Six Major Reasons Why the Dollar Won't Collapse

[Twisted Titan]

Take a major bong hit on that Hopium


This year, longtime bear and well-known economic forecaster, Gary Shilling, recently made a splash in the financial community by turning positive on the U.S. economy and dollar (http://www.financialsense.com/contributors/john-mauldin/six-reasons-bullish-america). Given the lingering amount of pessimism by many investors after two major stock market crashes and the fear of another repeat event, there’s at least one thing that Shilling makes clear that investors SHOULDN’T be worried about happening anytime soon: a collapse of the U.S. dollar


Given that a currency reflects the strength of the nation that issues it, it's important to consider the following six reasons why Gary believes the U.S. dollar will maintain its strength as the global reserve currency for many years to come. The following are taken from his exhaustive study of dominant world currencies going back to ancient Rome along with comments made in his recent interview with Financial Sense (http://www.financialsense.com/financial-sense-newshour/a-gary-shilling/advantage-america-best-place-investment).



1. Economic ProductivityAmong developed nations the U.S. has had the strongest productivity over the last decade. For example, the U.S. averaged 2.2%, Japan 1.6%, U.K. 1.2%, Germany 0.9%, Canada 0.9%, France 0.8%, and Italy flat. When you consider the deflationary trends now at work in emerging markets and other developed nations, Gary believes that U.S. productivity will continue to outperform and help keep the dollar strong

.
2. The World’s Largest EconomyThe dominant currency is typically found in the world’s largest economy and the U.S. is head-and-shoulders above the rest. As Gary points out, in 2012 U.S. GDP was $15.7 trillion. The second closest, China, was nearly half the size at $8.2 trillion. If you think China is about to overtake the U.S. in terms of size, Gary says “China would have to grow 12% a year for 20 years to catch up…it’s now down at about 7.5% growth and as the Chinese economy shifts away from being driven by exports…away from infrastructure, away from heavy borrowing, and so on, their growth is going to grow even more slowly.


”
3. Deep and Broad Financial MarketsHere, Gary writes, “Internationally, money—especially today when it can be transferred anywhere in a split second—wants to be where the action is. That requires not only a powerful and large economy but also deep and broad markets in which to invest. Today, the U.S. Treasury market trumps all others in size and, in the eyes of investors…, in safety as witnessed by the mad rush into Treasury bonds in times of recent global trouble."
Similarly, he states, “American stock market capitalization is four times that of China, Japan or the U.K. and is over three times the Eurozone's…Almost 50% of Treasuries are held by foreigners but only 9.1% of Japan's government net debt is owned by non-Japanese. According to the IMF, 62% of the world's currency reserves are in dollars. The 24% in euros is down from 29% four years ago. Foreigners so love investing in the U.S. that at the end of 2012, it exceeded U.S. investment abroad by $4.4 trillion, up from $4 trillion a year earlier.”



4. Free and Open Financial Markets and Economy“Investors want to go where it’s free and open; they don’t like China. China periodically freezes their currency. They did that for example during the Great Recession. They had let it float up but then they froze it when they got worried. They’re now letting it float a bit, but they turn it on, they turn it off. Other currencies are much less free to people moving out. They typically manipulate currencies in a lot of places. The Swiss, for example…froze their currency 1.2 to the Euro when everybody wanted to be in the Swiss Franc because they worried that a strong currency would kill their exports to the Eurozone, which is their major trading partner.


”
5. Lack of Substitutes“Things can change over time but one statistic that I think is very important is global forex trading. Now, there’s two sides to this so the numbers add up to 200%, not 100%, because for every sale there’s a buy. But if you look at the trading, in 2001, the U.S. dollar accounted for 90% of all the daily trading in currencies. In 2013, it’s down from 90% to 87%. But if you think of all that’s happened in that time, the euro currency had come in, China has gotten stronger, etc. But it still has only declined 3 percentage points and it’s way ahead of anything else. The second one today is the euro at 33% versus [the USD at] 87%, the yen 23%, sterling 12%—in other words, this is the currency that people transact.



”
6. Credibility“The sixth characteristic is credibility. And that’s the only one where you can say there’s been any questioning of the dollar. And it is true that last year that Standard & Poor’s did downgrade the U.S. from triple AAA to AA+, but that hasn’t really hurt. You might remember that when they did that, Treasuries actually rallied…and it has not changed the willingness of foreigners to put money into dollar denominated assets. So, the credibility issue is the only one that is not absolutely triple-A, but it hasn’t had any decided effects so far.



”

[Shami-Amourae]

It will only collapse if the Jews want it to or Bitcoin takes over.

[kiffertom]

or if opec quits taking it for oil!

[Cebu_4_2]

OPEC is ruled by the jews.

[mick silver]

dam thats some good weed , they need a crash . dont they keep saying theres way way to many sheep in the world . plus you cannot have more on welfare then you have working this will not play out well

[mamboni]

There are problems with his thesis. For one, we cook the books. Productivity in the US is not the highest in the world - I don't believe it. As for GDP, this is a goosed highly manipulated number that means little as it is based on small samples and phone surveys. And it includes consumption and government spending, hardly the makings of a healthy growing economy. China's GDP is very understated. I believe that China has already surpassed the US in size because it is now the largest import-export economy in the world. And that's what really matter in a global economy. Structurally, the US is screwed; the economy will be consumed by welfare babies and legions of toothless boomers. It will take time to lose it to be sure, but the dollar's reserve currency status is on probation. The author says collapse: what does that mean? The dollar has been "collapsing" since 1913. And in today's interconnected world where $trillions move in seconds, any threat of a dollar devaluation and/or a yuan peg to gold would lead to accelerated dollar selling by reserve holders.

[palani]

No need to actually wait for a collapse. As long as you believe in the currency then it has not collapsed but as soon as you turn your back on it and seek more stable currency the old one goes away. In other words the collapse is up to you.

I see on the news this morning the restaurant workers are picketing for a $15 wage. Should this come to pass they will be doing their part to make the currency go away.

[Horn]

Another reason is in those countries that allow it as legal tender streets.

any economy is actually strengthened by a competing currency,

even if it they are both generally week and dragging them down to hell.

[Spectrism]

Pure horseshat. The writer talks about the US Treasury bonds as being the safe haven-


Today, the U.S. Treasury market trumps all others in size and, in the eyes of investors…, in safety as witnessed by the mad rush into Treasury bonds in times of recent global trouble.


He also talks about a growing economy in the US-


Among developed nations the U.S. has had the strongest productivity over the last decade. For example, the U.S. averaged 2.2%, Japan 1.6%, U.K. 1.2%, Germany 0.9%, Canada 0.9%, France 0.8%, and Italy flat. When you consider the deflationary trends now at work in emerging markets and other developed nations, Gary believes that U.S. productivity will continue to outperform and help keep the dollar strong


Take away the $80b+ money printing each month and then tell me where the growth is. We sent our manufacturing capability & technology to China. We have built up the dragon to come back and eat our children. Now we have moronic puerto ricans picketing the burger joints for a living wage. These uneducated, self-important idiots think that flipping burgers should be a higher paying job. It was barely a part-time job for high school students. The growing GIBSMEDATS in the spawning supplemented lowlife ghettoes will be the easily manipulated authorization for the global controllers destroying the real producers of Amerika.

Take away the government jobs, welfare, SNAP, government grants & subsidies, and you will see a better picture of the depression we have been in for 5 years.

[Ares]

This year, longtime bear and well-known economic forecaster, Gary Shilling

Shilling for the bankers? At least he has the name for it.

[Ponce]

If the chair on which the fat man is sitting and not reinforced, sooner or later, it will collapse. The US is to fat and the dollar to weak.

V

[Hatha Sunahara]

This is a propaganda piece. Tell all this to the unemployed people--roughly 1/3 of the work force. It sort of implies that we will have very high unemployment and no change in government policies, and that the MSM and government can keepus all hypnotized indefinitely. Believe that at your own risk. This is a PM forum here.


Hatha

[EE_]

This is a propaganda piece. Tell all this to the unemployed people--roughly 1/3 of the work force. It sort of implies that we will have very high unemployment and no change in government policies, and that the MSM and government can keepus all hypnotized indefinitely. Believe that at your own risk.
This is a PM forum here.
Hatha

Do the unemployed people really matter...certainly not to the rich?
Could there be enough people with money to drive the economy themselves?
This is a PM forum? Coulda fooled me!

[EE_]

If the chair on which the fat man is sitting and not reinforced, sooner or later, it will collapse. The US is to fat and the dollar to weak.

V

Maybe in 20 years? You'll be just hitting your prime.

[Spectrism]

Just remember this: when you are about to slaughter an animal, you don't want to get it excited by the blood of others or connect the dots for its impending doom. Goodfellas butter up their targets before they whack them.

Beware when all say things are getting better.

1Th 5:3 For when they shall say, Peace and safety; then sudden destruction cometh upon them, as travail upon a woman with child; and they shall not escape.
1Th 5:4 But ye, brethren, are not in darkness, that that day should overtake you as a thief.

The birthing process only goes one way. As time continues to flow into the future, so a new thing is birthed into the world. The process is undeniable and imperative. The energy is used by Obama as a surfer uses a wave- "FORWARD" is his mantra after "HOPE and CHANGE" to lull the cattle to peaceful assurance.

The reality will be played out as the voice behind the teleprompter will ride the wave for peak energy but every wave has its end. Those willingly riding along see the soft warm sands of the shore in their deceived view but the wave moves them steadily toward the crashing rocks just beyond their view over the previous wave.

Liars & shills, deceived deceivers wooing a stiff-necked hollow people, all flowing inexorably toward the end. Blinded, they cannot see the signs. Perverted, they cannot digest truth. Proud, they cannot admit confusion. Selfish, they insist on injustice to serve their desires. Through the chute they ramble, head to ass to head, moving as one and believing they are fine. The voice says all is well. The knocker keeps knocking.

But this time is different. Yes... very different. The knocker can only fix one at a time. More are coming swiftly. Wholesale slaughter is fast approaching as the woman in travail. The birthing will be messy. The harvest will not spare many and soon all will be collected. Only a few will avoid the death chutes. Only a few will be humbled to see the signs, hear the truth and be set free.

[Ponce]

Maybe in 20 years? You'll be just hitting your prime.

I have never seen a fat old man, have you? ......... as you grow older you grow smaller.

V

[Sparky]

There are two simple reasons the Dollar won't collapse any time soon:

1) The Dollar is valued against a basket of other fiat currencies. In order for the dollar to collapse, there would need to be a sound alternative. Every other country that matters has similar or worse fiat/debt problems as the U.S.
2) What really backs fiat currency? Military strength and natural resources. The U.S. knows this, and is committed to keeping its military untouchable. They'll tell you it's to defend against terror, but it's really to defend the dollar. On top of that, our natural resources are diverse and vast.

Don't confuse currency value with purchasing power. Currencies collapse, while purchasing power erodes. The USD is at no risk of collapse; it is only at risk of eroding purchasing power.

[Ponce]

Sparky? as you know many countries are saying bye bye to the green back by forming their own monetary innerstructure by having other currencies......China is buying TONS of gold and by doing this other countries will look up to them as the next world power.........let's face it amigos, the US is done for.....as Rome, England and others........the only power that we now have is the power of the gun and that cannot last.

V

[mick silver]

are not all currencies own by a few people that own the fed in ever country , so would they all not be the same ? rothschilds .............



ROTHSCHILD CONNECTIONS




OTHER CONNECTIONS












Fed. Reserve Bank of N.Y. which
controls all other Fed.R.Bks. Humanist of
the Yr 1978

[Horn]

Sparky? as you know many countries are saying bye bye to the green back by forming their own monetary innerstructure by having other currencies......China is buying TONS of gold and by doing this other countries will look up to them as the next world power.........let's face it amigos, the US is done for.....as Rome, England and others........the only power that we now have is the power of the gun and that cannot last.

V

Well the yuan just unpegged from the dollar, that should set some wheels in motion.

Who knows they may start accepting dollars on the street in China now...?

[Sparky]

Well the yuan just unpegged from the dollar, that should set some wheels in motion.

Who knows they may start accepting dollars on the street in China now...?

Just unpegged? It unpegged in 2010.

China is positioning itself to be a big player in the financial world. But they are a political mess. Fiat requires faith, and the Chinese government will have to prove themselves as trustworthy to the rest of the world before the yuan can become the world's reserve currency. They have a long way to go. Maybe in a generation or two.

[Horn]

Just unpegged? It unpegged in 2010.

Unpegged as in not playing, not unpegged as in floating freely along with, or fully unanchored <--- if that's a word. Not bought in.

China Is Quitting the US Dollar


Now, seemingly out of the blue, China has announced that it would rein in its purchase of US dollars. "It's no longer in China's favour to accumulate foreign-exchange reserves," Yi Gang, a deputy governor at the central bank, said on Wednesday.

http://motherboard.vice.com/blog/china-is-quitting-the-us-dollar

[Silver Rocket Bitches!]

SDRs have been in place for a while now and the military is being purged as we speak. The only thing keeping the dollar alive at this point is psychological. No fiat can live forever. Next comes the iron fisted price controls as they try to protect their interests at all costs. S'gonna get ugly.

[Ponce]

Even if you were to dress a monkey in a tux it will always be a monkey, I don't see any hope for the US, either now or in the future...we are now a third world country......the military aside.

C

[mick silver]

are not all currencies own by a few people that own the fed in ever country , so would they all not be the same ? rothschilds

[Neuro]

The dominant currency is typically found in the world’s largest economy and the U.S. is head-and-shoulders above the rest. As Gary points out, in 2012 U.S. GDP was $15.7 trillion. The second closest, China, was nearly half the size at $8.2 trillion. If you think China is about to overtake the U.S. in terms of size, Gary says “China would have to grow 12% a year for 20 years to catch up…it’s now down at about 7.5% growth and as the Chinese economy shifts away from being driven by exports…away from infrastructure, away from heavy borrowing, and so on, their growth is going to grow even more slowly.
Actually this is not true. If China grows at current rate of 7.5% and US at 2% in 20 years China's economy would be more than 50% bigger than us 1.055^20 =300%.

[singular_me]

There are problems with his thesis. For one, we cook the books. .
enough said :)


Among developed nations the U.S. has had the strongest productivity over the last decade.
Yeah, thanks to QE...The author is a keynesian, isnt he? Actually I am surprised to see that it is published on the financial sense, a site I used to visit a lot in the past and that seemed to be a place for anti-fed economics

[mamboni]

Yuan of 2013 is equivalent to the Yen of 1960. If you have cash in the market, you should convert it to Yuan here: http://tinyurl.com/ky6djg9

The Yuan will increase 6 fold relative to the dollar and achieve 1:1 convertability within 10 years. You will not get anywhere near these gains from US Treasuries.

[Spectrism]

Yuan of 2013 is equivalent to the Yen of 1960. If you have cash in the market, you should convert it to Yuan here: http://tinyurl.com/ky6djg9

The Yuan will increase 6 fold relative to the dollar and achieve 1:1 convertability within 10 years. You will not get anywhere near these gains from US Treasuries.

LOL... in a fair world, maybe. But we are talking about slant-eyed thieves who will very soon say to the world: The People's Republic of China thanks you for donating all your factories, technology, trade secrets and supplies to us. All Yuan are belong to us. All you bases are belong to us. All you politicians are belong to us.

[Sparky]

Yuan of 2013 is equivalent to the Yen of 1960. If you have cash in the market, you should convert it to Yuan here: http://tinyurl.com/ky6djg9

The Yuan will increase 6 fold relative to the dollar and achieve 1:1 convertability within 10 years. You will not get anywhere near these gains from US Treasuries.

I could see this being a good investment, but I doubt 6x; I'd guess 1.5x-3x. Almost certain to beat the tar out of US Treasuries. But even at 6x, it means the dollar still won't have collapsed. It's not really a collapse unless they stop offering the currency conversion entirely.

[Spectrism]

War is in the air. We have maybe 3 years left in this world. Could world war last as long as two? It is even possible that the end game will go on without the US, which is reduced to tribes of warlords.

If we are in the last days, we are overdue for another birth pang.... some major calamity or group of events should be near. We need to figure out a timescale for major events.

Anyway... I see China as getting more aggressive to the point of stepping on anyone that gets between them and resources. If I were Australian, I would be concerned. When they step across the big line, currencies won't mean anything.

[mamboni]

LOL... in a fair world, maybe. But we are talking about slant-eyed thieves who will very soon say to the world: The People's Republic of China thanks you for donating all your factories, technology, trade secrets and supplies to us. All Yuan are belong to us. All you bases are belong to us. All you politicians are belong to us.

I'm not happy about America's decline. For my entire life America was the undisputed master and leader of the world. We had it and we did it all. But we've blown it all and living too high and forgetting all the wisdom of our forefathers. China is in the ascendancy and I have to embrace that reality if I'm going to provide for my family. Sadly, my children and grandchildren will come of age in a world where America is a second rate power and just another country. It is what it is.

[EE_]

I'm not happen about America's decline. For my entire life America was the undisputed master and leader of the world. We had it and we did it all. But we've blown it all and living too high and forgetting all the wisdom of our forefathers. China is in the ascendancy and I have to embrace that reality if I'm going to provide for my family. Sadly, my children and grandchildren will come of age in a world where America is a second rate power and just another country. It is what it is.
At least you have hope that's all it will be. I think our situation is much more grave then that.

[Jewboo]

I think our situation is much more grave then that.



It is.

[Rubberchicken]

Whatever you want to make of the currency talk whether it be yuan, bitcoin, gold,or dollar they are two steps ahead and you are one step behind. Get used to it. Your not in the club...

[mick silver]

there 30 years ahead we are 30 years behind

[7th trump]

I'm not happy about America's decline. For my entire life America was the undisputed master and leader of the world. We had it and we did it all. But we've blown it all and living too high and forgetting all the wisdom of our forefathers. China is in the ascendancy and I have to embrace that reality if I'm going to provide for my family. Sadly, my children and grandchildren will come of age in a world where America is a second rate power and just another country. It is what it is.

I dont beleive America is going anywhere.
America was a power house before the dollar became a reserve currency.....it'll stay a powerhouse even after the dollar loses its reserve currency.
Money isnt what makes any country a powerhouse.

America's political problems will reduce once the reserve status goes overseas.
Dont forget "who" flocks in hoards to money!
I say good for the chineese who love communism.....zionist, communism and money all go hand in hand.
China can have all the cursed money changers.
It's a blessing for America not to hold the reserve status and the zionist to leave.

[palani]

I dont beleive America is going anywhere.

America is a figment of your overactive imagination.

[Spectrism]

Amerika is burnt toast. If I may wax "religious" for a moment, all the nations of this world throughout history rose and fell for reasons. The enlightenment and progress to civilization happened when people embraced the christian message. Religious cults that perverted it pushed nations into darkness and corruption.

America was blessed as a land of the free wherein the people lived generally good lives and worshipped God. They expanded the true Church in America and sent missionaries to other countries. Those days are gone. Now Amerika has turned firmly away from God. The blessings of liberty, freedom, truth, peace- withdrawn from an evil people. Wealth and comfort are artificially supported by a crumbling structure. Time is almost out. The facade is wearing thin.

As ancient Israel was overrun by savages when they turned from YHWH, so Amerika will be overrun... and it is already happening.

[7th trump]

America is a figment of your overactive imagination.

We all know who has the overreactive imagination.

Did you not say you were homeless, but yet sleep under a roof?

[7th trump]

Amerika is burnt toast. If I may wax "religious" for a moment, all the nations of this world throughout history rose and fell for reasons. The enlightenment and progress to civilization happened when people embraced the christian message. Religious cults that perverted it pushed nations into darkness and corruption.

America was blessed as a land of the free wherein the people lived generally good lives and worshipped God. They expanded the true Church in America and sent missionaries to other countries. Those days are gone. Now Amerika has turned firmly away from God. The blessings of liberty, freedom, truth, peace- withdrawn from an evil people. Wealth and comfort are artificially supported by a crumbling structure. Time is almost out. The facade is wearing thin.

As ancient Israel was overrun by savages when they turned from YHWH, so Amerika will be overrun... and it is already happening.
Not going to argue with you Spec.
You know as well as I know time is short.
I'm coming from the view point that America isnt going to be destroyed and something else takes it place before judgement falls.
Time is way to short for that.
America is already being punished.....we are being gutted by political savages that God has allowed, but that doesnt mean america is overtaken by foreign forces.
God smashes the invading forces that will come from the north..........they never reach American soil.

[EE_]

http://www.youtube.com/watch?v=cUT-XOKJ5mY#t=677