Russia threatens to dump the dollar

[Jukai]

Actually the title is a bit off, this is just the personal opinion of one man who works for Putin, not the official stance Russia is taking. If he still has his job by tomorrow we'll know if he's backed by Putin or not.

It's mutual destruction, much like a nuclear threat. Russia could hurt us bad, especially given our energy situation, but the damage they'd inflict onto themselves would be twice as bad, it would likely cause open rebellion. The fuck can they use? The EU is as angry as Russia as we are, they won't trade with Russia using anything but the dollar. China would be crushed if the dollar gets devalued. Their own currency is like, 1/30th as valuable as our dollar.

They might as well just nuke us.

 

[Byron Carter]

China's populace survives on creating stuff for U.S. consumers. Whether it's plastic junk, or your smart phone/tablet.

China needs America. America sort-of needs China, but we could survive without them.

But let me reiterate: China NEEDS America. Without those jobs, the Chinese populace would go into extreme unemployment and revolt.

Any tie Russia thinks it has with China is paper-thick. China's fate, at least for the foreseeable future, is bound to the U.S.

 

[LatFlare]

US foreign policy is so weak right now that i wouldn't be surprised if this is mere trolling on the part of the russkis aimed at eliciting another ridiculous, hypocritical response and empty threats which the US can't follow through on, and thus undermine barry's street cred.

 

[AA4142CA]

Oh shit. It's the USSR all over again. I remember being in school something like 25 years ago. And the teachers were telling about rotten west. Then for another 25 years I'v been hearing about how western economic and US dollar will collapse. In Ukraine we always considered it as a propaganda so people could get rid of the hard currency. And we all know what happened to rouble in USSR and what happened to Hryvna couple of times.

 

[Bumble_Bee_Tuna]

Oh shit. It's the USSR all over again. I remember being in school something like 25 years ago. And the teachers were telling about rotten west. Then for another 25 years I'v been hearing about how western economic and US dollar will collapse. In Ukraine we always considered it as a propaganda so people could get rid of the hard currency. And we all know what happened to rouble in USSR and what happened to Hryvna couple of times.

Much of the Russian collapse in the 1990s and the dissolution of the Soviet Union can be blamed on the libertarian Chicago-school of economics and the Cato Institute. I suppose the Soviet economic collapse is an example of a libertarian "success" story.

 

[DizzyYeahYeah]

Dump the US dollar and then move to primarily Euro trading?

I'm not even sure I know what's going on.

 

[AA4142CA]

Much of the Russian collapse in the 1990s and the dissolution of the Soviet Union can be blamed on the libertarian Chicago-school of economics and the Cato Institute. I suppose the Soviet economic collapse is an example of a libertarian "success" story.

First time I see an american blaming US for collapse of Soviet Union. I always thought it's something to do with the fact that USSR pumped everything in needless support of as they called it "brotherhood countries" ended up fighting in one of them for 9 years. Another fact is the complete refusal going towards economic reforms inside the country believing that dollar cost less than a rouble. Official rate in USSR was 1 rub= 1,30$. In truth the system they have created was bound to fold as a time bomb mechanism. Pardon for not going to deep into details.

 

[LC Shepard]

Much of the Russian collapse in the 1990s and the dissolution of the Soviet Union can be blamed on the libertarian Chicago-school of economics and the Cato Institute. I suppose the Soviet economic collapse is an example of a libertarian "success" story.

The absence of law, courts, complete anarchy and abundance of mob fights for control of assets and factories is the core of the libertarian Chicago-school of economics. I clearly remember Milton Friedman always saying "The most important thing is to have no rule of law and no enforcement of contracts that way an economy can prosper" Or was that Hayek? or von Mises? I always forget

:icon_neut

 

[Jack V Savage]

China's currency is pegged to the US dollar, which means their money loses value if US dollar goes down. They want the US dollar to stay high, so the money they lent won't go down the drain. Also, China's trade volume with US is many times bigger than the one they have with Russia. If push comes to shove, China will bail on Russia.

Not really. China has kept the yuan artificially *low* because they rely a lot on exports. "The money they lent" is just part of that process (when they want a cheaper yuan, they print more of them and then buy treasuries). They've been easing up on that, but the yuan is still below what it would be if China wasn't manipulating it. Further, the "peg" is very flexible, in that they can change it any time and frequently have. So if the dollar got cheaper (which A. would be good for us and B. wouldn't happen to any noticeable effect, BTW) and China didn't want the yuan to get cheaper, they'd just change the peg.

Also, this story seems fishy to me.

 

[Amerikuracana]

You see.. China doesn't play by the rules of an actual free market or the rules most of the civilized world played by, that is why they screwed up the game and why we should have not played with them until they learned the rules in the first place.. But a few people made money off the game falling into anarchy, and they pushed for it.

China could do wtevr and would just put a gun in the mouth of anybody in their country who did not abide, and could fluant the fact that it owns a significant portion of the U.S in its debt to parts of the world as its claim to legitimacy in wtevr it wanted to do. Don't be surprised if China and Russia partner to win this thing in the long run.. Enjoy cheap Wal-Mart stuff that breaks or is ruined when you wash it once that you really didn't get any cheaper you idiots.

 

[ZroC]

Dump the US dollar and then move to primarily Euro trading?

I'm not even sure I know what's going on.

They've been talking about returning to the gold standard.

I'm quite certain these countries see some kind of great positive out of this to even consider it as an option. There's been a lot of talk on this in the last few years. They seem hell bent on doing it, they're just trying to figure out the right way to do it. Perhaps these countries want to become self-sustaining outside of the current system. Maybe they have their own agendas have become sick of the USA looking over their shoulders at everything they do so they're willing to take a blow in order to secure their own sovereignty.

http://www.thestreetgoldevent.com/why-us-enemies-buying-all-the-gold/

President Vladimir Putin told his central bank not to "shy away" from the metal, adding, "After all, they're called gold and currency reserves for a reason."

And Hu Jintao, General Secretary of the Communist Party of China, says: "The current international currency system is the product of the past."

Others have provided clues as well.

"We're in the midst of an international currency war," said Guido Mantega, finance minister of Brazil.

"Quantitative easing also works through exchange rates… The Fed could engage in much more aggressive quantitative easing, to further lower the dollar," said Christina Romer, former chair of the Council of Economic Advisors.

Economist Kyle Bass recently spoke to a senior member of the Obama administration about its planned solutions for fixing the US economy and trade deficit. When he asked, "How are we going to grow exports if we won't allow nominal wage deflation?", the answer he got was, "We're just going to kill the dollar."

 

[Jack V Savage]

China could do wtevr and would just put a gun in the mouth of anybody in their country who did not abide, and could fluant the fact that it owns a significant portion of the U.S in its debt to parts of the world as its claim to legitimacy in wtevr it wanted to do. Don't be surprised if China and Russia partner to win this thing in the long run.. Enjoy cheap Wal-Mart stuff that breaks or is ruined when you wash it once that you really didn't get any cheaper you idiots.

It's interesting that you guys really seem to think that authoritarianism works better. The evidence very strongly suggests otherwise.

Economist Kyle Bass recently spoke to a senior member of the Obama administration about its planned solutions for fixing the US economy and trade deficit. When he asked, "How are we going to grow exports if we won't allow nominal wage deflation?", the answer he got was, "We're just going to kill the dollar."[/B]

"How are we going to (do something countries do all the time) if we won't allow (something that never happens)?" "(Something no one would ever say)."

 

[Amerikuracana]

It's interesting that you guys really seem to think that authoritarianism works better. The evidence very strongly suggests otherwise.



"How are we going to (do something countries do all the time) if we won't allow (something that never happens)?" "(Something no one would ever say)."

It only started working better when capitalism decided it was the way to make a ton of money.. That was sad and a fail in the long term outlook for capitalism itself.

 

[Jack V Savage]

It only started working better when capitalism decided it was the way to make a ton of money.. That was sad and a fail in the long term outlook for capitalism itself.

I'm not following.

 

[Amerikuracana]

I'm not following.

We may be talking about different things.

A repressive communist regime like China has historically never worked.. It should have stayed that way. But the greed above ethics which can potentially ruin capitalism took hold, and decided that repressive communist regimes were just fine, as long as they could make a few people a lot of money in the short term. China and even communism may IRONICALLY may end up winning the war for the world because of the greed over ethics problem which can arise (and did) from capitalism.

 

[Jukai]

Might want to stop the doom and gloom, Amerikuracana. After America threatened sanctions, the stock market in Russia fucking plummeted and Putin had to make a speech about how things are just fine and he isn't going to invade anytime soon.

 

[IDL]

A relevant article on the topic in relation to how the US is pretty vulnerable

..

Economist John Williams says if Russia sells its U.S. dollar holdings, it could trigger hyperinflation. Could it collapse the financial system? Williams contends, “Yes, it certainly has a potential to do that. Looking outside the United States, there is something over $16 trillion in cash, or near cash. That’s about the same size as our GDP. . . Nobody has wanted to hold the dollar for some time. The dollar, fundamentally, is weak. It couldn’t be weaker. All the major factors are against it. It’s just a matter of what would trigger the massive selling. Nobody wants to hold it. The Russians start selling, and you have China indicating a general alliance here in terms of what’s transpiring. If the rest of the world believes this is what’s going to happen, people who have been wanting to get out of the dollar for some time very easily could front-run the Russians. The scare is on. People will try to get out of it as rapidly as they can.

http://usawatchdog.com/russian-dollar-dump-could-crash-financial-system-john-williams/

 

[nefti]

The US and china are connected at the hip, the US is china's #1 export destination. Why would china destroy the economy of their #1 client? Not gonna happen.

 

[IDL]

The US and china are connected at the hip, the US is china's #1 export destination. Why would china destroy the economy of their #1 client? Not gonna happen.

The US may not have the ability to pay China. Much of what China is receiving in payments is just IOU's anyways.

I'm sure there are long term strategies at play.

 

[Jack V Savage]

A relevant article on the topic in relation to how the US is pretty vulnerable

..

Economist John Williams says if Russia sells its U.S. dollar holdings, it could trigger hyperinflation. Could it collapse the financial system? Williams contends, “Yes, it certainly has a potential to do that. Looking outside the United States, there is something over $16 trillion in cash, or near cash. That’s about the same size as our GDP. . . Nobody has wanted to hold the dollar for some time. The dollar, fundamentally, is weak. It couldn’t be weaker. All the major factors are against it. It’s just a matter of what would trigger the massive selling. Nobody wants to hold it. The Russians start selling, and you have China indicating a general alliance here in terms of what’s transpiring. If the rest of the world believes this is what’s going to happen, people who have been wanting to get out of the dollar for some time very easily could front-run the Russians. The scare is on. People will try to get out of it as rapidly as they can.

http://usawatchdog.com/russian-dollar-dump-could-crash-financial-system-john-williams/

This is ludicrous, of course. The "threat" is just a flunky of a dumb second-world thug blustering about a subject he doesn't understand and the far-right in America thinking it means something even though there's no rational mechanism by which this could harm America and no chance that it would be carried out anyway (because it would only hurt Russia).

The US and china are connected at the hip, the US is china's #1 export destination. Why would china destroy the economy of their #1 client? Not gonna happen.

That's true, but it's also true that China couldn't destroy the economy of the U.S. if it wanted to. That would require stopping people from making, doing, buying and selling stuff. There's nothing China could do that would have that effect.

The US may not have the ability to pay China. Much of what China is receiving in payments is just IOU's anyways.

I'm sure there are long term strategies at play.

All interest payments combined are 1.5% of GDP, and most of that is going to Americans. Also, the U.S. has assets that exceed the total value of its debt (that is, the country has no net debt at all).