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Thread: The Demise of the US Dollar already being orchestrated ?

  1. #1
    Banned Melonie's Avatar
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    Default The Demise of the US Dollar already being orchestrated ?

    All that can be hoped is that this isn't actually true ...



    (snip)"In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.


    Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

    The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

    The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

    This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

    The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

    Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East. "(snip)

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    Banned Eric Stoner's Avatar
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    Default Re: The Demise of the US Dollar already being orchestrated ?

    RATS ! You stole my thunder and posted this before I could.

    There is a little more to the story. China, Russia, Japan and France are reportedly supportive of an Arab oil producer plan to replace the dollar with a "basket" of currencies including Euros, Yen, Yuan, Rubles and gold to facilitate oil transactions. Last I checked, gold was selling for $1028 an ounce.

    In an obliquely related matter, the Central Bank of Australia raised it's primary lending rate to 3.25% a jump of 25 basis points. Other G-20 central banks are expected to follow suit shortly but the Fed is not expected to raise rates until January.
    Last edited by Eric Stoner; 10-06-2009 at 12:17 PM.

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    Default Re: The Demise of the US Dollar already being orchestrated ?

    and here comes the 'cavalry' ... obviously not the US 'cavalry' though

    (snip)"The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.

    "Important progress in managing imbalances can be made by reducing the reserve currency country's 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.

    Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."

    He said: "Greater use of a truly global reserve currency, such as the IMF's special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes," he said.

    The SDRs are the asset used in IMF transactions and are based on a basket of four currencies -- the dollar, euro, yen and pound -- which is calculated daily."(snip)

    from


    If you're wondering about the US dollar Seignorage issue the UN is talking about ...

    (snip)"In today's podcast we try to answer the question: Where is all the U.S. currency?

    In it we mention that the U.S. government profits from the fact that people all over the world love our green pieces of paper.

    How does the government actually profit? Through something called seigniorage, which is as hard to explain as it is to spell.

    In the old days, seigniorage was the revenue the government earned because it costs less than a dollar to print a dollar. Say it costs 2 cents to print a $1 dollar bill. Then, poof, the government has gained something like 98 cents when it prints that dollar and uses it to buy something. That's overly simple but it's a good starting place.

    Today the Federal Reserve controls the money supply. And one of the ways it does this is by buying or selling treasury bills. If the Fed wants to increase the money supply, it buys some treasury bills (government bonds) from banks. So a treasury bill is taken out of circulation and replaced, basically, with dollars. Presto. More dollars in the world.

    Here's the key part: more dollars in circulation means more treasury bills at the Fed. And unlike dollars, the treasury bills earn interest. So the Fed profits. It's holding onto those treasury bills, which pay off with interest. Basically, when you hold onto U.S. cash, you're giving the Federal Reserve an interest-free loan"(snip)




    In a nutshell, the US dollar currently being used for international trade settlements, while the US runs an external deficit on the order of 2-3 billion a DAY, allows the US gov't to earn a huge amount of Seignorage income. If, as suggested by the UN, SDR's based on a basket of currencies being used for international trade settlements in the future, will deprive the US Treasury of 80% of it's current Seignorage income. I'm guessing here, but 2 billion * 365 * 3% interest = about 22 billion dollars per year in lost Seignorage revenue to the US gov't !!!

    But this may be small potatoes compared to the lost Seignorage revenue to the US gov't of world market / economic growth creating only 20% as much demand for US dollars as is currently the case. If say 1% = US 600 billion of world economic growth required mostly US dollars to fund international trade settlements, then you're talking about a 98 cent profit on every one of the 600 billion new US dollar printed. But if international trade settlements start being conducted in SDR's, the same 1% world economic growth would only require 150 billion newly printed dollars instead of 600 billion, with the balance now being made up of freshly printed euros, yen and UK pounds ! This would be a HUGE .i.e. 450 billion dollar per year loss to the US Fed / gov't ... which would ultimately have to be made up for via higher US taxes.

    ~
    Last edited by Melonie; 10-06-2009 at 10:51 AM.

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    Default Re: The Demise of the US Dollar already being orchestrated ?

    After hitting a high of $1048, gold has settled at $1037 an ounce.

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    Default Re: The Demise of the US Dollar already being orchestrated ?

    ^^^ I would also add that a whole bunch of commodities, from foods like wheat and corn and soybeans, to base metals like tin, to certain energy futures like crude oil, were also up 3-4% today. But no there's no consumer price inflation waiting in the wings because of a devalued US dollar, right ?

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    Default Re: The Demise of the US Dollar already being orchestrated ?

    Quote Originally Posted by Melonie View Post
    ^^^ I would also add that a whole bunch of commodities, from foods like wheat and corn and soybeans, to base metals like tin, to certain energy futures like crude oil, were also up 3-4% today. But no there's no consumer price inflation waiting in the wings because of a devalued US dollar, right ?
    Thats cuz they will change the basket to spam, tomato leaves, and crackers.

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    Default Re: The Demise of the US Dollar already being orchestrated ?

    It's getting curioser and curioser. First of all, nobody is believing any of the denials issued by the partiipants i.e. there WAS a meeting and there WAS a discussion about trading oil in something other than dollars. Gold was included in the proposed "basket" of currencies that would replace the dollar. By an amazing coincidence, the largest holders of gold at present include Russia ( also a major gold producer ), China, Japan and France. Since this proposal was leaked, the price of gold has shot up to new records.

    Remember that China was busy buying gold on the "dips". When gold declined in price, they stepped in and bought. Russia will do anything that boosts the price of it's major cash producing commodities: oil, natural gas and now gold. This latest has served to increase the value of their gold holdings.

    The real question is : Were they serious about shifting from the dollar OR was this a ploy to boost the value of their gold holdings ? Or both ?

    The bottom line for us "little people" ? Expect oil to hit $85 a barrel by the end of the year.

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