General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIn light of the repeated GOP tantrums .. should the world move away from USD as a reserve currency?
If I am China/Middle east oil exporter - I would seriously consider the idea. Why tie up your money in dollar denominated assets when there is a risk of crazy shit happening?
I would diversify to CAD, EURO, YEN, YUAN etc.
What are the consequences? US would have to increase interest rates in order to make dollar attractive, imports would be more expensive ( exports would be more competitive) .. ie we will have make and sell more stuff to the world in exchange for its oil/ ipods/ clothes other plastic crap.
In other words - we will become like other nations that, unlike us, don't get to run up huge current account deficits without paying a price for it.
Don't count it out .. You may very well see this happen over the next decade or two.
ruffburr
(1,190 posts)Bullshit politicking keeps up from the R/W,It won't be in a decade or two it'll be next week
srican69
(1,426 posts)then all bets are off.
Assumming that we weather this (yet another totally made up and unnecessary) crisis - the world will soon begin to expect a 'GOP Craziness' risk premium for their dollar investments ..
the CAPM model will have be modified thus
R = rf + r(GOP) + Beta * market risk premium
srican69
(1,426 posts)because honestly - there is no risk free rate anymore.
NoOneMan
(4,795 posts)Its only at 90% of its highest, and the government is on the hook for a swarm of mortgages on the verge of defaulting as the country is ready to plunge into a housing disaster that will make the US market crash look like a Mickey Mouse problem.
NuclearDem
(16,184 posts)Junkdrawer
(27,993 posts)Other top priorities outlined in the final agreement, dubbed the eThekwini Declaration, include promoting global so-called sustainable development, which according to the United Nations entails a radical restructuring of human civilization. Also key on the list of BRICS rulers demands: further centralization of power in the hands of the UN, more government meddling in the economy, ramped up attacks on national sovereignty, increased power for Third World dictators on the global stage, and much more.
In February, the premier alliance of socialist political parties, known as the Socialist International, gathered in Portugal for its Council meeting. Following the recent Congress held in South Africa amid reports that the ruling communist-oriented regime is involved in genocide, the SI meeting adopted a declaration calling for a new internationalism, proposing the creation of a new global set of agreements, the restructuring of the WTO to recycle trading profits from severe wage differentials toward authentic global income security, and a new IMF and global currency regime built on the multilateral synthetic bancor system conceived by Keynes himself.
...
http://www.thenewamerican.com/world-news/africa/item/14983-brics-regimes-forge-new-world-bank-call-for-global-currency
Agnosticsherbet
(11,619 posts)It will happen when the rest of the world is ready. We will pay the consequences.
geek tragedy
(68,868 posts)is subject to devaluation and manipulation at a moment's notice.
2naSalit
(86,822 posts)what will China do? Their money is tied to the USD so if we fail...?
Turbineguy
(37,372 posts)(although still weak) reason for attacking Iraq. When Saddam Hussein switched oil pricing to Euros.