What will things be like if the dollar collapses?

[JaySherman]

LBN article got me thinking. Anyone care to speculate will happen domestically and what life in America will like if the dollar collapses? I can't even begin to imagine.

[proud patriot]

1. It wouldn't be fun

We are a Debtor nation right now .

it wouldn't be fun at all :-(

[NewJeffCT]

2. well, the Depression had Hoovervilles

We'd have Bushtons or Bushvilles...

[Hippo_Tron]

30. Bushtons... Bushvilles!!!!

I'm moving to Canada.

[htuttle]

3. Fuel will become very expensive, one way or another

Here's a quote from that article:

Steven DeSanctis, small-cap strategist with Prudential Equity Group said his biggest concern is that oil prices can stay high in dollar terms, as people outside the U.S. are effectively paying less.

Economies using the euro will see lower energy costs and a lift in their economies, but in the U.S. -- the world's largest consumer of oil -- companies will see profits erode.

If the dollar's value drops dramatically, it's unlikely that OPEC will be willing to take the hit of receiving a fraction of what they used to make (relatively). So they'd either jack the dollar price up, to make up for the drop in the dollar's value, or flee the dollar entirely, and start pricing oil in euros, compounding the dollar's depreciation.

Fuel would be expensive inside the US either way. That would lead to inflation in everything that uses fuel in the manufacturing and supply chain, which is pretty much everything. Food would also become more expensive, due to agri-chemicals heavy use of petroleum.

Bad news.

[Timefortruth]

8. Another reason * wants a devalued $

ANWAR, there is no amount of suffering that is too much for them to get their way.

[pscot]

10. Oil Price Spike = Economic Downturn

The correlation is very high.

[caledesi]

4. Could someone please explain "collapse of the dollar?"

What are the ramifications?

[JaySherman]

11. If the value of the dollar drops so low

foreign investors pull out, the stock market will collapse. Imported goods, which is virtually all, becoming prohibively expensive as exporters from Asia and Europe raise prices to compensate for the low value of the dollar. Oil prices, among other things, skyrocket. Interest rates also rise. So you have a situation with rapid rising inflation, but with no one having any money. Basically, The Second Great Depression.

Worst case scenario: the dollar collapse results in a global financial meltdown, creating similar political and economic conditions to those that led to the start of WWII.

This article explains it better than I can:http://www.startribune.com/stories/535/4278431.html

[myrna minx]

35. Sheesh--will we become the United States of Saudi Arabia?

That's a scarey thought. :scared:

[shanti]

38. i know someone who just returned from rome

and she said the dollar is practically worthless in europe...

[caledesi]

43. Thank you Jay. nt

[camero]

5. Think Argentina

Since the repukes are getting rid of all the circuit breakers and we have massive debt, sooner or later the foreign governments who are financing the debt will want to be paid now.


A run on the banks, hyperinflation. Consumer loans harder to pay off because of increased interest rates. You get the picture.

[amazona]

6. isn't hyperinflation good if you have debt?

It makes your debt worth less and less.

When we had double digit inflation in the late 70s and early 80s, people would run up debt knowing that in a few years the debt would be only an insignificant portion of their income and easier to pay off...so it was better to buy more house than you might otherwise, for example.

With hyperinflation, people have who saved and planned for the future are screwed. Their savings become without value. Older people on pensions or other fixed income are put into poverty and cannot recover since they can no longer work.

In hyperinflation, you are in a race to spend your money while it still has the most value.

That's about all I remember about it now.

It's pretty much a war of old against young. Older retired people would be wiped out financially with no hope of recovery. But younger people would actually benefit from this kind of economy because their student loan debt, their new house debt, etc. looks smaller and smaller next to their income.

[lcordero]

7. this is an employer's market

[camero]

14. and the jobless would be paying more for food, housing, etc.

with money that is worth less. More govt. funds going to pay debt. The 70s wasn't really hyperinflation, even though it was high. And wages rose along with prices because of govt. imposed controls.

No such luck this time.

[TreasonousBastard]

15. Hyperinflation's sorta good...

if you owe and can still pay. Nothing says your income in the inflated dollars will keep up with the other expenses. Or that you'll have an income.

If it got really, really, bad, though, they could call in present dollars and replace them with inflated ones, which means your debt is in the new dollars.

At any rate, the usual calculations of paying present costs with inflated future dollars, and washing the interest, won't count at all with all the other problems out there.

[SheilaT]

19. Hyperinflation is truly terrible.

Ordinary inflation is sort of good for people who have long-term loans as the cost of paying them back becomes significantly cheaper over time. But meanwhile, as you already noticed, savings become worth less and less over time.

Hyperinflation means prices are totally out of control. They go up and up and up with no stop. Something that costs twenty dollars on Monday is thirty dollars on Tuesday and eighty dollars by Friday. In Germany in the early nineteen twenties there was hyperinflation, and people literally had to tote wheelbarrows full of money around to pay for the anything at all.

[Yupster]

24. My guess is

inflation is how we will pay off our debts some day. I don't really see any other way.

[SpiralHawk]

34. Argentina Si

Greg Palast warned about exactly this over a year ago. He wrote about the Argentinian scenario, and said this this is likely the planned fate of the US under BushCo and cronies.

[cliss]

9. I have a friend from Switzerland

who used to say, "when the US gets a cold, the rest of the world gets pneumonia". Actually, he used a much grosser analogy, but you get the idea.

What he meant was, we're a global economy. One partner (in this case, the leading partner) can't go down without taking others with it. All of our economies are linked together through trade.

Remember how the far east asian currencies were in a meltdown a few years ago? It started with the Thai Baht, and spread to other countries. There was the fear that the Japanese Yen would go down with the others.

Take a wild guess at how badly American bankers were shaking that day.

If the dollar goes down, or at least goes down quite a bit further, we will take some other currencies down with us. We will cause chaos and instability in currency markets.

And US policymakers, in particular the sec. of the treasury, John Snow, doesn't seem to give a shit about letting the dollar go down the toilet.

Which just blows me away. And it should reinforce the notion of just how radical these guys really are.

[RebelOne]

12. I hope not. I need every cent that's in my 401K.

since I'll be retiring in the next 5 years.

[demvoter]

13. So any money that

We would hold in cold hard cash would be worth ...ZERO?
I had heard that gold would be the only thing that would hold its value?
Scary thought.

VOTE DEMOCRAT!!

[lotteandollie]

You might consider real estate.

If you are concerned about inflation, then stay away from long term bond funds, stocks might be a better choice. I am starting to get some real estate. I still think a good mix of all sorts of assets is the way to go. I do see inflation picking up.

[DoNotRefill]

23. Nope....

all commodities would retain at least SOME value. Cash money, on the other hand, would be worthless.

People with lots of "stuff" can always use things for barter. Of course, if you're having trouble putting food on the table, some commodities (like consumer electronics, cosmetics, et cetera) would be worth much less, but I'm sure there'd still be some kind of market for it.

Just in case things go really really bad, I keep some precious metals (gold and silver) at the house, along with firearms and lots of ammunition. With those 3 things, I figure if the world ends and I survive, I can trade for what I need, or shoot to eat.

[gristy]

16. What must be considered is what will be bush's response to

the impending collapse of the dollar. THAT is the question of the day, because there WILL be a response. My guess is that the only viable response, the only one that would stave off its ultimate collapse, would be for him to

cut spending AND raise taxes

That is, he would have to get our country's fiscal house in order. So far he and his congress have been able to do neither. Something's going to blow a gasket. Our economy, the electorate, or the BFEE. Maybe all 3. This has got me a lot more scared than today's terra-alert, I'll tell you that.

[K-W]

17. We very well could be heading to another depression

the question is will we be able to recover while retaining international economic dominance and our current domestic system.

[wanderingbear]

18. Not to much different for me..

I know how to grow a garden and build shelter.

[Catherine Vincent]

20. That is great!

The people that live off the land now will be the ones that won't suffer as much if a depression happens again. Us city folks will be screwed.

[wanderingbear]

32. Too True Im afraid..

When all gos to hell in the city..The country will be the place of refuge..

[shanti]

39. same thing that happened the first time around

in 1929. the country folks didn't feel it as much...at least that's what my grandmother told me before she died. they lived in orange county, ca, which was COUNTRY back then.

[Malva Zebrina]

44. Bravo

and so do I. I would recommend, if possible, that one buy some land somewhere where the soil is good, and work that land. It is good for the soul as well as god for survival.

[nostamj]

21. ha! and I thought I was depressed *before* reading this thread...

if anyone asks, i'm out on the window ledge.

thanks george!


happy holidays from the anti-christ

[FlemingsGhost]

22. Revolution.

Americans have no tolerance for pain/sacrifice.

I can't wait...

[Tansy_Gold]

36. No tolerance??

Gee, I dunno. they've already tolerated * and all his horrors for three years now. . . .and haven't done much to change things.

Doesn't make me any too confident of a revolution any time soon. . . .

:-(

[YNGW]

40. Ever heard of The Great Depression?

Americans have experienced pain/sacrific before and tolerated it.

The "I can't wait" part I don't get. Who would wish suffering on others?

[Nevernose]

25. The beginnings of a world-wide depression (n/t)

n/t

[tritsofme]

26. It would never get that bad,

it would destroy the world economy, and central bankers around the world would have to act to buy massive amounts of dollars to keep it afloat.

[FlemingsGhost]

28. You are mistaken.

Your perspective is beholden to the traditional idea of a strong U.S. dollar dictating the dynamics of an entire global economy. I can't blame you. I'm guessing it's been the standard for as long as you have been alive.

When the Euro becomes **THE** universal monetary trading currency, all you know about global trade and commodity trading becomes antiquated and somewhat obselete.

When it happens, we simply become passengers... as opposed to pilots.

[tritsofme]

31. Even if that scenario were to play out,

it would still be extremely detrimental to the world economy if over 1/3 of the world's GDP suddenly turned into crap. We buy more goods and services from other countries than any other nation on the world, and if we cannot continue to buy those items because of a worthless dollar, it means world-wide depression.

Right now a strong euro hurts the countries in the eurozone and bouys our recovery. European exporters are hurting because the euro trades so high against the dollar.

This doesnt mean I dont think the dollar may dip lower before international action is needed, I actually took a gamble in some speculation on euro with a substantial amount of money last year, and have gotten quite a return.

Imagine what our already record setting trade deficit would be if the dollar did not depreciate some over this year.

[number6]

27. are we like on the economic Titanic ???

:scared:

[BiggJawn]

29. Remember the "Mad Max" flicks?

Might not be as pretty...

[GreenPartyVoter]

33. I think you should research the IMF and World bank

and what they do to a bankrupt country. Because I honestly think that's the NeoCon plan.

If you need a starting point, just go to greg palast's website and read about it there.

[Jacobin]

37. LOTS of foreign tourists

coming here to take advantage of cheap hotels and goods and services.

Pricey foreign cars get pricier.

Arbotrageurs getting richer and richer.

Stock market tanking as foreign investors cash in their stocks (priced in dollars) to buy euros.

Mostly bad things if it goes down too far.

[NoKingGeorge]

41. The European Central Bank will not act before the Euro

is at 1.35 to the dollar. Is that too far? Can anyone here do the math on rates vs debt to come up with some tipping point....

[ElsewheresDaughter]

42. can we say "The Great Depression Redux"?

[FDRrocks]

45. Hyper inflation...

Fear the speculation!