The coming USA currency crisis and Argentina

[gouchobob]

This is in regards to the chart shown above from Morgan Stanley. This chart has been around for some time in various forms. The article below basically debunks the chart.

http://www.businessinsider.com/2009...ne-debt-to-gdp-chart-is-wrong-and-meaningless

Personally I think there has been a problem in household debt in the U.S. but the idea that the dollar is going to collapse anytime soon is way overdone.

 

[gouchobob]

The two are different things. We like a good justice system. We don't like supposedly "legal" contracts done in the neocons 1990s in Argentina.
When an American says "legal security" we listen "approval to take more money from Argentina", and this is for a good reason.

So, there you have it. We like your money if it creates jobs. We don't like it if you take the gains abroad or the jobs are McJobs. And if in the future we don't like your money no more, and we feel that you cheated on us, we will take it from you. It is not ok for you? So don't bring your money, we DON'T need it (and your dollars are every day less worth of attention).

Welcomed are the entrepreneurs and the innovators, despised are the parasites that want to feed in our low wages. If you want to us to respect you, you must first respect us. After all, this is our country.

(and I will be happy to give recommendations on everything I know about BA. I cannot believe that somebody wrote here that our pizza is not good and that NYC is better. Please, go out of Recoleta sometimes).

I believe that these types of opinions are widely held here and that a change in attitudes is unlikely. This should be good news for those who like Argentina as it is, nothing is going to change anytime soon.

 

[redrum]

I have been hearing about the US dollar being wheelbarrow useless since the Vietnam war started before the 60's (only not before because I was too young before then). Will not happen! The US dollar is linked to the most stable society in the world.

Only reason you are hearing it here is because BA is now home to some Yanks too weird even for the guntoters in North Idaho. Spent a summer in Coeur D'Alene!!!!

Serah !!!!

mendoza - let's spend more time debating the issues rather than calling people "weird". let's not demonize people simply because they have a different opinion.

expats are some of the most interesting, intelligent and colorful people i have ever met. i can safely say that the best americans i have ever known have been outside of the US.

please back up your statements with reasons and facts.

demise of the dollar can't happen to the US you say? with all due respect, that is an extremely arrogant statement. of course it can happen to the US. what makes you think the US is so special?

it happend to Rome. it happend to Great Britain. and it's HAPPENING to the US as we speak.

the "most stable society in the world" you say? we were, not anymore. those things that made us a great nation are today falling by the wayside. the constitution is being violated and ignored. big government has created an anti business, anti capitalist environment that is not conducive to any real recovery.

the dollar has lost roughly 95% of its purchasing power since the early part of the last century due to inflation. all governments that print fiat currencies eventually destroy that currency through abuse. the fact that it has taken so long for the dollar is due to geo politics, our military strength and our world currency status.

all of that is changing right now. if you can't see it then you are living in denial or not focusing on the correct information.

the US govt. has long term debt obligations in the neighborhood of 80 trillion dollars. the debt is so large it will never be paid pack. there is not enough money in the entire world to pay it back. this means that a devaluation of the currency is inevitable albeit it could take several years. it's either devalue the currency or default and they're not going to default.

if you have a better solution for protecting your purchasing power other than precious metals, then let's hear it. gold is up 9 years in a row. silver was up close to 100% for 2009. even base metals such as copper, zinc, lead...etc, are all doing better than the stock market. do you know of another asset class with that track record?

but again, it's not actually gold that is up, it's the fact that the dollar is going down. gold is appreciating against all fiat currencies as governments continue to inflate, being led of course by bernanke and co.

the dollar index was 120 in july '01. today it's a paltry 77. how can anybody say the dollar is not going down?!

 

[Lucas]

Lucas, I don't get your point. Why is judicial security a bad idea? What's wrong with an independent, impartial and honest court system?

The two are different things. We like a good justice system. We don't like supposedly "legal" contracts done in the neocons 1990s in Argentina.

When an American says "legal security" we listen "approval to take more money from Argentina", and this is for a good reason.

So, there you have it. We like your money if it creates jobs. We don't like it if you take the gains abroad or the jobs are McJobs. And if in the future we don't like your money no more, and we feel that you cheated on us, we will take it from you. It is not ok for you? So don't bring your money, we DON'T need it (and your dollars are every day less worth of attention).

Welcomed are the entrepreneurs and the innovators, despised are the parasites that want to feed in our low wages. If you want to us to respect you, you must first respect us. After all, this is our country.

(and I will be happy to give recommendations on everything I know about BA. I cannot believe that somebody wrote here that our pizza is not good and that NYC is better. Please, go out of Recoleta sometimes).

WOW! Pal, you went in with shoes end caps towards the front...

That is exactly what I try to tell Sergio, but not so than dramatically as direct to the chin.

 

[mendozanow]

Sorry, I was not trying to denigrate anybody, just trying to be light-hearted.

 

[redrum]

I agree and I think a lot of this stuff that the dollar will collapse is overdone, although there are still big problems in the USA and the economic recovery is going to be very slow and anemic due to necessary de-leveraging that's needed and occurring in the economy.

The primary reason for the weak dollar today is very low interest rates in the U.S. which will probably end in the next year or so. After that it's anybody's guess, exchange rates are notoriously hard to predict.

bob.....i don't necessarily like the word "collapse" either. i prefer the word "devaluation". but one thing is for sure, the seeds of the dollar's destruction have already been sown.

let us not underestimate that. it most certainly is not "overdone" as you mention, just the opposite in fact. not enough people are aware of what is really going on.

we're living in a very special time right now. and i don't mean special as a good thing. we will in our lifetimes witness the changing of the world's reserve currency. and that is bound to have some interesting consequences. those who can place their bets beforehand can hopefully weather the storm and maybe even profit from it.

the problem of the dollar is not low interest rates. let's move a step back. the problem of the dollar is that there are too many dollars! the problem is the reckless expansion of credit, the increase of the money supply and thus the decreasing value of the dollar as has been occurring for the past century.

at this point, increasing the interest rates will only make the situation much much worse.

that's the problem the fed currently finds itself. the fed cannot continue to keep interest rates so low due to pressure from existing bond holders. it also needs higher rates in order to make future bond sales an attractive investment to investors, domestic and abroad.(if the treasury can't find buyers then no worries. the fed will simply PRINT money out of thin air and buy the treasuries itself)

however raising rates will only increase the government debt payments. i think we have something like 2 trillion coming due next year. that's a pretty big amount of debt to even raise by one basis point. raising rates will also supposedly put into jeopardy homeowners as well as some of the very institutions we just spent so much money to bail out.

so you can see the dilemma. there will be no recovery. how can there be? we cannot afford our existing debt obligations.

we have no jobs. there is no such thing as a jobless recovery.

we will most likely see a short, temporary "recovery" due to propping up our ponzi scheme economy with more economic easing. once that sugar high wears off however things will not be good as we are in much worse shape to deal with a great depression as compared to the 30's. back then we were the world's largest creditor, a net exporter of energy and a manufacturing powerhouse.

today, we are none of those things.

 

[ULDB65]

if you have a better solution for protecting your purchasing power other than precious metals, then let's hear it. gold is up 9 years in a row. silver was up close to 100% for 2009. even base metals such as copper, zinc, lead...etc, are all doing better than the stock market. do you know of another asset class with that track record?

Lots of folks, including me, received much better returns a few years ago from Real Estate than from precious metals. Precious metals are a commodity no different from any other, and are subject to similar cycles of boom and bust.

If you trust your timing, feel free to put all those eggs in one basket. But if your crystal ball is as fuzzy as most peoples, maybe spread your eggs around a bit more...

 

[Cangurito]

redrum, you nailed it. I want to thank everybody else for their contributions too. This has turned into an excellent debate.

 

[redrum]

Lots of folks, including me, received much better returns a few years ago from Real Estate than from precious metals. Precious metals are a commodity no different from any other, and are subject to similar cycles of boom and bust.

If you trust your timing, feel free to put all those eggs in one basket. But if your crystal ball is as fuzzy as most peoples, maybe spread your eggs around a bit more...

well, we're speaking in general terms here, in today's market. i'm sure many people received better returns from real estate a few years ago. in general however most people's properties are down in value from their artificial highs. certain areas, of course, will/should always be strong markets.

if you've got the money then i don't necessarily think real estate is a bad idea, again depending on the market. people will always need a place to live right?

what i'm saying is to also have money in gold/silver, at least 25% of your net worth, which most people don't have or know much about. in addition, most investors can easily more afford to pick up a few gold coins than buy a property.

commodities in general are going to be the next wave i.e. oil, natural gas, water, food, metals...etc. but why are gold/silver so special? because they have a dual value. they are commodities but they are also real money.

they have intrinsic value and zero counter party risk. they are practical and easily transported as opposed to carrying around a barrel of oil or bushel of wheat. can't carry a house in your pocket. gold has been money for 5,000 years and will continue that role. what paper money, backed by nothing but a govt promise has lasted as long?

in terms of timing, that's exactly what we're talking about. it's gold's time. it's being re monitized by central banks. we don't need a crystal ball to predict what's going to happen. if you understand the fundamentals and examine recent trends then i think you can make a pretty educated guess as to how things will unwind in the long run. at least you can make preparations and hedge yourself.

 

[orwellian]

This is in regards to the chart shown above from Morgan Stanley. This chart has been around for some time in various forms. The article below basically debunks the chart.

http://www.businessinsider.com/2009...ne-debt-to-gdp-chart-is-wrong-and-meaningless

Personally I think there has been a problem in household debt in the U.S. but the idea that the dollar is going to collapse anytime soon is way overdone.

It doesn't debunk it, it uses different statistics to come up with an other conclusion. One of which is: "There is no evidence at all from this ratio that the aggregate household sector has a debt servicing problem."
I seriously don't know what reality they live in. And besides, Credit Suisse is an investment bank which makes them bias.

The problem with the dollar is not the debt levels but FED's willingness to print money to pay for the debt. What they ought to do is let the banks fail. There is no way of knowing the exact losses. So obviously if they continue to print money the way they have to pay for the losses in the derivatives market, hyperinflation is the only outcome. But nobody knows what is going to happen.