Why Should the US$ Crash Before Euro?

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hillbilly's picture
hillbilly
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Why Should the US$ Crash Before Euro?

A relative Newbie here, and have been mightily encouraged and certainly educated by the wealth of comments and postings on this site; not to mention Chris Martenson Crash Course...outstanding. 

My question is having understood that the wealth of posts point to a USD$ crash (to some extent or other) as opposed to a crash of the Euro, why should this be?

There are many comments and links to relating to articles on how a number of countries in the EU are in a pivotal financial position in that they have either lent considerable % of their GDP to Eastern European (Ukraine. Latvia etc) countries or who have significant exposure to mortgages to these same countries; Austria, Switzerland and Sweden to start, With Ireland, Spain & Greece mentioned to be dire straights as well.

Surely, if things start to unwind in Europe first, then the USD may be seen as a safer haven than anywhere else on the planet. There is only so much gold we can walk around with - and it really does not lend itself to e-commerce quite yet. 

Or are we going to be converting our Euros and $'s pretty smartish into Yuan?

Thanks in advance for any comments. 

that1guy's picture
that1guy
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Posts: 333
Re: Why Should the US$ Crash Before Euro?

so, here is what I posted on another thread that is very very colse in nature....

http://www.peakprosperity.com/forum/world-getting-ready-dump-dollar/14418 

 if you check out the posts there it will give you some interesting insites. I am still waiting to see more added to my response, but it is good start. It is kinda long, I was attempting to fit a lot of info in to a small amount since I was writing from work. Here it is...

Ok, so no one here is completely wrong about the euro at all, or even the pound (I have been living here in England for three years now...USAF), but it is truly hard for me to see everyone sticking with the dollar. Let’s see if we can break this down a little bit between us all here.

Starting with the pound. In the time I have lived here I have seen it go from an exchange rate of 1.70 to one pound to as high as 2.13 to one pound. We currently sit at between 1.40-1.45 to one pound. Personally England has been following in the US's footsteps in many ways, all the way down to the housing market, and 'quantative easing'. With that said England has some rough waters ahead, but not at nearly the size or rate of debt the US is getting itself into. As Joe posted, and I believe, our administration seems to be sealing the deal for the dollar. Just look at the Omnibus package just passed...another 400 billion down the drain. At this point in time, I don’t see the pound going anywhere, they are just in for some major issues ahead, but still may be the lesser of two evils between the dollar and pound (definitely not as sharp).  

The Euro seems to be in a ton of troubles, and can see it playing out in a few ways; the complete break of the Euro (going back to individual currencies), a few countries defaulting in the very near future and possibly dropping out of the Euro zone, or even the Euro zone suffering a large amount and squeezing by. Oddly enough the exchange rate is still 1.25 to one euro. Do I see people fleeing to the euro...not right now, that’s for sure,

 Now, the one that I really think people should be eyeing is China. We all know about their HUGE reserves, and some may know about them starting to use it (hence the billions being spent in Europe, Russia, UK...). They have even recently started a 'practice' program with 8 countries making the yaun the currency of trade (all bills receivable in yaun, not dollars). This stuff is all happening now...and frankly with almost 2 trillion in reserves, it is not surprising, not to mention the fact that they are still looking at a positive growth rate this year. I’m sure not in the double digits like the past, but the fact that it is positive (they are guessing 8%) should say something really big to anyone all the while we just contracted 6.2% in the last quarter. Maybe I am crazy, but just off of that very small bit of info why would people dump their money into dollars when just off the numbers alone we are COMPLETELY insolvent. 

We (the USA) are currently 10,946,000,000,000+ in debt and counting. In the last month alone we have gone up 300billion (I have the meter on my screen and the site saved). All of fiscal 08, not counting any unfunded liabilities of course, was only at about 454billion total. Am I saying Bush was any better.....absolutely not. Now we have the rest of the 700 billion bailout, the new 787 billion bailout, the trillions on all their other programs, the (horrible) housing bill, the 200billion+ TALF, and  now to top it off they are even passing 400 billion omnibus spending bill with over 7 billion in pork barrel crap. The list goes on and on and on. By the time Obama's first term is done we are in track to hit (and surpass) 15trillion in national debt, This all started a long time ago, I think we can all agree on that, but to think that the dollar is the only 'safe haven' out there I feel is silly.  Peter Schiff made a great analogy that the government’s plan to fix everything by supplying more credit is like giving a fat kid on a diet Twinkies, it just won’t work, so for governments and people alike to bet their futures and invest in the dollar (whether it be bonds, stocks or cash) I feel is the worst choice of them all.

As sagar said, there is always gold as well. Whatever happened to that you know? If they could figured out a way to get rid of the fractional reserve system, or at least tweak it, that would at least put somewhat more of a cap on all this crazy printing, and bailouts. Rumor has it that china is even looking to amass about 4000 tons more gold in the near future, though I have not been about to find anything backing that other than rumor mills yet, but if you think about it, it would only run them about 96billion dollars to do right now, and with 700 billion in dollars in their reserves that would be a synch. Anyway, I’m guess I should get back to work, I’ll be on later tonight though, I can post some links to news and other items I have if anyone is interested. I did my best to condense a TON of info, I hope it isn’t too hard to read, lol...I'd like to hear your thoughts...

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: Why Should the US$ Crash Before Euro?
hyspec wrote:

A relative Newbie here, and have been mightily encouraged and certainly educated by the wealth of comments and postings on this site; not to mention Chris Martenson Crash Course...outstanding. 

My question is having understood that the wealth of posts point to a USD$ crash (to some extent or other) as opposed to a crash of the Euro, why should this be?

There are many comments and links to relating to articles on how a number of countries in the EU are in a pivotal financial position in that they have either lent considerable % of their GDP to Eastern European (Ukraine. Latvia etc) countries or who have significant exposure to mortgages to these same countries; Austria, Switzerland and Sweden to start, With Ireland, Spain & Greece mentioned to be dire straights as well.

Surely, if things start to unwind in Europe first, then the USD may be seen as a safer haven than anywhere else on the planet. There is only so much gold we can walk around with - and it really does not lend itself to e-commerce quite yet. 

Or are we going to be converting our Euros and $'s pretty smartish into Yuan?

Thanks in advance for any comments. 

I would not think so since the Chinese have been accused of minipulating their currency.  I can't see anyone taking interest in the Yuan. 

I want to know... Who holds the majority of gold?

that1guy's picture
that1guy
Status: Gold Member (Offline)
Joined: Jan 11 2009
Posts: 333
Re: Why Should the US$ Crash Before Euro?

Believe it or not there is big interest in the yaun. Yes they have been accused of manipulation, and probably do it. The same can be said for America. We manipulate the market on many fronts *coughs* gold, silver, hedge funds....*coughs* just to name a few.

You know who holds the gold is a really good question. I believe there is a big shift happening in that arena, but there seems to be no solid numbers on which government holds it. ETFs and paper gold doesn't help this...

Farmer Brown's picture
Farmer Brown
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Posts: 1503
Re: Why Should the US$ Crash Before Euro?

The US still has the largest gold reserves:

http://www.elitetrader.com/vb/attachment.php?s=&postid=2086287

 

(supposedly)

that1guy's picture
that1guy
Status: Gold Member (Offline)
Joined: Jan 11 2009
Posts: 333
Re: Why Should the US$ Crash Before Euro?

Thats awsome, thanks for the link.....I like that you added supposedly in there, lol

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: Why Should the US$ Crash Before Euro?

Thank you for the link!

hillbilly's picture
hillbilly
Status: Member (Offline)
Joined: Oct 6 2008
Posts: 6
Re: Why Should the US$ Crash Before Euro?

Thank you all for commenting, I appreciate your time.

I remain unconvinced that the US$ will fail before the Euro, I wonder if it is not possible for all currencies to survive, whilst we witness simply a broad based reduction in global activity/gdp of 20% or more instead of having individual winners/losers.

I find it difficult to accept that the US will stand by whilst their currency is debased whether intentional or not. Perhaps relative fortunes will remain, decreased globally and experienced by all to a similar extent. Perhaps it will be like turning the clock back to the 1960's or 70's in terms of average wealth; where we all experience a crimp on our ability to buy goods and services that we have become accustomed to over the last 15 years. Perhaps the number of luxury vehicle manufacturers globally will halve in number, so too the yacht builders and so on. Will choice in the number of similar goods be diminished.

Maybe this is where we are headed, instead of an armageddon experience of hyper-inflation and weimar experiences. 

 

 

 

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