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Local Currencies To Replace Dollar For 5 Countries' Dealings
An anonymous reader writes "Brazil, Russia, India, China and South Africa — the BRICS group of fastest growing economies — signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other. The world does need a new financial architecture, but the BRICS by themselves are unlikely to be able to drive that change."
I think Spaceballs got it right.
This is VERY bad news to an already weakened dollar.
The volume of trade between the brics may not be a lot now - but in the next few years it will only go up, and USD will lose its hallowed status. The USD has a residual value because it is a global default currency - and as countries unwind their position, the real value of USD will be apparent (esp. with the huge debt in the US).
So BRICs using local currencies is good. It will isolate them from the stupid US policies, and prevent the brics from bearing the burden of the US debt.
Time Americans realized that you cant just attack some country cos it has oil - and then expect the rest of the world to bear your debt.
BAHAHAHAHA Stupid spammer can't even post a link properly!!!
You fail at spamming, sir. How do you feel about the BRICS situation?
One lesson from the mid-1990s Asian financial crisis was that since the US dollar is the de-facto world currency, countries needed to hold large amounts of US currency as a hedge against speculators and currency fluctuations (an alternate lesson was to impose capital controls). The move amongst the BRICS to trade in their own currencies will mean a reduction of the holdings of US currencies by the countries involved (which is what the US public seem to desire), which in turn will make it easier for them to revalue their currencies (because it won't be effectively destroying the value of their US currency holdings) -- which is another thing that the US public seems to desire.
So it seems like a win-win for all countries.
The only sensible solution is to replace currency with leaves. It's probably the only hope the US has of repaying it's debts.
ENTIRE modern financial structure depends on trust. That's that. Void papers and monies backed by various privately owned central banks or private investment firms had been the perpetrator of this trust system so far. And all the world obliged by it.
If you really go down to it, there is nothing real left backing the financial and monetary values and papers right now. They are SO inflated and complicated that, one top hedge fund manager said on cnn, even he himself doesnt know the exact composition of the fund he was managing. However this fund too, is taken as a real fiscal value, and is also considered as a backer of monetary value of the country it is being traded in.
water vapor. if you erase that water vapor and overinflated stocks, you will see that nothing remains backing the money of most countries like switzerland, britain, usa.
whereas this BRIC alliance that the summary so gleefully drops down, actually PRODUCES value. they have solid backing for their money. contrary to the others, you can actually buy solid products and services with that money from those countries.
Once there is traction behind these, and the water vapor of the established financial scourge in the west is ignored, everything easily will change.
really. china produces most of the world's products now. so, what ? some investment bank from wall street, is going to threaten china ? oh boy. what will happen if china says 'give me yuan' ?
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This is just the start to the New World Order and one currency to control the masses.
hahahaha. invading india, a 1 billion country, with nuclear weapons, ally of russia, china ? ......
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Don't they also have one of the larger armies in the world? Sure, they're outnumbered by the US military, but you don't just ignore a large military force.
yes they are quite large. even proposal of an invasion of india is hilarious. leave aside their military power, but, noone would allow that on any ground.
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Not to mention they'd immediately pull all our tech support and offshored coders, and *then* where would we be?
The USD is in bad shape, but compared to the yen or the ruble? give me a break, go look at the last 20 years of those currencies and ask if you want to trade in them.
Not only did you suggest a country with a billion who actually produces real goods AND is nuclear armed can be bullied, China is aslo BRICS. Do you seriously think South Africa is going to give a shit about a dying economy when latching onto India and China will be a bonanza?
See : Australia's present economic boom generated by selling real shit to BRIC
"repatriate" your manufacturing ... WHERE will you sell your products to ? europe ? china ? russia ? india ? all the while where china produces the same product for dimes ? with its 1.5 billion population ?
in case you are not yet aware, china is the BIGGEST market on the planet, and one of its cards in his hand, is this. noone can ignore the market that is china and be set.
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Not to worry. The multi-national corporations, so highly revered by many Americans, will survive just fine by simply moving operations completely out of the US and into whatever country suits them. So, it's not all grim!
http://www.rootstrikers.org/
As someone sitting in India, I love this move. Sure my paycheck is going to suffer once they start cashing in all the dollars from their reserves and the rupee strengthens. But as a long term measure this is just absolutely required.
The dollar jumped to the forefront of all this because (IMHO) they managed to ensure OPEC only sells using dollars. But if Russia, China, Brazil and (hopefully) Iran starts selling things in other currencies, US loses the critical ability to just print out more dollars to pay off their deficits or the bring down the world economy just to get out of jail free. Which is what China's aiming for, I guess. And Manmohan Singh was one of the most famous finance ministers in India, responsible for the economic liberalization of the 90s, I guess he knows what he's doing as well.
The fall of the dollar is a big deal for the developing world.
Quidquid latine dictum sit, altum videtur
financial chicanery is something that only happens in the west?
genuine economic activity only happens outside the west?
the us dollar has weakened, so it makes sense to look at other currencies for transactions. if those other currencies also weaken, well then you look around again for the next safest currency
that's the beginning and end of the entire story here
currently, the chinese real estate market is overheating. some say china could go through the same bust followed by anemia that japan has suffered since its real estate market tanked in 1990. or maybe it won't. either way, the yuan looks safest right now, but that is subject to change. just like any other currency, including the dollar
we are entering an era which is more fluid financially, so people will be trading in all sorts of currencies, depending on various perceptions of strength, that should shift over time. nothing pro- or anti-western about it. stop trying to inject politics into a subject matter which is pretty bloodless and simple: "what's the safest currency?" when they think about that, they think relative stability, nothing more
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
But what will you do about the over supply of leaves?
http://michaelsmith.id.au
Oh, but India DOES have WMD. ;)
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Getting it right the 2nd time makes it much less fail.
"Prediction: within 10 years, Windows will be a Linux distribution." Me, 7-6-2016
and ?
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India is not an ally of China. There are huge land disputes, troops at the borders, etc. China has entered behind the scenes in the Kashmir dispute between India and Pakistan as well. (I believe part of it is building railroads in disputes areas.) China is also attempting to contain India in the Indian ocean too, with deals for ports to protect Chinese trade routes. Competition for resources can see these two at each other's throats in the future. (Large populations, proximity, clashing zones of influence.)
The BRIC alliance (South Africa is peanuts and just in there as the token African country) is much more pragmatic than Western media like to portray it. It's really these countries trying to wrest away some international power away from the West, and they know they can't do it individually.
The US is closer to being an ally to both India and China than the latter two are to each other.
Um, why would they do that? The amount of back doors...
those land disputes and kashmir issue is a remainder of the 1950s and mao era. it is 2011 now. they linger, and will linger on. however, there are bigger mechanics of life than land as of 2011, and all know it. this is why there is a BRIC bloc, including I and C.
alliances, are pragmatic.
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Do you think China is going to send billions of Yuan to Europe during a crisis?
Well, right now, they would find some happy takers in Ireland, Greece and Portugal . . .
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
Frankly it ain't the USA that needs to be worried....it is everybody else. remember what happened when Germany went tits up in the 20s? Something about taking Poland? So what do you think will happen when the largest military in the world can't hand out local bread and circuses? Why we'll just take yours!
And the bitch is? With the right leader unlike the crazy Austrian we'll pull it off too and you know how? Deals baby! Watch how easy it would be: Oh Putin want to be president for life? How about having the USSR back? We know you miss the old days, well its yours baby! We won't say a word pal, enjoy...just don't say nothing about what we do in OUR backyard, kay? Russia down
Hey China! Our buddies in the east! Hey you know that whole Taiwan thing? Roll the tanks baby, it is ALL yours. Oh and as long as you keep the trade up Africa? help thyself buddy. China down.
So what do the USA get for our dealing? Why North and South America, of course! The United Continent of America has a REAL nice ring to it, don't ya think? All those nice oil sands up north, all those resources down south, Lebensraum here we come!
And honestly who would stop us if China and Russia agreed to sit this one out? Germany? Will be too busy shitting their pants at the USSR on their doorstep, especially with the USA out of NATO. The UK? They are an island, Wolfpacks showed how to fix THAT problem. They have...what? 1 Aircraft carrier? We got 11, no problem! France? Italy? oh they'll bitch, but who cares.
As for getting the American people behind it? Do the same trick the Austrian used, lots of "bread and jobs" along with a false flag or two. Wouldn't be hard to paint Chavez and a few others to be the new devils.
So for all those "Yay America is gonna fall" types? be careful what you wish for, because Germany got to be the asshole twice last century, and before those in power go silently into that good night I have a feeling it will be the USA's turn. Frankly it wouldn't take long at $10 a gallon gas and 40% unemployment to get Americans to sign off on just about anything. you already have some serious hatred of foreigners building up with the lax border and H1-Bs, really wouldn't be hard to direct that hatred at a chosen target. Scary thought, isn't it?
ACs don't waste your time replying, your posts are never seen by me.
Given that Brazil when it revalues their currency switches between "cruzado" and "cruzerio" (and most recently "real", short for "cruzerio real") on an almost clockwork basis, invariably involving a devaluation of 1,000:1 or some other ridiculous figure like that, were they planning on using Cruzados or Cruzerios to exchange, and how many truckloads of whatever they use will it take to make a Rand, Ruble, Yuan, or Rupee?
Just because you're paranoid doesn't mean they aren't out to get you
I'm not an Economist. Can someone in that field think 5-10 steps ahead and tell me whether this is a good or bad thing?
Frankly it ain't the USA that needs to be worried....it is everybody else. remember what happened when Germany went tits up in the 20s? Something about taking Poland?
Good, then I will just have to wait 25 more years to see the fall of USA (hint: remember what happened to Germany in 1945).
I think I predicted this here on /. in 07/08, earlier? i'll have to google. Taken a bit longer than expected, but economies are like oil tankers. 11/12 is going to be real painful for the ordinary Joe. You now have the choice of more recession or inflation (Hint, TPTB'll pick inflation). Stockmarket's flying though, to da moon.
This has been on the cards since 2000 and you can blame the Federal Reserve and it's owners JPM and GS.
Note, the shit won't *really* hit the fan till oil is priced in other currencies. Gotta keep those Saudis happy.
Deleted
Erm, no. First of all, China and Russia are by no means friends, the only place close to China where they can feasibly expand is Russia.
Also, throughout history no one has managed to keep a country occupied, the local residents has historically always fought the invaders, yes it might be "interesting times" for a while, but there is no way they would be able to do anything meaningful.
The US wont go into war, if the US tries to fight everyone a delegate from China will approach the US in the same manner the US approached the UK just before they lost their colonies. Back then the US pointed out that if the UK went into war they would default their loans, suddenly the UK had no real power. If the US started to threaten everyone China would just default the US loans - this would kill the dollar, which would halt all export to the US, including food, try waging war without food...
and is a sign of the future I think. The $US has been declining for some time - well the underlying economy has - , and the recent GFC did nothing so stem the tide.
Simples:
When the going rate is something like three deciduous forests to buy "one ship's peanut, to obviate the problem and effectively revalue to the leaf...embark on an extensive defoliation campaign and...burn down all the forests" [DA, HHGTTG, 1978] or use something like Agent Orange...
A rose by any other name would smell as sweet;
A chrysanthemum by any other name would be easier to spell
remember what happened when Germany went tits up
Let's see: we ended up with a destroyed country, divided between several invader alliances and even decades after reunion the country is smaller than before.
Don't you think your "allies" would all come running once you've spread your military too thin and run down your economy after years of war? They'll decide to "help democracy" and portrait themselves as saviours for decades to come. Nothing like creating a nice little diversion to make people forget you just annexed a few countries they might be miffed about.
I wonder who will get the west coast? China might like it. Why would they be content with a tiny speck of dirt like Taiwan? Russia will likely go for Alaska. Canada will get a few northern states as reparations. Nobody would want Texas so they'll finally secede. Mexico might snag Arizona and New Mexico. Who'll be interested in Hawaii? Could be turned into a decent international military base.
Yea, good luck with that.
This will be a big shift and cause US citizens a lot of pain but the consequences can be greatly decreased if we shift our national priorities toward taking care of our own people rather than maintaining military dominance over the world in order to protect the corporate elite. Do we really need to spend more than the rest of the world combined to protect US citizens? Hard to make that argument.
Trade to be done in non-us dollars. That will hurt the US very very badly.
The oldest man just died recently, at 114 years of age. This means that he was born before 1900. When he was born and for a long time in his life, the British still had an empire. You wanna bet they didn't trade or loan money in USD? Who would use money from some backwards place filled with barbarous people with barely any history?
And then, the world changed. The US rose up to be the new super power. Pact Britannica, replaced by Pact USA. Not british warschips but American carriers patrolled the oceans, protecting trade... as long as it followed their rule. It is not without coincidence that oil is traded in dollars and some dare suggest that America's wrat was raised when certain oil producing countries dared consider trading in Euro's instead of dollars. Look it up and see just how many seconds it took for the US to declare the leaders in power a danger to western civilization.
All true? Partly. It is not like Saddam did not do plenty else to cause upset. Maybe it was just the straw that broke the camels back or one of the many straws already on the back. Who knows.
What is important here is that this old man saw the world change, saw certainties wiped away AND then replaced by new certainties. Many above post that US dollars are just the way things are. Yes, they are. For as long as they have been alive at least. But there are those who knew different realities in their youth, realities that seemed just as sure and to be able to last forever. Go ahead, travel back to the 1897 and declare the british empire will crumble in London. Don't worry if your timemachine can't travel forwards in time, I don't think you are going to need a return trip.
The BRICS countries are HUGE together and have tasted the downside of US dominance. Together they control more then half the world population. More resources then anyone else, more production then anyone else, more market then anyone else. And they realize this and are stirring. Should the US be worried? About as worried as the brits pre-WW1 should have been before the pound. Once the symbol of stability, now toilet paper.
And the brits didn't learn, they still cling to their ideas of empire and that the pound will beat everything else. That is why they didn't join the Euro and still beat themselves on the chest about it despite mass unemployment and mass debt that is tearing their society apart from the inside.
Is trade in another currency then dollars going to hurt the US? Yes and no. Yes because a lot of the value of the dollar hangs on the fact that it is used by everyone for trade. If this changes, a LOT of dollars will appear on the market because the need to have a huge pile in reserve to buy stuff (like oil) will disappear. Simply put, Holland needs a pile of dollars now if it wants to buy oil and a healthy reserve for emergency purchases whatever they might be. If oil trade changes to Euro's, then it doesn't need a pile of dollars anymore and even its reserves can go down since it already holds Euro's in reserve. That will lower the perceived value of dollars and might bring it down to the real value.
If the perceived value of the dollar now is equal to the real value, then the US won't be hurt. Nobody really knows but many doubt it is. On the other hand, IF the US "collapses" it could stop being the world police man, go back on itself and save a fortune on its military budget. If the dollar is worth less, then importing makes far less sense, US might start producing on its own shores again.
US bankers and the superrich won't like it. But the people of the US might be better off.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
this would kill the dollar, which would halt all export to the US, including food, try waging war without food...
The GP makes an interesting comment (not that I agree) but dude, the US feeds the world. I am all on board with banging the US trade deficit, but we export food. Do you know what drives the economy of all the mid-western US states? Hint: it's not high finance or blockbuster movie releases....
...which I admit, does seem pathetically low. Also, I freely admit that the US has a protectionist agriculture industry (you can trivially corroborate by searching for WTO complaints about the US & sugar). However, food is the least of our worries. We can feed everyone in our country by ourselves, as well as a significant part of the rest of the world. We have no need to import food.
Quoth the US Dept of Commerce:
The U.S. trade surplus in foods, feeds, and beverages rose $16.8 billion to reach $19.4 billion in 2008, up from a surplus of $2.6 billion in 2007.
you mean that you predicted that the US wouldn't be the only economy in the world? wow. your smart.
... this guy is a capitalist--above all, he seeks to profit from the sales of his wares,
but its no more offensive than listening to preacher deliver a sermon in front of a
life-size Roman instrument of torture, and probably more accurate:
http://www.endofamerica13.com
Cue flames of hell...
Good, then I will just have to wait 25 more years to see the fall of USA (hint: remember what happened to Germany in 1945).
Ah, you mean when Germany deployed the largest nuclear arsenal in the world, that happened to be in their possession centrally located in their uncontested, contiguous continental land mass and had world-wide, warheads-detonating-within-150-meters-of-designated-target-within-30-minutes reach, the neutralization of which required infeasible invasion across at least one of the world's two largest oceans (or total nuclear war)?
Time have changed. External military overthrow of any well-established nuclear power is infeasible. Stick with the economic warfare scenario. The US required the UK to back out of their involvement in the 1956 Suez Crisis by merely threatening to liquidate their UK bond holdings acquired during WWII. This style of attack is much more credible, and in my opinion, likely.
Americans have never attacked a country solely because it had oil. It has attacked oil exporters, but there was always a more compelling reason to attack that country. I will NOT rehash all the reason for going into Iraq, btw. Feel free to list your full gamut of right-on-cue taunts about the Bush administration. I don't care. This is not the topic of discussion. And I don't want it to disintegrate into that. It's 1999 today -- not 2003.
Any guest worker system is indistinguishable from indentured servitude.
You see, in a normal world if I printed up some paper and tried to use it to buy goods and services from you, nobody would take it. But if you tax people in that paper, and you take measures that people owe you debt denominated in that paper, and you start out with a commodity (like gold) and switch it out for certificates of promise, and then paper later on. Then you can force something that's worthless to have value. (Of course, none of this stuff can be done without the force of law to pounce the crap out of people)
In a way, this is how all fiat money works. But since the US was the world reserve currency, we had the additional ability to print money more recklessly than in other places. That is, and get away with it without causing the US to become a banana republic. I think a lot of other countries are getting fed up with that (if not jealous), which is why the game is coming to an end.
A lot of trade now accepts euro and dollars, with more and more preference for the euro if the end destination of the goods is in the euro zone.
I was promised a flying car. Where is my flying car?
Brazil: Only major BRICS trading partner is China. Is major trading partner with US, Japan, Eurozone.
Russia: Only major BRICS trading partner is China. Is major trading partner with US, Eurozone.
India: Only major BRICS trading partner is China. Is major trading partner with US, Eurozone.
China: No BRICS states among its major trading partners. Is major trading partner with US, Japan, Eurozone.
South Africa: Only major BRICS trading partner is China. Is major trading partner with US, Japan, Eurozone.
So, the only BRICS that's an important trading partner from the perspective of any of the other BRICS is China, and none of the other BRICS are important trading partners from the Chinese perspective. That means the only BRICS currency of any real importance in inter-BRICS economic activity is the Chinese renminbi.
And what are the major characteristics of the renminbi? It neither freely floats nor is freely convertible, which means it's unusable as a reserve currency. Further, since the major components of its currency basket are the dollar, euro, and yen, any general move to the renminbi from those currencies would require China to buy them to maintain the "managed float".
Oh, and the agreement is only about credit and grants, not use in trade, which makes it particularly pointless. None of these countries are major investors in each other, or likely to be anytime soon. Is the Chinese government going to stop building plants in China to start building them in India? Really?
So you are in favor of the Federal Reserve continuing to loot American citizens and the rest of the world. Really love the fear mongering, a nice touch.
Do you always set-up your own posts?
We can feed everyone in our country by ourselves, as well as a significant part of the rest of the world. We have no need to import food.
No competition from imports? Sounds like a great time for Monsanto to skyrocket prices doesn't it? You think because of some war, companies will stop trying to profiteer on the back of citizens? Heh.
considering Wall Street & Investment banks of the USA is run by criminals, if i was a trader or import/export man in a foreign country i would avoid the USD like it was infected with the plague.
Politics is Treachery, Religion is Brainwashing
but the BRICS by themselves are unlikely to to be able to drive that change.
However a recent Bloomberg article pointed out that China is now Germany's #1 client, replacing the US which has held that position almost since WW2. Considering that China's growth has "slowed" to a mere 9.7% per year, it won't be long at all before they are the largest economy in the world and we will have to do as China says. Another interesting side note is that all those German imports - precision factory machinery, BMW's and other cars, electronics, etc require energy to run. China's demand for oil is about to explode, at a time where we may be nearing peak oil. This is going to be very, very interesting.
The other side of the coin is that the US dollar as the world currency reserve means that the US is in a very special situation. The US is the only country in the world that can print US dollars. Every other country needs to trade valuable goods and services to obtain one US dollar with which to purchase commodities. The US can simply print it, and in fact this is what it has been doing for a while now. However the minute the US stops being the world reserve currency the US no longer can print its way to importing vital commodities. It will have to earn them like everyone else. Historical data shows that every country that loses status as the world's reserve currency (recent example, the British Pound pre WW2) undergoes severe economic distress. Americans are in denial of this, but irresponsible monetary policy always has consequences. A big hint is the Euro at 1.44 (as if the Euro were in great shape) and the Canadian dollar at 1.04 - not to mention all the other currencies. People don't want US dollars anymore, thanks to Ben and his buddies.
Seven puppies were harmed during the making of this post.
US has has been trying for years to get the rest of the world to stop using our currency.
I am very small, utmostly microscopic.
Answer unclear. Ask again later.
>Americans have never attacked a country solely because it had oil.
I think I heard somewhere that the country also needs to be weak. The USA doesn't attack anyone who can put up a decent fight.
Some of my favourite people are from th US; Vonnegut, Chomsky, Bill Hicks.
And so it begins.
Well, do what you always do: go invade them!
India and China alone are over ONE THIRD of humanity.
Now, when that one third of humanity gives loans to itself (C-I, I-C) it is no longer dependent on the current or the future state of US economy, nor does it have a reason to care about possible changes it may create there.
Where will this become apparent? Fungible assets that they spend more than anyone else - like food and fuel.
They take out a loan from each other to import goods, pay goods in dollars because they have to, which influences the dollar value in a positive sense (it goes up or it doesn't go down, but since everyone else is trading in dollars it is usually invisible) - but now, the price of their loans does not increase with the amount of grain or oil they import.
As a bonus, both economies being outsourcing centers for the US economy, the positive influence their importing makes on the dollar now makes the dollars they are paid in more valuable - while their interest rates and other costs of loan don't go up along with the value of the dollar.
Bonus points if the exporter country is the lender at the same time. Like say... Russia for grain/oil/coal.
A smaller economy/country would probably not have that much of a positive effect, but we ARE talking India and China here. And Russia.
And 2.5 billion people can eat a lot of food and burn a lot of fuel.
Mit der Dummheit kämpfen Götter selbst vergebens
TAHT MEANS THEY MUST BE STOPPED!!!!1
this is the standard policy, isn't it?
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"Bitcoin is the first digital currency that is completely distributed. The network is made up of users like yourself so no bank or payment processor is required between you and whoever you're trading with. This decentralization is the basis for Bitcoin's security and freedom."
You take tungsten, slightly less dense than gold, and a lot cheaper, mix it with a small amount of a more dense but more expensive metal to get up to the right density, then mix and plate it with about 50% gold. Very difficult to detect if you do it right, and costs a little over half the price of real gold.
Look, Archimedes called and he wants his density method for counterfeit detection back. The method you describe may be sufficient to sell fake bullion to Ethiopia, where it seems that you don't even need to get the density right, but it will not fool any serious gold trader.
The problem is not density alone, hardness is fundamental, because practical methods to identify metals today are based on speed of sound in the metal.
Ultrasonic thickness measuring equipment is the best way to detect fake metals, it works in a principle similar to the traditional "ringing sound" method for detecting fakes. Gold coins and bullion have a precisely defined thickness, if you use an ultrasonic transducer to measure it and get a wrong result it's a fake. And, of course, the transition inside the bar from gold to tungsten is trivially detected when you have the proper equipment, which you surely have if you are trading in large amounts of gold.
In an "arms race" scenario, technology definitely works against the counterfeiters. It's much harder and more expensive to create a gold-coated tungsten bar than to detect it.
Gold-backed trade is stupid, just like Quadaffi. There's not enough gold in the world to back the currencies. Also, one can't increase gold supply if trade volume and economy increases.
The Great Depression showed it quite clearly - the longer you stay on gold standard, the longer you suffer.
However a recent Bloomberg article pointed out that China is now Germany's #1 client, replacing the US which has held that position almost since WW2. Considering that China's growth has "slowed" to a mere 9.7% per year, it won't be long at all before they are the largest economy in the world and we will have to do as China says. Another interesting side note is that all those German imports - precision factory machinery, BMW's and other cars, electronics, etc require energy to run. China's demand for oil is about to explode, at a time where we may be nearing peak oil. This is going to be very, very interesting.
The average age in China is roughly 40. In twenty years it will be 60 (duh). So China is in a race to get rich (and not just the lucky / select few) before it gets old. Because once it gets old it will be much harder to keep growing, and also support its aged population (like North America is having with its Baby Boomer population).
India on the other hand currently has an average age of 20; two decades from now it will be 40. I think they're in much better position to become more dominant in the future than China is.
There are no guarantees of course, but demographics can certainly influence a lot of things.
Also, throughout history no one has managed to keep a country occupied, the local residents has historically always fought the invaders, yes it might be "interesting times" for a while, but there is no way they would be able to do anything meaningful.
The Romans managed it. Most of the internal provinces didn't rise up as nations, Rome fell apart as a cohesive whole from the middle outwards. Their trick was to encourage local participation in government and the military, and to control the fashion. In modern parlance, being Roman was cool. This is actually quite similar to the state in much of the world at the moment (although a lot less than it was in the '80s) - American things are cool, local things are not. Hollywood would be much more important than the nuclear arsenal in creating an American Empire.
I am TheRaven on Soylent News
Is it just me or are the libertarians flocking here to try and push their craziness.... I've seen like 6 high rated comments about the laughable "gold backed currency needed!!!" opinion....
learn to read why this would be a very bad idea
This style of attack is much more credible, and in my opinion, likely.
And if that doesn't work, there's always the nuclear option - a tax audit
For justice, we must go to Don Corleone
>There's not enough gold in the world to back the currencies
Read the last sentence.
>Also, one can't increase gold supply if trade volume and economy increases.
No but the total volume doesn't decrease either, it is just used in products, stored as wealth or traded. Again read the last sentence.
Gold value has remained extrodinarily stable over the last 100 years, the measurement device we use to quantify its worth however hasn't ... money.
The dollar has fluctuated wildly and gradually lost over 90% of its original value. This is why what was once $25 an oz is now $1405 an oz
Maybe you should read up on the actual causes of the great depression, a lot of the prevailing theories gloss over the application of easing of gold reserves and shifting to a "more modern" fractional reserve.
http://en.wikipedia.org/wiki/Great_Depression#Causes
Money is detaching its meaning with value, specially when you can make billons out of thin air, is another bubble, but one that goes to the core of the system. Changing currency while keeping enabling that is just a placebo.
If those were the only two qualifications, we'd have invaded Canada years ago.
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On BRICS, it's mainly the same big Wall st. money shipped offshore that funded the BRICS economic growth so they really dictate the way these countries grow in many ways. They're in there. The only vestiges of economic freedom are lingering and dieing in the west. There's no real middle class in the BRICS countries and won't be the way things are going. It's a small group of people with all the money - as unsustainable as the West
The Great Depression had nothing whatever to do with gold supply, but rather self-referential paper pyramid scams that collapsed. We have built similar things today with different paper instruments, but the end result will be the same. There is enough gold to back the world's currencies (and give them their proper value rather than their over-inflated worth they have now), and gold supply can be grown (albeit slowly, a wonderful control on inflation which the parasitic banking cartel loves so much,
If Brazil borrows from India, it doesn't matter if those bonds are indexed in reals, rupees, renminbi, or Icelandic krona. Brazil can just go to JP Morgan, Deutsche Bank, BofA, or any other bank with a derivatives desk and buy some currency swaps. As far as Brazil is concerned the loan is now indexed in dollars. The bank doesn't want to take any risks, so they'll probably go straight to India and sell them the other side of the swap, and India would be more than happy to buy it. The bank now makes a fee without taking any risk, and Brazil and India get the PR boost of using bonds indexed in BRICs currency -- without giving up the relative safety of using dollars.
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"No but the total volume doesn't decrease either, it is just used in products, stored as wealth or traded. Again read the last sentence."
So? Gold will just act as a drag, because its limited supply will make transactions more and more costly as their volume grows. USD (or any other fiat currency) is much better in that regard.
"Maybe you should read up on the actual causes of the great depression, a lot of the prevailing theories gloss over the application of easing of gold reserves and shifting to a "more modern" fractional reserve."
This is immaterial, quite a lot of factors had influenced the economy. But the Depression was caused (in the sense that it became the Depression with the capital letter) mainly by ineffective policies of the Federal Reserve. It had contracted the monetary supply and instituted austerity measures, essentially strangling the economy.
The validity of Keynesian economy during liquid traps has been validated multiple times by now and its validity is out of the question.
By the 1990 definition of CPI, we're at 6% (a 10% change over last year). shadowstats.com to see unemployment and inflation by older measures, before the government decided to sugar coat.
.... that this is something new. That it hasn't already been going on to some degree, albeit under the table.
Euro zone countries buy oil in Euros. Quietly, so as not to upset the USA. In much the same way as shopkeepers give under the table discounts for cash. But quietly, so as not to piss off Visa or other credit card companies. If Saudi Arabia plans on doing %50 of its business with Euro zone businesses (Don't sweat the numbers. I just pulled %50 out of my ass for this example.), then it would be reasonable for them to get %50 of their revenue in Euros. Cut the local loan shark out of the equation. And they won't get stuck with a pile of depreciating currency if they don't run out and spend it immediately.
Have gnu, will travel.
No, the Great Depression had everything to do with the gold standard. It started as a run-of-the-mill business-cycle recession and was exacerbated by unfortunate international trade problems and then by stupid monetary policies.
And there's certainly not enough gold out there. The global GDP is 6*10^16 dollars and the amount of financial gold in the world is 165000 tons or 1.65*10^11 grams. At the current price of gold $50 per gram the total worth of gold is just 8.25*10^12 dollars - that's less than one 0.1% of the global GDP! For comparison, the total amount of currencies in the world is about half of the GDP.
So you'll have to appreciate gold value by about thousand times for it to replace the fiat currencies. This is totally impractical and impossible.
Also, the global GDP grows at about 3% each year while gold reserves grow less than 0.5% each year. So you'll automatically slow down economic growth by several times.
And finally, even using gold as an intermediary in the trade (so I can buy 1 kg of gold in Germany, give it to you, and then you immediately sell it in Japan) is not feasible. The total amount of gold is way too small even for in-flight transactions.
Let me give you a lesson in macroeconomics.
The money needed to cover a GDP is roughly the money supply times the velocity (number of times money changes hands during a year)
Now redo your calculations and get it right this time.
In the coffin.
Enjoy hyperinflation. Blame capitalism. Love government. Keep the Fed.
Yup. That's why I've added that the total amount of currency is half of GDP. I.e. an equivalent of a one dollar note changes hands twice a year, on average.
With gold, this value will be close to 10000 times a year. A small 4 order of magnitude difference, I know.
Listen to the Planet Money podcast on NPR for an interesting story about how Brazil invented a nonexistent currency about 2 decades ago to fix its hyperinflation problem.
Err. We did.
And those hockey-playing bastards burned down the fargin' White House.
There are over 300 comments on this issue, and it's not clear to me that this really occurred. I don't see a single link to a news source that I'm personally familiar with.
It was a joke, ass-burger.
There, you just showed us what a big moron you are. India has the world's second largest Army, fourth largest Air Force and Sixth largest Navy, not to mention nukes. And of course, it has a billion-plus people and is the world's fourth largest economy. Only a thorough moron would even dream of invading India.
The ability of the U.S. government to project military power relies very heavily on cheap oil and food. It also relies on the cooperation of over 100 other nations where U.S. military bases are located. When the dollar collapses, so will all of these things, and the collapse of U.S. military dominance over the world will not be far behind.
Nonaggression works!
Wrong money base, the world's M0 is only about four trillion dollars, half the gold's worth.
to continue, to cover demand deposits, slightly less liquid, that "value" is currently twice your claimed world gold present value. Going to gold (and perhaps silver as well) is very doable
M0 is only physical currency (i.e. paper money). That's definitely not enough, since it's a small fraction of the total amount (M3).
And you'll have to replace M3, not M0.
Harry Turtledove, is that you?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Third qualification is brown people.
nope, m3 includes too many illiquid things. Gold-backed money was always a fractional reserve system, no reason to change that by creating your hypothetical "full gold reserve required" system
Your example to demonstrate that losing reserve currency status causes economic distress it Britain in the 1930s... so why was every other country in the world experiencing depression at the same time? I know that economics is not physics, but you have to try to isolate your variables just a little bit...
There's no sense in a global currency which can be only used as a replacement for cash. One can use dollar (or euro) just as fine for that.
What makes dollar desirable is that it can be used for other purposes as well (that's why a significant portion of the global M3 is denominated in dollars). And gold can't replace it.
The barest minimum would be M2, and the total gold amount is a small fraction of that.
you realize that is impossible right? the UK had to have the US as a friend so if we threaten to walk away, they suddenly are staring down teh USSR without us. It wasn't an option.
The US, on the other hand, couldn't care what China's opinion is. In fact, China needs to care about us a whole lot more. The US could, at any time, simply refuse to replay China (and only China) on any US debt obligations. Some 2 trillion+ in our debt would vanish as would 2 trillion in assets the PBOC uses to indemnify itself against the reserves it holds. What would China do? Really, suddenly every other nation would quickly learn to not fuck with us.
You know the last time a country wanted the US to stop it's inflation of it's debt? It was the early 1970's and it was West Germany. But they needed us so when we said no, they stepped up and started buying our debt as fast as they coudl to prevent a devaluation. Why? Because they already owned so much a devaluation would have been cataclysmic. But they couldn't buy enough. This is much more likely with China. What followed was quick devaluation and at that time, the biggest paper loss anyone could imagine for an investor.
I think your logic is backwards as to who has teh choice when it comes to treasuries between the US and China. The US can make the treasuries held by China go to 0 in an instant. The chinese, on the other hand, are a captive audience.
you sure you know anything about international relations? India, almost to its core, hates China. There were several wars and still unsettled territories in it's northwest, and India is the biggest support in teh world of the Tibetan movement.
We expect the world population to be decreasing by mid century, thanks mostly to the liberation of women in the 2nd & 3rd world.
There is a very real risk that'll lead to serious currency deflation almost everywhere because land, blue chip stocks, blue chip corporate bonds, etc. are all less valuable once everyone's revenues start falling. It might turn out that small caps become the only growth opportunity for investors, chasing mountains of capital into VC funds, etc.
I'd expect the politicians will prevent this by printing more money to buoy up land and stock prices, perhaps even eliminating income tax in favor of inflation.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
So for all those "Yay America is gonna fall" types? be careful what you wish for, because Germany got to be the asshole twice last century, and before those in power go silently into that good night I have a feeling it will be the USA's turn.
You know, the rest of the world has been paying attention, and planning for this contingency, for a while now. I mean, you don't think China's sudden interest in modernizing its industrial capacity was rooted in economics, do you? You think Canada has centralized it western armed forces between the oilsands and the American border to make its army more economical? It isn't even a question of trying to "take down America" any more, it's a simple contingency : "If/When the U.S.A. stumbles hard, how will they react, and what should we do prepare?"
Frankly it wouldn't take long at $10 a gallon gas and 40% unemployment to get Americans to sign off on just about anything. you already have some serious hatred of foreigners building up with the lax border and H1-Bs, really wouldn't be hard to direct that hatred at a chosen target. Scary thought, isn't it?
Scary? Persistent fear-mongering has already numbed anyone with a TV to that kinda threat. Everybody's run the drills "when a terrorist strikes", everybody has been told regularly to prepare for the worst. I mean, the thought that Americans would choose to be conquerors, when push comes to shove, is tiring, but I think there would be a shit-load of insurgent fighting to deal with, first - there are many Americans who know that it is the wrong choice.
Frankly, I would expect America to sell off Hawaii or Alaska before marching the army. As you said, at 40% unemployment, just about any drastic solution may appear palatable. Maybe a few states would separate from the union to join other countries, or form a new country of their own. There are any number of ways to fix something when it breaks.
Are the American Continents really not big enough, and resource rich enough, to support
a mere fraction of a billion people?
Maybe not in the style to which we are accustomed to. Maybe that's it.
Maybe that's the frigging point.
No Naturalists here I guess.
There are only three solutions to overgrazing
the range.
Don't do it in the first place.
Move onto someone elses range, and get shot.
Reduce your stocking loads.
Sig - This is based on a system that WORKS
This was expected. HOPEFULLY, we can get China to unfix their money from the dollar. As it is, they will likely try to get their Yuan as a reserve money. If so, then bric wil effectively kill themselves. Any nation that manipulates their money in the way that China has, will do so against others and seek to destroy them as well.
There is little doubt that the dollar is going to lose reserve status. China's manipulation, combined with W and now Obama doing little, has seen to that. HOWEVER, OPEC and a few other nations, are pushing, wisely, for a return to a gold standard. If that comes about, then the Yuan will have no choice but to be unfixed. At that time, China will lose all of their advantages.
I prefer the "u" in honour as it seems to be missing these days.
What about the space program and space habitats? There is room for quadrillions of humans in space...
http://space.mike-combs.com/
Besides, the Earth itself is very deep. And who needs much copper these days? We use fiber optics, which is mostly sand...
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
Hold onto your hats folks, and stock up on food.. it's gonna be a BUMPY ride
Egypts rumbling about ditching the dollar for Suez Canal transactions.....thats got to be a nail in the coffin!
Then why aren't we invading Venezuela?
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... is coming.
This is a realistic description of what could happen the day the dollar dies. I like this preview but it's frightening, at least for american people.
http://www.youtube.com/watch?v=2N8gJSMoOJc
Why can't You all see that money is one of the sources of all crap that exists in the entire world? Try to imagine just for a second world without money, crime(btw 90% of people in prisons committed a money or money related crime, so, no money no crime), prison would eventually be replaced by a re-education center, no prices anywhere and with all the known resources of Earth well managed we could all live better than bill gates, I really mean ALL, no more children dying each 5 seconds from hunger, release of actual cures for most known diseases(well most of them where human creations so..), no shitty repetitive jobs tat don't help in any way any human brain towards evolution, etc etc.. You name it and without money and politics it could be done.. Tired of this crap.. Peace
Last I remembered, Russia still had a larger nuclear arsenal. MAD still applies.
Not that that's much comfort for the likes of us.
Gold not a small fraction, it is half the value of M2, quite comparable. Again, when we were on the gold standard until 1973, we did not have nor need any such level of "coverage" as you are claiming, a gold standard for backing paper money never worked that way. Dollar and euro are undesirable as it is subject to uncontrollable machinations/creations of banking cartel (70% of U.S. bailout actually went to foreign banks), the dynastic families in that are quite evil, funding both sides of wars, genocides, etc.
Eh, liberties taken for dramatic effect. However, the Federation of American Scientists estimates that the US has slightly more operational weapons than Russia, despite having a significantly lower total inventory. Notably, the US/Russia both have an order of magnitude more weapons than the other nuclear powers on the list.