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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: bacchus_ii who wrote (163856)	6/8/2005 10:26:18 AM
From: Sun Tzu	Read Replies (1) \| Respond to of 281500

Not all currencies are overvalued. Many are fundamentally undervalued. So I am not advocating devaluing all of them and certainly not devaluing them all to the same extent. Fundamentally the value of a currency should reflect the trade surplus and the political stability. USD is overvalued on both grounds. The single windfall for US was to get Saudis and OPEC to quote Oil in USD. This made the dollar the "fiat" world currency. There is now 3x more USD outside the US than within it. Think about the leverage this brings. A simple change in dollar policy can bring the downfall of some governments. US is also the only country whose foreign debt is denominated in its own currency. So who cares how much the debt when all you have to do is print some more. Gee if only I could print my own money! Through a network of 700 military bases around the world and a slew of covert actions, we make sure that only "friendly" regimes survive who would not dare challenge the status quo.