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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: ChinuSFO who wrote (132502)	3/31/2013 10:57:53 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

The BRICs aren't forming their own currency. They are forming their own alternative to trading in US dollars. Today, they have to trade their own currencies into USD, then buy the goods they want, like oil, from each other. In the future, they will accept each other's currencies in payment. That's what these bilateral trade deals are all about. The net of it is that these countries will no longer need to hold large reserves of USDs because they can simply trade in their own currencies with each other. Now, if going forward, the demand for USDs goes down in banks across the world, what exactly do you think the impact on the US will be? I'll give you a deep hint. We can print dollars to our heart's content to finance our deficits now, because there is an incredible demand for USDs around the world so countries around the world can conduct their own trade with each other. When those countries start to trade in their own currencies with each other, they won't demand USDs, which means we can print as much as we want, but there won't be any demand. So what happens to prices when supply starts outstrip demand for any good that you can think of? Prices in that good plummet. So prices of USDs relative to other currencies will plummet. Sounds good for exports right? Maybe, but it will crush the purchasing power of the 99% of Americans whose income hasn't increased in a decade and is not likely to increase in the future. It will result in a massive destruction of the standard of living in this country. All of this is not longer in doubt. The probability of it happening is now about 99%. The only question is when will this happen? I think it is already happening and it will be a slow grind with occasional fast dip corrections in the future. We are already on this long term trajectory and it will grind worse over the next two decades. Some of the investments that will hold their value relative to this destruction of wealth and purchasing power will be foreign bonds of strong, fiscally conservative countries like Australia, gold, silver, real assets like John V. buys to rent out, and RMBS in the US.