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How will it affect everyone?

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posted on Mar, 5 2013 @ 08:11 PM
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Hello,

I am asking for real answers, so if you don't know them or can't explain them so that a child could understand them (I'm not proud) then please refrain from answering.

We all know that the American dollar is going to crash in the near or near distant future (unless the US government takes over the world, or some other far out there reason), however, why is this going to affect the world?
I'm asking because I don't know.

Aren't the majority of products not made in the USA anymore? Is the US buying that much stuff from other countries that their markets would suffer if the US stopped buying from them? Is it because the USD is the world reserve currency? Wouldn't another currency just take its place in that case?

Please forgive me for my ignorance on this subject, but I am trying to learn and what better place than ATS?

Thank you in advance!
edit on 5-3-2013 by superman2012 because: (no reason given)




posted on Mar, 5 2013 @ 08:16 PM
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reply to post by superman2012
 


No problem.

The basis of international trading is the US dollar.

Explanation.

Basically it would ripple through the markets causing untold financial uncertainty. Since the market are built entirely by speculation, this would cause a world wide panic on stocks and banking services.

That's the running theory anyway.

ETA: Another article explaining:

www.economicshelp.org...

~Tenth
edit on 3/5/2013 by tothetenthpower because: (no reason given)



posted on Mar, 5 2013 @ 08:21 PM
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reply to post by tothetenthpower
 


I can see that happening if it were to happen quickly, but what if it is happening slowly and people have time to prepare for it. Market crashes are not seen by too many people before it happens, it seems like quite a few people are expecting/watching this happen. So, if that is the case, it won't really affect too many people (outside of the US) as long as we learn Chinese right?



posted on Mar, 5 2013 @ 08:24 PM
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reply to post by superman2012
 


lol

Well that depends. The US and Europe pretty much invented modern banking and most of the world's wealth is on either the London, Chinese or US stock exchanges. Both are heavily involved in currency trading and any other manner of trading.

ALL in US dollars. In order for it to not effect people that much, countries would need to stop using the dollar as the reserve. That however, removes confidence in the market when discussing the dollar, so it's more likely to fall exponentially in value, and lead to further financial issues in your home markets.

Since the US are the world's largest consumer market, not having the money to import products means other nations cannot export. Standard of living decreases across the board as revenue does for various corporations and government.

~Tenth



posted on Mar, 5 2013 @ 08:25 PM
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This is one of the largest reasons, right here for why the World will hurt badly and deeply when the U.S. falls.

US Foreign Assistance by Country for 2013

Plenty of people make it a near sport to bash the Americans, world wide and for everything remotely negative or merely inconvinient at times. The truth is that for as much bad as the United States does actually do, it runs nearly as many medical, Peace Corps, AIDS Assistance, USAID and countless other benefit programs all over.

That goes down too. For some, the numbers represented there don't mean much and to Western eyes, that may be accurate to say. What is 100 million to a Western nation or to the thoughts of a citizen of them these days? Well, to nations around the world, it's quite a lot, actually.

Alphabetical List of Nations with GDP Numbers

As the figures show with a bit of flipping back and forth....it's a large % of the entire GDP of some of the nations receiving our support, military or otherwise. When the U.S. economically goes down for the count and for an extended period.....all that likely vanishes. It will be quite a gap in the world to see in some areas.



posted on Mar, 5 2013 @ 08:28 PM
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reply to post by superman2012
 


Whomever controls the reserve currency owns the goose that lays the golden eggs.

The fight over which nation will gain control of the new reserve currency will be ferocious. The US isn't just going to give it away, it will need to be taken. It is no secret that China lusts after it.

Whomever gains control is guaranteed to be the top superpower in a unipolar world. It's the stuff World Wars are made of.
edit on 5-3-2013 by METACOMET because: (no reason given)



posted on Mar, 5 2013 @ 08:30 PM
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reply to post by tothetenthpower
 

I'm going to use China as an example:

If a worker there makes crap wages producing cheap product for export to the US, and the US stops buying the cheap product, wouldn't it benefit China to let their currency be worth more (as people are saying they are devaluing it) so that people could make more money and then spend their money on the products that they once were exporting?

Otherwise, they are stuck holding a bad debt, with a devalued currency, poor workers, and lots of cheap product.



posted on Mar, 5 2013 @ 08:31 PM
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reply to post by Wrabbit2000
 


I haven't read through your link yet, but doesn't foreign aid happen mostly where the richest people in the poorest nations get the aid? It doesn't directly benefit the little starving orphaned child you see on TV.



posted on Mar, 5 2013 @ 08:33 PM
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I think martial law would be implemented in the US due to rioting and looting. Other countries would withdraw all support for the collapsing US currency. Some nations may try an invasion, probably an air strike, when the people are already panicked.



posted on Mar, 5 2013 @ 08:36 PM
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reply to post by superman2012
 


It effects the world because the dollar is the world reserve currency... in other words it is the currency that nations use to do business with each other. The dollar is also what is used to purchase oil, this is known as the Petro-Dollar. In 1970 (maybe 1972) Nixon made an agreement with Saudi Arabia that they would only accept US dollars for their oil, and in return we offered our military protection for their oil fields. Soon after, OPEC liked the idea and incorporated it worldwide for all oil transactions, and the Petro-Dollar was born. The Petro-Dollar creates a world wide demand for the dollar, which makes everything here in the US cheaper and our way of life/standard of living MUCH better than virtually everywhere else. It also gives us some of the cheapest gas in the world, even at $4.00 a gallon we are still MUCH cheaper than everywhere else save for the oil producers.

Over the last year or so, countries have lost confidence in the dollar because the FED has opened the printing presses up to the extent that the dollar is losing value by the day. Brazil, South Africa, China, Russia, and Iran, among many other nations have all made deals among themselves to trade/buy/sell oil with other means than the dollar. They are using gold and other currencies, which means that there are trillions of dollars in circulation overseas not being used, and because the demand for the petro-dollar is shrinking, those unwanted dollars will eventually work their way back here to the US and cause massive inflation. It is already starting to happen... just look at the price of food and gas, as well as the over inflated value of the Dow Jones.

China is positioning themselves to have their currency take over as the world reserve currency, and they plan on backing it with gold which is why they have been buying massive amounts of it over the last year, and they have no intention of easing up. China is also working deals with Russia and Iran to trade goods, gold and currency for China and Russia's oil. This, in my opinion, is the main reason the war drums are beating more and more to go to war with Iran... it has nothing to do with nukes... it has everything to do with Iran finding ways around sanctions, and hurting the value and demand of the petro-dollar. Middle East wars are all about oil and the position of the petro-dollar in the world market, and don't let anyone tell you any different.

Moral of the story is... the world has lost confidence in the dollar, and whatever they have in reserves will work it's way back here to the US causing inflation, maybe even hyper-inflation. Everything will get more expensive, countries will stop buying treasury bonds, in fact they already have... the FED is the only one buying them at the moment (Quantitative Easing). They can't stop QE because when they do this house of cards comes crashing down. If you think 2008 was bad, you haven't seen anything yet. To see what this looks like in real life, Google Zimbabwe Inflation... because that is what we are in store for.
edit on 5-3-2013 by OptimusSubprime because: (no reason given)



posted on Mar, 5 2013 @ 08:37 PM
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I understand the great depression of the USA and the financial mess that Europe was in about that same time. I can't comprehend this mess though, it will be a collapse of many countries. I predict a power struggle at the same time between the major powers of the world. I can't even comprehend the possible outcome of this on this big of a scale.



posted on Mar, 5 2013 @ 08:39 PM
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reply to post by OptimusSubprime
 


^THIS

Well said Optimus!



posted on Mar, 5 2013 @ 08:43 PM
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reply to post by superman2012
 

I'd say there is a fair % of that side of things and where the aid is termed as "aid" but more like creative payments to other officials or whoever needs paid. I'm sure that happens often enough. Then another % is through things like the IMF as the initial point and to hold other nations under control by the aid/debt accumulating.

For all that though, there are still a good number of those in places like USAID and the Peace Corps ..among many others... who joined Government and stay there to make sure some of the money does good. However well it works out for the long term, things like the AIDS and disaster funding are a good example of where it has major impacts in individual lives, among poor nations.

For another way of thinking of it..... Look at the Universities which, among some programs, are almost entirely left leaning for political thought. Where do you think a good # of them go from University? Government has stability but gives them a place for all that ideology. That's what will be missed most, I believe.



posted on Mar, 5 2013 @ 09:05 PM
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Wonderful! Thank you for explaining it so a child (me) would understand!



posted on Mar, 5 2013 @ 09:12 PM
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reply to post by superman2012
 


In theory you'd be correct. The problem is that there is no market in China for cheap US goods. I mean sure they get sold, but not in the volume that they do in the States.

You can imagine that Wal Marts are relatively rare in China. Also the Chinese have no interest in doing what you propose as their current fortunes rely on these current conditions.

I'm no export and to be honest my understanding of world markets is amateur in comparison to others who have posted here, but China's success is largely due to the US. The downfall of their economy could occur if the US went that route.

There are ways to insulate themselves and emerge as the dominant power, but I don't think they are quite ready yet. Their plans are still very much in motion I think.

~Tenth



posted on Mar, 6 2013 @ 01:22 AM
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reply to post by superman2012
 


Well . . . this is a conspiracy site, so I know some will disagree with me straight away. But, "we" don't all "know" that the US dollar will collapse. In fact, there are only two ways in which any currency can overtake the US dollar, regardless of value.

One, and in the case of China's Yuan (or more accurately the Renminbi, as Yuan is a generic term that refers to all currency including American), would be for the Chinese to take political control of the world and outlaw any other currency.

Second, for America to implode and go third world. This would also assume some fortunate country then invades and takes political control of America, thus replacing the dollar with their currency.

In the first case, we'd have bigger troubles than currency . . . so who cares. In the second, we'd have bigger troubles than currency . . . so, who cares.

All modern currencies are fiat currencies . . . ALL for repetition sake, no modern currencies are based solely on hard assets (like gold). This means the value is determined solely by market forces (public and private speculators) and the very government that issues it. In America's case, the FED being the determining factor.

The problem with the Renminbi is that it's value, in the largest sense, is set by the government. A communist government that strickly controls the flow of information to and from China and is known for being less than honest. How many free countries are going to except the world standard currency of a country that cannot be trusted to be honest, or even give the illusion of transparency? We can probably agree that all governments are less than transparent on several issues, but the Chinese take the cake on secrecy and misinformation (with the exception of maybe South Korea and the old Soviet Block). Now, if China were to democratize and open their doors and books to the rest of the world . . . maybe. But, again, that would mean a massive revolution in China, just like what would be need in America to "collapse" or replace the dollar.

You may then say . . . "OK, well then what about the Euro?" Well, the EU hasn't even abandoned their respective native currencies and they clearly have their own economic issues that they can't sort out. So, again, without major world upheaval . . . not going to happen.

Let's say OPEC decided to use the Renminbi as the "petrol-dollar" . . . How much confidence would investors or traders have in the value of a barrell? You would see the oil profits and prices fall very fast . . . and possible another world war. It's all about confidence in the perceived value when it comes to investing and trading.

I know people like to cling to fear and books like "Aftershock; however, if you sit and rationally think things through, you'll quickly realize those issues aren't going to happen without world upheaval . . . And again, the dollar would be the least of anyone's worries at that point.

Now . . . what I would be worried about is the value to investors in holding on to US debt (bonds) with our skyrocketing out of control debt. If China decided to dump all of their holdings and others followed suit, you could see runaway inflation and conditions in this country would deteriorate . . . which would probably lead to the doom and gloom you hear about, but would still not "collapse" the dollar. At worst, countries would demand trade in their native currency.

Hope some of this helped and hope you can see through the fallacy of our dollar "collapsing".

ETA - Here is a short blurb from the wiki on Renminbi to show latest actions on even taking the Renminbi seriously for trade.

Through most of its history, the value of the renminbi was pegged to the U.S. dollar. As China pursued its gradual transition from central planning to a market economy, and increased its participation in foreign trade, the renminbi was devalued to increase the competitiveness of Chinese industry. It had previously been claimed that the renminbi's official exchange rate was undervalued by as much as 37.5% against its purchasing power parity (see below).[5] However, appreciation actions by the Chinese government, as well as quantitative easing measures taken by the Federal Reserve and other major central banks, have caused the renminbi to be within as little as 8% of its equilibrium value by the second half of 2012

Since 2005, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. China has initiated various pilot projects to "internationalize" the RMB in the hope that it will become a reserve currency over the long term

Renminbi Wiki
edit on 3/6/13 by solomons path because: (no reason given)



posted on Mar, 6 2013 @ 01:49 AM
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reply to post by OptimusSubprime
 


The US dollar is the largest held reserve currency, but is not the only reserve. The Euro, pound stirling, Japanese Yen, Swiss Franc, and Canadian dollar are all acceptable reserve currencie for trade according to the IMF and public and private speculators.

Can the dollar be overtaken as the world leader held in reserve . . . sure. If enough of the world's speculators lose confidence in the dollar and demand the other reserves. However, this will not automatically lead to hyper-inflation or a "collapse" of the dollar. Short of the US being over taken by other countries, there wouldn't be that massive of a trade off, regardless of value. Unless, by collapse, you simply mean not the largest held reserve. Anything else amounts to fear mongering.

China will never be seen as a reserve by the world or the IMF, regardless of how much gold they eat up. At the end of the day they are still a secretive communist regime who maintains complete capital controls over the conversion of the Renminbi and they have no open bond market. The best they are able to do now is operate modest currency-swap transactions with lesser countries.
edit on 3/6/13 by solomons path because: (no reason given)
edit on 3/6/13 by solomons path because: (no reason given)



posted on Mar, 6 2013 @ 08:14 AM
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Originally posted by solomons path
reply to post by OptimusSubprime
 


The US dollar is the largest held reserve currency, but is not the only reserve. The Euro, pound stirling, Japanese Yen, Swiss Franc, and Canadian dollar are all acceptable reserve currencie for trade according to the IMF and public and private speculators.

Can the dollar be overtaken as the world leader held in reserve . . . sure. If enough of the world's speculators lose confidence in the dollar and demand the other reserves. However, this will not automatically lead to hyper-inflation or a "collapse" of the dollar. Short of the US being over taken by other countries, there wouldn't be that massive of a trade off, regardless of value. Unless, by collapse, you simply mean not the largest held reserve. Anything else amounts to fear mongering.

China will never be seen as a reserve by the world or the IMF, regardless of how much gold they eat up. At the end of the day they are still a secretive communist regime who maintains complete capital controls over the conversion of the Renminbi and they have no open bond market. The best they are able to do now is operate modest currency-swap transactions with lesser countries.
edit on 3/6/13 by solomons path because: (no reason given)
edit on 3/6/13 by solomons path because: (no reason given)


You're right... other currencies do serve as a reserve currency, but traditionally the US Dollar has been used much more than the others. Because of this, there has been a global demand for the dollar which has given us here in America a consistent standard of living. In reference to the question in the OP, Americans will be effected greatly by a change in status as the reserve currency, as well as the demise of the petro-dollar, because the standard of living here will go straight to hell once that occurs. The vast majority of people are not aware of this nor are they ready to deal with it.



posted on Mar, 6 2013 @ 09:09 AM
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Originally posted by OptimusSubprime

Originally posted by solomons path
reply to post by OptimusSubprime
 


The US dollar is the largest held reserve currency, but is not the only reserve. The Euro, pound stirling, Japanese Yen, Swiss Franc, and Canadian dollar are all acceptable reserve currencie for trade according to the IMF and public and private speculators.

Can the dollar be overtaken as the world leader held in reserve . . . sure. If enough of the world's speculators lose confidence in the dollar and demand the other reserves. However, this will not automatically lead to hyper-inflation or a "collapse" of the dollar. Short of the US being over taken by other countries, there wouldn't be that massive of a trade off, regardless of value. Unless, by collapse, you simply mean not the largest held reserve. Anything else amounts to fear mongering.

China will never be seen as a reserve by the world or the IMF, regardless of how much gold they eat up. At the end of the day they are still a secretive communist regime who maintains complete capital controls over the conversion of the Renminbi and they have no open bond market. The best they are able to do now is operate modest currency-swap transactions with lesser countries.
edit on 3/6/13 by solomons path because: (no reason given)
edit on 3/6/13 by solomons path because: (no reason given)


You're right... other currencies do serve as a reserve currency, but traditionally the US Dollar has been used much more than the others. Because of this, there has been a global demand for the dollar which has given us here in America a consistent standard of living. In reference to the question in the OP, Americans will be effected greatly by a change in status as the reserve currency, as well as the demise of the petro-dollar, because the standard of living here will go straight to hell once that occurs. The vast majority of people are not aware of this nor are they ready to deal with it.


Well I can't argue with any of that . . .

I just feel getting to that point will also involve larger issues (geo-political agression/conflict with China) and we'll have bigger fish to fry than just dealing with the fallout from the dollar. Unfortunately, at this point, the world is tied to our mess.



posted on Mar, 6 2013 @ 09:53 AM
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The USA still makes things and has the highest GDP in the world.

We are just not making the stuff the average person needs or wants...

Weaponry and advanced weaponry
Heavy construction equipment
Surveillance tech
Medical equipment
Pharmaceuticals
Refined gasoline
Energy technology

and

Food.

The average Joe is more interested in electronics and entertainment and most of that stuff is imported. When we stop allowing ourselves to be "perpetually entertained and distracted" maybe we will get back to inventing, manufacturing and exporting things that the rest of the world will want so badly they will throw money at us (until some turncoat sells the technology to our trade competition)






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