End of US dollar as reserve currency near?

[bush_cheney2004]

But in the early 70's countries around the world got scared and began to doubt that the US would honor their promise of convertability under Bretton Woods in part due to spending on the Vietnaam war, and the US's trade defecit, countries began demanding that the government redeem their US dollars with gold as the US had promised. Countries like Switzerland and France were some of the first ones.....

....You seem to have zero knowledge of how Fiat Currency came to be, or the history of our monetary system.

Everyone here can have just as much "knowledge" as you got from the same Wiki article.

[dre]

Everyone here can have just as much "knowledge" as you got from the same Wiki article.

I probably would have written an empty ad-hom post like that as well, if I was completely unable to address the subject at hand. Basically ALL the replies to me in thread ammount to the same thing. Nobody has effectively argued a single fact that I presented. Instead they try to make the subject about ME... Have I travelled abroad? Do I "understand democracy"? Did I "read wikipedia"?

How about answering a simple question.

You purchase paper certificates from me based on my promise to allow you to trade those paper certificates back in later for six-packs of beer. Then when you show up and demand a six-pack for one of the paper certificates I sold you, you are told "Nope... Sorry. We dont trade those certificates for been anymore.".

Fair deal? Or scam?

[bush_cheney2004]

...Fair deal? Or scam?

Fair deal....read the fine print. The US was not obligated to redeem ALL foreign (or demestically) held dollars for gold, only to maintain reserves within margins. See "silver certificate" for another example of a broken "promise".

...besides, I don't even like beer.

[dre]

Fair deal....read the fine print. The US was not obligated to redeem ALL foreign (or demestically) held dollars for gold, only to maintain reserves within margins. See "silver certificate" for another example of a broken "promise".

...besides, I don't even like beer.

You havent even read the agreement. The US commitment to maintain convertability was the lynch pin that made Bretton Woods work. Origional BW nations had proposed a "bancor" but the US talked them into using the dollar instead by promising to fix it to gold.

The entire basis of the agreement was that instead of BW nations fixing their currency to gold, they would fix it to the US dollar instead, and the US would fix THEIR dollar to gold.

The problem is, the US was essentially bankrupt. There was no way it could ever hope to repay its debts in terms of real purchasing power, so the FIAT currency scheme was hatched, and every since then the US has financed itself through inflation, which has allowed them to siphon wealth off from the rest of the world.

[bush_cheney2004]

You havent even read the agreement. The US commitment to maintain convertability was the lynch pin that made Bretton Woods work. Origional BW nations had proposed a "bancor" but the US talked them into using the dollar instead by promising to fix it to gold.

Nonsense...their were several mechanisms for subscriptions in the par value system. Keyenes and White agreed on a compromise that favored the Americans if only because it was the biggest solvent survivor of WW2 (and still almost went broke).

The entire basis of the agreement was that instead of BW nations fixing their currency to gold, they would fix it to the US dollar instead, and the US would fix THEIR dollar to gold.

No, there were other interests and objectives requiring a compromise.

The problem is, the US was essentially bankrupt. There was no way it could ever hope to repay its debts in terms of real purchasing power, so the FIAT currency scheme was hatched, and every since then the US has financed itself through inflation, which has allowed them to siphon wealth off from the rest of the world.

LOL...the rest of the bombed out world had nothing better to offer! To the victor goes the spoils.

[dre]

Nonsense...their were several mechanisms for subscriptions in the par value system. Keyenes and White agreed on a compromise that favored the Americans if only because it was the biggest solvent survivor of WW2 (and still almost went broke).

No they agreed because the US promised convertability which essentially ensured that theyre reserves would have consistant purchasing power.

Which is of course why the entire agreement fell apart and Bretton Woods collapsed as soon the US refused to honor the bargain.

This essentially resulted in a situation where the rest of the world is paying for the US way of life, its expensive wars, its social programs, military programs, etc.

A country that bought a billion dollars worth of US debt via instruments that matured in 40 years for example, will only ever get a fraction of their money back. The US keeps the rest of purchasing power as proceeds of the scam. In the last 40 years US currency has inflated 473.25%. So in terms of purchasing power they are giving the US about 5 units, and eventually getting paid back 1.

[bush_cheney2004]

No they agreed because the US promised convertability which essentially ensured that theyre reserves would have consistant purchasing power.

That was only one of many other provisions agreed to.

Which is of course why the entire agreement fell apart and Bretton Woods collapsed as soon the US refused to honor the bargain.

Nonsense....US dollar hegemony developed over many years and many nations engaged in arbitrage, undermining BW long before Nixon's controls measures in 1971.

This essentially resulted in a situation where the rest of the world is paying for the US way of life, its expensive wars, its social programs, military programs, etc.

Sounds good to me...who also benefitted from the USA's "expensive wars".

[dre]

That was only one of many other provisions agreed to.

Nonsense....US dollar hegemony developed over many years and many nations engaged in arbitrage, undermining BW long before Nixon's controls measures in 1971.

Sounds good to me...who also benefitted from the USA's "expensive wars".

Sounds good to me

At least youre admitting it now.

We'll see how good it sounds to you once you need 10 000 US dollars to buy a cheese burger.

[bush_cheney2004]

At least youre admitting it now.

Look, it didn't happen just because of suspension of gold convertibility...other limp dick currencies had every reason to play along because the US dollar was the only game in town before and after 1971.

We'll see how good it sounds to you once you need 10 000 US dollars to buy a cheese burger.

No problem...I can still buy many cheese burgers.

[August1991]

Wrong again. Richard Nixon forced over 200 countries to accept the US dollar as Fiat currency in 1971 by suspending the convertability of the US dollar to gold, and shit-canning bretton woods.

Nixon forced no one to do anything.

dre, you have obviously never lived or travelled abroad. You don't understand how billions of foreigners manage their savings, or their transactions. The US dollar is a convenience that they choose. It makes their life easier.

The US dollar is a reserve currency because billions of people, around the world, freely choose it to other alternatives.

Canada, the US, Netherlands, and France are the countries Iv been to so far THIS YEAR.

Netherlands? Hmm. Try different currencies in the Red Light District of Amsterdam, or a taxi in Paris. You will soon learn the meaning of "liquidity" and "reserve currency". Edited June 30, 2010 by August1991

[dre]

Nixon forced no one to do anything.

dre, you have obviously never lived or travelled abroad. You don't understand how billions of foreigners manage their savings, or their transactions. The US dollar is a convenience that they choose. It makes their life easier.

The US dollar is a reserve currency because billions of people, around the world, freely choose it to other alternatives.

No the US dollar is the reserve currency for the exact reasons I outlined. Your continued references to "billions of people choosing" lead me to believe you dont even know what a "reserve currency" is.

I posted a fairly detailed and completely accurate account of how the US dollar became the worlds reserve currency, and when it became fiat currency and the events that lead to those things happening... all easily verifiable information if you spent 10 minutes. Im not sure what else you expect.

I also posted my international destinations for this year I didnt need US dollars for anything in Europe btw. Believe it or not my Interac card issued by my local credit union worked, even on communes in the deep south of France. I was kinda suprised.

[dre]

Nixon forced no one to do anything.

dre, you have obviously never lived or travelled abroad. You don't understand how billions of foreigners manage their savings, or their transactions. The US dollar is a convenience that they choose. It makes their life easier.

The US dollar is a reserve currency because billions of people, around the world, freely choose it to other alternatives.

Netherlands? Hmm. Try different currencies in the Red Light District of Amsterdam, or a taxi in Paris. You will soon learn the meaning of "liquidity" and "reserve currency".

Netherlands? Hmm. Try different currencies in the Red Light District of Amsterdam, or a taxi in Paris. You will soon learn the meaning of "liquidity" and "reserve currency".

You need to start at square one and learn about reserve currency is, because it has nohing to do with buying prostitutes in Amsterdam. Its money that governments use to facilitate foreign exchanges, and purchase commodities.

[ZenOps]

Nixon screwed over everyone else in the world. But in the end, it didn't take long to reciprocate.

Gold is important as a low water mark for currencies, even if everyone converted whatever currency they have, there would still be less than one ounce for every person on the planet.

Nixon pretty much started a chain of events leading up to devaluation of the US dollar. But its not like anyone cares about "credit card" type economics during Nixon, sure it was great for the US for maybe a decade, but just like a credit card debt hangover - it usually comes back with a huge bite later.

But that seems to be the way the US likes economics, borrow to the point of bleeding - and then borrow some more.