Comments on: World stuck with the dollar, more’s the pity Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: dhome Fri, 03 Apr 2009 22:26:03 +0000 The problem is not the USD per se but
a) it’s a single national currency (as de Gaulle said – it has a home) that has and will be managed for the benefit of the issuer and the determent of the issuers’ creditors and
b) that self-interest will result in an increasingly unstable global economy and
c) the Bretton Woods agreement, which by default gave the USD it’s privileged position, no longer applies – in any sense.

The problem with the IMF and it’s SDR is that it is a thinly-veiled surrogate for the USD and will, in its current form, suffer from the same problems as the USD. The new world realitiy is that more than 60% of the world’s population and ? of it’s remaining cash is not to be found in either the USA or the IMF.
As the IMF will have to, increasingly, turn to non-members for funding; these countries (China, Russia, Brazil and India) will, justifiably, want a say in how these funds are to be allocated. Will the Washington Consensus relinquish its power? I don’t think so. So an entirely new body with an entirely new international “currency” will eventually be called for.
A real NEW World Order will have to include, in positions of power, the following economies: China, EU, USA, Russia, Brazil and, if they can ever agree, some Gulf common market structure. A “currency” based on a basket of these economies would provide for a more balanced and less vexatious global economy.
The days of the US dictating how the global economy will be shaped ended in September, 2008 and, just like the British and French found out in the 19th and 18th centuries; those days will not come back. History moves on.
I just hope that a new currency can be found fast because the most recent display of deliberate mis-management of the world’s reserve currency by the US (which has a pathetic record of economic mis-management going back to 1973); fills me with dread. Why? Just ask yourself how will commodities such as oil and food be priced when the US finally manages to provoke a hyper-inflation event in the USD? The rise in both last year (oil @ USD149, all food up +50%) was just a foretaste of the possibilities.

By: SKV Thu, 02 Apr 2009 21:24:30 +0000 I said military budget is 4% of GDP. Don’t mistaken GDP for Federal Budget.
4% of GDP == 21% of Federal Budget.

Actually military spending is good for economy. These money goes to weak US manufacturing rather than to China.

Japan promise $100BIL to IMF, EU another $100BIL. I just wondering about remaining $800BIL. May be Russia or Kazakhstan?

Zimbabwe can lend $100,000,000,000,000,000,000,000,000.00+ with easy but in Zimbabwe dollars.

I glad to see World Currency thats nothing to do with USD.
But reality is:
World Currency will be backed by USD at least on 50%-60%. Essentially World Currency and USD will be hardwired. In this case I don’t want China or EU making decisions that affect US economy.

Lets make 19 of 20G put in $40BIL-$50BIL and US puts the rest. In this case it is going to be real ‘World Currency’.

By: Jim Quinn Thu, 02 Apr 2009 18:45:49 +0000 The IMF in advocating continuing adherence to the US Dollar, as the de facto monetary standard, is essentially saying that this to will pass and it will be return to business as usual, perhaps with new rules and regulations.

A reality check shows that the US is not what it once was. It may be have been the world’s biggest economy but now its built on a foundation of sand. For example, (1) the extent to which real estate and the financial sector contributed to its GDP; (2) its knowledge economy (whatever that is) is not built on/a generator of jobs … Bill Gates once told India’s entrepreneurs that jobs are to be found in manufacturing, i.e. creating the goods that people need (3) US government’s debt (federal, state and municipal) and the deficit in the current account are long past being sustainable.

The Chinese and others are right, its time for a new monetary standard; one with an appropriate regulatory framework around it, one that would, for example, eliminate arbitrary valuation of local currency by states; provide for multilateral control; and not afford bias to any particular state. The US, Canada and others others have been arguing that the Chinese are undervaluing their currency for market purposes but perhaps they are simply factoring in parity with the underlying value of the US dollar.

It is a house of cards that has to tumble.

By: francis gerard Wed, 01 Apr 2009 23:19:20 +0000 someone said that the US spends only 4% on the military… that is patently false.

US military/defense spending was 21% of the federal budget (as of 2008), but that number is likely higher now, because of the ongoing wars.

notably, the US government spends about the same amount, around 20% each, on social security and health care.

that budgetary pie is gonna have to get a lot bigger (which we now know is not ecologically sustainable) OR the portions become much smaller, if we are to continue to advance and maintain a decent standard of living.

i know this… those military dollars, in the hundreds of billions, would sure come in handy at HOME right now… in this time of recession.

By: Robert Wed, 01 Apr 2009 21:37:32 +0000 Obama may talk strong, but ultimately, if he doesn’t offer the Chinese at least the courtesy of listening to their concerns and proposals, why should they lend him the 2T$ he needs to raise on Treasuries? He can tell them to get stuffed, because they already have high exposure to the dollar, but that only works if you don’t need to borrow ANOTHER 2T$… It is high time America had to consider the real cost of borrowing, when it is denominated in something that they can’t print.

If I were the Chinese, I’d ask the Treasury to denominate T bills in Euros if they want China to buy them to fund America’s excessive debt.

By: SKV Wed, 01 Apr 2009 13:46:26 +0000 Hi Bruce,
Your emotions goes well ahead of public facts. What do you read?

US military budget 4% of GDP not 40%. Military Export “40% of GDP goes to military so what do you expect?”

I have a good news for you US military budget just 4% of GDP. Check Wikipedia.

=> “patents and software rides on the government funded programs that are directly tied to the military machinery.”

Over all only small fraction of patents comes from military related research. But it is the most imressive fraction :).

Lion share still comes from private funded research. Again check numbers.

Nothing wrong that Gov spend money on military and fundamental research. It must spend many times more!

You should stop using very much every technology piece like Internet/Microwave/Computers etc. They all came from military research of 1940-60.
Internet – nuclear site communication (1960’s).
Microwave – radio radar transmitter head (1944)
Computers – long range artillery targeting 1940’s
etc etc etc.

Do you condemn research that helped US bring down Nazi & Cold War?

=> “Our country exports war machineries, and as shameful as it is that is all that we have left.”

US military (weapon & services) is just $10,700,000,000.00 (10.5 BIL) out of $1,650,000,000,000.00 (1,650.0 BIL).
Ooopps less than 1%.

I don’t see why military is so bad. Check history of own country. BTW I am not from US.

You should be proud of US military: WWII/WWI Desert Storm/ Korea etc.

By: bruce m Wed, 01 Apr 2009 05:16:05 +0000 40% of GDP goes to military so what do you expect?
Our country exports war machineries, and as shameful as it is that is all that we have left.
all the so called patents and software rides on the government funded programs that are directly
tied to the military machinery.

It is sad but it is true and only American people can change that and until then …

By: SKV Tue, 31 Mar 2009 18:07:24 +0000 To Mr. J Fernandes;
Your hate to US affects your ability to grasp facts.

-> “…The WHOLE WORLD EXPORTS, the very best of their products to America;

While chasing cheap goods US brought in bunch of junk that killed US jobs. Thank must be stopped.

-> “… in exchange for PAPER…”
If you don’t need this PAPER (We call it US Dollar) please send me excess. I still can use it :).

“America exports nothing much other than weapons.”
In reality US exports:
1. Intellectual property – US registers more patents than any other country;
2. Medical equipment & drugs;
3. Heavy Machinery like Caterpillar earth movers etc;
4. Trucks
5. Aircrafts (passenger/cargo/military)
6. Helicopters (passenger/cargo/military)
7. Entertainment (Movies/Songs etc)
8. Software (Google/Micro$oft/Oracle etc)
9. Weapons (it looks like you familiar with this part)

You are right here. This list must be longer. Much longer.

By: J Fernandes Tue, 31 Mar 2009 14:31:40 +0000 The WHOLE WORLD EXPORTS, the very best of their products to America; in exchange for PAPER..

America exports nothing much other than weapons.

By: SKV Mon, 30 Mar 2009 19:15:41 +0000 Hi,
US saving own financial system also saves World Financial System as long as ~ 70% of contracts are priced in USD. The reason – USD is the most liquid currency and US gov goes extra mile to keep it this way.
US gov it honors ALL contracts domestic/foreign when it bails out Banks/Financial_companies.

We have example of mini ‘World Currency’ – EUR.

In EUR zone only Germany has efficient economy and room to lend more money. But given the burden of the rest of EU Germany repeatedly refused it. EU end up providing ‘good laws’ rather than cash when business heeds money. All lending is done on national level because nobody wants to help poor neighbors.

US will have no intensive to support ‘World Currency’ as Germany has no intensive to support EUR.

China/Russia/Kazakhstan call for ‘World Currency’. Does any of these countries have free floating Currency? Opppssss…
They all playing political games.

China needs ‘World Currency’ to escape direct pressure from US on artificial low rate yuan/USD.
Everybody want say on World Finance but nobody want to commit money. US is the only nation that commits trillions $ to US/World finance (so far they are the same). lets US decide what to do with these trillions. I don’t need China/Russia opinion until they more put money in. They can start with floating own currencies.