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There Are Now Challenges To The Dollar’s Hegemony [Copy link] 中文

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Post time 2014-8-15 22:59:56 |Display all floors
15 August 2014.








The Shanghai Cooperation Organisation (SCO) are taking deliberate steps towards doing away with the dollar entirely for pan-Asian trade.

Recent developments setting up a rival to the IMF by the BRICS nations is part of this challenge.

If you follow the geopolitics, you might reasonably conclude that the dollar’s dominance has peaked and is now declining.

The SCO appears to believe there can be a transition away from the dollar, an idea that could turn out to be dangerously wrong at a time of great but generally unrecognised currency fragility.

At the heart of the issue there is a worrying lack of distinction between the dollar’s reserve function and its function as the monetary standard from when it replaced gold in 1971.

To fully appreciate the importance of the dollar as the standard for all other currencies, we must review the monetary history behind how and why the dollar replaced gold, and the implications for today.

The US dollar progressively broke its relationship with the gold standard from 1933 onwards, when gold ownership by US citizens was unexpectedly banned.

The Bretton Woods Agreement after 1944 then defined the gold-based monetary order until the Nixon Shock in 1971.

President Nixon ended Bretton Woods and all rights to dollar conversion into gold.

By default, all other national currencies went on a US dollar standard, albeit a floating one.

Crucially, the confidence in the purchasing power of all fiat currencies became vested in an underlying confidence in the purchasing power of the US dollar.

This is a separate monetary function from the dollar’s reserve status, though the two functions are intertwined and may be difficult to separate in practice.

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Post time 2014-8-17 13:25:15 |Display all floors
This post was edited by jay_dee at 2014-8-17 13:26

With all currencies floating as well as gold, silver and platinum its a bit of a stretch to find one safe bet.
Pinning to anything is always dangerous.
I'm just here for the money

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Post time 2014-8-18 14:34:00 |Display all floors
jay_dee Post time: 2014-8-17 13:25
With all currencies floating as well as gold, silver and platinum its a bit of a stretch to find one ...

Yuan and Ruble is the option~

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Post time 2014-8-18 16:12:37 |Display all floors
That is not an option, it is a joke.
Might as well be dog turds and earwax.
I'm just here for the money

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