Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: zonder who wrote (267304)	11/14/2003 3:42:23 PM
From: GraceZ	Read Replies (2) of 436258

Do you feel it was America's huge growth per annum that made the USD the reserve currency of choice? No. The USD became the reserve currency primarily because everyone had less faith in the other liquid currencies. Other currencies might have been seen as more stabile (Swiss Franc) but few currencies had large enough markets to be sufficiently liquid for the huge flow of funds that now occurs between nations. Also, a large portion of the developed world had (and still has) a vested interest in having the dollar be the reserve currency since we send so many of our dollars abroad to buy their goods. If people are starting to lose faith in the $ as a reserve it is because we've become increasingly more socialist while the former communist countries are becoming more capitalist. I am not sure I agree with you that Eurozone has to be more capitalistic for EUR to gain more space in the reserve coffers of the world. Socialist countries have a natural bias towards inflation, everyone trying to get a little of their "fair" share from those that are the most productive, with government trying to hide ruinous taxes in the form of cheaper money in the future.

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