Hypothetical situation regarding dollar vs peso

bigbadwolf said:
You may not believe it but I was going to mention it. My favorite is #3. Right in the beginning, when Max opens a tin of dog food and devours most of it. When the aviator brings out his long wooden spoon, the dog snarls at him.
And he didn't even check the 'best before' date.
 
harpo said:
A weakened dollar/peso cuts both ways; more competitive exports, more expensive imports.
The temptation for the US is to inflate its way out of debt; a plummeting dollar will be part of that fun ride - hold onto your hats folks!

Right now the risk of deflation(and stagnation) is much more realistic then inflation.

USA first need to jumpstart there economy before they even can worry about inflation so for the short term it's not a problem

With a gradual strenghting of the dollar you can also overcome the risk of high inflation
 
So no one thinks ARG might replace the dollar with some other currency for things like Real Estate purchases?
 
BlahBlah said:
Right now the risk of deflation(and stagnation) is much more realistic then inflation.

USA first need to jumpstart there economy before they even can worry about inflation so for the short term it's not a problem

With a gradual strenghting of the dollar you can also overcome the risk of high inflation
All highly speculative. Pretend money has to be paid back one day with the real stuff; our children and grandchildren look likely to get the bill for this party.
 
harpo said:
Pretend money has to be paid back one day with the real stuff; our children and grandchildren look likely to get the bill for this party.

That's correct. As for the recovery of the US economy -- somewhere or another Michael Hudson refers to the "polite fiction of the American economy." US manufacturing is hollowed out, and this process has occurred over the last three decades. It would take decades to rebuild it - if it's possible at all. That's why the country has kept going with speculative booms -- the dot-com boom of the last '90s, which segued (with a hiccup) into the real estate boom that came a cropper two years ago. The country stays afloat on capital inflows from countries that are running current account surpluses with the USA -- when this process of recycling worthless paper (received for real goods supplied by China and others) stops, the country will be in crisis. It already is in crisis.
 
Engdahl has written a piece today, well worth reading:

What defines the situation today is a growing realization across all Eurasia from Beijing to Moscow, from Alma Ata to Ankara that the pillar of the postwar order, the United States has become an increasingly incalculable partner and force in world economic and political affairs. Some even within the US speak of a terminal decline in American influence over the coming decades, with terms such as ‘imperial overstretch.’ It’s essential to understand the extent and nature of the current economic and financial crisis of the Dollar System if we are to make any serious calculation of the future.



The crisis which broke in August 2007 as a crisis in the sub-prime or high-risk segment of US real estate credit was in fact a first manifestation of a process of debt destruction which is bringing the United States into a new Great Depression, one that will last at least a decade, perhaps several. In its severity it will be far worse than that of the 1930’s. Today the USA is the world’s greatest debtor economy. In 1929 it was the largest creditor. Today the USA public debt is over $11 trillion, growing at the fastest rate in history. The Federal deficit this year is estimated to exceed $1.8 trillion as the Treasury pours money into a bankrupt banking system to try to rescue a collapsing Dollar System. In 1929 US Public Debt was insignificant.



Since Washington abandoned the Bretton Woods Gold Exchange Standard convertibility in August 1971 it has been accepted wisdom in Washington that, as Dick Cheney put it, ‘deficits don’t matter.’ So long as the dollar was world reserve currency and the US was the greatest military power, the world would support the dollar. That era appears to have ended. The trade surplus economies of Asia, above all China are becoming increasingly concerned that the value of their dollar investments in US debt will depreciate as the volume of debt needed continues to soar.



In recent months China has begun exploring alternative investment avenues to replace their dollar investments. Russia and Brazil, seeking to reduce their dependence on the dollar, plan to buy $20billion of SDR bonds from the IMF and diversify foreign-currency reserves. Russia’s central bank said it may cut investments in US Treasuries, currently estimated at $240billion, and China says it may reduce reliance on the dollar and US bonds. China today is America’s largest foreign creditor.

This is no short-term impulse to dump dollars or a pressure tactic by the countries of Eurasia. It’s the beginning of a global tectonic shift away from a sole financial center to many regional or ‘multipolar’ centers over the next decade. As the trillions of dollars of US taxpayer bailouts have demonstrated, try as they might, Humpty Dumpty, the Dollar System can’t be put together again, as it was even three years ago. Wrong economic policies, decisions taken more than four decades ago in Washington and Wall Street, have reached their relative limits. The world is in what Joseph Schumpeter once called ‘creative destruction.’ The consequences for the future of Eurasia are enormous.
 
harpo said:
All highly speculative. Pretend money has to be paid back one day with the real stuff; our children and grandchildren look likely to get the bill for this party.

There is nothing speculative about the fact that there is hardly any inflation in the US now
 
If Argentina had a government that was capable of being business friendly than maybe they could switch from dollars. I'm back in the US right now, lets just say that I have switch from hoarding monedas to gun amo. The stores in Texas, Oklahoma, and Kansas can't keep amo in stock. Guns sells are high. My family is stockpiling stuff, becauase they think that something is going to happen. As for not worring about inflation..."what goes down must go up". Right now US is in deflation, but inflation will occur at some point. Like SS said, Argentina has forest fires every 8-10 years, US hasn't had one since 1930s.
 
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