White Chocolate said:
I agree with Marksoc, very few currencies are directly pegged to the US dollar any more. "Fiat Currency" from the Latin "Fiat" means "Let there be". It is currency by government decree, without being backed by tangible assets, such as the gold. Almost by definition, all fiat currencies move independently as their value is based solely on the confidence people have in each government that prints them.
This as opposed to 'pegging a currency' to the value of the dollar (or other anchor). When this happens, all pegged currencies would move in lockstep with the dollar. As far as Argentina's history with that, if anyone does not know it you should do some reading because it is a textbook study in pegging and then de-pegging, if you will, your currency to the dollar.
In my opinion, the current US currency situation is like the mutually assured destruction of the cold war. Some would say we are screwed if China (and others stop) loaning us money. We are like US individuals too used to living above our means. This may be true, but at least for the time being, if China and these other countries stopped loaning us money we would stop buying all their crap so they would just be shooting themselves in the foot. That is why it most likely will not happen at least not in the foreseeable future.
So again, I say to the original poster of this thread do not worry too much about it and if you are, simply put some of your money in some other currency. I am somewhat concerned about the short term valuation of the dollar so I plan to convert my cash position into 1/3 dollars, 1/3 Euros, and 1/3 Brailian reals before moving at the end of this month. If anyone in the forum would like to chime in as to what they feel are the best currencies to hold your money in while in BA and why I would love to hear your opinions.
white choc....i think you should probably be doing a lot of reading yourself as well.
about 65% of the world uses the dollar to some degree, either directly as their own currency or to back up their own local currency, argentina being a perfect example of course. hence, if the US inflates its currency, argentina must also inflate the peso. otherwise, the peso would gain in value against the dollar thus hurting exports.
if there is a major devaluation, what's going to happen to all the countries whose central banks have their reserves in dollars? things will be very unpleasant however things will be the worst for americans obviously.
stop listening to the propaganda that china will continue to lend the US money, simply not true. china is only saying that in order to maintain the value of the almost 2 trillion dollars it holds in reserves. making an announcement of not buying dollars would see the value of their dollar reserves plummet. makes sense right? this is all a geo political game. china is smiling while at the same time trying to get out of the dollar as fast as possible.
in the meantime, it is buying gold like mad as well as spending billions of those dollar reserves each month on natural resources and everything else it will need to keep its economy running for the next 25 years. the chinese government has announced on national tv, instructing its citizens to buy gold and silver. china knows what's coming, they're not stupid, only americans appear to be the dumb ones.
in short, everybody is inflating, not just the US. that is why it is not recommended to hold the majority of your funds in ANY fiat currency be it dollars, euros, pounds, yen or reals. i would hold at least 25% in gold then divide the rest as you wish.
gold is up 9 years in a row. the dollar index was 120 in july 2001 and is 77 today. the federal reserve has printed a trillion dollars out of thin air and there will be more to come. the opec nations have announced they will be using their own currency instead of dollars to trade oil. china is making agreements with other nations to conduct trade in yuan instead of dollars. multiple nations are calling for a new reserve currency. our economy is a dead man walking. there will be no recovery.
i mean seriously, how much more evidence do you need? what else needs to happen before you start to realize what is happening here?!
