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How will a Dollar collapse affect other countries

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posted on Jan, 7 2008 @ 10:24 AM
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I'm so fed up with the UK and my life that I'm considering going to Ecuador to teach English. However, Ecuador uses the US Dollar as it's currency and I suspect that this is the year when the USD goes down the toilet. Now, if I'm in Ecuador when this happens will I be in a very bad situation?




posted on Jan, 7 2008 @ 11:44 AM
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reply to post by Mahatma87
 


I'm so fed up with the UK and my life that I'm considering going to Ecuador to teach English. However, Ecuador uses the US Dollar as it's currency and I suspect that this is the year when the USD goes down the toilet. Now, if I'm in Ecuador when this happens will I be in a very bad situation?


Slow down Mr M87. First, the US dollar will not “collapse.” Our currency is valued against other currencies and precious metals based on the opinion of the buyer (say speculators) whether the US is in a good short term economic condition or is in a poor short term economic condition. The real measure of the “worth” of US currency is best indicated by the interest we have to pay to borrow money on the 20 and 30 year US Treasury Bonds. It’s around the high 4's I believe. (A lot of people put more credence in the 10 year bond. It should be trading lower than the longer term bonds). The day to day quotes you get on currency trading is really based on a few dozen currency speculators around the world. A small enough group it could be rigged.

The US has about $400 b. of printed currency in circulation. About $240 b. is used inside the US, about $160 b. is used outside the US. Russia in the late 1990s when their local currency was of doubtful value, went to the more stable currency. I believe Russia is not back on the ruble. See Note 1. Ecuador went to the USD in 2000. Prior to WW2, it was the British pound. Now it is the US dollar. For good or ill.

Ecuador. Population, 13,755,680 (July 2007 est.) Ethnic groups: mestizo (mixed Amerindian and white) 65%, Amerindian 25%, Spanish and others 7%, black 3%. Ecuador has substantial petroleum resources, which have accounted for 40% of the country's export earnings and one-third of central government budget revenues 493,200 bbl/day (2005 est.) GDP - per capita, $4,500 (2006 est.) Population below poverty line: 38.5% (2005-06). All numbers from CIA World Factbook.

Now to your question. I think the important numbers are Ecuadorian GDP per person - $4,500, and the number of persons below poverty level, 39%. These numbers point toward anyone who has a substantially higher income enjoying the “good life” at their expense. Suppose you have a RELIABLE income of $3,000 a month. Note the operative word is “reliable.” If you are prepared to "go native" to some extent, you could have a small villa, and 2 or 3 servants. Regardless what the dollar does here, you should be in good shape there. Sure, if the US does a 1920s Wiemar Republic re-run and hyper-inflates the dollar, then we are all going to Hell! Without first dying.

In the final analysis the worth of a country’s currency is based on the country. The US has 300,000,000 people - + 12,000,000 undocumented workers - and occupies the best sited 3,000,000 square miles on the planet. It’s hard to seriously muck up that advantage.

Look at it this way, if NOT the USD, then WHAT currency?


Note 1. When the US began to revise its old currency layouts, the first bill to be given the new treatment was the $100.00. We formerly printed $500 and $1000 bills, but the IRS - tax collectors - wanted to shut down the off-book underground economy so they took those out of circulation. Still good, the $500 commands a $50 premium and the $1000 a $100 plus. Any bank however is required to forward those bills to the US Treasury where they are burned.

The first shipments of the new $100 bills went to Moscow! That was because we alleged the Iranians were counterfeiting the old $100s and the bogus bills were nearly indistinguishable from the genuine thing. Hey, we got mad at Iran in 1979 and have not gotten over it. We OTOH ignore the Iranians displeasure with our 1953 overthrow of their ONLY democratic government. Hmm?

[edit on 1/7/2008 by donwhite]



posted on Jan, 8 2008 @ 03:41 AM
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When the U.S. Dollar collapes, so will the monetary units of all other countries, except maybe those in the South Pacifice who base their wealth on big circular rocks with holes in them that they can't even put in a bank.



posted on Jan, 8 2008 @ 08:03 AM
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posted by kyred
When the U.S. Dollar collapses, so will the monetary units of all other countries, except maybe those in the South Pacific who base their wealth on big circular rocks with holes in them that they can't even put in a bank.


While China's GDP has grown to nearly 50% of the US to be the world's No. 2, there are 1.3 billion people in China as opposed to the US's 300,000,000. Further, China has committed itself to economic growth at the expense of its environment. One can barely breathe in Beijing or Shanghai. The Olympics are at risk. Of more immediate concern in China is the 1 billion people in the interior who have been left outside the NEW economic success enjoyed by the 300 million nearer to the coast. The 1 billion are becoming more restive as they demand a larger share of the new prosperity.

But Kyred is right. If the US goes down, economically, the rest of the world will soon follow. Just look how the US sub-prime mortgage meltdown has effected the rest of the world. You should recall that mortgage meltdowns are not mandated by GOD. The US had its most numerous housing expansion between 1945-1975 and we had NO mortgage meltdown. That was easily accomplished under New Deal policies and regulatory programs.

The country is now 27 years into Reaganism - the welfare Cadillac guy - who began the dismantling of the US Government. It was Reagan who offered governance by slogan: "Government is the problem not the solution." Hmm? It now seems that banking regulations and a trained enforcing bureaucracy do perform a valuable service after all. Maybe we'll restaff the whole government? Keep lead paint away from our children. Keep our food supply uncontaminated. Assure safe medicines. Enforce work rules. Protect our wetlands. Watch for excessive water usage. And etc.


Errata in my first post.
Par. 2, I believe Russia is not back on the ruble. Change NOT to NOW
Par. 3, These numbers point toward anyone . . Change POINT TOWARD to SUGGEST
Par. 5, . . worth of a country’s currency is based on the country. Change 2nd use of COUNTRY to COUNTRY’S WORTH.

[edit on 1/8/2008 by donwhite]



posted on Jan, 8 2008 @ 08:08 AM
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When and if the United States dollar crashes Pesos and Euros would increase in value again creating a new economy I don't see the point of saving a present curency forever everything has to change countrys to profit from this are mainly Iran.



posted on Jan, 8 2008 @ 08:43 AM
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the USD currently has a confidence-value rating of ~76.5, (.076 cents)which is somewhat lower than immediately before the monetary turmoil
of the USAs credit/mortgage/overrated derivitave paper 'crisis'
when the USD enoyed a 82-80.5 value...
Not So Much of a Devaluation... yet.

most world economists anticipate the USD to devalue o around 72-71 cents compared to all/any other national currencies around the globe.
So...i'd say that in comparison to Equadoiran per capita income
that is pretty much tied to the USD, one would need to have an income of aound 20% more than the locals per capita income just to maintain
that priviledged state of living in an Equador community.


~~~~

the dollar 'collapse' will only be around 10% from it's current $0.76+ cent value,...
and foreign merchandise/goods/services will make that up with higher prices they will charge.



expect all those super sized 80" plazma screen TVs and other high-end electronics to be our 'exports' ,,
as many americans won't have a much credit, or home loan monies available anymore..

~~ while all existing grains & food contracts will be met..
future food exports will be curtailed under a 'Strategic Reserves' category.


[edit on 8-1-2008 by St Udio]

[edit on 8-1-2008 by St Udio]



posted on Jan, 8 2008 @ 11:10 AM
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posted by St Udio
the USD currently has a confidence-value rating of ~76.5, (.076 cents) which is somewhat lower than immediately before the monetary turmoil of the USAs credit/mortgage/overrated derivative paper 'crisis' when the USD enjoyed a 82-80.5 value...Not So Much of a Devaluation... yet.


Very few people understand HOW and WHY the meltdown ever happened. Here’s the skinny. The US Civil Service Commission - now abandoned - was created in the late 1880s. By the 1928 election of Herbert Hoover it is my memory the entire Federal Civil Service numbered fewer than 50,000 bureaucrats (excluding the Post Office. See Note 1).

Beginning in 1933, the US Federal government underwent a sea change in its internal structure. See Note 2. Among dozens of agencies, the US created the FDIC - Federal Deposit Insurance Corporation - which was funded by a 0.5% once a year tax on deposits paid by the banks. Membership in the FDIC was optional, but 100% of our banks have joined. No one would dare deposit his or her money in an uninsured bank. Since 1933, no depositor in the US has ever lost one penny in an insured bank.

The FDIC audited banks monthly. It examined loans, and strictly controlled the number of bad loans a bank could make or carry. If the number rose to a certain critical level, the FDIC would take over the bank and reform it then turn it back to the original owners. Back then, you did not monkey with the money.

Another 1933 creation was the FHA. Federal Housing Authority. Created to assist employed but low income people become home owners. Prior to 1933, the standard banking practice required home buyers to make a 50% down payment. The FHA allowed 10% down payments. It insured the mortgages. To cover any defaulted loans, the FHA added 0.5% “insurance” fee to all of its insured home loans. A 4% home loan cost 4.5% under FHA. The borrowers paid the cost of insurance. This guaranteed payback greatly encouraged lenders.

Aside: Of equal consequence, for the first time in America, the FHA set national construction standards for houses. Number of rooms, inclusion of closets, inside bathrooms, dedicated kitchens, the number of electric outlets and the capacity of the wiring, quality of materials and site locations were all under Federal regulations. Again, it was optional with builders, but if you wanted your house to qualify for an FHA loan, you had to do it their way.

And more. Although FDR did not invent neighborhood savings and loans, it was under his aegis they prospered and grew. Because the FDIC set bank deposit interest rates, the Federal government allowed S&Ls to pay 0.5% more interest than banks. Also insured by the FSLIC. Federal Savings and Loan Insurance Corporation. I will not explain the 1980-1990 Savings and Loan (S&L) debacle here only to remark it was a failure of regulations. Its estimated the taxpayers will lose $30 b. a year for 30 years. Corporate welfare. But not one dime for the homeless? Hmm? God Bless America. Land of the Free and Home of the Brave.

In 1943, the GI Bill of Rights was enacted by Congress, arguably the single most significant law ever passed. The Armed Forces of the US numbered 13 million in 1945, but we had already discharged 3 million men. Total served: 16 million. Every man (or woman) with more than 90 days honorable service was eligible to attend schools of every type, trade, academic or professional including seminaries and received monthly government assistance. Colleges in America grew 5 fold to 10 fold. See Note 3. A 4 year baccalaureate is de rigeur for all upwardly mobile Americans whereas before War 2, fewer than 5% of Americans had a college degree.

But, equally important for the topic here, the GI Bill allowed every veteran to buy a house for NO money down! Show your discharge papers in the morning and by nightfall, you and your family were sleeping in your own home! Perhaps 20 million GI/FHA homes were built altogether. Not one dime was lost in defaulted mortgages. Thanks, New Deal, you did right by America. The suburbs were born! And with them, shopping malls and limited access highways. And for once, the much overworked announcement is true, “Things were never the same again.”

But we’ve changed all that. We now have self-auditing banks, local building inspectors, and slick talking “mortgage brokers” who have hoodwinked the all so willing public. We LET IT HAPPEN. We gave up the BEST large government in the world for the MARKET. And now you can see what the market will do for you. Remember this: the builders got paid. Probably in many cases, OVERPAID. The original loan makers got paid. Undeservedly as it turned out. The so-called "mortgage bundles” of 100s of mortgages were SALEABLE overseas because they, like Americans, thought “the US government” was watching over them. IF we had kept the 1933 regulations in effect, neither the first nor the second mortgage debacles would have occurred. But alas, thanks to you Mr. Reagan, that was not so.

Americans think GOD regularized housing in the country and have not the slightest notion why or how a house in Maine came to be constructed to the same standards as a house in Oregon. And etc. All of that has now been abandoned by the ANTI regulation phenomenon that swept America with the election of Ronald Reagan in 1980. We’re back to the starting line. Who first said “If you don’t know your history, you are doomed to repeat it?”


Note 1.
The Post Office was the major source of political patronage from its founding 1792 until 1971 when it was re-organized as the USPS - United States Postal Service - and made into a quasi-governmental organization. All employees are now fully covered by merit plans or unions and it is OUT of politics.

Note 2.
By 1945, the Civil Service numbered about 3 million. Republicans were mad then and are mad now because 80% of the new hires were Democrats. Hey, one hand washes the other?

Note 3.
I attended EKSC - Eastern Kentucky State College - in 1956 when it was proudly announced the enrollment had exceeded 2,500. Today’s EKU - Eastern Kentucky University - has over 20,000 enrollment. In 1941 the school had 700 students.

[edit on 1/8/2008 by donwhite]



posted on Jan, 10 2008 @ 12:03 AM
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Just a short post here, but I'm thinking China and Japan are going to work really hard for that not too happen with China being the leader in that causes. We're one of China's biggest customers if not the biggest. They own a substantial amount of our debt as well as Japan. Think of how much they each stand too lose if the dollar where to "collapse". I can see those two countries doing pretty much anything to avoid that happening.



posted on Jan, 10 2008 @ 08:24 AM
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posted by ChrisJr03
Just a short post here, but I'm thinking China and Japan are going to work really hard for that not too happen with China being the leader in that causes. We're one of China's biggest customers if not the biggest. They own a substantial amount of our debt as well as Japan. Think of how much they each stand too lose if the dollar where to "collapse". I can see those two countries doing pretty much anything to avoid that happening.


I’m reading a book by Kevin Phillips. American Theocracy: The Peril and Politics of Radical Religion, Oil and Borrowed Money in the 21st Century. Usually referred to by its short title American Theocracy. He explains how the Global Economy began in 1492, if not before. Sure, it was not so pronounced before World War 1, 1914-1918, but it became the underlying motivation for World War 2, 1939-1945.

I’m a car buff. By the late 1950s the Ford Motor Co owned part of Toyo Kogyo, maker of cars sold under the name Mazda. Chrysler owned part of Mitsubishi, GM owned part of Isuzu. All Japanese companies. Ford had early on founded Ford of England and Ford of Germany. Chrysler bought Simca, a French company. In the late 1960s rush to get into smaller cars, Renault designed a car for Chrysler which sold it to AMC where it was produced in Canada.

Prior to War 2, GM owned Vauxhall in England, Opel in Germany and Holden in Australia. Ford and GM made cars in Canada. In 1933, Ford had built the largest truck factory in the world in the USSR. That is why pictures showing trucks supplying Leningrad during the 900 Day Siege look like 1935-36 Fords. They were! So when did globalization begin? If not Marco Polo, then who?

On topic. By 1950s, the US dollar had become the de facto world currency. It remained so until our 2003 ill advised excursion into Iraq. The dollar was fairly stable all during that time frame. More so than any other. It is to our distinct advantage to preserve that unique status. American fiscal policy after 2001 however has militated against others outside the US sharing our joy over the high status of the dollar.

To be an enduring world currency means you must manage your fiscal base so well that people can quote prices in dollars and make contracts with confidence. Confidence is hard to gain but easy to lose. Foreigners do not use the dollar because they love us. They use it because it offers an advantage to them not found in other currencies.

I believe GOP domestic policy goals sharply conflict with the more important global necessity of running balanced budgets here so as to keep the value of the dollar not only high but all the more, STABLE. Deficit financing is rapidly destroying our once proud status. We will suffer for this policy for years to come.

Yes, China and Japan as well as all other countries will reluctantly hold up the US dollar. But we will be forced to make concessions we may not want. If we had managed our fiscal policy better, we would not be in this vulnerable position in 2008.

[edit on 1/10/2008 by donwhite]



posted on Jan, 12 2008 @ 12:45 AM
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I don't see the dollar collapsing (just devaluing a bit more)

I also see that the european central bank has begun talk of a rate cut (although they didn't make that move this week)

smells like the Euro dollar is gonna go down soon

guess who likes that?

i just got a call from GOLD he says he loves it , no matter which country you buy it in...wait it's my call waiting.....hello..........what's that silver you think people should give you more respect also....ok...but when do you think the masses will catch on?

the shock of a generation will be the re-adjustment to a lower standard of living for many americans

and if that is the only shock in the next 5-10 years will be very lucky



[edit on 12-1-2008 by cpdaman]



posted on Jan, 12 2008 @ 02:56 AM
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Originally posted by cpdaman
I don't see the dollar collapsing (just devaluing a bit more)

Or should we say inflation.



posted on Jan, 12 2008 @ 09:37 AM
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For perspective on which country is likely to succeed the US dollar as the world's reserve currency, see this list of the top 10 countries. I added Russia as it is close to being in the top 10.

1 United States $13,201,819
2 Japan $4,340,133
3 Germany $2,906,681
4 People's Republic of China $2,668,071
5 United Kingdom $2,345,015
6 France $2,230,721a
7 Italy $1,844,749
8 Canada $1,251,463
9 Spain $1,223,988
10 Brazil $1,067,962
11 Russia $986 940
52 New Zealand $103,873
Numbers are GDP in 1000s. Rankings from the World Bank 2006

en.wikipedia.org...

[edit on 1/12/2008 by donwhite]



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