The Coming Dollar Collapse - Democratic Underground

FlyingTiger

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Thu Mar-19-09 05:28 PM
Original message

The Coming Dollar Collapse

Edited on Thu Mar-19-09 05:49 PM by FlyingTiger

This is some scary, scary stuff:

<snip>

But the financial world and America's position in it are more complicated than in the 1940s. We now owe lots of money to creditors outside the U.S., and when they see the Fed buying long-dated Treasuries they're bound to start worrying about what that means for the dollar. If they get too worried, they could drive up interest rates here and counter the impact of the Fed's purchases. So there are limits to the Fed's magical powers, and they already began showing up in currency markets this afternoon, with the dollar falling sharply against the euro and other foreign currencies....

“There was a stampede by foreign investors to exit their U.S. dollar investments,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Everyone wants to bring their money home. It’s not about return on capital. It’s whether you can get your capital back.”

<snip>

Analysts say a loss of confidence in US Treasury securities could cause a dramatic drop in the dollar and force Washington to pay higher interest rates.

http://www.meltingpotproject.com/mpp/2009/03/dollar-rumblings-ii.html">Link to more

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LakeSamish706

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Thu Mar-19-09 05:30 PM
Response to Original message

1. And this certainly doesn't help the situation.... see inside.

U.N. panel says world should ditch dollar
We are so screwed.

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

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CJCRANE

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Thu Mar-19-09 05:45 PM
Response to Reply #1

2. Is this the first step

to a global currency?

IIRC the Ecu was the precursor to the Euro.

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LakeSamish706

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Thu Mar-19-09 05:46 PM
Response to Reply #2

3. It would almost seem that way... n/t

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Po_d Mainiac

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Thu Mar-19-09 07:15 PM
Response to Reply #2

4. maybe or it's just the death of the dollar n/t

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many a good man

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Thu Mar-19-09 07:34 PM
Response to Original message

5. Biggest one day drop since 1985

NEW YORK, March 19 (Reuters) - Oil jumped more than 7.0 percent on Thursday and the U.S. dollar slid further on fears that the Federal Reserve's plan to pump an additional $1 trillion into the U.S. economy will ramp up inflation in the future.

U.S. stocks slipped as investors took profits in financials that soared after the Fed announced on Wednesday its latest move to end the deepest U.S. recession since the early 1980s.

The dollar fell for a second straight session and the euro soared above $1.37 as investors feared the massive purchase of U.S. Treasury debt will debase the world's reserve currency.

"We are facing what I think is one of the most aggressive inflationary periods in our country's history," said Zachary Oxman, senior trader with TrendMax Futures in Encinitas, California.

"The minute these (commodity) markets sniff inflation, things are going to go through the roof and the dollar is going to get whacked," he said.

http://www.reuters.com/article/bondsNews/idUSN1960307920090319

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roamer65

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Sat Mar-21-09 05:48 PM
Response to Original message

6. The Fed has no choice but to devalue through quantitative easing.

Edited on Sat Mar-21-09 05:49 PM by roamer65

We are now all going to pay for this crisis through the most insidious tax ever created...hyperinflation.

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FlyingTiger

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Sat Mar-21-09 09:17 PM
Response to Reply #6

8. ...which is essentially a regressive wealth tax, because it hurts the poor the most.

Having a billion in the bank that's downgraded to a hundred million isn't nearly as bad as having $5,000 in the bank that's downgraded to $500.

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Kat45

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Sun Mar-22-09 06:10 PM
Response to Reply #8

9. It seems to me that everything hurts the poor the most.

It's hard to think of anything that doesn't. :grr:

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truedelphi

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Tue Mar-24-09 11:05 PM
Response to Reply #8

12. or down to fifty bucks. sigh n/t

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inna

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Sat Mar-21-09 07:10 PM
Response to Original message

7. oh boy. i read this entire thread, it's all just shocking.

we haven't even started to get a feel what the future may be.

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skoalyman

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Sun Mar-22-09 10:45 PM
Response to Reply #7

10. dollar index@ 83.38

I had a weird dream last year around this time about the index hitting 67.76:scared:

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FlyingTiger

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Tue Mar-24-09 06:21 PM
Response to Reply #10

11. I think your dream is optimistic.

China's pretty much waving a huge sign that says, "We're gonna start selling all of our dollars!"

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upi402

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Tue Mar-24-09 11:15 PM
Response to Original message

13. Wells Fargo will send you Euros for $8 shipping, any amount

and without the 12% markup, more like 5% or 6%. Not like Forex trading, spot, with 2 day delay (I read this but never tried it).
Sounds like I need a plan? Yep!

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