2021, the next 1971?

Discussion in 'Currencies' started by leo25, Jun 19, 2020.

  1. leo25

    leo25 Well-Known Member Silver Stacker

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    So in 1971 the world officially disconnected from gold. This followed by a massive increase in money supply and therefore price inflation. 50 years later and i feel we might see the world disconnect from the US dollar as the reserve/trading currency. If so i would imagine we will again see a massive increase in the money supply and price inflation.

    Many countries are getting frustrated with the USD and are looking at other options, either being direct trade/ currency swaps or an alternative reserve currency like the SDR.

    Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission


    Will the SDR replace the roll of the USD? Consisting of a basket of dominant currencies and commodities.

    These things normally take a long time to build up, but then change very fast.

    Like the saying, how did you go bankrupt. "Two ways. Gradually, then suddenly."
     
    Last edited: Jun 19, 2020
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  2. leo25

    leo25 Well-Known Member Silver Stacker

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  3. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    While I'm hedged for such an event, I don't see it happening in 2021. The reason is because Covid has affected the US more than Asia. It's strange but this is actually good for the dollar. A weak dollar is good for the dollar. Covid has allowed the Fed print more $$$ which makes the elites around the world happy. And elites run the world.
     
  4. leo25

    leo25 Well-Known Member Silver Stacker

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    Any reason is enough for the FED to issue more credit into the global system, or even no reason at all. I wouldn't say the FED issuing credit makes the elites around the world happy. They would be much happier if they could use their own currency for global trade and ditch the USD.

    The main reason the USD is the global currency is due to them having nukes at the end of WW2, so they got to dictate the rules. This will continue as long as they can be the overwhelming force in the world.

    I only picked 2021 as it's a nice clean 50 years after 1971 :). Though I'm hoping it turns out to be a lucky guess. My seconds guess will be 2071. :D
     
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  5. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    The Chinese Communist party is pushing this narrative. They want the RMB to be the world reserve currency. Good luck with that.

    IN 2019 88% of international currency transactions were conducted in US dollars.

    In 2019 4.3% of foreign currency transactions were conducted in Yuan.

    If trust in the USD is diminishing this year (and that is debatable) then trust in the Euro and the Yen and the other 5 currencies that also trade more than the Yuan is also shaky.

    I don't see the USD losing it's position any time soon because there is nothing to replace it that we know of that is trusted as much even now. There are too many US dollars held by other countries and investors for the system to let that store of international value disappear.
     
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  6. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Everyone hates the US, but this doesn't mean they like other powers even if they have to pretend to like each other in public. The US may well be the "lesser enemy", especially the powers sharing common land borders or near each other, they will eventually be arch enemies again.

    It's like Asian families where daughter-in-laws and mother-in-laws live together, they are arch enemies, but when another son gets married and a new daughter-in-law moves in, the former arch enemies become allies, but once the new daughter-in-law moves out, they become enemies again.

    The world is now in a flux, enemies may become allies and vice versa. But one thing never changes, the one closest to you is potentially your biggest enemy.
     
    Last edited: Jun 19, 2020
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  7. tongkat

    tongkat Active Member Silver Stacker

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    Here’s to your second guess!
     
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  8. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    It's clear China is now testing the boundaries all around. Skirmishes with India, ramming through with the Security Law in HK despite G-7 advised against it, and also cyber-attacking Australia. It's not unlike Japan, who thought they could win the war by attacking Pearl Harbor - at least partly because they saw the western world to be morally corrupt, decadent and weak and considered to use the societal disruption in the west to their advantage.

    If and when the push comes to shove, I will choose US dollar as the reserve currency all day long over anything to do with any communist regime.
     
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  9. leo25

    leo25 Well-Known Member Silver Stacker

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    I think everyone can agree that will never happen.

    SDR is highly integrated now and is in a position to take on roll as a reserve/settlement currency. The USD will not disappear, it will just join the likes of the Euro and Yen.
     
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  10. leo25

    leo25 Well-Known Member Silver Stacker

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    The song Hotel California describes why the RMB will never amount to anything.

     
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  11. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Actually, I think it can happen. But it may take 100 years. Of course, the top down approach in China will no longer exist by then, meaning, the existing political system won't exist. It will be replaced by some sort of republic which was the original plan in 1911.
     
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  12. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Really? Care to justify that? :D
     
  13. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    China is also targeting Canada - https://www.theguardian.com/world/2...anadians-spavor-kovrig-with-alleged-espionage

    All these actions may seem senseless but I think there's actually a logical explanation. I'm starting to think that China's actions are aimed at stemming private capital (and human capital) flight to Australia and Canada and to prevent factories from moving to India by creating a sense of instability.

    Modi is extremely smart by being very quiet on the provocation. India is already winning and there's no need to over react.
     
  14. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    Valid point - which would also be supported by Boris Johnson offering pathway to UK citizenship for all HK British National Overseas passport holders. Imagine c. 3 million HK inhabitants exodus.
     
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  15. leo25

    leo25 Well-Known Member Silver Stacker

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    This is the most open talk i can find with a country expressing their issues with the USD. But most countries have the same frustrations.

    The idea of a reserve/settlement currency being the currency of a single country is absurd. Such an idea was only possible due to the US having unmatched power at the end of WW2 when the new system was built.
    By definition, the US has to constantly run a large trade deficit in order to supply the world with USD to play in the game. Great for the US, not so great for everyone else.

    The whole video is worth a watch, but you can jump to 8:30 if you want to get to the guts of it.
     
    Last edited: Jun 19, 2020
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  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I’ve read that the IMF has been busy pursuing its agenda by encouraging the price of commodities to be measured in SDR , as per your previous post on QANTAS I think.

    I’m not sure why corporations would come on board with that.

    The IMF is impotent with regard to most advanced nations so I can’t see Western nations agreeing to use SDR as opposed to USD.
     
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  17. leo25

    leo25 Well-Known Member Silver Stacker

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    I guess us small timers are not in the club so we won’t really know what is happening in the background. We have to just wait and see when it’s presented in the future.

    In the mean time all we can do is speculate based on crumbs we find. :p
     
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  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I was trying to keep away from that idea :p
     
  19. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Not bad for 92 years old at the time. Got to admire his stamina and drive to get back in the game.

    As an aside...but related.

    [​IMG]
     
  20. Slimey

    Slimey Well-Known Member

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    1971 all over again.....I am going to invest in flares and treads.....aahhh the good old days of fashion.
     

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