Dollar Value Predictions 2021/2022

[Wade K.]

Regardless of inflation in the USA, the paper american hundred dollar bill has a life of its own- it is the currency of choice, in many parts of the world, where local currencies are questionable, where banks are not to be trusted. over 2/3 of the actual paper bills are not even in the USA, and are used for all sorts of transactions, legal or not, by people who dont know the Federal Reserve bank from a hole in the ground, who care naught about US debt levels, and, for many, dont even read.
Drug deals in the golden triangle, asset smuggling from Moscow to Cyprus, passage from Turkey to Greece by rubber boat, Cocaine deals in Columbia, car sales in the persian gulf, even house sales in Buenos Aires- the Benjamin has a life of its own, which is reflected by the blue rate, completely independent of what economists or doom predictors say about the US economy, and, for the foreseeable future, it will.
A hundred bucks has spending power. Its disconnected to reality, and has been for decades.

Good points but a key thing you wrote was "has been." While 2/3rds of Dollars may be outside the U.S. it's the U.S. Federal Reserve that actually prints those Dollars and something like a third of all Dollars ever printed has occurred in the last year, with much of that in the last two months. No matter where you are with your Dollars its worth is defined by trading against other currencies. There are cracks in the system such as China creating a gold backed digital currency. Our Fed chairman recently stated they are looking at the possibility of doing the same. And the holders of U.S. treasury bonds have griped pretty bitterly about the low interest rates alongside the massive printing. There are no guarantees that the system can withstand plans to spend unprecedented trillions.

 

[Ries]

I am extremely dubious. There are an estimated 10 billion dollars in US bills in circulation outside of the USA. Right now, I could find someone to take a US 100 in pretty much any country in South America, Africa, or Asia. And I cant imagine finding someone to take a Chinese gold backed digital currency in any of those places.
Crypto currencies are playthings and speculative games for a tiny percentage of the world's wealthy- nowhere does any serious amount of actual business, buying and selling of things, use crypto currencies.
And the numbers I find are that 20% of the US dollars were printed last year.
Again, if I buy a house in Argentina, nobody who I buy it from could give the slightest care as to how many of them were printed in 2020. It is a reliable currency, globally, completely independent of US economics.
In reality, Gold is only good for a few things- some electrical uses, and jewelry.
It has value because we all agree it does.
And thats the same thing with US hundred dollar bills.

There are no guarantees for ANYTHING.
EVER.

Certainly, there are exchange rates for the dollar, which people use when exchanging US cash outside of the US. But many things are priced based on local economies- like houses in Buenos Aires. The price of a house in BA, in dollars, does not float with the exchange rate- it responds to local conditions. The dollar is the medium of exchange, because its negotiable, not because of its value in forex markets. Although I do not buy and sell large quantities of illegal cigarettes, guns, or drugs, my guess would be that the price is the price, in dollars, and todays London exchange rate doesnt mean that a kilo of coke goes up and down in rural columbia based on that number.

 

[Wade K.]

I am extremely dubious. There are an estimated 10 billion dollars in US bills in circulation outside of the USA. Right now, I could find someone to take a US 100 in pretty much any country in South America, Africa, or Asia. And I cant imagine finding someone to take a Chinese gold backed digital currency in any of those places.
Crypto currencies are playthings and speculative games for a tiny percentage of the world's wealthy- nowhere does any serious amount of actual business, buying and selling of things, use crypto currencies.
And the numbers I find are that 20% of the US dollars were printed last year.
Again, if I buy a house in Argentina, nobody who I buy it from could give the slightest care as to how many of them were printed in 2020. It is a reliable currency, globally, completely independent of US economics.
In reality, Gold is only good for a few things- some electrical uses, and jewelry.
It has value because we all agree it does.
And thats the same thing with US hundred dollar bills.

There are no guarantees for ANYTHING.
EVER.

Certainly, there are exchange rates for the dollar, which people use when exchanging US cash outside of the US. But many things are priced based on local economies- like houses in Buenos Aires. The price of a house in BA, in dollars, does not float with the exchange rate- it responds to local conditions. The dollar is the medium of exchange, because its negotiable, not because of its value in forex markets. Although I do not buy and sell large quantities of illegal cigarettes, guns, or drugs, my guess would be that the price is the price, in dollars, and todays London exchange rate doesnt mean that a kilo of coke goes up and down in rural columbia based on that number.

20% last year, but a good deal more in 2021. The U.S. Dollar hasn't always been the reserve currency, went off the gold standard in 1971, and every fiat currency in history has eventually failed. A good way to make that happen is to inflate away its value through massive printing. Not saying it's going down in flames tomorrow, but it is weakening and who knows in 5 years, 10, 20 what the future holds.

 

[Ries]

I cannot predict the future. My point is that the worries about the soundness of the US economy are extremely unlikely to have much to do with the blue rate. The blue rate reflects the actual buying and selling of physical dollars in Argentina, which is principly done by Argentines, usually either because its a better hedge against inflation than the peso, or because they need to buy things in dollars.
I have bought real estate in Argentina- the transactions took place in actual physical 100 dollar bills, run thru counting machines. (that means that contrary to your doubts, most Argentines trust the soundness of the dollar much more than the peso)

I also know business people in Argentina who physically carry dollars abroad to buy things, as nobody outside of Argentina wants pesos.

Hence, the worries of deficit hawks and gold bugs do not figure into the blue.
Those are US mental afflictions.
Actual forex traders dont worry about it either- they trade 7 trillion a day globally, and forex trading is focused on this week, not some vague future which may or may not happen. Forex trading is mostly speculative, betting on fractions of a percent of move for short term gain, or for immediate payment of debts in foreign countries.
Again, little to do with the blue.

 

[Wade K.]

I cannot predict the future. My point is that the worries about the soundness of the US economy are extremely unlikely to have much to do with the blue rate. The blue rate reflects the actual buying and selling of physical dollars in Argentina, which is principly done by Argentines, usually either because its a better hedge against inflation than the peso, or because they need to buy things in dollars.
I have bought real estate in Argentina- the transactions took place in actual physical 100 dollar bills, run thru counting machines. (that means that contrary to your doubts, most Argentines trust the soundness of the dollar much more than the peso)

I also know business people in Argentina who physically carry dollars abroad to buy things, as nobody outside of Argentina wants pesos.

Hence, the worries of deficit hawks and gold bugs do not figure into the blue.
Those are US mental afflictions.
Actual forex traders dont worry about it either- they trade 7 trillion a day globally, and forex trading is focused on this week, not some vague future which may or may not happen. Forex trading is mostly speculative, betting on fractions of a percent of move for short term gain, or for immediate payment of debts in foreign countries.
Again, little to do with the blue.

Fair enough, but if the Dollar collapses, and it is a big if, those paying the blue rate to get Dollars to preserve their wealth are going to get hammered. And those depending on the blue rate for their Dollars sent by WU are likewise going to be hit hard. Putting some money in gold as a store of wealth, not speculation, could come in very handy in such a scenario.

 

[Ries]

I am assuming you have never bought property in Argentina. I really doubt that, even if the dollar goes down in, say relation to the Euro, it will change the fact that real estate transactions in BA take place in dollars. And it probably wont change the fact that the dollar, at any exchange rate to the peso, is still a currency that you can use all over South America, and when you fly to Miami to go to Sawgrass Mall.
You are talking in theoretical macro economics, with a heavy dose of Eeyore doom and gloom- I am talking about the on the ground reality for literally billions of people on earth who just need money that works. Dollars work. Almost everywhere.
Gold is ridiculous to carry, store, is not negotiable at any food or clothing store I have ever been to, and always has pretty significant transaction fees to either buy or sell.
Its just not practical.
Gold earrings, sure, could be handy for the zombie apocalypse- although probably less than food or bullets or skills.

 

[Wade K.]

I am assuming you have never bought property in Argentina. I really doubt that, even if the dollar goes down in, say relation to the Euro, it will change the fact that real estate transactions in BA take place in dollars. And it probably wont change the fact that the dollar, at any exchange rate to the peso, is still a currency that you can use all over South America, and when you fly to Miami to go to Sawgrass Mall.
You are talking in theoretical macro economics, with a heavy dose of Eeyore doom and gloom- I am talking about the on the ground reality for literally billions of people on earth who just need money that works. Dollars work. Almost everywhere.
Gold is ridiculous to carry, store, is not negotiable at any food or clothing store I have ever been to, and always has pretty significant transaction fees to either buy or sell.
Its just not practical.
Gold earrings, sure, could be handy for the zombie apocalypse- although probably less than food or bullets or skills.

You don't seem to grasp that gold has always been considered money, a store of value, worldwide. Not talking about walking around with a bucket of gold, talking about being able to exchange it for local currency. If the day comes that the Dollar collapses, becomes worth a lot less and major countries move to establish a new reserve currency, you may then realize what I'm talking about. You speak as if that's the way it's always been and always will be. I hope you're right, but as the saying goes those who don't learn from history are doomed to repeat it.

 

[Ries]

You are dreaming. What store have you bought something with using gold lately? Do you have some nuggets in your pocket right now? Pieces of Eight? Its not "money". Its a pretty volatile investment, I know people who have made money on it, and others who have lost, big. It goes up, and down. People who already have enough currency to live on can afford to dabble in gold- which leaves out about 99% of Argentina, or the USA, for that matter.
To buy gold, you need to pay a premium over the quoted value. To sell gold you need to pay a premium over the quoted value. Thats in the USA. In Argentina, you can only buy gold from Banco Cuidad, and its not even legal to own 99.99% gold. Similar restrictions occur in many places. You could, I suppose, keep it in a vault in Singapore, but its completely impractical to use to pay the rent, buy food, or pay your electric bill.
I know a lot of people are dreaming of that day when the Dollar Collapses.
But until then, you still need currency of the country you are living in, or, dollars.
Thats the truth, ruth.

 

[Wade K.]

You are dreaming. What store have you bought something with using gold lately? Do you have some nuggets in your pocket right now? Pieces of Eight? Its not "money". Its a pretty volatile investment, I know people who have made money on it, and others who have lost, big. It goes up, and down. People who already have enough currency to live on can afford to dabble in gold- which leaves out about 99% of Argentina, or the USA, for that matter.
To buy gold, you need to pay a premium over the quoted value. To sell gold you need to pay a premium over the quoted value. Thats in the USA. In Argentina, you can only buy gold from Banco Cuidad, and its not even legal to own 99.99% gold. Similar restrictions occur in many places. You could, I suppose, keep it in a vault in Singapore, but its completely impractical to use to pay the rent, buy food, or pay your electric bill.
I know a lot of people are dreaming of that day when the Dollar Collapses.
But until then, you still need currency of the country you are living in, or, dollars.
Thats the truth, ruth.

Apparently your reading comprehension is lacking. Who said anything about trying to buy things with gold nuggets? I'm merely suggesting that it's wise in case of an economic collapse to keep a percentage of your wealth in gold so that you have something tangible you can exchange at say a bank or government facility for local currency. I'm am neither eager to see the Dollar collapse or predicting its imminent collapse. But in a severe economic downturn, which can be caused by too much debt, both public and private, and the inflation caused by too much currency in the system, having a store of wealth in the form of precious metals could save your bacon.

 

[Wade K.]

You are dreaming. What store have you bought something with using gold lately? Do you have some nuggets in your pocket right now? Pieces of Eight? Its not "money". Its a pretty volatile investment, I know people who have made money on it, and others who have lost, big. It goes up, and down. People who already have enough currency to live on can afford to dabble in gold- which leaves out about 99% of Argentina, or the USA, for that matter.
To buy gold, you need to pay a premium over the quoted value. To sell gold you need to pay a premium over the quoted value. Thats in the USA. In Argentina, you can only buy gold from Banco Cuidad, and its not even legal to own 99.99% gold. Similar restrictions occur in many places. You could, I suppose, keep it in a vault in Singapore, but its completely impractical to use to pay the rent, buy food, or pay your electric bill.
I know a lot of people are dreaming of that day when the Dollar Collapses.
But until then, you still need currency of the country you are living in, or, dollars.
Thats the truth, ruth.

And having a "store" of wealth, storage if you will, isn't the same as a store you buy clothes or food from. Sheesh.