johnnyrodgers20 Posted December 7, 2011 Share Posted December 7, 2011 If the default world currency (The US dollar) becomes that of another nation or nations then our dollar becomes just our currency. Then we would not be able to print our way out of the mess we are in. For example oil is now sold in terms of dollars. They exchange the currencies from all the other countries into dollars to determine how much a barrel of oil is worth. Once we are no longer the world's currency we are going to have to live within our means. And then we will feel the true effects of all the spending and debt we have accrued from wasteful and irresponsible spending of our govt. So how exactly do we go from being the "default world currency" to not the "default world currency"? And how is it really a debt if money is just pulled out of thin air? That happened after WWII when Britian was the default world currency. There were worries about their debt and they changed the default currency to the dollar. There have been talks by Opec and other arab nations about changing the world currency. Some have suggested the yuan from China. China and Russia are also trying to move the default currency away from the dollar. I am not sure it will happen any time soon but you never know. When you PULL MONEY OUT OF THIN AIR it has consequences. Things like inflation, it is being held in check artifically by keeping down interset rates but you can't hold it down long. Other issues start to pop up that are not controlled by interest rates like oil and gas prices. Food, just look at your food bill and think back to a year ago. Inflation is going up and printing more money only exacerbates the situation. I think Britain (although an island) would be a bulky and inconvenient currency. I think is a pretty good explanation! I am sure there are better articles out there but for now you can get the gist of the default or reserve currency. http://en.wikipedia.org/wiki/World_currency Link to comment
Sub-Husker Posted December 7, 2011 Share Posted December 7, 2011 I think Britain (although an island) would be a bulky and inconvenient currency. Bulky, yes... but it only weighs a pound. Link to comment
carlfense Posted December 7, 2011 Share Posted December 7, 2011 I think Britain (although an island) would be a bulky and inconvenient currency. Bulky, yes... but it only weighs a pound. Link to comment
Malth Posted December 7, 2011 Share Posted December 7, 2011 If the default world currency (The US dollar) becomes that of another nation or nations then our dollar becomes just our currency. Then we would not be able to print our way out of the mess we are in. For example oil is now sold in terms of dollars. They exchange the currencies from all the other countries into dollars to determine how much a barrel of oil is worth. Once we are no longer the world's currency we are going to have to live within our means. And then we will feel the true effects of all the spending and debt we have accrued from wasteful and irresponsible spending of our govt. So how exactly do we go from being the "default world currency" to not the "default world currency"? And how is it really a debt if money is just pulled out of thin air? That happened after WWII when Britian was the default world currency. There were worries about their debt and they changed the default currency to the dollar. There have been talks by Opec and other arab nations about changing the world currency. Some have suggested the yuan from China. China and Russia are also trying to move the default currency away from the dollar. I am not sure it will happen any time soon but you never know. When you PULL MONEY OUT OF THIN AIR it has consequences. Things like inflation, it is being held in check artifically by keeping down interset rates but you can't hold it down long. Other issues start to pop up that are not controlled by interest rates like oil and gas prices. Food, just look at your food bill and think back to a year ago. Inflation is going up and printing more money only exacerbates the situation. I will do more research on your first point and address it later. As for the second part, sure, if you sent everyone a check for a million dollars, it would obviously be inflationary. However, the mere act of additional deficit spending doesn't automatically cause inflation to rise. Historically, there seems to be no correlation between growth of inflation and the deficit. See below: And I don't understand what you mean by low interest rates "artificially" keeping inflation down. If anything, low interest rates increase inflation, and raising interest rates is like the number one way to fight inflation. Also, inflation is not currently an issue, and isn't projected to be one for some time. A dollar X amount of years ago obviously bought more than it does today from inflation, but that doesn't make a low level of inflation a bad thing. And when I see a higher food and gas bill, I don't attribute it to inflation, I attribute it to higher oil costs. Using such large amounts of corn for ethanol production also isn't helping much. Link to comment
johnnyrodgers20 Posted December 7, 2011 Share Posted December 7, 2011 If the default world currency (The US dollar) becomes that of another nation or nations then our dollar becomes just our currency. Then we would not be able to print our way out of the mess we are in. For example oil is now sold in terms of dollars. They exchange the currencies from all the other countries into dollars to determine how much a barrel of oil is worth. Once we are no longer the world's currency we are going to have to live within our means. And then we will feel the true effects of all the spending and debt we have accrued from wasteful and irresponsible spending of our govt. So how exactly do we go from being the "default world currency" to not the "default world currency"? And how is it really a debt if money is just pulled out of thin air? That happened after WWII when Britian was the default world currency. There were worries about their debt and they changed the default currency to the dollar. There have been talks by Opec and other arab nations about changing the world currency. Some have suggested the yuan from China. China and Russia are also trying to move the default currency away from the dollar. I am not sure it will happen any time soon but you never know. When you PULL MONEY OUT OF THIN AIR it has consequences. Things like inflation, it is being held in check artifically by keeping down interset rates but you can't hold it down long. Other issues start to pop up that are not controlled by interest rates like oil and gas prices. Food, just look at your food bill and think back to a year ago. Inflation is going up and printing more money only exacerbates the situation. I will do more research on your first point and address it later. As for the second part, sure, if you sent everyone a check for a million dollars, it would obviously be inflationary. However, the mere act of additional deficit spending doesn't automatically cause inflation to rise. Historically, there seems to be no correlation between growth of inflation and the deficit. See below: And I don't understand what you mean by low interest rates "artificially" keeping inflation down. If anything, low interest rates increase inflation, and raising interest rates is like the number one way to fight inflation. Also, inflation is not currently an issue, and isn't projected to be one for some time. You are right I ahd that backwards!! My bad!! A dollar X amount of years ago obviously bought more than it does today from inflation, but that doesn't make a low level of inflation a bad thing. And when I see a higher food and gas bill, I don't attribute it to inflation, I attribute it to higher oil costs. Using such large amounts of corn for ethanol production also isn't helping much. That is the essence of inflation. When goods cost more from year to year. You can debate the reasons as to why there is inflation but it is still regarded as inflation. The definition: http://www.investopedia.com/terms/i/inflation.asp#axzz1fsDxEmcA Link to comment
Malth Posted December 7, 2011 Share Posted December 7, 2011 That seems to be referring specifically to the actual purchasing power of the dollar. Inflation is growing at what, 2-3%? Does that account for the entire increase in price? I would say the increased cost of oil over the past 10 years or so has outpaced inflation. Link to comment
johnnyrodgers20 Posted December 7, 2011 Share Posted December 7, 2011 That seems to be referring specifically to the actual purchasing power of the dollar. Inflation is growing at what, 2-3%? Does that account for the entire increase in price? I would say the increased cost of oil over the past 10 years or so has outpaced inflation. And that is why they don't include oil and food in the inflation index Link to comment
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