How will it affect everyone?

Originally posted by solomons path

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.

I agree, we've (the Royal We) made our bed... now I guess it's time to lie in it