Iran Threatening the US Dollar
- Thread starter WoodPeckr
- Start date
If Iran switches to Euro it will be more expensive to import. The official US line is that they support a strong dollar. However, they actually prefer a sinking dollar to boost local economies and to devalue their foreign debt. It's a gamble that may work or end up like Argentina. Having said that I don't think the US can influence the value of the dollar because it is at the mercy of Asian central bankers lenders who are commanding higher interest rates to compensate for a lower dollar.
In the end I wouldn't be to worried about it because it all tends to level itself out, i.e. US increasing consumption without increasing output leads to a nation in debt that can't afford to consume anymore. At that point it will turn around and kick start local production again.
In the end I wouldn't be to worried about it because it all tends to level itself out, i.e. US increasing consumption without increasing output leads to a nation in debt that can't afford to consume anymore. At that point it will turn around and kick start local production again.
They did maintain gold reserves. A few years ago, the Bank of Canada was selling most of what it had left. I'm not sure what you would call "sizeable" but the currencies of nonU.S. dollars were only officially convertible into U.S. dollars and not gold. However, as central banks could convert U.S. dollars into gold, in a sense they were indirectly backed by gold. To be honest with you, monetary economics is NOT my area of specialization within economics. I just thought my previous post would help clarify the discussion that was going on a bit.danmand said:
I thought it was very clear, and helpful. As in having an actual professional opinion on the subject, not to mention some good facts.someone said:
I am going on recall here (from history) but wasn't it the Central Bank Of India that is credited with the tipping point on Sterling's dramatic fall? And I am sure it was a chain reaction toosomeone said:
Conspiracy Theory? Or economics fact?
"...When oil is denominated in dollars through US state action and the dollar is a fiat currency, the US essentially owns the world's oil for free. And the more the US prints greenbacks, the higher the price of US assets will rise. Thus a strong-dollar policy gives the US a double win... "
This is a particularly provocative statement..tompeepin said:
"...When oil is denominated in dollars through US state action and the dollar is a fiat currency, the US essentially owns the world's oil for free. And the more the US prints greenbacks, the higher the price of US assets will rise. Thus a strong-dollar policy gives the US a double win... "
I also thank you for your professional insights. May I ask a supplemental question, please? What was the exact nature of the "other currencies were officially convertable into $US and not gold".someone said:
I believe that Denmark, as an example, left the Sterling sometime in the 1930's, but I am unaware that the danish krone have been convertable into $US since then. I thought the danish krone was a floating fiat currency. Actually, the danish paper money until recently at least, had the statement printed on them: "convertable into gold according to the National (Central) Bank's rules" . The national bank's rules of course being that no conversion to gold was possible.
It has been a long time since I have read anything on this stuff. Perhaps, Denmark was not a member of the Britton Woods agreement? I don’t have the list of countries memorised but I’m sure there would be a link somewhere on the internet that has it. Alternatively, I don't think their would be anything to prevent them from giving you gold under the system as by fixing the exchange rate with respect to the U.S. dollar in theory it was fixed with respect to gold. Basically, countries like Canada stood ready to exchange their currencies for U.S. dollars at given rates. This kept exchanges rates with the U.S. fixed. The U.S. currency was fixed in relation to gold (I think it was at $35 or something like that). Thus, other currencies were fixed with respect to gold. i.e. if one Canadian dollar was worth one US dollar (I think it was actually worth a bit more than a U.S. dollar) and one U.S. dollar was worth 1/35 of an once of gold than one Canadian dollar was effectively worth 1/35 of once of gold. However, the B of C would only give you the U.S. dollar in exchange for a Canadian dollar. Paper currency is still a debt of the B of C but now they only give you another bill (or give you a cheque and cover it by crediting the reserve accounts the chartered banks keep with them which is just an accounting entry to them).danmand said:
Edit: I just realized that Mcluhan was posting about something different than I responded to in this part of my post so I deleted it. He may be right about India and the UK pound. It has been some time since I studied that case. However, in terms of the demanding their gold from the US I seem to remember that France played a major role in the crisis.
I just did an internet search. It seem that the currencies were pegged to gold but convertable to the U.S. dollar (as long as national currencies are convertable in terms of the U.S. dollar they were pegged to gold. I copied the following from http://en.wikipedia.org/wiki/Bretto..._Bretton_Woods_system_of_fixed_exchange_rates
"The "pegged rate" or "par value" currency regime
What emerged was the "pegged rate" currency regime. Members were required to establish a parity of their national currencies in terms of gold (a "peg") and to maintain exchange rates within 1 percent, plus or minus, of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
The "reserve currency"
In practice, however, since the principal "reserve currency" would be the U.S. dollar, this meant that other countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within 1 percent, plus or minus, of parity. Thus, the U.S. dollar took over the role that gold had played under the gold standard in the international financial system.
Meanwhile, in order to bolster faith in the dollar, the U.S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold. At this rate, foreign governments and central banks were able to exchange dollars for gold. Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar, itself convertible into gold, and above all, "as good as gold." The U.S. currency was now effectively the world currency, the standard to which every other currency was pegged. As the world's key currency, most international transactions were denominated in dollars.
"The "pegged rate" or "par value" currency regime
What emerged was the "pegged rate" currency regime. Members were required to establish a parity of their national currencies in terms of gold (a "peg") and to maintain exchange rates within 1 percent, plus or minus, of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
The "reserve currency"
In practice, however, since the principal "reserve currency" would be the U.S. dollar, this meant that other countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within 1 percent, plus or minus, of parity. Thus, the U.S. dollar took over the role that gold had played under the gold standard in the international financial system.
Meanwhile, in order to bolster faith in the dollar, the U.S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold. At this rate, foreign governments and central banks were able to exchange dollars for gold. Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar, itself convertible into gold, and above all, "as good as gold." The U.S. currency was now effectively the world currency, the standard to which every other currency was pegged. As the world's key currency, most international transactions were denominated in dollars.
That's right. And what you are seeing are people like John Snow and George W. Bush Jr. do the actual dollar intervening in a longer term, while other countries are pegging. I claim that in 2000 the "bubble" wasn't a bubble at all, but was made to look like one, so George W. Bush Jr. could weaken the US Dollar, saturate the system (with the invasion of Iraq) and boost the price of oil to highs in the upper $40.00 - lower $50.00 range. They didn't expect it to go to $70.00 and are using a "measured pace" of interest rate hikes to have that cost go lower, but not too fast, so the oil companies can make the most money before Greenspan resigns and the 2006 elections. Although they planned this to go right to 2008 as prices would drop substantially and the Republicans can "look good".
I claim the bubble was not a bubble, because individual websites were making money, the economy was booming and companies like Ebay and Google were not "sucking up" all the ad dollars people's individual sites were making on the Internet. Individual small business websits can still make money on the net, but the responsibility has shifted in which these giant overinflated behemoths suck in a percentage of making "Net Money".
George W. Bush Jr's BS of $300.00 fake tax refund to everyone (in which I never received it), was to slosh the US with US Dollars, lower the interest rates as fast as possible in a Japan style economic crash and weaken the dollar with those bogus statements "we believe in a strong dollar" and outsourcing everyone's job and income. 9-11 was a bonus for the Bush Jr. administration, to say it in horrible words. Not to mention the airline industry was to receive 10 billion dollars in bailout money, but were only given 1.6 billion. How much is Katrina getting? $62 billion?? Iraq? $200 Billion?? See what weakens the US Dollar by slushing the system with an excess. And keeping the airlines weak, keeps the US Dollaw weak. A healthy airline system creates great domestic and international business for, who else? THE UNITED STATES OF AMERICA! So Bush Jr. definately wants a weak airline industry and a weaker Amtrak industry. Build a giant bridge in Alaska for population 25 people, or a $500 million indoor Idoho Sen Grassely 5 acre greenhouse for no reason. How about forgiving all college loans, USA??
We were fine in 2000 and the US economy could withstand the dreaded 9-11 attack. What this phoney unelected government did was make it look like a bubble, rather than a "measured pace" downward. Instead they are doing a "measured pace" in the wrong directing at the cost of the middle class (who are the poor), in high gas bills, high heating bills, and wait until the $48.00/mo electric bill goes to $148/mo for a few months. Not to mention high health insurance from the illegal US health insurance industry that covers the CEOs with a bundle of fat overweight women manning telephones and notepads.
Iran is not weakening the US Dollar. If anything they are strengthening it.
Just my thought. Gyaos
I claim the bubble was not a bubble, because individual websites were making money, the economy was booming and companies like Ebay and Google were not "sucking up" all the ad dollars people's individual sites were making on the Internet. Individual small business websits can still make money on the net, but the responsibility has shifted in which these giant overinflated behemoths suck in a percentage of making "Net Money".
George W. Bush Jr's BS of $300.00 fake tax refund to everyone (in which I never received it), was to slosh the US with US Dollars, lower the interest rates as fast as possible in a Japan style economic crash and weaken the dollar with those bogus statements "we believe in a strong dollar" and outsourcing everyone's job and income. 9-11 was a bonus for the Bush Jr. administration, to say it in horrible words. Not to mention the airline industry was to receive 10 billion dollars in bailout money, but were only given 1.6 billion. How much is Katrina getting? $62 billion?? Iraq? $200 Billion?? See what weakens the US Dollar by slushing the system with an excess. And keeping the airlines weak, keeps the US Dollaw weak. A healthy airline system creates great domestic and international business for, who else? THE UNITED STATES OF AMERICA! So Bush Jr. definately wants a weak airline industry and a weaker Amtrak industry. Build a giant bridge in Alaska for population 25 people, or a $500 million indoor Idoho Sen Grassely 5 acre greenhouse for no reason. How about forgiving all college loans, USA??
We were fine in 2000 and the US economy could withstand the dreaded 9-11 attack. What this phoney unelected government did was make it look like a bubble, rather than a "measured pace" downward. Instead they are doing a "measured pace" in the wrong directing at the cost of the middle class (who are the poor), in high gas bills, high heating bills, and wait until the $48.00/mo electric bill goes to $148/mo for a few months. Not to mention high health insurance from the illegal US health insurance industry that covers the CEOs with a bundle of fat overweight women manning telephones and notepads.
Iran is not weakening the US Dollar. If anything they are strengthening it.
Just my thought. Gyaos
Where is the friendship in this thread?
As the grandson of a WWII veteran it amazes me how my neighbors to the north continue to discount the blood America has shed in defending the world against tyranny. Let me say this to all that bash the USA. When you wake up in the morning and read your paper in English (instead of German), remember your neighbors to the South of you. We have sacrificed many of our family (millions in defense of the worlds freedom from tyranny). I continue to be amazed at those that forget the Gulf War ended in a conditional surrender. Iraq was ALLOWED to retain its political leadership IF then held by the terms of the surrender. They did not, and therefore violated the terms of the surrender. The two main powers that fought in that war (USA and UK) enforced the terms of the surrender. Sorry but my weak friends in Europe do not have the backbone to stand up against tyranny as their forefathers did.
In conclusion let me summarize and say this. The USA has always been a kind neighbor to Canada and recognizes Canada as a key ally. There are those in the US that disagree with the current administrations policy but there are always disagreements in the country. The people of the US do not critize Canada or do they question their political motives. Although it appears as though some of you would prefer to be hooked to the European landmass rather than the North American one. When the world was threatened by Communism everyone looked to America to defend against it. We have spent TRILLIONS of dollars providing defenses for the free world as well as the lives of our ancestors, and children. Do not underestimate the resolve of the USA, to ahead and poke fun at the good ole USA, but remember who has provided protection to the world when it needed it most AND who paid for it.
As the grandson of a WWII veteran it amazes me how my neighbors to the north continue to discount the blood America has shed in defending the world against tyranny. Let me say this to all that bash the USA. When you wake up in the morning and read your paper in English (instead of German), remember your neighbors to the South of you. We have sacrificed many of our family (millions in defense of the worlds freedom from tyranny). I continue to be amazed at those that forget the Gulf War ended in a conditional surrender. Iraq was ALLOWED to retain its political leadership IF then held by the terms of the surrender. They did not, and therefore violated the terms of the surrender. The two main powers that fought in that war (USA and UK) enforced the terms of the surrender. Sorry but my weak friends in Europe do not have the backbone to stand up against tyranny as their forefathers did.
In conclusion let me summarize and say this. The USA has always been a kind neighbor to Canada and recognizes Canada as a key ally. There are those in the US that disagree with the current administrations policy but there are always disagreements in the country. The people of the US do not critize Canada or do they question their political motives. Although it appears as though some of you would prefer to be hooked to the European landmass rather than the North American one. When the world was threatened by Communism everyone looked to America to defend against it. We have spent TRILLIONS of dollars providing defenses for the free world as well as the lives of our ancestors, and children. Do not underestimate the resolve of the USA, to ahead and poke fun at the good ole USA, but remember who has provided protection to the world when it needed it most AND who paid for it.
Thank you for the reminder. And according to your accounting of blood, we actually should thank the russians about 100 times more, because they shed 100 times more blood than the US in defending the world against tyranny.johnwayne said:
But you are really off your rocker, if you take a discussion about the value of the US dollar as an offence against the grandsons of WWII veterans. Nuts!
I think you should go a little deaper and then you'll find the tyranny of Iraq did not violate the terms of the surrender, except for 150km range missles. That's it. What happened is when there was a "conditional" surrender, not an "unconditional" surrender, General Norman Swartzkoff, that fat idiot, said "sure, you can have helecopters with missiles". And to hear him say that as if he didn't know Iraq was going to do what they did to the Kurds and Shiates, means he's personally responsible for that whole mess. That war was made to look good, but that general took a huge risk with those forces. He was lucky they made it they way they did, but they should have either went all the way in, or occupy the south and the north, boxing Huessein in even further or force an unconditional surrender. A "conditional" surrender was for the oil companies.johnwayne said:
Today, there's no need to celebrate the Bush Jr.'s and the right wing as Republicans with their fake "mission accomplished" war. The Bush Jr. Inc administration are not really Republicans. They are a form of communists. They represent the hidden 3rd party in American politics embedded within the GOP. The "powerless" communists. And I recommend everyone laugh when Russian President Vladimir Putin answers questions for America better than Bush Jr does at press conferences. It shows strong probability that Bush Jr. is a powerless communist and Putin comes from an emerging democracy, with ridged edges, but a democracy nevertheless. Bush Jr.'s communist party ends in the 2006 and in 2008 elections. You are either with the communists by supporting Bush Jr. Inc, or you are with the Republicans, Democrats and the Independents.
Gyaos
Facts not to be forgotten: The U.S. has the 3rd largest population and the 3rd largest area in the world. Its GDP is by far the largest in the world. Its economy is the strongest in the world and has been the "engine that could" in driving the world economy for a long time. China's economy is now the 2d largest and, because it is growing faster than the U.S.'s, it may one day be the largest. Canada is the U.S.'s largest trading partner, with the U.S. buying more than 80% of all Canadian exports and providing Canada with a positive trading balance of more than $10 billion annually. Regularly, when reading threads here, I am surprised at the apparent desire of so many of those who post here that the U.S. fail. Do they have any idea what would happen to Canada if the U.S. economy fell apart?
I am concerned that the U.S. continues to import more than is exported and I am concerned that our governments (Federal, states and local) cannot control their spending. Our federal tax code is incomprehensible and, because it is, has lead to a disconnect between the taxpayer and the government. Our two political parties are farther apart than at any time in my experience. We are addicted to oil and to consumer goods we don't need. The rise in the price of oil means that most people have less to live on in real terms, even though our economy is still expending faster than the rate of inflation. If not for the increase in the price of oil, most sectors of our economy would actually be experiencing deflation.
In the wake of the Katrina disaster, we will become more focused on internal needs. Most of our trading partners will experience a decrease in our purchases; my expectation is the Canada will not - that the limitations upon softwood imports will be lifted, since so much lumber is needed.
If the repair work made necessary by Katrina increases GDP and there is any decrease in imports in real $$, Katrina may become one of the more significant positive economic factors in recent history.
I am concerned that the U.S. continues to import more than is exported and I am concerned that our governments (Federal, states and local) cannot control their spending. Our federal tax code is incomprehensible and, because it is, has lead to a disconnect between the taxpayer and the government. Our two political parties are farther apart than at any time in my experience. We are addicted to oil and to consumer goods we don't need. The rise in the price of oil means that most people have less to live on in real terms, even though our economy is still expending faster than the rate of inflation. If not for the increase in the price of oil, most sectors of our economy would actually be experiencing deflation.
In the wake of the Katrina disaster, we will become more focused on internal needs. Most of our trading partners will experience a decrease in our purchases; my expectation is the Canada will not - that the limitations upon softwood imports will be lifted, since so much lumber is needed.
If the repair work made necessary by Katrina increases GDP and there is any decrease in imports in real $$, Katrina may become one of the more significant positive economic factors in recent history.
Not so sure that Communism is the correct term for Team 'W'. I've been saying for years they represent more of a Plutocracy (the special Corporate interests, MIC, wealthy, etc.) within the USA or to some degree a type of Corporate Fascism that Mussolini espoused when Benito was in power. Communism is on the left while 'W' along with Plutocracy and Mussolini's Corporate Fascism all lie to the right.Gyaos said:
