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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: dybdahl who wrote (7176)	5/12/2008 6:04:57 AM
From: Real Man	Read Replies (2) \| Respond to of 71456

Yes, you can plot things in logarithmic fashion. However, it's not always justified. The current World currency system is relatively new by historic standards. Indeed, a "reserve currency" enjoys benefits other currencies don't. Despite the Euro, the global share of the dollar as a reserve currency is still much higher than in 1995, the previous dollar bottom. Now we have the Euro. The toughness of Trichet can be rationalized. The Euro was not introduced with the purpose of settling European trade, rather, it was introduced to compete with the dollar as a reserve currency. As such, trust in reserve currency needs to be built before the benefits (printing and distributing) can be reaped. However, eventually this will be done. The "reserve currency" system is certainly most unfair, as the country that can print a "reserve currency" enjoys temporary benefits others don't, such as running a huge current account deficit for quite some time without seeing a currency crisis. My personal opinion is that if the dollar based system collapses, perhaps, the World will return to more fair practices, such as the gold standard, but that, of course, might not happen - having access to the printing press is too convenient. Nevertheless, a dollar crisis is a crisis of the global reserve currency, and, by extention, of the global reserve currency system. Thus, the latter could collapse. Note that despite the fact that the gold standard has been gone for a really long time - perhaps, as long as 70-80 years (the first "wave"), most Central Banks still hold huge quantities of gold.