which world currency wil dominate in the future

[raqueteer]

This doesn´t look too good for the dollar.

http://market-ticker.org/archives/1439-WARNING-Deflationary-Collapse-Dead-Ahead.html

[hockables]

Correct me, if I'm wrong.

Gold backs the US dollar. Gold is the standard of the world.

Gold stocks are 17% higher than in Jan. 1, 2009 as of today and climbing!!!

Do any of you think that having Gold is NOT better than stocks or mutual funds?

Show me a stock or mutual fund that has outperformed Gold since Jan. 1. There aren't any.

Actually many mutual funds have bounced back by as much as 50% from their initial drop. Still well down from their high prices.

If a person had the fore-sight and the funds to purchase after the big hit they could have outperformed the 20-25% rise in gold with less capital output

[rufus]

Gold is a safe investment. It protects your value, but it produces no income while you hold it. Also, it only takes the greed of certain politicians to relieve you of your wealth. Franklin Roosevelt squeezed the gold out of the US population and only gave twenty dollars an ounce for it. The government basically stole the savings of the nation.

Those that failed to turn in their gold found that they had problems selling it later. Only at deep discounts could they cash out in illegal sales.

Gold is difficult to move across borders, and it is hard to run with such a heavy load. In times of political turmoil it can be a liability. How much gold lays buried or hidden away in places like the former Soviet Union and Red China? How many families have stories of wealth put down the well in the hope that it could be retreived at a later date?

The currency of the future may be gold, but I doubt it. Now if I can just find that well!

Rufus

[davidhf]

Correct me, if I'm wrong.

Gold backs the US dollar. Gold is the standard of the world.

Gold stocks are 17% higher than in Jan. 1, 2009 as of today and climbing!!!

Do any of you think that having Gold is NOT better than stocks or mutual funds?

Show me a stock or mutual fund that has outperformed Gold since Jan. 1. There aren't any.

You stand corrected; Gold DOES NOT back the USD.

[Ajijic]

http://www.financialpost.com/news-sectors/story.html?id=2083196

OTTAWA -- The Canadian dollar climbed above the US95¢ level Thursday for the first time in over a year as weakness in the U.S. dollar intensified, prompting several central banks in Asia to intervene in an effort to cap the rise in their local currency.

The loonie hit an intraday high of US95.19¢ before settling down to close at US95.04¢, an increase of US0.91¢. The currency has gained US2.5¢ in the past week and is now at its highest level since Sept. 29 of last year, just before markets began to crumble amid the financial crisis. Analysts have suggested parity with the U.S. dollar is a possibility before the end of 2009.

The Bank of Canada has repeatedly warned of the impact of a higher dollar, and senior deputy governor Paul Jenkins did so again during a speech Wednesday in Vancouver in which he warned the currency's "persistent" strength threatened economic growth.

But analysts say the impact of the central bank's verbal interventions are beginning to wane.

"The central bank's shot across the bow has definitely subsided. There's not much they can do," said John Curran, senior vice-president with CanadianForex, a foreign exchange provider. "If we have commodity strength, and we see equities rallying, and steady strengthening of the Canadian dollar, then the dollar is not out of line with everything else that's going on."

Mr. Curran said the gain in currencies like Canada's was largely powered by the market's growing comfort with risk-taking, bolstered by events in Australia. Thursday, Australia reported 40,600 jobs were created in September and the jobless rate fell to 5.7% from 5.8% reinforcing the view the country's central bank will hike interest rates again. The Reserve Bank of Australia, raised rates on Tuesday, becoming the first major industrialized nation to do so following the financial crisis.

"That has given the green light for more risk to be taken. And people are just continuing on with that," Mr. Curran said.

Also a factor is the continuing weakness in the U.S. dollar, which Thursday hit a 14-month low against a basket of currencies. Overall, the U.S. dollar has dropped 12% from the peak it reached this year in March, and analysts don't expect any pickup until there is a sign the U.S. Federal Reserve might begin hiking its key policy rate.

The U.S. dollar has declined due to its weak economic fundamentals and large deficits, which will force Washington to flood debt markets with treasuries in order to finance day-to-day government operations.

The continuing fall in the U.S. dollar prompted a number of Asian central banks to intervene in foreign exchange markets by buying the U.S. dollar and selling their own currencies. These were said to include South Korea, Hong Kong, Taiwan, Thailand, the Philippines and, possibly, Indonesia.

Thailand's central bank confirmed its market activity. Its assistant central bank governor said the baht, Asia's fourth best-performing currency, was climbing at an unsustainably fast pace and it took action to slow its rise.

"Some days its strength is beyond economic fundamentals," Suchada Kirakul told reporters in Bangkok. "The baht is strong and we are still taking care of it."

Asian central banks intervene to keep their currencies from appreciating, which would hurt their export-oriented economies.

"One of these Asian central banks, on its own, wouldn't have material impact on the U.S. currency. You need a co-ordinated effort amongst a whole lot of central banks to have an impact," said Sacha Tihanyi, currency strategist at Scotia Capital.

He and other analysts add it is quite common for Asian policy makers to intervene in currency markets – a fact that has drawn considerable criticism from policy makers in the west, such as Canada's Finance Minister, Jim Flaherty, and Bank of Canada governor Mark Carney.

Indeed, few analysts expect the Bank of Canada to intervene directly in the markets to cap the loonie's rise. Many believe the U.S. dollar's decline is one of the eventual outcomes as the global economy attempts to correct so-called trade imbalances. The problem, they add, is that an undue amount of the so-called rebalancing is being put on Europe and Japan, while Asian economies – most notably China – are not doing their part.

Read more: http://www.financialpost.com/news-sectors/story.html?id=2083196#ixzz0TRJAO5Kd

[Mainecoons]

Running the money printing press will get ya every time.

[newinajijic]

No one knows what will be the world currency in 10 years, but many experts agree it won't be the USD.

[jimmiller]

No one knows what will be the world currency in 10 years, but many experts agree it won't be the USD.

And it won't matter if it is or isn't.

[newinajijic]

jimmiller - Why do you say that?

[jimmiller]

jimmiller - Why do you say that?

Canada,Japan,France,Germany and a few others seem to have done alright without their currencies having been reserve currencies. Not being a reserve currency country doesn't matter for them. Why would it for the US?

If the US managed its economy in accordance with its being a reserve currency nation,it would matter. But they don't so it doesn't.

[rufus]

It appears that the Obama administration's ability to print money is unending. Remember the German inflation of the 1920's; that is our future. The US's national debt will be paid with the printing press.

The Federal Reserve cannot manipulate the money supply any more by fiddling with the interest rate. Money flows from areas of low interest to areas of high interest. We now live in a world economy, and money moves in a twinkling of an eye.

Bank of America lent their TARP funds to China. Chinese banks then lent the money back to the US consumers by way of high interest bank cards.

The situation will get worse when the congress impliments a value added tax. This increases the price of US produced goods at every step of production. Buy ore, add the VAT. Refine steel and sell it to a processor, add the VAT. Processor sells steel to a rolling company, add the VAT. Rolling company sells rolled steel to auto company, add the VAT. Auto company sells car to wholesaler, add the VAT. Wholesaler sells car to dealer, add the VAT. Dealer sells car to consumer, add the VAT.

US produced good will be so expensive that no one can afford to buy them. It will put an end to what is left of the US industry.

And how does hyper inflation affect the retired person living in Mexico? Your retirement check will be virtually worthless. You will be poorer than your maid or gardener.

Rufus

[jimmiller]

It appears that the Obama administration's ability to print money is unending. Remember the German inflation of the 1920's; that is our future. The US's national debt will be paid with the printing press.

The Federal Reserve cannot manipulate the money supply any more by fiddling with the interest rate. Money flows from areas of low interest to areas of high interest. We now live in a world economy, and money moves in a twinkling of an eye.

Bank of America lent their TARP funds to China. Chinese banks then lent the money back to the US consumers by way of high interest bank cards.

The situation will get worse when the congress impliments a value added tax. This increases the price of US produced goods at every step of production. Buy ore, add the VAT. Refine steel and sell it to a processor, add the VAT. Processor sells steel to a rolling company, add the VAT. Rolling company sells rolled steel to auto company, add the VAT. Auto company sells car to wholesaler, add the VAT. Wholesaler sells car to dealer, add the VAT. Dealer sells car to consumer, add the VAT.

US produced good will be so expensive that no one can afford to buy them. It will put an end to what is left of the US industry.

And how does hyper inflation affect the retired person living in Mexico? Your retirement check will be virtually worthless. You will be poorer than your maid or gardener.

Rufus

The US money supply -M2- has actually been shrinking for several months and is only 6.6% above a year ago. Hardly the catastrophe you describe. Here's the link: http://research.stlouisfed.org/publications/usfd/page6.pdf

But even if you are correct in your predictions, that has nothing to do with a currency being a reserve currency.

[Doolittle]

Running the money printing press will get ya every time.

While I won't argue that printing more $ is not beneficial to the value of the dollar, I will point out that the dollar was lower in value a couple of years ago, long before the printing began.

[Ajijic]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4x9dIJsPn4U

Meanwhile C$ is at 96.7 to US$ and highest ever against the MXN peso. I thought this would bring Canadians to Mexico but many Canadian friends are saying the negative Mexican publicity is creating fear and is driving tens of thousands to Florida and other southern states with the C$ approaching parity.

[RVGRINGO]

I remember when the bad guys in Florida targeted Canadians because they knew that they weren't armed and couldn't shoot back. I'm sure that they'll be safer at Lakeside.

[Ajijic]

A good move if Calderone can get it approved.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aCkvArgCzmPc

[tomgates]

If you study history, you will find that unless the US is defeated and conquered militarily, the US dollar will continue to be the number one reserve currency.

[jimmiller]

If you study history, you will find that unless the US is defeated and conquered militarily, the US dollar will continue to be the number one reserve currency.

The dollar is the major reserve currency for three main reasons: 1) the US economy is large,so other countries can maintain large amounts of their reserves in dollar-denominated investments which provide maximum liquidity; 2) the US has a good history of providing a good legal environment so that foreign investors know that their money won't be stolen through regulation,seizure,or some form of arbitrary action; and, 3) the US has generaly managed its monetary policy to permit a positive return on investment,even during the inflationary times of the 1980`s.

If any of those factors should change unfavorably,the US dollar would lose its importance as a reserve currency. It wouldn't require a military defeat to do it.

The other question is where would the money go? If China decided to move its trillion dollars of reserves,where will they invest it? Venezuela,or Iran maybe? I doubt it. The Euro would be a good candidate,but it wouldn't require a military defeat of the US.

[Mainecoons]

You're speaking of the past, not the current unprecedented situation of wholesale running of the printing press. And I wouldn't be too sure of #2 with this bunch, either.

Huge energy and trade deficits on top of huge budget deficits. Something has to give.

BTW, oil is above $80 again, good for Mexico but probably bad for U.S. dollar exchange rate, particularly if the budget package passes in Mexico. Don't be surprised to see 10 Pesos to the buck again real soon.

[jimmiller]

You're speaking of the past, not the current unprecedented situation of wholesale running of the printing press. And I wouldn't be too sure of #2 with this bunch, either.

Huge energy and trade deficits on top of huge budget deficits. Something has to give.

BTW, oil is above $80 again, good for Mexico but probably bad for U.S. dollar exchange rate, particularly if the budget package passes in Mexico. Don't be surprised to see 10 Pesos to the buck again real soon.

What "wholesale running of the printing press" are you referring to? Data please,rather than broad,un-substantiated generalizations.

Here is a link to the Federal Reserve of St. Louis http://research.stlouisfed.org/publications/usfd/page6.pdf

It shows that money supply has been shrinking in recent months, is flat over six months,and has increased by a whopping 6.1% over the last year. What has been happening is that people have bailed out of private investments and bought treasury securities while the Fed has bought private securities from the Treasury and others,like mortgages. The net increase in the money supply has been minimal from what it would have been otherwise (normally it increses 4-5%)

[tomgates]

This comes from the Oct 23 Gartman Letter:

With each passing day it seems we become more and

more disconcerted by the disdain with which the US

dollar is being treated by investors abroad. The dollar

is now spoken of in disdainful, disparaging terms in a

manner we never really expected to see the US dollar

spoken of. The US remains the world’s dominant

military power certainly, but in the course of the past

decade, and certainly with increasing speed in the past

nine months, the dollar is spoken of in terms of derision

rather than respect, with that derision becoming ever

louder and more vehement. Quite honestly, why

should it not be spoken of in such disdainful terms, for

the government is profligacy personified, lurching ever

left-ward and creating deficits that we would never,

ever have dreamt possible? When the “Jeremiads” of

the “Hard Money” disdainful right-wingers become the

order of the day, times are difficult at best. But we shall

have to admit that the anti-deficit brawling of the “Hard

Money” crowd that seemed for the past many decades

to be nothing more than screeds is now coming true.

Their fears… which got them little other than notoriety

on the speaking circuit… always seemed to us to be

useless cries in the desert, and those who followed

them for decades watched as their economic

bearishness served them ill, not well. But now their

wailing and gnashing of teeth is serving their followers

well, and rather than being the fact that stopped clocks

are right twice a day, perhaps those on the “Hard

Money Far Right” are on to something as the deficit

does not simply rise, it explodes. As borrowing is not

large, it is enormous, and as foreign investor fears

about the future of the economy are not merely rising,

they are gigantic and are growing by the hour… by the

day.

Which then brings us to the report this morning that

Russia and India have apparently been holding talks

centred upon using the Ruble and the Rupee for all

future bilateral trade, by-passing the US dollar as the

“translation” currency of choice and thus diminishing

yet again the dollar’s position as the world’s premier

reserve currency.

According to the reports, the

larger banks in both Russia and

India such as VEB, Sberbank and

VTB on the Russian side and

State Bank of India, Union Bank

of India and Canara Bank on the

Indian side, have met and have

concluded that it is wise and

simple to conduct international

trade in their own currencies and should proceed in the

future to do so. To this end, the Russians have been

calling… loudly and often…for the world of

international trade to be materially less dependent

upon the US dollar in all instances, and has been

reducing the dollar’s share of its $400 billion of

currency reserves to less than 50% from well above

80% only a few years ago. To “trade” internationally

with India, and to book that trade in Rupees and/or

Rubles is simply one more step toward the

marginalization of the US dollar as the world’s reserve

currency. These days it seems that there is one “babystep”

here and another “baby step” there in this

seemingly inexorable process. Sadly, the Obama

Administration seems utterly unaware and/or worse

utterly unconcerned about these steps. Eventually

“baby steps” become marching orders.

[Mainecoons]

Here you go, Jim:

Trade deficit clock:

http://www.americaneconomicalert.org/ticker_home.asp

Budget defict clock, headed for 1.7 trillion this year:

http://www.americaneconomicalert.org/ticker_home.asp

The commentary is dated but the clock is up to the second.

The Federal deficit has TRIPLED under the current U.S. administration. That is a FACT

Now as to the money supply:

From Wikpedia:

In economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time.[1] There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits.[2][3]

Although the debt is piling up, the banks are not lending and people are not borrowing, hence the money supply is TEMPORARILY not growing:

Other two factors that must come together to create money relate to bank lending. Banks must make loans to people that want to borrow money. If banks do not make loans, money supply does not grow. If people do not come into the bank to borrow, then loans cannot be made. Neither people nor banks are interested in loans, apparently. Since May, U.S. bank lending has fallen by $2.5 trillion due to the combination of these forces. That reduction in bank lending reduces the U.S. money supply.

http://www.financialsense.com/editorials/schmidt/2009/0831.html

You are confusing a TEMPORARY situtation caused by a recession with the certainty of inflation due to all that new money being created by the Federal deficit as soon as there is some economic recovery.

Finally, here is the Washington Post confirming exactly what I told you: The Federal Reserve is monetarizing the debt by printing money:

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031802283.html

History is absolutely consistent in what happens when a nation embarks on this kind of economic behavior--runaway inflation followed by economic collapse. The U.S. has become the biggest Banana Republic in the history of man. This has been coming since Lyndon Johnson and has now gone exponential.

There ain't no free lunch, Jim.