Why Countries Are De-Coupling From the US Dollar
Once seen as the currency of the World, since 2008 the US dollar has steadily decreased in value against most currencies.
This has started a process of dollar de-coupling where nations lessen their dependence on the greenback.
The US dollar is still the currency of debt, diplomacy, and international trade.
However since the American banking crisis where effectively over 90% of US banks were bankrupted after the 2008 market crash.
The greenback has lost its appeal, as newly emerging countries are slowly becoming the engine of growth, like China.
Quantitative easing (printing money) has also affected investor confidence in the US dollar, as debts created by massive bailouts have been added to by the sale of US bonds to allow for further printing and supplying dollar notes into the global money supply.
The main concern about the real value of the greenback, is the current state of the US economy which is seeing a boom in Wall street, but a depression in main street America.
The sense that this is somehow unreal, as share prices are somehow not linked to what is really happening in the economy.
has created a mistrust of the dollar as a currency unit.
By 2012 the US will be in the highest indebted nation in the world, with a debt ratio higher than Greece or Ireland.
And the only current solution the Federal reserve has had is to print more money, and hand it to bailed out banks, who in turn are only using it to invest in the stock market- rather re-invest it in the economy in the form of loans.
Countries like China who have a massive surplus of dollars, and have helped the economy by buying bonds, are more concerned now with the implications of an economy which looks good on Wall Street, but on main street is facing a double dipped recession.
One reason the new China- Indian- Russian trade zone is in local currencies, rather than the greenback, and we are seeing a current surge in commodity prices as countries purchase commodities with their surplus dollars.
The de-coupling of the US dollar continues, as printing money is becoming less of an option for the US government, as the fear of inflation - the natural consequence of printing money, through building debts continues.
By 2012 many economist fear that if the US face another banking crisis, it will not have the funds to bail out its existing banks, neither does the average consumer in the US have the same confidence in their own currency, then they did ten years ago.
In emerging countries Indians cherish the rupee more than the greenback, whilst some Latin American countries are trading in their own currencies rather than the once sought after dollar.
There is a solution to a potential dollar crisis cited by many independent economists.
Ensure US banks use the newly printed dollar notes as loans to small businesses and consumers, rather than to prop up stock market values on Wall Street.
Start initiating austerity measures whilst opening up the US market for more competition rather than allow large corporations run the economy.
In 2010, over 40% of Americans worked either full-time or part-time in low paid service jobs- whilst thousands of small enterprises failed, but large corporations like Wal-Mart expanded.
This cannot encourage global investment, if the majority of consumers are working in survival level jobs.
De-coupling from the US dollar, could create a much lower valued dollar, whilst consumer growth in the developing world, offsets global investment in the United States.
If the greenback is to continue as a viable global currency, real change to the US economy is needed or it faces its own demise.
This has started a process of dollar de-coupling where nations lessen their dependence on the greenback.
The US dollar is still the currency of debt, diplomacy, and international trade.
However since the American banking crisis where effectively over 90% of US banks were bankrupted after the 2008 market crash.
The greenback has lost its appeal, as newly emerging countries are slowly becoming the engine of growth, like China.
Quantitative easing (printing money) has also affected investor confidence in the US dollar, as debts created by massive bailouts have been added to by the sale of US bonds to allow for further printing and supplying dollar notes into the global money supply.
The main concern about the real value of the greenback, is the current state of the US economy which is seeing a boom in Wall street, but a depression in main street America.
The sense that this is somehow unreal, as share prices are somehow not linked to what is really happening in the economy.
has created a mistrust of the dollar as a currency unit.
By 2012 the US will be in the highest indebted nation in the world, with a debt ratio higher than Greece or Ireland.
And the only current solution the Federal reserve has had is to print more money, and hand it to bailed out banks, who in turn are only using it to invest in the stock market- rather re-invest it in the economy in the form of loans.
Countries like China who have a massive surplus of dollars, and have helped the economy by buying bonds, are more concerned now with the implications of an economy which looks good on Wall Street, but on main street is facing a double dipped recession.
One reason the new China- Indian- Russian trade zone is in local currencies, rather than the greenback, and we are seeing a current surge in commodity prices as countries purchase commodities with their surplus dollars.
The de-coupling of the US dollar continues, as printing money is becoming less of an option for the US government, as the fear of inflation - the natural consequence of printing money, through building debts continues.
By 2012 many economist fear that if the US face another banking crisis, it will not have the funds to bail out its existing banks, neither does the average consumer in the US have the same confidence in their own currency, then they did ten years ago.
In emerging countries Indians cherish the rupee more than the greenback, whilst some Latin American countries are trading in their own currencies rather than the once sought after dollar.
There is a solution to a potential dollar crisis cited by many independent economists.
Ensure US banks use the newly printed dollar notes as loans to small businesses and consumers, rather than to prop up stock market values on Wall Street.
Start initiating austerity measures whilst opening up the US market for more competition rather than allow large corporations run the economy.
In 2010, over 40% of Americans worked either full-time or part-time in low paid service jobs- whilst thousands of small enterprises failed, but large corporations like Wal-Mart expanded.
This cannot encourage global investment, if the majority of consumers are working in survival level jobs.
De-coupling from the US dollar, could create a much lower valued dollar, whilst consumer growth in the developing world, offsets global investment in the United States.
If the greenback is to continue as a viable global currency, real change to the US economy is needed or it faces its own demise.
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