Posted on 06/05/2019 12:02:23 PM PDT by SeekAndFind
“” “” China’s economy is TEN times Russia’s LOL!
Ten times!
Putin is Xi’s puppet.”” “”
Russia was a number 2 economy just a half century ago. It is still the second militarily and really close to it is terms of international diplomatic influence.
There is about 50/50 chance it would be back into top 5 economically in the next ten years.
Now China buys Russia’s military strength for China’s advantage.
Not Russia’s.
A hslf-century ago Russia used it’s military strength for Russia’s own advnbtage.
I don’t know which Chinese wars Russia is fighting. Because none.
Then you have no idea what a reserve currency is about.
So, you believe the U.S. Dollar is still backed by gold?
No...but in order to be a reserve currency, central banks must keep a supply of the currency to back up these transactions. As the reserve is not needed, due to international settlements in other currencies, the need to keep those reserves declines.
If the bank is not going to need them—and everyone knows that, the entire supply of dollars is, all of a sudden, too large. So they start selling them. It starts a cascade effect where everyone is selling dollars—and all of those dollars start going down in value.
The Fed would need in raise interest rates to “sop up” the extra dollars and get them out of the market.
So, the process will start slowly. First with trading between two fairly large economies. Then with things like “oil for gold” —which is already happening. It could hit a tipping point and almost overnight, things are really bad.
Its like the old saying, “How do you go bankrupt? A little at a time, and then all of a sudden.”
I am not indicating this WILL happen. But it is things like this that show that the rock solid dollars is not as rock solid as it used to be.
And no, the USD is not backed by gold. If we were backed by gold the debt could never have gotten this high.
But you knew all this right? You understand how this works—since you are trying to educate me.
The way Central banks are buying gold, something is amiss.
My guess is that someone will try to establish an SDR—basket of currencies. But I doubt that would work.
I CAN envision a world that has established “gold” yuan, rubles, yen, dong, dollars...that could be used for international settlement. These would not be for internal use nor retail use—but almost like an international credit based on a standard unit.
I believe that people entrenched in the current central banking, fiat currency, world are going to be shocked when we fall into another significant economic period.
Please do not misunderstand—I am not predicting this any time soon. We still have a few floors to add onto our house of debt cards. But, forewarned is forearmed.
USD is a reserve currency because of the widespread belief in the power of the US economy and the freedoom of its circulation. I probably didn’t put the latter correctly but can’t think out more proper wording so far.
I'm also aware of the realities of the Russian economy and have no concerns over them or the Chinese driving the dollar from its perch.
Well, with your four econ courses, you should realize that this is not going to happen overnight. But with our reliance on international support for our empire, it is not going to take much to start the ball rolling down the hill.
Our military might is still the greatest in the world and imposing our “will” on countries is key to maintaining the reserve status.
But just as any empire can be toppled by one small group of people “begging to be shot” buy resisting that will—so goes the empire.
You are looking at it as a micro event. Pull out your macro book and see how small, incremental events in one place can impact the larger economy.
As "entitlement" spending runs out of control, our debt deepens and the Lib's attempt to solve that with increased taxes will strangle our economy.
THAT element, will in turn impact our competitiveness on the international stage.
Russia and China avoiding trade in dollars is a nit in comparison.
There is much talk about - and some minor local attempts to try - a move towards a cashless economy. Perhaps that is why the central banks are beginning to hoard gold; Russia also, and perhaps China. A cashless society would put the banks in total control over everyone who does not own anything of intrinsic value {e.g.: Greece recently}. Growing world wide debt could become a critical factor; what is it estimated at at present: over $100 tril?
Yes, those are a concern.
But the reason the government can get away with that is we control the reserve status internationally. With that status, the central bank can inflate the currency—for example, targeting inflation so we are always paying down debt with less expensive money.
Think of the shit show if we continue spending, and we lose reserve status. Inflation would make Zimbabwe look tame.
No, the transactions between China and Russia won’t amount to much. But then add, China and Japan? China and South Korea? China and India? Russia and all of them—using something other than a dollar or ruble.
My point was not that this was “the end”; but rather the start of a snowball that could wreck us if it picks up speed. That would hurt us much faster than the debt explosion—and it would happen in a short, brutal, event over which the US has no control.
Some here seems like don’t realize the size of Chinese economy. Combined with Eurozone it is really surprising why USD is still relevant at all.
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