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World Economy without the U.S. Dollar

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  • World Economy without the U.S. Dollar

    I've posted previously about Russia attempting to work with Iraq to form their own Oil Market... That was maybe a year ... year and a half ago. At that time, it was also rumored Russia was trying to work the Ruble in as the world currency in place of the dollar.

    So in that timeframe, it appears Russia is now working with BRICS (Brazil, Russia, India, China, and South Africa) to do that exact thing (except possibly the Ruble part).
    Analyst: Germany Secretly Plans to Join BRICS and Dump the Dollar

    Posted on July 24, 2014

    by Paul Joseph Watson

    Financial analyst Jim Willie sensationally claims that Germany is preparing to ditch the unipolar system backed by NATO and the U.S. in favor of joining the BRICS nations, and that this is why the NSA was caught spying on Angela Merkel and other German leaders.In an interview with USA Watchdog’s Greg Hunter, Willie, a statistical analyst who holds a PhD in statistics, asserted that the real reason behind the recent NSA surveillance scandal targeting Germany was centered around the United States’ fear that Europe’s financial powerhouse is looking to escape from an inevitable dollar collapse.

    “I think they are looking for details on assisting Russia on dumping the dollar. I think they are looking for details for a secret movement for Germany to get away from the dollar and join the BRICS (Brazil, Russia, India, China and South Africa.) This is exactly what I think they are going to do,” said Willie.

    Earlier this month, the BRICS nations (Brazil, Russia, India, China and South Africa), announced the creation of a new $100 billion dollar anti-dollar alternative IMF bank to be based in Shanghai and chaired by Moscow...
    There is more to that article on the DCClothesline (blog), including:

    Putin launched the new system by saying it was designed to, “help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies,” a clear signal that Russia and other BRICS countries are moving to create a new economic system which is adversarial to the IMF and the World Bank.

    Offering an insight into the attitude of the western elite towards Russia, comments made by the likes of former US ambassador to Iraq Christopher R. Hill suggest that Moscow is increasingly being viewed as a rogue state. Back in April, Hill said that Russia’s response to the Ukraine crisis meant that Moscow had betrayed the “new world order” it has been a part of for the last 25 years.

  • #2
    Re: World Economy without the U.S. Dollar

    Makes sense for the countries involved. Why wouldn't they want reduced interference from the U.S. in financial issues? Of course it also opens each of them up more to the sheenanigans of each other in how they manipulate their local currencies. China does as well as it does because of how much of it's funds they can flaot thanks to U.S. bonds (and trade).

    ?


    • #3
      Re: World Economy without the U.S. Dollar

      There are great benefits for some people in the fact that the reserve currency has been the dollar. The repercussions of this changing is something I cannot get my mind around, for it is so complicated, with so many interrelationships involved, that will actually affect the lives of ordinary people. I would see the inevitable crash of the dollar if this happens.

      Some people think that this would in the long run be a good thing, for it is anti One World Order, which is a one world oligarchy. And this would be a major set back for that one world order.

      I keep hearing about a planned currency for north America, that would replace the dollar, and would include Canada and mexico. I think it is just another conspiracy, but it's getting harder and harder to separate the conspiracies from actuality given the proliferation of all sorts of propaganda. And given the people being unable to trust their own gov't. It's an atmosphere rife with confusion.

      Also, there are these ads all over the media about the coming economic doom. These are the most unstable times I have ever personally witnessed. I think we are watching the fall of the American empire play out right before our eyes. And I think it is a consequence of globalization and the rise of oligarchs. The oligarchs are fighting one another.

      ?


      • #4
        Re: World Economy without the U.S. Dollar

        Originally posted by Blue Doggy View Post
        There are great benefits for some people in the fact that the reserve currency has been the dollar. The repercussions of this changing is something I cannot get my mind around, for it is so complicated, with so many interrelationships involved, that will actually affect the lives of ordinary people. I would see the inevitable crash of the dollar if this happens.

        Some people think that this would in the long run be a good thing, for it is anti One World Order, which is a one world oligarchy. And this would be a major set back for that one world order.

        I keep hearing about a planned currency for north America, that would replace the dollar, and would include Canada and mexico. I think it is just another conspiracy, but it's getting harder and harder to separate the conspiracies from actuality given the proliferation of all sorts of propaganda. And given the people being unable to trust their own gov't. It's an atmosphere rife with confusion.

        Also, there are these ads all over the media about the coming economic doom. These are the most unstable times I have ever personally witnessed. I think we are watching the fall of the American empire play out right before our eyes. And I think it is a consequence of globalization and the rise of oligarchs. The oligarchs are fighting one another.
        I heard it once said that Obama has a goal of putting the U.S. on an economic par with the rest of the world. DO NOT know if that is or was true, but what he has done thus far certainly seems aimed at that goal. That said, however, given the failed economic policies of GWB, Obama did not have that much work to do.

        ?


        • #5
          Re: World Economy without the U.S. Dollar

          There has been plenty of discussion, articles, and blogs talking about the potential for more nations to join something that by effect "dumps the dollar." This is not the first time this has been brought up, we talked about it around the time of the economic collapse as well. Arguments have been made before on the notion of the petrodollar concept as the hidden reason for so much of America's imperialism and even many of our wars. The main ingredient being if we fight for oil, we are also fighting for insurance that it is traded with our dollars thus subject to our own monetary and fiscal policy. If you follow the logic put forth by those that support these blogs the notion traces back to Nixon's removal of the US from the gold standard (well to be fair, he completed the process as the idea predates Nixon.)

          There is good reason for this subject to be coming back up now, the Cold War with Russia woke up from the nap it was taking back when we called Russia the USSR. The German angle also has some play here, especially given the fallout from the NSA spying scandal. In following the articles that make these suggestions there is some real truth to the consequence of the US no longer being the prevailing reserve status.

          In my opinion the dollar being dumped would be catastrophic but I also believe we seem to have more to worry about with China's actions than Russia's (or Germany's.) China specifically has worked out well how to profit from having both a trade surplus with the US, own a sizable portion of US Debt, and still negotiate contracts with other nations traded in something other than the dollar. China now, or will soon, surpass the US as the #1 oil importer. Buying on the open market will put pressure on the US dollar to be the reserve currency in trade for the product when the parties involved may not be all that kind to US policy. When I say policy I am talking about more than just fiscal and monetary policy, but foreign policy as well. Consider who are the world's top exporters, who runs those nations, and more importantly ask the question who of them are really friends of ours?

          I am not entirely convinced we will have a world economy with a lesser US dollar presence all that soon, but an argument can be made that historically speaking world reserve currencies used also to trade on a global scale do not last all that long. In our era we are talking about energy, and switching oil pricing in something other than the link to the US dollar as a reserve currency is problematic. Even if the switch is to something like Gold, instead of a currency, we still have more to worry about with China than Russia, Germany, Brazil or India (perhaps even combined.) China used to be #5 in the Gold Reserves list behind even France. But as of late they now import more Gold than just about anyone else on the planet and the betting among bloggers suggest the pinnacle of fear should be when and if China eclipses the US and Germany as holding the most Gold. Assuming that ever happens, all bets are off on the US convincing the planet it's monetary and fiscal policy is superior, meaning an even harder time suggesting our currency is most safe. Just for information's sake, India hardly makes the list at #10 and Russia is way back at #7 still trying to replenish it's reserves (last time I checked.)

          If you look at it with all of this context, then engaging Russia in the manner we have, and spying on Germany to the point of causing such discontent was total stupidity. It means the eventual commitment of US forces (even if just in a showing) to secure our position as dominant, but for purely monetary illusion of strength reasons and not necessarily humanitarian or allied support reasons.

          Now I do not really buy all of this, but it is a hell of an argument. Something that Brazil, Russia, India, China and South Africa will all have to do to is explain their own currency manipulations and status in world trade. A problem for Germany will be its connections to the Euro, as they are now learning the pains of being linked to so many weak economic models with so much dependency on debt. Like Greece, Italy, Spain, and France (in that order of worst to not all that better.)

          ?


          • #6
            Re: World Economy without the U.S. Dollar

            Originally posted by Sluggo View Post
            There has been plenty of discussion, articles, and blogs talking about the potential for more nations to join something that by effect "dumps the dollar." This is not the first time this has been brought up, we talked about it around the time of the economic collapse as well. Arguments have been made before on the notion of the petrodollar concept as the hidden reason for so much of America's imperialism and even many of our wars. The main ingredient being if we fight for oil, we are also fighting for insurance that it is traded with our dollars thus subject to our own monetary and fiscal policy. If you follow the logic put forth by those that support these blogs the notion traces back to Nixon's removal of the US from the gold standard (well to be fair, he completed the process as the idea predates Nixon.)

            There is good reason for this subject to be coming back up now, the Cold War with Russia woke up from the nap it was taking back when we called Russia the USSR. The German angle also has some play here, especially given the fallout from the NSA spying scandal. In following the articles that make these suggestions there is some real truth to the consequence of the US no longer being the prevailing reserve status.

            In my opinion the dollar being dumped would be catastrophic but I also believe we seem to have more to worry about with China's actions than Russia's (or Germany's.) China specifically has worked out well how to profit from having both a trade surplus with the US, own a sizable portion of US Debt, and still negotiate contracts with other nations traded in something other than the dollar. China now, or will soon, surpass the US as the #1 oil importer. Buying on the open market will put pressure on the US dollar to be the reserve currency in trade for the product when the parties involved may not be all that kind to US policy. When I say policy I am talking about more than just fiscal and monetary policy, but foreign policy as well. Consider who are the world's top exporters, who runs those nations, and more importantly ask the question who of them are really friends of ours?

            I am not entirely convinced we will have a world economy with a lesser US dollar presence all that soon, but an argument can be made that historically speaking world reserve currencies used also to trade on a global scale do not last all that long. In our era we are talking about energy, and switching oil pricing in something other than the link to the US dollar as a reserve currency is problematic. Even if the switch is to something like Gold, instead of a currency, we still have more to worry about with China than Russia, Germany, Brazil or India (perhaps even combined.) China used to be #5 in the Gold Reserves list behind even France. But as of late they now import more Gold than just about anyone else on the planet and the betting among bloggers suggest the pinnacle of fear should be when and if China eclipses the US and Germany as holding the most Gold. Assuming that ever happens, all bets are off on the US convincing the planet it's monetary and fiscal policy is superior, meaning an even harder time suggesting our currency is most safe. Just for information's sake, India hardly makes the list at #10 and Russia is way back at #7 still trying to replenish it's reserves (last time I checked.)

            If you look at it with all of this context, then engaging Russia in the manner we have, and spying on Germany to the point of causing such discontent was total stupidity. It means the eventual commitment of US forces (even if just in a showing) to secure our position as dominant, but for purely monetary illusion of strength reasons and not necessarily humanitarian or allied support reasons.

            Now I do not really buy all of this, but it is a hell of an argument. Something that Brazil, Russia, India, China and South Africa will all have to do to is explain their own currency manipulations and status in world trade. A problem for Germany will be its connections to the Euro, as they are now learning the pains of being linked to so many weak economic models with so much dependency on debt. Like Greece, Italy, Spain, and France (in that order of worst to not all that better.)
            I have most frequently heard this kind of talk tied around the oil marketplace, too. We are seemingly a defacto oil-backed dollar instead of gold-backed.

            ?


            • #7
              Re: World Economy without the U.S. Dollar

              Originally posted by Good1 View Post
              I have most frequently heard this kind of talk tied around the oil marketplace, too. We are seemingly a defacto oil-backed dollar instead of gold-backed.
              I would say we are a "trust our monetary and fiscal policy" backed dollar while also trying to be the de facto transaction standard to move oil around the globe, all so we can ignore the place of gold as a means to ensure fiscal sovereignty.

              You have to remember the entire reason for moving away from a gold-backed monetary standard is so that a government can artificially control the money supply and interest rates. This has roots all the way back to the Great Depression. High unemployment and deflation made it a challenge to stimulate the economy, and classical economist could not adequately explain why they were seeing what they were seeing in economic result year on year. The run on the bank risk then was slightly different than what it means today, then it meant cashing in deposits and hitting the gold supply. In order to effect interest rates but also deal with people and business not in a position to borrow FDR cut the dollars connections with Gold backing (domestically.) Now FDR could get dollars into the economy, borrow at cheap rates in the process, and still control interest rates for business to borrow. It took all the way up to 1971 for Nixon to complete the process by ending the practice of exchanging dollars for US gold reserves. Between the two they effectively broke the "promise" that a dollar was worth a certain amount of Gold, domestically or internationally.

              It is an important lesson as the selling points were lengthy. That the Fed could then use monetary policy to ensure dollar value and increase property for all income classes. The Fed to could also handle the amplifications of the economic cycle with lesser impact on Americans. It would allow monetary and fiscal policy to have greater effect on providing for sustained high employment, strong economic growth, and price controls. Lastly the selling point was that break from Gold would allow the trade deficit to fall allowing for better competition for the American worker against foreign competition.

              Turns out every one of those promises was an outright lie.

              The real purpose was to design a fiscal mechanism to rely on monetary policy to borrow massive amounts of money at very controlled interest rates that could be eventually paid back with dollars worth far less than they were at the point of borrowing. That part ended up true which is why ever since that moment we started to borrow money year on year regardless of the economic condition of the nation. We know the selling points were false as prices for goods and services are *anything* but under control, our economic cycle is prone to bubbles that tend to pop in spectacular fashion and be more frequent, our trade deficits are worse, we nailed the coffin shut on being a production and export nation to one of import and consumer debt models, *and* lastly our income divide is worse now than when they started by just about every known economic measure.

              Those are the reason that trust in the dollar is one of consequence like what we see today, these every so often conversations about US monetary and fiscal policy making other nations nervous about using our dollars to back their currency and of course transaction in oil. Which we know for fact is the biggest movement of wealth for a product ever in the history of man, including Gold itself. Think about that for a moment.

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              • #8
                Re: World Economy without the U.S. Dollar

                Originally posted by Good1 View Post
                I have most frequently heard this kind of talk tied around the oil marketplace, too. We are seemingly a defacto oil-backed dollar instead of gold-backed.
                The dollar hasn't been gold-backed for decades and the dollar isn't oil-backed because the price of oil fluctuates wildly.

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                • #9
                  Re: World Economy without the U.S. Dollar

                  Another reason to move from the gold standard was so gold could be sold for more then the price controlled amount you would want it to be.
                  An oil backed dollar or even better an energy backed dollar would be great and serve to introduce a practical value of money that would still support investment and serve as a measure of economic function. You could make money by generating energy....just like you can make money by generating energy.

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                  • #10
                    Re: World Economy without the U.S. Dollar

                    Once oil is on it's way out as the "energy/value" unit, and it is replaced by a more stable source of energy, the potential for much better economic stability presents itself. If a new unit of energy trends around $1 forever, there is little pressure for inflation. That should be one objective for any economy, IMO: Keep inflationary pressure from essential products or services at or near zero.

                    Energy cost is at the foundation of all modern economies. Gold is a non-productive means of measuring or controlling the economy. It's main value is in electronics technology. Using it as a monetary standard depends on who hoards the most gold, or is the most able at controlling the mining of it. It seems to be an artificial control, unrelated to the actual productivity of a nation.

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                    • #11
                      Re: World Economy without the U.S. Dollar

                      Originally posted by Good1 View Post
                      I've posted previously about Russia attempting to work with Iraq to form their own Oil Market... That was maybe a year ... year and a half ago. At that time, it was also rumored Russia was trying to work the Ruble in as the world currency in place of the dollar.

                      So in that timeframe, it appears Russia is now working with BRICS (Brazil, Russia, India, China, and South Africa) to do that exact thing (except possibly the Ruble part).


                      There is more to that article on the DCClothesline (blog), including:


                      Well, not sure what Germany "joining" the "Briccs" is even supposed to mean actually. Germany furthermore already has a currency that is even explicitly a challenge to the dollar, it is called the Euro. Challenging the dollar though is a long-term goal, over the short - term Germanys (and other nations) gamble is to build a single currency zone based on fiscal rules that ensure a) sustainability and b) stability and that stand very much in contrast to anything that the US is preaching.
                      Not possible ? Well, US "analysts" have for years been trumpeting epitaphs for the Euro around and predicted the "certain" implosion of the single currency within weeks, months or years countless times. For a currency that has been declared dead in anglophone media that often it is pretty much alive and even continously attracts new members.
                      As a last sidenote, I am unaware how the US spying on Germanys investigations against the NSA, defence ministry, and recruiting double agents in the intelligence services helps them to understand fiscal and monetary policies. The appropriate place for that would be the german Central Bank, the Bundesbank, and the European Central Bank, the ECB. Since both are independent and dont take orders from politicians.(!) But what do I know, I just live here



                      It is still a gamble, but in case you havent been paying attention recently :

                      http://www.cnbc.com/id/101760913

                      To say nothing of some latter day Mediterranean converts, who thought that Berlin's relentless preaching about the virtues of fiscal discipline and probity would pay off by building up investor confidence was a cruel "pie in the sky."


                      The German hectoring, assorted with some wrenching arm-twisting, not only produced results, it slowly passed the disciplinarian's baton back to the markets. And that is where we are now: Markets are closely scrutinizing fiscal policies and budget outcomes in a way that no euro area government would again dare test their patience.

                      The German-led stability pact has also institutionalized euro area budget procedures. Each member country must submit its fiscal policies for review to the EU Commission before they are presented to the country's legislature. That is a serious dent in national sovereignty, but the scrutiny of the EU Commission, euro partners and financial markets has opened up a transparent process where any fiscal transgressions would entail exorbitant costs for public finances.

                      The monetary policy is in the hands of a supranational institution – the European Central Bank (ECB) – which has shown rigor and imagination in handling a hugely difficult task with limited authority in the context of an incredibly complicated legal and administrative environment.



                      These are the most important points about the "fiscal compact" treaty that the Eurozone nations have signed :

                      http://uk.reuters.com/article/2012/0...8210QH20120302

                      The budget of a country must be in balance or in surplus, which means that in structural terms - that is excluding one-off items and business cycle variations - the deficit cannot be higher than 0.5 percent of gross domestic product.

                      - Only countries which have debt to GDP ratios significantly below 60 percent can have a bigger structural deficit, but not more than 1 percent of GDP.

                      - If the budget is not in balance, automatic correction rules, written into national laws, must kick in.

                      - The balanced budget rule must be written into national law, preferably the constitution, one year at the latest from the day the fiscal compact enters into force.

                      - If a euro zone country does not write the balanced budget rules into its national law, it can be sued in the European Court of Justice and, if it does not comply with the Court's ruling, it can be fined 0.1 percent of its GDP.

                      - The agreement will enter into force once 12 euro zone countries ratify it, or on January 1, 2013.

                      - A country with public debt higher than the EU limit of 60 percent of GDP has to reduce it by one twentieth a year as a benchmark.

                      - Euro zone countries will coordinate national debt issuance plans in advance.

                      - Only countries that have ratified the fiscal compact and written the balanced budget rule into national law will be eligible for euro zone bailouts from the European Stability Mechanism.

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                      • #12
                        Re: World Economy without the U.S. Dollar

                        Originally posted by Sluggo View Post
                        T
                        Now I do not really buy all of this, but it is a hell of an argument. Something that Brazil, Russia, India, China and South Africa will all have to do to is explain their own currency manipulations and status in world trade. A problem for Germany will be its connections to the Euro, as they are now learning the pains of being linked to so many weak economic models with so much dependency on debt. Like Greece, Italy, Spain, and France (in that order of worst to not all that better.)

                        Well, I would argue that not all of Americas policymakers would see consolidation of the Eurozone crisis nations as welcome news. Which is not to say that America isnt interested in a prosperous and stable Europe, yet a fiscally reasonably solid and economically reasonably balanced as well as reasonably integrated single currency zone (noone will achieve perfection during our lifetimes ) would raise unwelcome questions about the USs own fiscal and financial screwups (and also question several dogmas that still pass as conventional wisdom in Americas debate). Even if the dollar will remain the reserve currency for some time to come.
                        I would also argue that this is part of the reason why US coverage tends to focus on the problematic aspects of the Eurozone (which I dont deny at all) and not on the unquestionable achievements (that exist as well). Another reason why the pro-Euro narrative appears underrepresented across the pond ( at least in my humble opinion) could be that Americans ( due to the language gap) rely on the british press for european news. And vast parts of the british press ( with notable exceptions) are hardly impartial sources when it comes to anything related to Euro and/or EU.
                        For Germany not only keeping the Eurozone intact but underwriting its transformation over time into a reasonably working financial entity based on a fiscal model that they can support is seen as a long -term strategic goal much more than a problem (not least because the alternative, ditching the single currency, is seen as much more risky). Germans have learned to live with the Euro, and that mood that is also reflected in polls. The "german UKIP", the AFD party ( with whom David Cameron has built a parliamentary alliance in the European parliament) is not represented in the national parliament and in the european elections they have scored slightly less than 7 %. Which, turned around, means that over 90 % of Germans either support the single currency or at least arent bothered enough to cast a vote for those that pledge to abolish it.
                        This gamble can fail for all kinds of reasons and that is broadly debated in Germany ( a debate that I rarely see reflected in anglophone media however). The reason why Germany is in that position at all however is connected to its economy and mentality. Since they also reflect on politics, where Germans usually eye the long-term :

                        http://www.prosperityeconomics.org/eurozone.html


                        The management doesn't worry about quarterly growth figures, but rather thinks long-term, said the sales director. This approach allowed it to weather the financial crisis without needing to lay off any permanent staff. There is much more team spirit here, he adds. We would never jeopardize our long-term growth for short-term opportunities. Nobody is going to lose their job if we don't grow for two years. It's wiser to go slow and invest.The lesson is inescapable. German industry is built on teamwork. Teamwork between banking and industry, between workers and managements, between today's workers and the young apprentices training for tomorrow's jobs. That in turn creates a sense of continuing stability, ironing out economic ups and downs, and from government's point of view, maximizing taxes and minimizing welfare outflows.

                        German Mittelstand are for the most part managed by their owners; they grow long-term and they don't have to please the financial community. Keeping community roots strong is also common to Mittelstand, and co-operative labour-management relations add to the community spirit. And this works across the generations as apprenticeship schemes ensure a continuing flow of expertise. German universities work hand in glove with researchers at local firms. Suppliers cluster round big manufacturers. Owner-managers rub shoulders with workers. And there is an underlying sense, tradition and history of teamwork and social responsibility.


                        :
                        And on german attitudes to the Euro :


                        http://www.project-syndicate.org/com...rust-in-europe

                        IThis narrative is simply wrong. In fact, Germans trust in the euro has been increasing throughout the crisis, and, though their trust in EU institutions was falling until a couple of years ago, it has now recovered.
                        CommentsView/Create comment on this paragraphThe best indicator of Germans attitude toward the euro is provided by a regular poll conducted since 2002 that asks a simple question: Would you like to have the Deutsche Mark back?............

                        ....It seems that crisis conditions have forced German citizens to reflect more carefully on the importance of the common currency. In recent years, the German public has been extensively informed about the potential fiscal cost of the rescue operations for Greece and other countries. But, despite the high potential cost, Germans have increasingly concluded that they prefer to keep the euro.
                        CommentsView/Create comment on this paragraphEven the Pew report found that a majority of Germans (52%) believe that their government should provide financial assistance to other EU countries that have major financial problems. Moreover, Germany is not an outlier. On average, there has been only a modest EU-wide decline in trust in European institutions, and this has been driven largely by the pronounced decline of trust in four countries on the eurozone periphery: Spain, Greece, Portugal, and Ireland. More important, however, trust in EU institutions has actually been more resilient in these countries than trust in national institutions.


                        Read more at http://www.project-syndicate.org/com...TzOO4eiOXdP.99
                        Last edited by Voland; 07-26-2014, 04:09 AM.

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                        • #13
                          Re: World Economy without the U.S. Dollar

                          Originally posted by Voland View Post
                          Well, I would argue that not all of Americas policymakers would see consolidation of the Eurozone crisis nations as welcome news. Which is not to say that America isnt interested in a prosperous and stable Europe, yet a fiscally reasonably solid and economically reasonably balanced as well as reasonably integrated single currency zone (noone will achieve perfection during our lifetimes ) would raise unwelcome questions about the USs own fiscal and financial screwups (and also question several dogmas that still pass as conventional wisdom in Americas debate). Even if the dollar will remain the reserve currency for some time to come.
                          I would also argue that this is part of the reason why US coverage tends to focus on the problematic aspects of the Eurozone (which I dont deny at all) and not on the unquestionable achievements (that exist as well). Another reason why the pro-Euro narrative appears underrepresented across the pond ( at least in my humble opinion) could be that Americans ( due to the language gap) rely on the british press for european news. And vast parts of the british press ( with notable exceptions) are hardly impartial sources when it comes to anything related to Euro and/or EU.
                          For Germany not only keeping the Eurozone intact but underwriting its transformation over time into a reasonably working financial entity based on a fiscal model that they can support is seen as a long -term strategic goal much more than a problem (not least because the alternative, ditching the single currency, is seen as much more risky). Germans have learned to live with the Euro, and that mood that is also reflected in polls. The "german UKIP", the AFD party ( with whom David Cameron has built a parliamentary alliance in the European parliament) is not represented in the national parliament and in the european elections they have scored slightly less than 7 %. Which, turned around, means that over 90 % of Germans either support the single currency or at least arent bothered enough to cast a vote for those that pledge to abolish it.
                          In the context we are talking about, as it applies to Germany joining a cause to dump the dollar, I have no real disagreement with what you have said. But Voland, the issue remains no matter how superior you deem the German path.

                          This conversation has to be about more than just what mistakes the US through monetary and fiscal policy has done to the US Dollar, especially in relation to use of the US Dollar as a reserve currency as well as a mechanism to move oil around the globe. The conversation has to include the proposal (more importantly who is behind that proposal) and their actions with their own currencies.

                          Russia, China, Brazil, India and South America have enough to contend with on their own telling others their approach to currency controls is superior. Russia, China and India especially. You could argue well that China and India are on one path to devalue their currency to match trade relations with the US and the EU, while Russia has an entirely different path in opposition to the US and to be most advantageous in energy trade with anyone they deal with.

                          Now, I know you are not pleased with German criticism but the point remains the same. Germany has attached itself to the weakness of other European economic models. Namely Greece, Italy, Spain and France. What you cannot deny is the EU is held back by the weakness of those models. Similar to the US model those nations have employment issues, deficit issues, overall structural economic problems.

                          I cannot think of anyone that really suggests the US dollar is the model to go by, and there is plenty to be critical of when it comes to US monetary and fiscal policy. Even our own economic model is one of real weakness based upon the debt we are willing to take on. But you have to admit, to convince the world to "dump the Dollar" someone is going to have to put forth a good argument that their replacement is worthwhile in the long term. I am having a hard time seeing the Germans join Russia, China, Brazil, India and South America and put forth a better option while Germany is held back by their Euro partners. At least not in today's condition.

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                          • #14
                            Re: World Economy without the U.S. Dollar

                            Voland, are you certain Merkel's thinking re the EU isn't similar to her thinking re the US, i.e., naive?

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                            • #15
                              Re: World Economy without the U.S. Dollar

                              I've read the quotes from links in Voland's posts. The EU has adjusted, to impose discipline as a result of the 'FAST AND LOOSE' policies run by the four countries in question. If Sluggo and Pogo read those quotes differently, please elaborate.

                              As for BRIC introducing competition to the World Dollar, I have to ask, "what is wrong with competition?" I would expect BRIC to screw up in their initial attempts, but so long as they learn and correct their mistakes, I see a lot of potential.
                              -A world cooperative or credit union, to compete for investment in less wealthy countries. If they can't pay back a loan from IMF, get one from the world Co-op on better terms.
                              -Development of economic "intangibles", such as greater communication and cohesion among critical groups before starting a development program. Controlled steps for conflict management cannot be quantified, but the consequences of 'playing it by ear' when parties are in conflict will damage the bottom line.

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