Posted on 04/09/2018 10:17:08 AM PDT by bananaman22
Quick! Convince yourself that adding a trillion dollars a year to our debt will have NO IMPACT on our future.
Hurry up, or you’ll miss a HUGE OPPORTUNITY!!!
Let’s go along those lines, the gold angle.
https://www.statista.com/statistics/267998/countries-with-the-largest-gold-reserves/
Now do I 100% believe these stats? No way, the US reserves have been questioned since 1971. But let’s take it at face value..........China does have the largest FX reserves on the planet and for good reason, its been depressing its currency for decades and can continually do so for many more and has been buying more gold in the past decade. But.......if they decided that a gold standard were the way to go they would need to necessarily harbor an illiquid asset to prop up what would be a “restricted-access currency.” There, they would need to change the dynamic to investing from primarily in US Treasuries which they cannot afford to do given it’s the only place they can run to garner the size they need. The global gold market is capacity constrained, the US Treasury is like a crack factory run by evil Oompa Loompas.
Your thinking is not out of bounds. The Bear and Dragon have many reasons to undermine us. But just like close-mindedness the old Soviet system, the former is too reliant on crude to ever make the USD irrelevant the latter is too reliant on US trade (and in some cases imports) to ever invoke a wholesale move away from the hand that feeds.
Ugh - you are talking about a microcosm of the greater world market.
The standard convention for pricing in commodities is USD. Yes you can have cross currency transactions take place but until those supersede the standard, they are noise.
Sure, they can pay in Rubles if anyone will take them. How about Confederate dollars too? Maybe East German Marks? The Truks and Iranians are not stupid when it comes to money.
From what I’ve seen, China and Russia both only very sporadically update their gold reserve statistics, and most people believe they lie about the true amounts. I’ve seen articles that compare gold trade statistics to show that China and Russia must be importing far more than they admit to.
Also, to have some kind of gold exchange standard, both would have to allow holders of Yuan/Rubles, at least governments anyway, to freely convert their Yuan or Ruble holdings into gold. I do not trust either to honor that. Heck, even Nixon had to abandon it a mere 25 years after the USA won WWII.
I freely admit I don’t know how it will work, but I also am quite certain both don’t like the global supremacy of the US Dollar, and will constantly seek to undermine it.
Turkey is on schedule to become the natural gas transit hub from Russia to Europe, with the likelihood they’ll add Iran/Iraq/Syria gas as well.
Settling contracts in rubles/dinars/liras/rials vs. dolars might make a lot of sense, considering the financial sanctions impulses in the West.
Who will take Syrian money now?
All of the countries I just mentioned will as part of their own separate exchange.
Syria isn’t going to be involved in this civil war much longer and the reconstruction that coming will bring an economic boom with it.
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