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Imagining a world without the dollar
The Washington Post ^ | April 29, 2011 | Barry Eichengreen

Posted on 05/01/2011 12:20:30 PM PDT by Tolerance Sucks Rocks

The dollar doesn’t have much clout these days. The greenback has lost 12 percent of its value against foreign currencies since the chaotic period after the failure of Lehman Brothers in 2008, and nearly 5 percent since the end of 2010.

Economists are debating the end of the era of the dollar, while news organizations paint it as a 98-pound weakling. Our so-called “fiat” currency, backed only by the full faith and credit of the government, no longer commands respect. So wouldn’t we be better off without it?

Imagine you woke up tomorrow and the dollar had vanished. The Federal Reserve was out of the business of supplying money. How would you go about your affairs?

The obvious answer is that life would become one big swap meet. It would be like your local farmers market, except that instead of a vendor selling carrots in exchange for dollars, she would have to trade them for the onions in the neighboring stall or for the paring knife of the cook with no vegetables at all. The problem with this is what economists call “non-coincidence of wants” — the carrot seller may not want onions, and those onions may rot before she finds someone who does.

This highlights the convenience of currency as a medium of exchange and a store of value. It follows that in a world where the United States no longer had a currency, there would be an incentive to use someone else’s.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Foreign Affairs; Government; News/Current Events
KEYWORDS: banks; barter; collapse; currency; dollar; economiccollapse; economy; exchange; federalreserve

1 posted on 05/01/2011 12:20:36 PM PDT by Tolerance Sucks Rocks
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To: Tolerance Sucks Rocks

The biggest loser would be the US government. It has nothing to swap, and there would be no paychecks for the millions of federal functionaries who live off the producers in this country.


2 posted on 05/01/2011 12:29:07 PM PDT by kittymyrib
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To: Tolerance Sucks Rocks
WaPo wants a global Euro.

What a great idea.

3 posted on 05/01/2011 12:29:39 PM PDT by E. Pluribus Unum (Under Islam, there is no separation of church and state. The church IS the state.)
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To: Tolerance Sucks Rocks

This is what the globalists have “imagined” for some time—and the traitors in DC are expediting and letting it happen.


4 posted on 05/01/2011 12:31:45 PM PDT by WKUHilltopper (Fix bayonets!)
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To: kittymyrib
The biggest loser would be the US government. It has nothing to swap,

Wrong. They can swap 'protection'. After all, isn't that the Chicago way?

5 posted on 05/01/2011 12:33:43 PM PDT by PAR35
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To: Tolerance Sucks Rocks

Anyone who has ever been to a Third World country knows that the locals have their own multicolored money that devalues every day. You also know that they love to take in American dollars. Or, they used to.

Thanks to the banks, the Fed, and the RepubliCrat parties, Americans will soon be able to experience the excitement of illegal currency trading that was previously limited to our Third World neighbors only.

Now, we just have to make our country a port of call for foreign cruise ships and navies.

</sarc>


6 posted on 05/01/2011 12:33:43 PM PDT by Bryanw92 (We don't need to win elections. We need to win a revolution.)
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To: E. Pluribus Unum

What are those Euros worth in REAL money, anyhow?/s;)


7 posted on 05/01/2011 12:34:50 PM PDT by Frank_2001
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To: Tolerance Sucks Rocks

I would rather imagine an America without Odumbo. Both America and the dollar can be strong again.


8 posted on 05/01/2011 12:36:20 PM PDT by pallis
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To: E. Pluribus Unum
WaPo wants a global Euro.

There isn't going to be a global Euro. There isn't even going to be a European Euro much longer.

What the Yurps are finding out The Hard Way is that any currency union that contains both hard-working nose-to-the-grindstone cultures and more laid back 'do it tomorrow' cultures will turn into a wealth pump that takes from the thrifty hard workers and gives to The Other Guys. The thrifty hard workers (AKA "Germans","Scandinavians" etc.) get tired of this. The union breaks up over this vast cultural difference.

Even worse, a single monetary policy for the world makes no sense when there exist countries at widely different stages of development.


9 posted on 05/01/2011 12:39:40 PM PDT by Nick Danger (Pin the fail on the donkey)
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To: Tolerance Sucks Rocks

I do not see a world without the dollar. I see the world without the dollar as the reserve currency. The dollar could be replaced by another currency, a bundle of currencies, or no reserve currency. International trading would involve currency conversions that could by highly volatile and very unfavorable. I see little alternative to the dollar’s lost status as the world’s reserve currency. Democrats have refused to accept economic gravity on government spending. The large masses of voters receiving government aid will never vote for someone who promises to reduce their government candy. We do not have strong enough protections for property rights in the Constitution. The majority can easily vote themselves the property of the minority. The majority will never surrender this power even after economic collapse occurs.


10 posted on 05/01/2011 12:39:51 PM PDT by businessprofessor
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To: Tolerance Sucks Rocks
Just part of the long range plan to reduce the power, prestige and sovereignty of the United States. This would be a rebellion worthy issue, we are not Europeans.
11 posted on 05/01/2011 12:43:06 PM PDT by dog breath
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To: businessprofessor

Unfortunately, you are correct.


12 posted on 05/01/2011 12:43:52 PM PDT by Former Proud Canadian (Slugs? Clingers?)
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To: Tolerance Sucks Rocks
Imagine you woke up tomorrow and the dollar had vanished. The Federal Reserve was out of the business of supplying money. How would you go about your affairs?

Reminds me of a good TV program when I was a kid.

Photobucket

13 posted on 05/01/2011 12:44:51 PM PDT by EGPWS (Trust in God, question everyone else)
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To: Tolerance Sucks Rocks
The Next Two Months: Best Case, Medium Case, Worst Case
14 posted on 05/01/2011 12:47:56 PM PDT by blam
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To: Tolerance Sucks Rocks
Americans Are Preparing At Unprecedented Levels
15 posted on 05/01/2011 12:49:37 PM PDT by blam
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To: businessprofessor

>>The majority can easily vote themselves the property of the minority.<<

True. Taking control of it is another matter entirely.


16 posted on 05/01/2011 12:51:04 PM PDT by B4Ranch (Allowing Islam into America is akin to injecting yourself with AIDS to prove how tolerant you are..)
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To: Tolerance Sucks Rocks

>>Imagining a world without the dollar

Nudge... nudge... nudge...

17 posted on 05/01/2011 12:54:01 PM PDT by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: dog breath

Agreed. The WaPo and the Dems are carrying out the orders of George Soros: the US Government is to acquire unbelievable amounts of debt, debasing the dollar, leading to its collapse as the reserve currency of the world, reduce the standard of living of the US, and institute SDR (basket of fiat currencies) as the new reserve currency, ultimately leading to a global government.

These elites know better than the people.


18 posted on 05/01/2011 12:57:07 PM PDT by bkopto ("I like being President. And it turns out I'm pretty good at it." Barack Obama, February 2009)
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To: Tolerance Sucks Rocks

Those who wish to destroy the dollar simply want to have a world without the influence of the United States.

Can you imagine this world without the United State of America? Imagine what would have been left after WWII without our presence, money and blood.

Or without our technology?

Or without our evil oil companies? /sarcasm

Or without our Christians, Jews and other’s generosity?

FUBO! and you Globalist traitors too.


19 posted on 05/01/2011 12:57:30 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: businessprofessor

Parson Malthus


20 posted on 05/01/2011 1:00:12 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: Tolerance Sucks Rocks
Imagine a world without the Washington Post.

Its easy if you try.


21 posted on 05/01/2011 1:01:47 PM PDT by Delta 21 (Make your choice ! There are NO civilians.)
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To: Tolerance Sucks Rocks

Real commodities are the true global currency. You either have them or you don’t.

For example, a real global currency is oil, not fiat USD. This is a big part of why we are a debtor nation.


22 posted on 05/01/2011 1:04:01 PM PDT by Lorianne (o)
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To: Lorianne

“No drilling here” is a bigger part of why we are a debtor nation.


23 posted on 05/01/2011 1:06:33 PM PDT by B4Ranch (Allowing Islam into America is akin to injecting yourself with AIDS to prove how tolerant you are..)
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To: B4Ranch

That’s part of it, but not the whole story.


24 posted on 05/01/2011 1:07:31 PM PDT by Lorianne (o)
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To: businessprofessor
Democrats have refused to accept economic gravity on government spending. The large masses of voters receiving government aid will never vote for someone who promises to reduce their government candy. We do not have strong enough protections for property rights in the Constitution. The majority can easily vote themselves the property of the minority. The majority will never surrender this power even after economic collapse occurs.

I have feared the same thing now for about 20 years. It all came to me when I heard someone make the following Statement,

...In any given country, you have 3 types of people economically speaking,

You have those people who produce more wealth than what they consume

You have those people who produce about what they consume...

You have those who consume more than what they produce...

Right now those who consume more than what they produce consistute a voting majority. We will never really resolve our economic problems until this situation changes.
25 posted on 05/01/2011 1:11:29 PM PDT by truthguy (Good intentions are not enough.)
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To: Tolerance Sucks Rocks
"Imagine you woke up tomorrow and the dollar had vanished."

Imagine that after awakening, you found that the debt bulls (dollar bulls) had vanished.

"The obvious answer is that life would become one big swap meet...The problem with this is what economists" [debt regime clowns] "call “non-coincidence of wants” — the carrot seller may not want onions, and those onions may rot before she finds someone who does."

Barter clubs in a previously defaulted country have grown to enormity and offer a virtually unlimited variety of products. The government there has not yet been successful in establishing control over them and remains a benign observer and student of the process.

The debt regime will continue to bloat and vaporize, as it has in ever other similar historical instance. That's inevitable. But some individuals and groups want to keep it going as long as they can (those who depend on government and services for their evaporating wealth).


26 posted on 05/01/2011 1:13:02 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96, Duncan Hunter or no-vote.)
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To: WKUHilltopper

Those retards? Havent thought the whole thing through. What about all the support infrastructure? Philosophy? Technology? Let alone the freedom, rights and liberty that the dollar has become synonymous with?

All this was over 2000 years in the making by Christians....


27 posted on 05/01/2011 1:14:18 PM PDT by himno hero ("armageddon is well seeded, America will pay"...Barrack Obama)
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To: EGPWS

“Reminds me of a good TV program when I was a kid.”

Definitely. I still have one of those business cards.


28 posted on 05/01/2011 1:14:45 PM PDT by Magic Fingers
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To: Tolerance Sucks Rocks

As for the arguments from the status quo in favor of refusing to allow the dollar to balance with the currencies of their trading partners (which lack of US manufacturing causes us to rely on increasing debts), they are obviously the ones wanting global government.

* With the currency and trade wars ahead, there’ll be no global government.

* With a currency of low value and lack of manufacturing base, there’ll be no big US government. Only small government can survive a low currency without sustainable revenues from manufacturing.

The free traitors are in favor of big, communist government. It is they, who are in league with foreign communist nations. It is they, who depend on the current big government to stifle new, small business competition (real work, the manufacturing of domestic products). It is they, who depend on big government, public education and social programs to keep their own familial harpies out of their roosts to rule us instead of them. And they are obviously in control of the speech and candidates of all political parties.

So the shrinking dollar is a consequence of globalism. So as our government shrinks for lack of revenues, we’ll be freer.

Pay attention to the candidate most hated by both political parties and their controlling constituents.


29 posted on 05/01/2011 1:25:10 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96, Duncan Hunter or no-vote.)
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To: Tolerance Sucks Rocks

There is a very viable alternative to the dollar, that is both legal, and at the State and local level would help to stabilize the dollar. During the Great Depression, it proved its utility hundreds of times, and it still finds some use in small parts of the US.

It is called “scrip”. It is *not* legal tender, but provides a complementary currency to an unstable dollar, because it is a very controlled currency. And best of all, it keeps local markets and local government functioning.

Article I, Section 10 of the US constitution forbids States from issuing any legal tender other than gold and silver coin. So a State would need to set up a public-private partnership with a corporation to issue scrip. This corporation would have its officers appointed by the State, and its books carefully audited by the State, but technically, at least, it would not be controlled by the State. It would not be a State office.

The value of the scrip would be set, as well as the prices of goods that could be purchased with scrip. But the entire use of scrip, by buyers and sellers, is entirely voluntary.

And it works no matter if the dollar is inflating, or if there is a shortage of physical dollars and nobody will accept electronic payment or checks, or just about any other problem.

A modern incarnation of scrip could even be printed on plain paper, because its reverse side would be printed with an encrypted, but public domain bar code called “data matrix”, which can be read by lots of scanners already out there.

Here is an example of the use of modern scrip in a realistic situation.

Because the federal government has “printed” too much money, strong inflation is hitting the marketplace. So instead of letting the value of your dollars erode, you convert some of them into scrip issued by the State licensed scrip corporation.

Say you start with a 1 to 1 conversion, so for $10 you get a “10 scrip note”. Just for doing the conversion in the first place, the corporation increases the value of your note to a “12 scrip”.

You go to a grocery to buy a gallon of milk. Today it costs $3, and the grocer says that tomorrow its price is expected to rise to $4. Yet today, with the fixed price of scrip, milk that costs “3 scrip” will still cost “3 scrip”, except the grocer is offering a discount on milk for those who buy milk at his store, so it only costs you “2.5 scrip”.

When you purchase it, State and local sales taxes are added, so the final price is “2.75 scrip”. The retailer then scans your scrip note, and the scanner displays your name and that the value of your scrip note is “12 scrip”. To confirm you are paying “2.75 scrip”, you enter your PIN number.

Your scrip bill is now worth “9.25” scrip. Were it your original $10 bill, today you would only get about $6.80 back. Tomorrow, perhaps $5.75. So all told, you have done much better by using scrip. But the goodness does not end there.

When lots of people buy scrip, it concentrates dollars with the State corporation. It uses those dollars to buy hard to get goods that are not manufactured in the State, especially things like pharmaceutical drugs. But it also pays retailers in dollars if they need to buy things in dollars, and the bulk of its gross profits go to the State, and from there to the cities, so they can pay for garbage pick up, police and fire protection, etc.

So the more “buy in” to the scrip system by producers, retailers, and the public, the better for everyone. Even if the dollar blows up, scrip will pick up the pieces.

Ironically, those who are now investing in gold and silver should be some of the strongest proponents of scrip, as it, not the dollar, is what maintains the value of their specie. With a still functioning market, they can not only buy things with their gold and silver, but they can get change for their purchases.


30 posted on 05/01/2011 1:40:44 PM PDT by yefragetuwrabrumuy
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To: Tolerance Sucks Rocks

About electronic, internet based money, the author says,

“these payment systems would be only as reliable as the individual companies’ software and servers, which would be impossible for end users to judge. Also, nothing would ensure that the electronic money you accumulate would hold its value, and nothing would prevent the operators of the platform from issuing more, in the first instance to themselves”

How does this differ from what we face now, with Fed created money?


31 posted on 05/01/2011 1:45:33 PM PDT by Stirner
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To: Tolerance Sucks Rocks

We’re NOT going to do away with the dollar. I know a lot of people here fantasize about how much fun it would be to barter for everything, but we’d have to go back to living an Indian lifestyle, with a consequent reduction in population of between 95 and 99%. Currencies pre-date the Romans by 500 years. You simply cannot have anything past a very primitive society function without it.

We will always have a dollar (as long as we don’t break apart), but its buying power will be MUCH LESS than it is now. I’m expecting it drop by two-thirds. If we weren’t the reserve currency of the world, I’d expect a much, much, larger drop. But even a two thirds drop will mean the effective tripling of just about everything we buy (maybe somewhat less for stuff that’s truly US, but tripling of everything else). It will not be fun, and anyone on this site, with the means to prep-up, but hasn’t, is simply an IDIOT. Because it must happen - our debt NOW is way beyond our ability to pay it back, it will keep growing, and growing. The only thing that keeps us alive financially is China’s kindness.

It’s over for the dollar as we know it...but not for the dollar as we see it - it will still be there, and it may buy you a stick of gum or a cigarette, but that’s about it.


32 posted on 05/01/2011 2:23:32 PM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts))
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To: Tolerance Sucks Rocks
"Imagine there's no money,
It's easy if you try..."


33 posted on 05/01/2011 2:27:40 PM PDT by Revolting cat! (Let us prey!)
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To: Frank_2001

Was reading an article in an investment newsletter I suscribe to that said the Euro would disappear within the year because of the defaults coming to many EU counties.


34 posted on 05/01/2011 3:01:59 PM PDT by redangus
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To: kittymyrib

it has land... and lots of resources on that land.


35 posted on 05/01/2011 3:07:36 PM PDT by sten (fighting tyranny never goes out of style)
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To: Tolerance Sucks Rocks
Imagining a world without the dollar

The problem is not a world without the dollar. The problem is a world with way too stinkin' many of them.

36 posted on 05/01/2011 4:00:41 PM PDT by dirtboy
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