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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Square_Dealings who wrote (42360)	12/7/2005 7:03:13 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Eventually we get to the point where dollars will not be accepted for trade in oil. What you do not get is that the pound and the YEN and probably lots of other countries including even China have worthless currencies. Chinese banks are likely insolvent. There is not a major fiat currency that is any good. That means you are essentially arguing for a return to the gold standard. There quite simply is a near zero chance of dollars not being accepted without a global seizure. As long as currencies are freely convertible, one can buy oil in them and the receiving country can convert that to gold or cotton or orange juice or silver or whatever. You are arguing that the dollar will not be freely convertable and will therefore not be accepted. I say on a relative basis many other currencies are equally bad and some possibly worse. Japan for example has a debt of 250% of GDP, the US is 70%. Which one is worse? Nearly every country is printing like mad. This is not just a dollar problem but the basis of your arguments seem to assume it is just a dollar problem. That is why I strongly disagree. We may indeed return to a gold standard but I stronly suggest that it will NOT be because dollars are not accepted. Mish