Posted on 02/24/2010 12:05:07 PM PST by Cheap_Hessian
NEW YORK/WASHINGTON (Reuters) - The only time the U.S. dollar ever took a serious shellacking in the marketplace, the wounds were almost entirely self-inflicted.
Facing mounting inflation and the escalating cost of the Vietnam War, President Richard Nixon, on August 15, 1971, took the United States off the gold standard, which had been in place since 1944 and required that the Federal Reserve back all dollars in circulation with gold.
The move amounted to a made-in-America double-digit devaluation, shocking the country's foreign creditors.
Deep inside the New York Federal Reserve Bank's fortress in lower Manhattan, Scott Pardee, then 34, was fielding frantic calls from central bankers around the world. They were demanding the United States cover the foreign exchange risk on their reserves.
"The whole roof came in on us," recalled Pardee, a former New York Fed staffer who is now an economics professor at Vermont's Middlebury College. "That is the kind of situation the U.S. doesn't want to be in."
Nearly 40 years later, the dollar still dominates world trade. At the height of the financial crisis in 2008, investors fled to the dollar as a temporary safe haven. But the dollar has been falling steadily since 2002, and as the world economy recovered last year, dollar selling resumed, reviving doubts about how long it could remain the world's unrivaled reserve currency.
The Greek debt crisis, which has sent investors stampeding back into the U.S. currency, has provided a reprieve.
(Excerpt) Read more at reuters.com ...
As bad as we are, there is still not an alternative for the international community, but if one should come about, we are toast.
With all the hot air coming from Wasington to inflate it, quite a while!!!
What are your alternatives?
Euro’s? see the PIIGS.
Rubbles? British Pounds?
Yen?
even weakened, the Dollar is still better than the alternatives.
Well, there are Singapore dollars, loonies, kiwi dollars, Aussie dollars, and an assortment of commodities.
The British pound is in a free fall.
The Euro is falling, but slowly as is the US dollar.
Go for Chinese yuan or russian rubles. All western currencies are at least tumbling.
There are a lot of currencies that are backed up by our military.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.