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What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby sulavaca » 12 Apr 2012, 19:37

China doesn't want it's RMB to become a world currency just yet. It still hasn't finished making its purchases of cheap gold and other commodities.
Once it has its stock in place though, then it will begin with backing its currency in gold.
It already has plans to open a precious metals currency banking system , which will be able to take power away from London, being the only centre which can dictate gold prices three times a day.
Once China has it's gold reserves in place, then it will want the value of those reserves to rise.

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What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby headhonchoII » 12 Apr 2012, 20:09

I wouldnt get so fixated on gold (I know it's hard for you :)), simply because the quantities are so limited.
But I might agree that China is importing strategic reserves of ores and commodities , recently they imported record amounts of copper and iron ore.

Still it's very hard to see what benefit China would have from a highly devalued USD against the Yuan.
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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby sulavaca » 12 Apr 2012, 20:18

headhonchoII wrote:I wouldnt get so fixated on gold (I know it's hard for you :)), simply because the quantities are so limited.


Which is why silver has also acted strongly in currency systems all over the world, and also why both of them have the honorable track record of being the most stable currencies ever known to man. Silver is relatively overlooked in recent years, since most people are still under the illusion that somehow fiat currencies are going to win through. Look, we are presently towards the end of the longest fiat currency popularity run the world has ever seen.

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What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby headhonchoII » 12 Apr 2012, 20:36

Silver may go up in value and paper money continues to be printed like crazy and devalued as part of deliberate policy, sure.

Still not all currencies are created equal. Oil , iron, copper and some other commodities are also strongly influenced by economic activity and changes in energy provision and technology, they are not a sure thing.
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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby sulavaca » 12 Apr 2012, 20:41

headhonchoII wrote:Still not all currencies are created equal. Oil , iron, copper and some other commodities are also strongly influenced by economic activity and changes in energy provision and technology, they are not a sure thing.


But these things you mention have no real history as being currencies. They are tradable goods, certainly, but I don't think you'll find many instances of individuals carrying oil or iron with them in order to pay for things like bread and milk.
Copper has been used in coins all around the world, but mainly as fiat denominations.
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What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby headhonchoII » 12 Apr 2012, 21:04

I understand, I'm just trying to illustrate that putting all your cash into certain commodities is also not a great idea as an inflation hedge, as ultimately inflation is the problem we are dealing with here.

For instance copper can be replaced by graphite if the price increases too much.
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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby sulavaca » 12 Apr 2012, 21:25

headhonchoII wrote:I understand, I'm just trying to illustrate that putting all your cash into certain commodities is also not a great idea as an inflation hedge, as ultimately inflation is the problem we are dealing with here.

For instance copper can be replaced by graphite if the price increases too much.


I understand the concept of hedging. I hedge as I keep an amount of value in cash, and the rest in gold and silver. Although I honestly don't see gold and silver as I do many other commodities, as these two things are money as well as having other physical uses and properties.
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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby Got To Be Kidding » 12 Apr 2012, 21:45

It is so good to see how everyone dismisses the implications of the US dollar losing its status as the Global Reserve Currency.

Please keep thinking like that while the rest of us get out of dollar assets. :bravo:

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What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby headhonchoII » 12 Apr 2012, 23:10

But it's not losing it's status, at least not yet or anytime soon.
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Re: What will happen if the U.S. dollar’s reign as the world reserve currency comes to an end?

Postby Shaktipalooza » 12 Apr 2012, 23:14

headhonchoII wrote:But it's not losing it's status, at least not yet or anytime soon.


True, so many countries in a race to the bottom. I'm putting better than 50/50 odds the Eurozone will break up.
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