I have to type that the United States is not "bankrupt" until it can no longer finance debt? Your "account" is a fantasy based on ignorance.

Youre not even reading the position youre arguing against. I never said the US cant finance debt. I said it had to change the rules of the game to be able to do so because under the previous rules it was bust. And I said changing those rules was an act of bankrupcty.

Your problem is that you dont know what bankruptcy is. You think that because the US still exists as an entity today that means the declaration of bankruptcy in 1971 didnt happen. You flat out lack the understanding of this subject required to even discuss it.

If the USA can agree to a BW system of monetary order, it can most certainly walk away as well.

Yup. And thats exactly what it did. Its an act of bankrupcty because they refused to honor their debts under the terms negotiated... just like you would be if you tried to pay your mortgage in "Bush_Cheney" certificates.

Bankrupcty protection simply means that youre able to settle your debts for less than what you owe creditors. So when you tell creditors that you are not able to pay your debts to them in gold as you had previously agree to do, and instead give them paper certificates with value you cant control through inflationary monetary policy, it ammounts to a declaration of bankruptcy.

Again... you arent even trying to argue any of these points. Youre just sticking your fingers in your ears and screaming "LA LA LA LA!". You refuse to even do a tiny bit of reading on the various different kinds of bankruptcy, and stick to this idiotic assertion that because the US still exists today that it didnt declare bankruptcy when it closed the gold window. Its like talking to a child.

[bush_cheney2004]

Youre not even reading the position youre arguing against. I never said the US cant finance debt. I said it had to change the rules of the game to be able to do so because under the previous rules it was bust. And I said changing those rules was an act of bankrupcty.

That doesn't make any sense because the US (and other nations) voluntarily agreed to a system of monetary order....the "rules" were arbitrary and not binding by any treaty. What the USA giveth..the USA can taketh away.

Your problem is that you dont know what bankruptcy is. You think that because the US still exists as an entity today that means the declaration of bankruptcy in 1971 didnt happen. You flat out lack the understanding of this subject required to even discuss it.

Show me the court proceedings and bankruptcy terms...but you know you can't. You watch too much American TV.

Yup. And thats exactly what it did. Its an act of bankrupcty because they refused to honor their debts under the terms negotiated... just like you would be if you tried to pay your mortgage in "Bush_Cheney" certificates.

Nonsense....all debts were serviced as before....never has there been a default.

Bankrupcty protection simply means that youre able to settle your debts for less than what you owe creditors. So when you tell creditors that you are not able to pay your debts to them in gold as you had previously agree to do, and instead give them paper certificates with value you cant control through inflationary monetary policy, it ammounts to a declaration of bankruptcy.

Repeating your fairy tale will not make it so...there was no bankruptcy protection order or behaviour...convertibility was suspended, just as was done by other nations during the 19th and 20th century.

Again... you arent even trying to argue any of these points. Youre just sticking your fingers in your ears and screaming "LA LA LA LA!". You refuse to even do a tiny bit of reading on the various different kinds of bankruptcy, and stick to this idiotic assertion that because the US still exists today that it didnt declare bankruptcy when it closed the gold window. Its like talking to a child.

This is getting to be repetitive....get smarter or get lost.

[dre]

That doesn't make any sense because the US (and other nations) voluntarily agreed to a system of monetary order....the "rules" were arbitrary and not binding by any treaty. What the USA giveth..the USA can taketh away.

Show me the court proceedings and bankruptcy terms...but you know you can't. You watch too much American TV.

Nonsense....all debts were serviced as before....never has there been a default.

Repeating your fairy tale will not make it so...there was no bankruptcy protection order or behaviour...convertibility was suspended, just as was done by other nations during the 19th and 20th century.

This is getting to be repetitive....get smarter or get lost.

That doesn't make any sense because the US (and other nations) voluntarily agreed to a system of monetary order....the "rules" were arbitrary and not binding by any treaty. What the USA giveth..the USA can taketh away.

That doesn't make any sense because the US (and other nations) voluntarily agreed to a system of monetary order....the "rules" were arbitrary and not binding by any treaty. What the USA giveth..the USA can taketh away.

Thats just objectively false. The rules were not arbitrary, they were negotiated and put into an agreement (Bretton Woods) which the US and all other major industrial powers signed in 1944. The agreement was that BW signatories would adopt the US dollar as their reserve currency and that all members would peg their currency to gold withing 5% in either direction, and that members would offer convertability.

Show me the court proceedings and bankruptcy terms...but you know you can't. You watch too much American TV.

And here was have the same strawman youve already had jammed up your own ass 1/2 a dozen times. The only person talking about any court proceedings is Rufus the Stunt-Bum who lives in your imagination.

Repeating your fairy tale will not make it so...there was no bankruptcy protection order or behaviour...convertibility was suspended, just as was done by other nations during the 19th and 20th century.

Those other countries never entered into an agreement with other nations that made their gold backed currency the worlds reserve. Its apples and oranges.

I gotta post this again because it still applies.

You arent even trying at this point. You have no argument... no case... no understanding of the subject at hand... nothing. This has essentially left you putting your fingers in your ears and screaming "LA LA LA LA IS NOT! IS NOT!", and trying to cling to a spelling mistake by bringing it up 5 times, and trotting out the same failed strawmen over and over again.

[bush_cheney2004]

Those other countries never entered into an agreement with other nations that made their gold backed currency the worlds reserve. Its apples and oranges.

It's still the world's reserve currency...you lose again!

I gotta post this again because it still applies.

Now even I'm bored with your spelling disability...tell us something we don't know.

[dre]

It's still the world's reserve currency...you lose again!

Now even I'm bored with your spelling disability...tell us something we don't know.

[Pliny]

Suspending convertability was in EVERY WAY an act of bankruptcy. The US owed an ammount of gold to its creditors that it could never hope to pay!!! It wasnt a matter of the US being "unwilling"... they simply did not have enough gold to honor their obligations to creditors.

If my business doesnt have enough cash to fund its existing operations or maintain its debt it is BANKRUPT.

Unless you can convince everyone to accept dre dollars. Then you are fine.

Picture this... I owe you 20 ounces of gold. But I flat out dont have it. So instead I unilaterally declare that instead of paying you the gold we had agreed to, Im going to give you "Dre Certificates" instead (and Im going continually reduce the value of these certificates so that you never really get paid). Thats a text book bankruptcy position. Do you not understand why? Any normal company doesnt get to change the UNITS that denominate its debt. The fact is that the US was unable to satisfy its financial obligations under the current framework, and declaring bankruptcy stopped its debtors from collecting in gold as they had been promised.

It isn't a textbook bankrupt position it is a textbook government currency debasement. In order to engineer the economy, and always have "money" available it must have control of the money supply.

The US wasn't bankrupt.

Bretton-Woods was an agreement made up by international bankers. The US was one of the most productive and wealthiest nations in the world and consequently a large market for foreign goods. The US stopped honouring it's silver certificates about 1967. Americans at the time couldn't own gold. It stopped honouring it's domestic gold certificates in 1933. So in 1967 the domestic US currency became a domestic currency entirely by fiat. The cancellation of Bretton-Woods in 1971 was a move to end the gold standard entirely and replace it with a new standard, the reserve fiat currency of the world - the US dollar. The one most in demand, and the gold standard would never again tie the hands of government. It's all about the ability to engineer the economy. Sound money in the hands of the population doesn't give government power to engineer the economy.

If you buy the story that the US was bankrupt you are not alone by any means. The gold standard had to be eliminated if government was going to have free reign and liberty in it's ability to guide the economy. It's that simple.

The government, as long as it's hands were tied by the gold standard and if it could no longer justify increased taxation the citizenry would tolerate, would always cry bankruptcy.

Would the country have gone bankrupt if Bretton-Woods would not have been canceled? Well, I don't see how domestically you can print fiat dollars at your whim and have consumers continue to consume on those tokens. You have to convince debtors to accept tokens too and the international banking community thought it was a good idea for the same reasons they removed the statement "will pay to the bearer on demand". They instantly metamorphosed their "cheques" into "money". If the public fell for it, the international market will too - and they did.

[dre]

Unless you can convince everyone to accept dre dollars. Then you are fine.

It isn't a textbook bankrupt position it is a textbook government currency debasement. In order to engineer the economy, and always have "money" available it must have control of the money supply.

The US wasn't bankrupt.

Bretton-Woods was an agreement made up by international bankers. The US was one of the most productive and wealthiest nations in the world and consequently a large market for foreign goods. The US stopped honouring it's silver certificates about 1967. Americans at the time couldn't own gold. It stopped honouring it's domestic gold certificates in 1933. So in 1967 the domestic US currency became a domestic currency entirely by fiat. The cancellation of Bretton-Woods in 1971 was a move to end the gold standard entirely and replace it with a new standard, the reserve fiat currency of the world - the US dollar. The one most in demand, and the gold standard would never again tie the hands of government. It's all about the ability to engineer the economy. Sound money in the hands of the population doesn't give government power to engineer the economy.

If you buy the story that the US was bankrupt you are not alone by any means. The gold standard had to be eliminated if government was going to have free reign and liberty in it's ability to guide the economy. It's that simple.

The government, as long as it's hands were tied by the gold standard and if it could no longer justify increased taxation the citizenry would tolerate, would always cry bankruptcy.

Would the country have gone bankrupt if Bretton-Woods would not have been canceled? Well, I don't see how domestically you can print fiat dollars at your whim and have consumers continue to consume on those tokens. You have to convince debtors to accept tokens too and the international banking community thought it was a good idea for the same reasons they removed the statement "will pay to the bearer on demand". They instantly metamorphosed their "cheques" into "money". If the public fell for it, the international market will too - and they did.

It isn't a textbook bankrupt position it is a textbook government currency debasement. In order to engineer the economy, and always have "money" available it must have control of the money supply.

Thats not why the gold window was closed though. It was closed unilaterally by the US and not through any agreement because countries were starting to demand payment and the US could never hope to buy. Thats a bankrupcty position any way you look at it.

Would the country have gone bankrupt if Bretton-Woods would not have been canceled

They WERE bankrupt under those rules. Which is why they changed the rules.

If you buy the story that the US was bankrupt you are not alone by any means. The gold standard had to be eliminated if government was going to have free reign and liberty in it's ability to guide the economy. It's that simple.

No its not that simple... youre making a CASE for getting rid of the gold standard that I basically agree with. But thats no what happened. Read about the chronology of events that lead to the suspension of convertability. Countries were demanding the gold they were owed, and the US flat out did not have it.

And changing the rules was a declarations of bankruptcy because it was done for the PURPOSE of protecting the US from its creditors. Which is what bankruptcy protection IS... protection that allows you to settle your debts to creditors for less than what was origionally agreed.

The US was one of the most productive and wealthiest nations in the world and consequently a large market for foreign goods.

Bankruptcy doesnt have anything to do with how productive an entity is. Lots of companies that declare chapter 11 are productive... they just dont have cashflow to carry on operations, one of those operatings being making payments to creditors. The US was unable to make these payments under the agreed apon terms. Ending convertability allowed them to pay less than they owed because now they were paying of debt with paper in an inflationary spiral instead of gold.

Even the way YOU describe it... its a bankruptcy.

And the only reason the US was able to do this is because the dollar was already the reserve currency. If entities could simply change the rules of the game like the US did there would NO SUCH THING as a bankrupcty. Greece for example could just do the same thing... they could unilaterally declare they would pay their debts with feta cheese instead of US dollars. That would ALSO Be an act of bankruptcy because they are reneging on the agreed apon terms.

If a country defaults on sovereign debt because it cant pay... its a bankruptcy position.

Like I keep saying... try it yourself. See what happens if you try and pull the same thing the US did with its sovereign debt to YOUR creditors.

You have to convince debtors to accept tokens too and the international banking community thought it was a good idea

Thats the beauty of it... since the US dollar was already the reserve currency under the weakened BW gold standard nobody could do a god damn thing about it. They were already sitting on mountains of these tokens. If they took a position against the US dollar they would destroy their own reserves.

Edited November 12, 2010 by dre

[bloodyminded]

...but I know how to spell "insolvent"...you didn't.

But you do have other issues with spelling...in the same post:

The US wasn't suppose to invade Iraq either....tough titties.

[Pliny]

No its not that simple... youre making a CASE for getting rid of the gold standard that I basically agree with. But thats no what happened. Read about the chronology of events that lead to the suspension of convertability. Countries were demanding the gold they were owed, and the US flat out did not have it.

You agree with doing what they did and think they should have done it. Can you think of another way they could have done it and have everyone agree? What if they just said, let's get rid of BW and use our currency as the world's reserve? What would be the problem with that? It's a brilliant idea according to yourself so why would there be resistance to it?

They probably sat down and said look we can save ourselves a ton of cash by not shipping this gold around all over the place for no seeming purpose since it just sits in vaults anyway, let's just ship the currency around. If you are an intelligent person it make sense to do that, doesn't it?

And changing the rules was a declarations of bankruptcy because it was done for the PURPOSE of protecting the US from its creditors. Which is what bankruptcy protection IS... protection that allows you to settle your debts to creditors for less than what was origionally agreed.

And the only reason the US was able to do this is because the dollar was already the reserve currency.

There was no international reserve currency at the time. Gold was the reserve. Domestically it was the reserve token. From 1967 to 1971, four short years, fiat currencies entirely replaced sound money.

Thats the beauty of it... since the US dollar was already the reserve currency under the weakened BW gold standard nobody could do a god damn thing about it. They were already sitting on mountains of these tokens. If they took a position against the US dollar they would destroy their own reserves.

I'm certain everyone would have been bankrupt had they not accepted the new rules. Whoever makes the money makes the rules, and now that money was entirely a federal reserve token the fed was making the rules.

It matters little if the US was bankrupt or if it were a power grab. We ended up at the same place. Precisely where high finance wanted to be. People that disliked America now had another reason to dislike her and were happy to see it in the light of bankruptcy. Evil America is bankrupt...Bwahahahaha...Nothing changed but the rules.

[dre]

There was no international reserve currency at the time. Gold was the reserve. Domestically it was the reserve token.

Thats simply not true. Gold backed US CURRENCY was the reserve under bretton woods... not gold.

The liberal economic system required an accepted vehicle for investment, trade, and payments. Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use. In the past this problem had been solved through the gold standard, but the architects of Bretton Woods did not consider this option feasible for the postwar political economy. Instead, they set up a system of fixed exchange rates managed by a series of newly created international institutions using the U.S. dollar (which was a gold standard currency for central banks) as a reserve currency.

They probably sat down and said look we can save ourselves a ton of cash by not shipping this gold around all over the place for no seeming purpose since it just sits in vaults anyway, let's just ship the currency around. If you are an intelligent person it make sense to do that, doesn't it?

It might make sense, but thats not what happened. Read about the "U.S. balance of payments crisis". The US suspended convertability because countries like france were starting to redeem all their greenbacks and the US gold reserve was being quickly depleted.

People that disliked America now had another reason to dislike her and were happy to see it in the light of bankruptcy. Evil America is bankrupt...Bwahahahaha...Nothing changed but the rules.

Youre the only one saying anything about America being evil.

Nothing changed but the rules.

Right. Classic chapter 11. I owe you 20 bux, but I dont have it so I have the rules changed so that I owe you less. Thats called bankruptcy.

[Pliny]

Thats simply not true. Gold backed US CURRENCY was the reserve under bretton woods... not gold.

Well, I think this is a sloppiness of nomenclature. By "reserve" I mean that which is held as a claim for payment. The US dollar under Bretton Woods was the only currency that was gold backed, that is it could be redeemed in gold, so other countries liked to hold US dollars as a "reserve" currency. As good as gold.

Gold backed US currency is "currency".

Gold backed currency, in the form of notes or bonds or dollar bills or cheques, is a claim on gold reserves, hence the term "gold backed".

No gold = No reserves.

US currency may have been popular to hold and indeed was considered to be the reserve "currency". The currency was a claim on their gold not on other American dollars, as it became after the cancellation of Bretton-Woods.

If the "currency" is gold backed then gold is the "money" and "currency" a claim on the money. Somewhat like a cheque is a claim on someone's "money". I can collect a pile of cheques written on someone's account payable to me but the "money" in his account is the reserve not the cheques in my drawer. Essentially the US made their "cheques" the money.

Why should the currency of a bankrupt nation become the reserve currency of the world?

[maple_leafs182]

Why should the currency of a bankrupt nation become the reserve currency of the world?

Because they made the U.S. dollar the currency that oil is bought and sold in.

[dre]

Well, I think this is a sloppiness of nomenclature. By "reserve" I mean that which is held as a claim for payment. The US dollar under Bretton Woods was the only currency that was gold backed, that is it could be redeemed in gold, so other countries liked to hold US dollars as a "reserve" currency. As good as gold.

Gold backed US currency is "currency".

Gold backed currency, in the form of notes or bonds or dollar bills or cheques, is a claim on gold reserves, hence the term "gold backed".

No gold = No reserves.

US currency may have been popular to hold and indeed was considered to be the reserve "currency". The currency was a claim on their gold not on other American dollars, as it became after the cancellation of Bretton-Woods.

If the "currency" is gold backed then gold is the "money" and "currency" a claim on the money. Somewhat like a cheque is a claim on someone's "money". I can collect a pile of cheques written on someone's account payable to me but the "money" in his account is the reserve not the cheques in my drawer. Essentially the US made their "cheques" the money.

Why should the currency of a bankrupt nation become the reserve currency of the world?

Why should the currency of a bankrupt nation become the reserve currency of the world?

I already explained this. Bretton woods nations were sitting on massive piles of US currency ALREADY. They quite literally had no choice. Although some of them like west germany actually were actually supportive of the idea.

The US dollar under Bretton Woods was the only currency that was gold backed, that is it could be redeemed in gold, so other countries liked to hold US dollars as a "reserve" currency. As good as gold.

No. ALL bretton woods nations had to peg their currency to gold within 5% in either direction, and all of them had to offer convertability (to other governments). Many of the architects of BW proposed using a new supranational currency called the "bancor", but the US dug in its heals, and got their way because of the strength and size of their economy.

Bancor is the name of the supranational currency that John Maynard Keynes was conceptualising in the years 1940-42 and which the United Kingdom proposed to introduce after the Second World War. This newly created supranational currency should then be used in international trade as a unit of account within a multilateral barter clearing system – the International Clearing Union –, which would also have to be newly found. The Bancor was to be backed by barter and its value expressed in weight of gold. However, this British proposal of introducing a supranational currency could not prevail against the interests of the United States, which then at the Bretton Woods conference established the U.S. dollars as world key currency.

So your assertion that the US dollar became the reserve currency under Bretton Woods because "so other countries liked to hold US dollars as a reserve currency" is just wrong.

Us dollars were already the "unit of economic account" under BW for all signatories.

[Pliny]

No. ALL bretton woods nations had to peg their currency to gold within 5% in either direction, and all of them had to offer convertability (to other governments). Many of the architects of BW proposed using a new supranational currency called the "bancor", but the US dug in its heals, and got their way because of the strength and size of their economy.

The strength of their economy?

What happened to bankrupt?

Read this article and get some facts straight. One being the following:

The U.S. dollar was the currency with the most purchasing power and it was the only currency that was backed by gold

Bretton Woods failed for two main reasons. The price of gold on the open market was rising above the dollars pegged rate of $35/oz. The dollar was thus overvalued. The other destabilizing influence was huge banking syndicates that formed in the sixties and speculated on the currency exchange market. The US could no longer afford to keep it's dollar pegged at $35.

No. ALL bretton woods nations had to peg their currency to gold within 5% in either direction, and all of them had to offer convertability (to other governments). Many of the architects of BW proposed using a new supranational currency called the "bancor", but the US dug in its heals, and got their way because of the strength and size of their economy.

It was Keynes from Britain who suggested the Bancor.

"In theory the reserve currency would be the bancor (a World Currency Unit that was never implemented), suggested by John Maynard Keynes; however, the United States objected and their request was granted, making the "reserve currency" the U.S. dollar. This meant that other countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within plus or minus 1% of parity. Thus, the U.S. dollar took over the role that gold had played under the gold standard in the international financial system. (Rogue Nation, 2003, Clyde Prestowitz)"

Nations had to keep the amount of their currencies at parity with the amount of their gold holdings at the pegged price of $35/oz.

The BrettonWoods nations had to peg their currency to the US dollar within 5%

So your assertion that the US dollar became the reserve currency under Bretton Woods because "so other countries liked to hold US dollars as a reserve currency" is just wrong.

Us dollars were already the "unit of economic account" under BW for all signatories.

This is what I said: "The US dollar under Bretton Woods was the only currency that was gold backed, that is it could be redeemed in gold, so other countries liked to hold US dollars as a "reserve" currency. As good as gold."

I am not suggesting that the US dollar was not the "unit of economic account" only that they preferred to hold US dollars.

[GostHacked]

No it wasn't...it was just abandoning BW and punishing West Germany for currency manipulation. The US is not bankrupt then or now despite your pleadings and wishful thinking. If the US was bankrupt, how did it go on to dominate the IMF? Why didn't the US default like Russia?

How much currenct manipulation has the US done in the past 5 years? A couple bailouts of banks and wallstreet and an injection of close to another trillion.

Us did not fail because of petrol dollars. If oil was not traded in US dollars, we would not be having this discussion. This is the ONLY reason why it did not fail. But the Soviets failed for a multitude of reasons.

The IMF is just the world's central bank run by an american, but not owned by America. See the difference? Because the guys running the IMF don't give much of a damn about the US or any other country for that matter. It is about controlling the world's so called wealth and monitary policy. If you don't buy into the IMF (like any other world body like the UN, WHO WTO, ect ect, you can't play the game.