posted on Oct, 6 2009 @ 03:53 PM
I like the timewave thread, its one of the best if not the best thread on this website. There is no reason to think that moving away from the dollar
is anything more but a reflection of the increasingly multi-polar world we live in. If everyone moved away from the dollar suddenly certainly there
would be a big crash.
However, a weakening dollar is not always a bad thing. In this case its a good thing, we want it to happen. That may seem counter-intuitive, but its
true, and let me explain why:
Many people believe that we are in the current mess because of the massive imbalance between China and America in terms of exports and imports.
Americans leaved beyond their means and Chinese suppressed their currency, with everyone else being taken for the ride because of the massive
investments in the US.
The reason why the dollar is so strong lately is because the chinese suppressed their own currency by buying dollars (aka US debt) and selling their
own currency. This does not mean China is responsible for the downturn, there are many other factors. But for our purposes we will just focus on this
relationship. As I explained earlier, this led to cheaper chinese goods and thus more chinese exports and more purchasing power for Americans, and
thus too much consumption.
Now this imbalance is slowly being fixed because of actions like the Arabs, although they are most likely doing it for their own gain too. However
China is also attempting to move their economy from export dominated to more consumption, although still more exports.
This, in turn means that US goods are cheaper on the international market and thus US exports increase, which in turn helps manufacturing. Therefore,
although a weaker dollar means less consumption, it also means balancing what was before a very imbalanced relationship and more exports from the US,
thus easing the decrease in consumption.
As a result, a weakened dollar means in the long term a multi-polar world, but that has been the sentiment for a while, and a weaker dollar does not
mean a collapse in the US.
Sorry for the economics on a timewave board. Back on track: if the novelty dips at its lowest near the time that the Iranian nuclear facility is going
to be inspected, do you think that means Iran will become more cooperative (seeing as how the timewave marks changes and a cooperative Iran would be a