Posted on 12/28/2006 2:09:14 AM PST by RaceBannon
Well I've said it before, and I'll say it again:
The U.S. dollar at one time was backed by gold, then silver, now it's a 'Federal Reserve Note', but the truth is, the dollar is backed by one of the most reliable and potent precious metals on Earth:
Pure, refined Plutonium.
Conveniently mounted on missiles in silos, submarines and contained within a vast arsenal of bombs.
Forget plastics young man, invest in Plutonium. :)
And just how would that bring on a recession?
I watched in the early nineties as the Canadian dollar plummeted in value against the American dollar. But instead of hurting the Canadian economy, it hurt ours.
It became too expensive for Canadians to cross the border and shop in the U.S. so they began to buy their stuff in their own country. Retail development exploded in Canada during the decade.
To the point that now, when the Canadian currency has risen substantially, they still shop over there -- it's just more convenient for them. I fail to see why a dropping dollar wouldn't have the same effect here.
For some people, it's always 1929.
"Or tell me, why has the US one currency, and not 50?"
Because the U.S. has essentially always been a single national economic entity. There is a very real problem trying to bring such a large basket of economies under one umbrella, especially the umbrella of a common currency. There are benefits, and there are drawbacks, and unfortunately the process of encountering and possibly overcoming the drawbacks is going to be much longer and more drawn out than the process of encountering the benefits. The benefits will be apparent well before the drawbacks have run their course, and that will maintain a degree of unpopularity for the currency among the nations using it.
This is a problem additionally (or especially) compounded by the differences in each of the economies in terms of population, development and specialization, and domestic fiscal policies and situations.
These are not problems anyone denies exists. They're very real, they're very understood and accepted among economists, including those in the employ of Brussels. The question is how well can those drawbacks be managed, and without true political and economic union there is a very real fear among many economists that ultimately the common currency's drawbacks _cannot_ effectively be managed even if it is maintained.
The fact that the Eurozone is wealthy and has a large population will alone give the currency weight and attractiveness, and on those strengths alone the euro should attain a degree of status as a reserve currency. Becoming a match for the dollar as a reserve currency is a very long way away, and the prospect of replacing it as "the" reserve currency is highly unlikely. If the dollar loses its status as "the" reserve currency, there will not be another that takes its place, we will simply revert to a time of "greatest among equals" at the currency table.
Because the 50 states are not, in and of themselves, sovereign nations. The countries that use the Euro are.
And I do sincerely hope you are not falling into the Europhile trap of believing the Eurozone or EU is equivalent to the 50 states of the United States. I cannot count the number of times I've seen this grave misunderstanding propagated, apparently on the idea that, well, the individuals states have their own governments and policies and are then under the umbrella of a federal government.
You can't even say our dollars are backed by plutonium when private international companies own and house our nuclear facilities. They did as of 2003.
Finally a voice of reason.
With so-called housing bubble refusing to "burst" socialists have to throw up other trial balloons to scare the ignorant.
Between that and all the kooks going after the DemocRat nod for '08, clearly the investment opportunity of 2007 is going to be Orville Redenbacker popcorn.....
Thanks for falling in my trap. :-) Oh I loved to see you adding reasons and arguements for a question whose answer should be obvious.
And here you have it in a nutshell.
Never before has any nation (or collective) been able to divorce monetary and fiscal policy over the long term. Yet that is what each of the participants in the Eurozone is trying to do: pass of monetary policy to a European Central Bank, but keep fiscal policy at home.
I don't want to sound too negative, but I do not believe it can work long term, regardless of the good will involved, the percieved advantages, coordination policies, fiscal guidelines and mandates, etc. notwithstanding.
The Euro WILL collapse: the only issue is how long it will take.
And the Dollar will collapse the day when China sells ALL its reserves. Let´s face it: currencies rely on the trust of others, and as long there are so many countries trusting (= having) the Dollar and the Euro, none of these currencies will crash.
"The countries that use the Euro are."
Not if Russia has its way.
Thanks for the post/ping. Interesting discussion. Bump!
The Swissie is the one which gives clues to the trend currency markets will take.
A moose once bit my sister...
Because the US is one country. The EU is a communist/marxist non-democratically ruled bloc and not a nation.
Middle Eastern countries moving to a currency that probably won't exist in 15 years.
Yes, that sounds like something they'd do. When the good Lord was handing out average and above brains he seems to have skipped that entire region.
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