Meltdown of U.S. Dollar Underway as China Dumps the Currency

reply to post by purplemonkey


I realize it is a personal question and I understand if you don't want to answer it, but I was wondering what you job is? And are you considering having a family, or do you have one?

The Chinese economy is currently structured upon USA debt. Similar the the derivative market that is structured on mortgage debt.

So, China's economic future is based upon the USA's ability to pay back the debt structure. The Iraq war has been financed by China and the oil producing countries agreement to accept USA debt (promise) instead of goods, services or cash.

The USA is like the guy who can't pay his mortgage, which would cause a domino effect in the derivative market and extreme corrections through out the world.

The lending nations know that the USA must be given every possible opportunity to pay back the debt in order for the lending nations to exist economically.

So, Dollars, Euros, Ameros or even more structured debt, they will take what ever they can to "perpetually delay the inevitable"

The real concern is that this debt will have to paid back by the labor of the workers who have not even been born yet.

Yes , America your grandchildren will be born into bondage, but hey then again, so were we !!!

Originally posted by Karlhungis
reply to post by purplemonkey

 

I realize it is a personal question and I understand if you don't want to answer it, but I was wondering what you job is? And are you considering having a family, or do you have one?

sure ill answer your question... i am currently unemployed and i have no family (as in kids or marriage)... and i am only 17... (use to have a job but quit cause of final year of high school, thats when they put the pressure on)

ps. i live in Australia if that makes a differnece

reply to post by purplemonkey


I see, that explains your stance. Thanks for the response.

reply to post by Karlhungis


care to elaborate on who you think i am?

reply to post by purplemonkey


I don't think I know you. I just understand that a 17 year old has a different outlook than I do. Being 31 with a family to care for and a career is a completely different reality than being 17 with no job and no family to care for.

I am not trying to judge you.

reply to post by Karlhungis


i can understand that... well i gotta tell ya your response was a lot less condescending than i was expecting

@ you

If this is true we are up shatts creek without a poodle.

If true this so called recession really will become a depression, especially if Saudi Arabia and Japan follow suit.

What this really means though, if true, is that the our days as a superpower are over, all that remains is our military, and thanks to bush minor and the Iraq invasion, is over stretched and crumbling.

Like any well-run business, China is looking to cut its losses when it becomes increasingly apparent that the debtor will not be able to pay the debt. The dollar has been falling and I think China is just trying to avoid being taken to the cleaners by the further devaluing of the U.S. dollar. I think this is a very significant thing and is definitely not good news.

i say that we just nuke them. let's get it over with. a nice mushroom field over there, and we can watch all that lead paint and tainted food products go up in radioactive fire. they dump the dollar and we dump our nukes. now that's what i call free trade.

My only doubt in its truthfulness, is that it hasnt appeared anywhere yet, ie MSM news, cnbc...

Comments by China that it intends to move away from its reliance on the dollar triggered a sharp drop in the Dow Jones Industrial Average

Thats pretty public a comment to make, it should be heard around the world if thats really the position of China.

How big could this 'possible' drop in the dow be?

reply to post by Brain Damaged


What an intelligent response.

Well the Dow is up 60 points this morning as of right now and that's after this news and the latest report that wholesale inflation for March was 3 times higher than expected.

Inflation Soars

Food Costs Rising Fastest in 17 Years

I think there's some serious market manipulation going on, for stocks to be rising with so much negative data.

Originally posted by Karlhungis
reply to post by St Udio

 

Does Bernake have any other tricks than just lowering rates and pumping in money? That obviously isn't working. I don't have any faith that the goons in power could save us if they wanted to. Sadly though, I get the impression that they don't want to.

There is honestly very little that CAN be done to "stop" people from dumping the dollar... short of invading and occupying a country (Iraq) ..


Just because China dumps its dollar reserves does not mean the Dollar is bottoming out.. they did not say "turn these dollars in to Euros" and *poof* no more dollars and a crap ton of Euros appeared. Someone had to take the dollars in exchange for Euro's.. which would actually be impossible. Because the European central bank would have to literally print some 900 billion Euro's to match the 1.4 trillion.. about a quarter of the way in the Dollar would sink against the Euro and as more people purchased Euro's through goods, services or exchange.. the Euro would inflate at an amazing pace..

The US Dollar became the World Reserve at a much slower rate then how the the Euro is expanding..

And a sinking dollar is not good for ANYONE .. not even for those who use Euro's.

It is best put in reference to Japan..

Japan's currency compared to the dollar increases.. record levels.. its at 100! .. Thats 1 American Dollar = 100Yen.

So Toyota, who sells a car for $20,000 dollars would have gotten much much more Yen for the dollar, but now, because the dollar fell so far so fast.. the amount of Yen made is far less... but this is NOT becaues the Yen deflated.. its because the currency where SALES are made sunk, to put it in perspective, it would esentially take a $20,000 car and make it a $15,000 car over night without decreasing expenses in production. Actually, production cost would INCREASE.

For every single point then Yen rises in comparision of the Dollar.. Toyota will loose several million dollars in an instant. I will find the article, but it was an insane amount of money..

This is the same for many importers..

China can dumb the currency all they want, but guess what, they still sell their products in American Dollars, so they will ALWAYS have a massive reserve of Dollars, as its the only thing we will give them.

Originally posted by mythatsabigprobe
I think there's some serious market manipulation going on, for stocks to be rising with so much negative data.

Don't confuse the financial sector with the stock market sector.

Just because stocks show a flat or rise, doesn't mean that the USD value will necessarily follow suit.

There doesn't need to be any manipulation going on for the two to trend in opposite directions.

Edited to note that Warren Buffet probably says it best when he says "Get greedy when everyone else is scared, and be scared when everyone else is greedy"


AB1

[edit on 15-4-2008 by alphabetaone]

Originally posted by Rockpuck

Just because China dumps its dollar reserves does not mean the Dollar is bottoming out.. they did not say "turn these dollars in to Euros" and *poof* no more dollars and a crap ton of Euros appeared. Someone had to take the dollars in exchange for Euro's.. which would actually be impossible. Because the European central bank would have to literally print some 900 billion Euro's to match the 1.4 trillion.. about a quarter of the way in the Dollar would sink against the Euro and as more people purchased Euro's through goods, services or exchange.. the Euro would inflate at an amazing pace..

The US Dollar became the World Reserve at a much slower rate then how the the Euro is expanding..

And a sinking dollar is not good for ANYONE .. not even for those who use Euro's.

It is best put in reference to Japan..

Japan's currency compared to the dollar increases.. record levels.. its at 100! .. Thats 1 American Dollar = 100Yen.

So Toyota, who sells a car for $20,000 dollars would have gotten much much more Yen for the dollar, but now, because the dollar fell so far so fast.. the amount of Yen made is far less... but this is NOT becaues the Yen deflated.. its because the currency where SALES are made sunk, to put it in perspective, it would esentially take a $20,000 car and make it a $15,000 car over night without decreasing expenses in production. Actually, production cost would INCREASE.

For every single point then Yen rises in comparision of the Dollar.. Toyota will loose several million dollars in an instant. I will find the article, but it was an insane amount of money..

This is the same for many importers..

China can dumb the currency all they want, but guess what, they still sell their products in American Dollars, so they will ALWAYS have a massive reserve of Dollars, as its the only thing we will give them.

You do know that prices can be changed?

First of all, if China would choose to dump their USD reserves for EUR it would theoretically be perfectly possible. Why wouldn't it? They just dump it in Forex markets and watch how low the dollar will drop before the order is completely filled. As this would have severe consequences for the international trade and other economic aspects it is safe to say it won't happen. At least not in a drastic way.

As for importers, yes, they may pay in USD, but the goods are priced according to FX-rates and costs incurred in their home currency. While immediate increase in prices is usually not possible, in the long run the real value of the foreign currency held by exporting country remains constant ceteris paribus.

Also, smart companies hedge their export prices on the FX-markets for the period they are unable to adjust prices. So they're really not taking losses due to short term FX-swings. Permanent and fundamental changes in FX-levels naturally effect exports, but that's another story.

It is true however that dollar is too important for anyone to know what exactly what would happen should it collapse. And I don't think anyone would like to try and see what happens...

reply to post by Brain Damaged


Brain Damaged..Huh..?.........With the current group of Thugs and Shysters we have running things I am sure that that option is on the table.
A word to the wise folks ....Get your house in order fast, events are starting to spin out of control,and the Clowns in Washington are not up to the task of getting us out of this mess. Remember what happened when Katrina struck. There is a big storm headed our way and we have a drunk at the helm.

Uhoh, thats it- the final leg of the dollar hegemony saga has begun.

I've always said that a dollar collapse was impossible as long as China held the currency as their main forex reserve.

It strikes me as bizarre that they plan on dumping dollars at great personal cost to themselves, just to strike a blow against the US. I think however, that China knows a dollar collapse would end the United States' reign as the supreme economy, and that China would most likely take over as the largest.

Time to buy Euros, in my honest opinion.

reply to post by alphabetaone


Right on! Actually the inverse movement of the dollar and stocks can be explained by the non-USD operations of the companies. If a company on a US exchange is mostly operating in other currencies and is not USD-dependent, it is natural that the dollar price of the company rises when the dollar plummets.

This is a pretty curious article and I'm kind of surprised that nobody appears to have verified it. Going to naturalnews.com for economics news might not be such a great idea.

According to yahoo finance, the dollar is not "the lowest in 57 years against the Canadian dollar" as the article states. The dollar hit it's lowest in 33 years on Nov. 11 of last year when it got down to .9057. It hasn't been anywhere close to that low since then.

This article is bunk.