The fate of the world's currencies in the wake of the demise of the dollar. - page 2
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I read that the U.S. dollar has two categories of banknote series: for domestic use and for the rest of the world, that the U.S. could overnight recognize "non-U.S." banknotes as mere bills... The Yellowstone volcano is about to go on the rampage, so let's just say the world 's currency is about to go belly-up, how will the rest of the world's currencies feel?
Please speak up, gentlemen.
The ruble will not be affected.
Which currencies will become stronger? The Norwegian krone (NOK) is now recognised as the most stable currency.
If the currencies fall against the dollar in sync, then the exchange rate between them can be almost the same, and then it doesn't matter how the dollar is at all :)
If currencies fall to the dollar in sync, then the exchange rate between them may barely change, and then it doesn't really matter how the dollar is at all :)
That is actually the point, that everyone is comparing to the dollar. But I am trying to imagine how the value of currencies will start to change (in which direction) relative to each other, not relative to the dollar.
The people of Russia don't care about the dollar exchange rate because they will buy bread with roubles. From this point of view it is worth considering saving in some currencies (for a trader - having deposits in different currencies). Right now, traders are benefiting from the growth of dollar vs ruble, because they will earn more in rubles, but will they do it for a long time, and will they do it forever. How will the global currencies behave after the fall of USA economy, which currencies will be stronger (again, without considering a date when it will happen, let's speculate only hypothetically).
And which currencies will become stronger? Right now the Norwegian krone (NOK) is recognised as the most stable currency.
Who knows. You have to know the economic ties too well. Countries economically strongly linked to the US will fall. Eureka is unlikely to be affected and so will all European countries.
Who knows. You have to know the economic ties too well. Countries economically strongly linked to the US will fall. Eureka is unlikely to be affected and so are all European countries.
I once read a fairly reasoned forecast on the US economy.
I will not give the arguments, but if the conclusions are brief, they are as follows.
Based on the macroeconomic problems of the USA, there are two ways of solving these problems: inflationary and deflationary.
Inflationary - devaluation of the dollar, and vice versa
Judging by the developments, and judging by the dollar weakening against all major currencies, the USA authorities have chosen a deflationary way of solving the problems. You can see what it means to the United States in the Great Depression of the 30s: all goods are available, but people have no money, demand falls, goods get cheaper, but no one buys them anyway. At the same time, all the toxic assets are being burned, especially financial assets. Real assets, minerals and real production of watches and trousers will be increasingly valued.
Falling demand in the US should cause a multiple drop in demand around the world. This is what happened in the world during the Great Depression (except for the USSR, which grew by leaps and bounds).
Today we are not the USSR and are in the same boat as the US, but the world situation is different. There is huge pent-up demand in China and India, almost 30% of the world's population. Will the governments of these countries manage to replace the fall in demand in the US with demand in their own countries - we are in the sweet spot, won't they? .....
... Will these governments be able to replace falling demand in the US with demand in their own countries - we're in for a treat, won't they? .....
They won't.
Ask yourself what is effective demand?
It doesn't just come on at the snap of a finger. Even if you start lending.
Demand is confidence in the future, demand is being educated enough to say to yourself "I can afford it because I'm in control of my life".
Demand is the momentum of an economy booming long enough for people to see that it's not going to end soon.
Remember when you opened your first real $10 forex trade, were you shaking?
Money takes some getting used to. Americans easily spend thousands, the Chinese peasant if you give him 10K will put it under his mattress, he's not used to that kind of money, he's afraid of it (I'm talking about the mass of people, not just a few).
So China's solvent demand will not grow in the near future. The best it can do is lend money to peasants, but then they won't repay the loans. So it is not demand but a sham.
The Chinese peasant has nothing to offer to the world, while demand is the exchange of money for goods, for the money to appear the Chinese need to sell something to the world (I am not talking about the Chinese workers, but the Chinese peasant, because they rely on him as the reserve of demand).
India has never wanted world domination, it has always been a donor of world economy since Roman times (when they sold spices for silver to save Rome from inflation). India is a self-sufficient country, and growing demand to keep the world economy alive is not good for it.
Perhaps gold will become the main "currency" and we'll go back to where we started a couple of millennia ago.