The end of the line for an international monetary system based on the “US dollar”

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SouthAmerica

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September 22, 2008

SouthAmerica: I wrote a number of times in the last few years that we were approaching the end of the line for an international monetary system based on the US dollar. I said a number of times: “I don’t know when the stamped out of the US dollar will start – but there many things that can trigger the spark, and that can turn very fast into a major international monetary crisis – something not seen for a long time.”

Finally we have reached that trigger point and I am in the process of writing an article explaining why the US dollar has reached the end of the line and the end of its useful life, and why the stampede out of the US dollar can start at any time now – at this point the world is going to demand the creation of a new international monetary system designed for the world of the 21st Century.

In December of 2005 I started a thread “Panic and the US dollar”, but the thread was moved from the economics forum to the Politics and Religion forum.

Maybe the moderator of the economics forum was right when he decided to move this thread from the economics forum to the Religion forum - now I started understanding his reasoning for such a move – the value of the US dollar is based on “Faith only” and not on economic theory.

Since American economic dogma about free market capitalism has been discredit and turned out to be just a cult – now the foundations of the entire US economic system has become questionable including what kind of real intrinsic value is behind its currency – the US dollar?

In the last few weeks we did not witnessed only the demise of the free market economic system in the United States – we also witnessed the end of the line for an international monetary system based on the US dollar.

Finally that international monetary crisis as never seen before is here and the final meltdown of the US dollar will materialize as Panic sets in and we see a stampede out of the US dollar.

Here are a few things that I wrote on this forum in the last 3 years:


PANIC and the US Dollar
http://www.elitetrader.com/vb/showthread.php?s=&threadid=60201&perpage=6&pagenumber=9


I don’t know when the stamped out of the US dollar will start – but there many things that can trigger the spark, and that can turn very fast into a major international monetary crisis – something not seen for a long time.


*****


March 12, 2008

SouthAmerica: …But with massive US government intervention to bailout Wall Street – and the American financial system is supposed to be an efficient system, at least is what they preach in Wall Street until they need another major government bailout.

The way things are going I would not be surprise if the coming years the United States economy needs to be bailout with loans from the IMF – just like a 3rd world country.


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May 16, 2006

SouthAmerica: Forget the usual reasons regarding currency ups and downs and its relationship to foreign trade, the business cycle and so on…

When a country decides that its currency will be one of the major reserve currencies around the world – remember close to 75 percent of the US dollars ever issued are flying around the world today completely outside of the US Treasury and Federal Reserve circle of influence.

Since the United States made the choice of becoming a very influential currency in world affairs when they replaced the gold standard – it is implied on that influence that the US will also act on a responsible way regarding its currency and would try to maintain the value of the US dollar as stable as possible in relation to the other major currencies of the world and the price of gold. (Gold is the other major source of monetary reserves of most countries around the world.)

Otherwise the United States can cause a major international monetary crisis if we have a collapsing US dollar in world markets.

The United States is inviting a crash against the US dollar when members of the US government administration follows a policy that deficits does not matter. You can fool people just for a certain period of time until they catch on regarding on what is really happening.

The US dollar became a special currency because it is a reserve currency held by many countries around the world. Because of this special reserve currency status the US dollar benefits in many ways including the global pricing of oil is done in US dollars.

The Bush administration – probably the most “incompetent” US government administration in US history – or they don’t understand it or they forgot that the US dollar is a reserve currency and they should not play games with government policy to further undermine the value of the US dollar.

The $ 70 billion dollar tax cut that they passed a few days ago it is just the latest example of the recklessness of the Bush administration regarding monetary policy. The value of the US dollar should go down and adjust accordingly to more red ink generated by this tax cut - because this tax cut makes the US deficit spending even worse.

(In my opinion, we have Idiots running economic policy in Washington today.)


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December 2005

SouthAmerica: …When this US dollar collapse becomes reality, the less developed countries will be the most devastated by this event, because these countries hold only a small fraction of their reserves in gold or euro.

Today over 70 percent of US currency circulates outside the United States. The major holders of this currency are the euro countries, Japan, China, Hong Kong, Taiwan, South Korea, Indonesia, and Singapore.

About 75 percent of the US dollars circulating outside the United States are in the hands of these few Asian central banks, and if any one of these countries decides to sell their US dollar monetary reserves to buy gold it will produce a stampede to exit the US dollar, creating a gold and euro buying panic – and we will have a major international monetary crisis in the world.

I don't know exactly, when or what will trigger the coming events, since no finance minister or central banker wants to be blamed for launching the world into a major international monetary crisis.

But the collapse of the US dollar it is coming before you know it.

You can bet on that!!!!

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September 22, 2008

SouthAmerica: Here is what I wrote about the new international monetary system that will born out of the ashes of the current international monetary system based on the US dollar.


*****


Brazzil Magazine – March 1, 2007


Here is why Brazil should adopt the “New Asian Currency.”
http://www.elitetrader.com/vb/showthread.php?s=&postid=1380678&highlight=gulf+currency#post1380678

Quoting from that article:

“The New Asian Currency

On May 5, 2006 The New York Times published an article “Asian Finance Ministers Seek Common Currency” – and the article said:

“Hyderabad, India — Finance ministers from China, Japan and South Korea announced tentative steps on Thursday to coordinate their currencies in ways that could ultimately produce a common regional currency like the euro.

The ministers, speaking on the sidelines of the annual meeting of the Asian Development Bank here, said that they would work toward closer coordination of their foreign-exchange policies.

They also pledged to enhance an existing framework to defend regional currencies against speculators and work toward the development of Asian bond markets.

Although an Asian monetary union is a distant goal, the Asian Development Bank has been pushing the idea of an Asian currency unit, or A.C.U., over the past year. The unit's value would be set by an index of participating currencies.

The idea has gained popularity among several Asian finance ministers as a step toward harmonizing regional monetary policies.

The development bank's Japanese president, Haruhiko Kuroda, a supporter of an Asian monetary union, had pledged to propose the creation of an A.C.U. at the meeting in Hyderabad, but reportedly held back in light of opposition from Washington.

… The Asian currency unit initiative is now backed by the so-called Asean Plus 3 grouping, which comprises the Association of Southeast Asian Nations, China, Japan and South Korea. The Hyderabad statement was issued after a meeting of Asean Plus 3 finance ministers.

Though billed as a small step, the idea of an Asian currency unit mirrors early moves made toward the euro. First, European countries devised a valueless measurement unit reflecting relative currency fluctuations. They then began aligning exchange rates and altering monetary policy to keep those rates in line, a process that took decades. The euro finally emerged as a currency in January 2002.”

The Single Gulf Currency

The creation of another major currency it is also under way for the countries of the Middle East. And the IMF (International Monetary Fund) has mapped out the steps that will be taken during the unification period to establish the Single Gulf Currency within the first decade of the new millennium.

The new single currency for the Middle East will initially be limited to members of the Gulf Cooperation Council, which includes some of the wealthiest nations on earth. The GCC Gulf comprises of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and United Arab Emirates.

Financial officials of the Gulf Cooperation Council (GCC) member states have approved the issuance of a single currency by 2010. It was no coincidence that at the 22nd summit in Muscat agreement was reached on setting up the AGCC Customs Union, which came into effect on 1st January 2003. Steps were also taken to set up a Gulf common market in 2007 and introduce a “Single Gulf Currency” by 2010.

Conclusion

The global economy is in the process of being rearranged and these changes are the result of globalization combined with the development of state-of-the-art new technologies such as a world that is connected by fiber optics, the constant increases in computer power, a growing global internet system that is connecting everybody, and the astronomical developments in global communications that has been making it easier to communicate and send information via satellites, internet, email or telephony.

Globalization, technology, and the amount of money that is moving around the world at the speed of light are forcing countries around the world to form these currency unions.

In July 1999, I said the following in one of my articles and made the following prediction:

“Most people should not be surprised if in ten years the breakdown of official reserves of the countries around the world will be as follows:

U.S. Dollar = 35 percent of market
Euro = 35 percent of market
New Asian Group = 25 percent of market
Other = 5 percent of market”

I guess taking into consideration what is happening in the Middle East, we will also need to add to the above list the “Single Gulf Currency” as the 4th major currency by 2010.

I want to remind the readers that in 2000 the U.S. Dollar had a 60 percent share of the global market for foreign exchange reserves held by central bankers of countries from around the world. As the readers can see, the result of this international foreign exchange market shift will have a major impact in the value of the US dollar, since most of the gains to be achieved by these other major currencies will be achieved at the expense of the US dollar.

In the coming years more and more countries will be forced to choose sides and become a member of a particular currency group; for these countries to be able to survive and prosper economically in the future under this new global monetary system. And in the case of the Brazilian economy when we take a good look at the road ahead, let’s say to the next 50 years, I have no doubt that Brazil should adopt the “New Asian Currency” as its new currency.

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September 22, 2008

SouthAmerica: By the way, the end of an international monetary system based in the US dollar it will be devastating for the US economy in many ways: in terms of interest rate in the US, inflation, and inflow/outflow of investment money, loss of influence around the world, and so on...

Right now the entire herd is very nervous and the stamped is about to start at any time.

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Debaser82: This is why the US has army bases in +150 countries.


*****


September 22, 2008

SouthAmerica: When the Pound Sterling was king the British also had army bases around the world and they used to say that the sun never went down in the British Empire – at that time the British controlled 25 percent of the globe.

The US economic system is in shambles and the US has depended for many years on foreign money to keep its economy afloat.

Now that the house of cards has crashed here in the United States and have exposed to the world a system that in the blink of total collapse – the foreigners would be stupid to continue supporting such a system.

The implosion started with the economic system and in no time will spill over to other areas including defense expense and cutting budgets for bases around the world.

Remember the Soviet Union also used to have major military presence and bases in many countries and it did not take long for that entire system to be dismantled for lack of money.

When a country reaches the end of the road and is overextended in every way possible as the United States is today it does not take long for the entire system to implode as panic sets in and this time it will be global panic - that the United States can’t do a damn thing about since over 70 percent of its currency is outside the US government area of influence and reach, and today the world moves at the speed of light.

If having an army around the world would save a country from a major economic implosion then the British Empire still would be controlling 25 percent of the globe.

And the Soviet Union still would be alive and well today.

The truth is Americans can start kissing goodbye to their military bases in 150 countries around the world.

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Quote from southamerica:

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Correction: On the above posting I misspelled the following word: Stamped

Should read: Stampede

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More...

No problem, no one reads your shit anyway.
 
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Jficquette: No problem, no one reads your shit anyway.


*****

September 22, 2008

SouthAmerica: But smart people such as yourself continue reading my postings - otherwise you would not be replying regarding my correction.

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SA,

When the US sneezes the rest of the world catches a cold still holds true.

If the US gets a cold this time the rest of the world will develop pneumonia.

Real Estate, fiat money, over-leverage, over-development, it all exists elsewhere.

Globalization works both ways.
 
Quote from southamerica:

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Correction: On the above posting I misspelled the following word: Stamped

Should read: Stampede

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More...

After spending here 3 years, you STILL don't know how to quote or edit a post. You are one of the few who uses his own quoting system...
There are buttons on the right, they do this for you. You can edit your mistakes, misspellings up to 30 mins of the posting time...
 
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