T Nation

Greenspan Giving Up on the Dollar


#1

"Greenspan: Euro Gains As Reserve Choice

AP
Monday September 17, 2007

Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice.

According to an advance copy of an interview to be published in Thursday's edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore.

The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.

Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar."

A great currency has been debased and defiled by our elite. The middle class will suffer.


#2

" A great currency has been debased and defiled by our elite. The middle class will suffer."

Yes. Yes we will. Point of thread? Do you have a solution to suggest? A reason perhaps?


#3

Yes. Back the currency by gold, $1200 per ounce. Fire all federal employees not in defense, financing the government, judiciary, or police. Sell off all assets not used by those 4 branches to reduce debt. Make it punishable with prison mandatory to even propose deficit spending or issuing fiat currency.

Close the Federal Reserve and have money issued by the Treasury. Eliminate all taxes and fund government operations through user fees.

Finally, to be a member of Congress, the honorable person must have the following tattooed on their foreheads: "The government that governs least governs best." (The last one is, of course, a joke. The others are totally serious.)


#4

http://www.currencytrading.net/2007/7-countries-considering-abandoning-the-us-dollar-and-what-it-means/


#5

Good link, Lixy.

I wonder if the falling dollar is a prelude to a new regional currency here, similar to the Euro. No one wants to see their wealth simply slip away, so perhaps a new stable regional currency is in the offing.

The sad part in all this is that loss of economic power often precludes loss of military power, similar to what happened to Britain. Britain lost its economic supremacy long before it lost its military supremacy.

The world will go unpoliced and investors will retreat toward the center, to protect their capital. The 3rd world will become even more poor and miserable. That is very saddening.


#6

The two cases are not very comparable. The government of Britain was actually getting money out of its empire. The US is ruining itself by starting unnecessary wars, handing out aid, etc. Those moronic (from a nationalist point of view) expenses will continue to drain the country as long as lobbies (the armament industry, AIPAC, etc...) exert more power than people on Washington.

As counter-intuitive as it might seem, I am mourning the slip of the dollar. The Moroccan Dirham is tied to the green bill, and a weaker dollar means a weaker Dirham. If the Moroccan government had any brains at all, they would have dumped the dollar long ago, but it seems that the illegitimate government is more interested in pleasing Washington than protecting the country's interests.

Actually, if the US woke up from its drunken money burning haze, dictators around the 3rd world will start falling off one by one. That'll likely lead to an initial cohesion, but they'll pick up within months (assuming no other meddles with it).

Take Saddam for example. He was a recluse who couldn't travel in his own country without a body guard. He was eventually going to be replaced by a spontaneous democratic government and the country could have thrived. Instead, the US felt the need to turn the place into a scene from Mad Max to satisfy the MIC's thirst and be able to set up more military bases in the oil-rich region. That is saddening. Nobody can replace the US as a hegemon. The natural order will be restored and regional powers will take over.


#7

You are funny when you try to be serious.


#8

Gold Standard

Unelected people setting completely arbitrary standards that directly affect the pockets of Americans?

Time to be done with the fed.


#9

Actually this was in the process of happening, until the food for oil scandal. Then Saddam had power again.


#10

Hey Headhunter, do you think it is even possible to go back to the gold standard when the US is in this much debt? I was reading an article by Jacques Rueff (French Economist).

Whilst he advocated a return to gold standard for the EU and the USA, he also cautioned against the US doing this with the current level of public debt as well as instability in private debt. I have done some poking around on the net but I can't find a good explanation.


#11

It would only be possible by introducing competing hard commodity currency. For example, the treasury can issue a new dollar based on gold or silver and it would compete with fiat currency. We could not just convert the current currency to gold or silver.


#12

http://www.mises.org/rothbard/genuine.asp

Read this!


#13

Whether its a new currency or somehow the old backed by gold, the currency weakness is a symptom, not the disease itself. The disease is Irrationality, the desire to spend more than is earned.

Our society suggests to me a pack of spoiled children who want something, no matter whether the money to buy it exists or not...to have universal health care and no money to fund it, to have 'free' prescription drugs but no money to buy them, to have your cake and eat it too.

Our problem is one of Philosophy. We've been taught that reality is non-objective, that morality can be twisted and turned anyway we like, and that human beings don't have a particular nature. We've been taught that violence is rational, that theft is okay if you can 'get away with it'.

We're going to pay for our irrationality, a lot. We're going to get just exactly what we deserve.


#14

Analysis from Paul Craig Roberts (Assistant Secretary of the Treasury in the Reagan administration. Former Associate Editor of the Wall Street Journal):

Dollar's Fall Collapses the American Empire; Bring Those 737 Overseas Military Bases Home!
By PAUL CRAIG ROBERTS

The US dollar is still officially the world's reserve currency, but it cannot purchase the services of Brazilian super model Gisele Bundchen. Gisele required the $30 million she earned during the first half of this year to be paid in euros.

Gisele is not alone in her forecast of the dollar's fate. The First Post (UK) reports that Jim Rogers, a former partner of billionaire George Soros, is selling his home and all possessions in order to convert all his wealth into Chinese yuan.

Meanwhile, American economists continue to preach that offshoring is good for the US economy and that Bush's war spending is keeping the economy going. The practitioners of supply and demand have yet to figure out that the dollar's supply is sinking the dollar's price and along with it American power.

The macho super patriots who support the Bush regime still haven't caught on that US superpower status rests on the dollar being the reserve currency, not on a military unable to occupy Baghdad. If the dollar were not the world currency, the US would have to earn enough foreign currencies to pay for its 737 oversees bases, an impossibility considering America's $800 billion trade deficit.

When the dollar ceases to be the reserve currency, foreigners will cease to finance the US trade and budget deficits, and the American Empire along with its wars will disappear overnight. Perhaps Bush will be able to get a World Bank loan, or maybe one from the "Chavez bank," to bring the troops home from Iraq and Afghanistan.

Foreign leaders, observing that offshoring and war are accelerating America's relative economic decline, no longer treat the US with the deference to which Washington is accustomed. Ecuador's president, Rafael Correa, recently refused Washington's demand to renew the lease on the Manta air base in Ecuador. He told Washington that the US could have a base in Ecuador if Ecuador could have a military base in the US.

When Venezuelan president Hugo Chavez addressed the UN, he crossed himself as he stood at the podium. Referring to President Bush, Chavez said, "Yesterday the devil came here, and it smells of sulfur still today." Bush, said Chavez, was standing "right here, talking as if he owned the world."

In his state of the nation message last year, Russian president Vladimir Putin said that Bush's blathering about democracy was nothing but a cloak for the pursuit of American self-interests at the expense of other peoples. "We are aware what is going on in the world. Comrade wolf knows whom to eat, and he eats without listening, and he's clearly not going to listen to anyone." In May 2007, Putin criticized the neocon regime in Washington for "disrespect for human life" and "claims to global exclusiveness, just as it was in the time of the Third Reich."

Even America's British allies regard President Bush as a threat to world peace and the second most dangerous man alive. Bush is edged out in polls by Osama bin Laden, but is regarded as more dangerous than Iran's demonized president and North Korea's Kim Jong-il.

President Bush has achieved his dismal world standing despite spending $1.6 billion of hard-pressed Americans' tax money on public relations between 2003 and 2006.

Clearly, America's leader and America's currency are poorly regarded. Is there a solution?

Perhaps the answer lies in those 737 overseas bases. If those bases were brought home and shared among the 50 states, each state would gain 15 new military bases.
Imagine what this would mean: The end of the housing slump. A reduction in the trade deficit.

And the end of the war on terror.

Who would dare attack a country with 15 new military bases in every state in addition to the existing ones? Wherever a terrorist turned, he would find himself surrounded by soldiers.

All of the dollars currently spent abroad to support 737 overseas bases would be spent at home. Income for foreigners would become income for Americans, and the trade deficit would shrink.
The impact of the 737 military base payrolls on the US economy would end the housing crisis and bring back the 140,000 highly paid financial services jobs, the loss of which this year has cost the US $42 billion in consumer income. Foreclosures and bankruptcies would plummet.

If this isn't enough to turn the dollar around, President Bush's pledge not to appoint an Attorney General if Michael Mukasey is not confirmed offers more promise. If the Democrats will defeat Mukasey's nomination, there are other superfluous cabinet departments that can be closed down in addition to the US Department of Torture and Indefinite Detention.

The American empire is being unwound on the battlefields of Iraq and Afghanistan. The year is two months from being over, but already in 2007, despite the touted "surge," deaths of US soldiers are the highest of any year of the war.

The Taliban are the ones who are surging. They have taken control of a third district in Western Afghanistan. Turkey and the Kurds are on the verge of turning northern Iraq into a new war zone, another demonstration of American impotence.

Bush's wars have endangered America's puppet regimes. Bush's Pakistani puppet, Musharraf, is fighting for his life. By resorting to "emergency rule" and oppressive measures, Musharraf has intensified his opposition. When Musharraf falls, thanks to Bush, the Islamists will have nukes.

American generals used to say that the wars Bush started in the Middle East would take 10 years to win. On Oct. 31 General John Abizaid, former commander of US forces in the Middle East, put paid to that optimistic forecast. Speaking at Carnegie Mellon University, Gen. Abizaid said it would be 50 years before US troops can leave the Middle East.

There is no possibility of the US remaining in the Middle East for a half century. The dollar and US power are already on their last legs, unbeknownst to Democratic leaders Pelosi and Reid who are preparing yet another blank check for Bush's latest request for $200 billion in supplementary war funding.

There isn't any money with which to fund Bush's lost war. It will have to be borrowed from China.

The Romans brought on their own demise, but it took them centuries. Bush has finished America in a mere 7 years.

Even as Gisele throws off the dollar's hegemony, Brazil, Venezuela, Ecuador, Bolivia, Argentina, Uruguay, Paraguay, and Columbia are declaring independence of the IMF and World Bank, instruments of US financial hegemony, by creating their own development bank, thus bringing to an end US suzerainty over South America.

An empire that has lost its backyard is finished.


#15

http://uk.youtube.com/watch?v=SJ_qK4g6ntM&eurl=http://garynorth.com/public/2637.cfm


#16

Ok, first of all, the dollar should not again be backed by gold when gold is at a peak. That would be devastating to the dollar when gold eventually falls. And yes it will fall.

The problem here is people think that money is not a real thing, but gold is. But then again so are tulips. (Oh no, not the tulip analogy again.)

The fact of the matter is just as we have decided that dollars have a certain value, we have done the exact same thing to gold.

A few years back, the dollar was high compared to European currency. (May have been before the euro, cant remember right now.) And now the dollar is low compared to the euro. This up down balance has been going on for a while. And is currently caused intentionally by our government.

There are some benefits, mostly in trade and tourism. America is a cheap place to go right now. (Though a little hard to get into if you try to come here legally.) And touring Europe for Americans is more expensive, which influences Americans to vacation in America.

Now the government could up the value of the dollar, though that would up interest rates, and you already see how that affects the sub-prime lending. (Why would anyone get an adjustable rate mortgage? Yes, save 1% now by agreeing to take all the market risk over the next 30 years.) Plus the idea that we may be heading toward a recession. (Interestingly when you hear on the news that we are in a recession, it often means the recession is almost over, and they just now noticed it.)


#17

Beautiful!


#18

Fresh from the oven...

http://www.unanimocracy.com/2007/11/08/why-prices-rise/