The imminent death of the US dollar is a foregone conclusion and this hasnt come about because of any sinister, coordinated attack on the currency by other economic powers, but by the ill-advised actions of the US itself. The two things that have helped the dollar maintain its strength against other currencies all these years was first that through very clever manipulation of oil-producing countries’ dependence on US-provided security in the 70s, Washington got them to agree not to accept any other currency in exchange for their oil, [hence the birth of the petro-dollar]. The other thing that guaranteed relative monetary stability for the US was that dollar surpluses from these oil exporting countries were, traditionally, invested in the purchase of US bonds. Since the US, in its struggle to maintain global hegemony in the face of other emerging economies, started imposing sanctions on powerful oil-rich states and allowing the price of oil to drop to levels that will affect the economies and local currencies of these countries, it has created a situation where the afflicted countries had to shed dollars, in the billions, to bolster their own currencies. In effect these US paper money is returning to its source not having the value it once had as there no longer exists the same demand for it; also, of course, the dollar surpluses are not there any more to buy those US bonds that the US is dependent on to balance its books. We may be seeing a strong dollar right now, but that is the phenomenon of the patient appearing better just before his death. Also that desperate short lived measures are being implemented to shore up the dollar by clever tricks like keeping the value of gold down to unjustified low levels. These measures cannot be maintained for too long and the US will be exposed to the inevitable reality that will force it to restructure its economy. There will be no more free rides; either American economists will find a way to make the dollar work as just another local currency based on the economic merits of the US, or Washington will force a global war that will in effect press the ‘reset button’ on the entire world.....and hope for the best.
Posted on: Thu, 15 Jan 2015 11:00:30 +0000
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