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Author Topic: De-Dollarisation.  (Read 106627 times)

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Offline Manny

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De-Dollarisation.
« on: August 12, 2015, 01:17:15 AM »
The penny is starting to drop even with Kerry.


I wrote an article recently on de-dollarisation that can be read here in English and here in Russian.
Read a trip report from North Korea >>here<< - Read a trip report from South Korea, China and Hong Kong >>here<<

Look what the American media makes some people believe:
Putin often threatens to strike US with nuclear weapons.

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Re: De-Dollarisation.
« Reply #1 on: August 12, 2015, 01:25:29 AM »
Rick Falkvinge (Political Pirate party leader sweden) also had a nice blog item about this:

https://falkvinge.net/2015/01/17/putins-unreported-genius-on-ukraine-currency-warfare/
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Offline Steveboy

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Re: De-Dollarisation.
« Reply #2 on: August 12, 2015, 06:17:33 AM »
Next year you will no longer be able to pay using $ on any of my sites, I also want to contribute to De-Dollarisation  tiphat
I support no government anywhere, ever, never. No institution, No religion!!


Offline Manny

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Re: De-Dollarisation.
« Reply #3 on: August 12, 2015, 06:44:59 AM »
Next year you will no longer be able to pay using $ on any of my sites, I also want to contribute to De-Dollarisation  tiphat

I still take them, but make sure to get out of them fast. I am slowly getting the Chinese I deal with out of the habit of using them.

Wifey went to Russia recently, she took some ££'s to change of course, a few Euros to spend in Germany en route, and I said, "Do you want this couple of hundred dollars in my drawer too?". She said, "Be serious":ROFL:

The kids enjoy them in collages though......

Read a trip report from North Korea >>here<< - Read a trip report from South Korea, China and Hong Kong >>here<<

Look what the American media makes some people believe:
Putin often threatens to strike US with nuclear weapons.

Offline cufflinks

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Re: De-Dollarisation.
« Reply #4 on: August 12, 2015, 10:01:09 AM »
I hope you lot invest the same way you spout of such Anti Americanism you will get wiped out - My investment advisory newsletters all look at Global Trading opportunities since the USA now generates more than 50% of its global economic activity internationally:

Warning: Global Recession Now Imminent
By Dennis Slothower
Editor, Stealth Stocks Daily Alert

Stocks were absolutely smashed on Tuesday after China’s devalued its currency, signaling a growing concern of slow growth from one of the world’s biggest importers of raw materials. After moving sharply higher Monday, stocks completely reversed to the downside on Tuesday.
The major indexes climbed a bit off their worst levels going into the close but remained firmly in negative territory. The Dow tumbled 212 points (-1.2%) to 17,402, the Nasdaq plummeted 65 points (-1.3%) to 5,037 and the S&P 500 fell 20 points (-1.0%) to 2,084. The NYSE finished at -0.95% and the small cap Russell 2000 at -0.94%.
In overseas trading, stock markets across the Asia-Pacific region moved to the downside –Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.
The major European markets saw greater weakness. While the U.K.'s FTSE 100 Index dropped by 1.1 percent, the French CAC 40 Index plunged by 1.9 percent and the German DAX Index plummeted by 2.7 percent.

The sell-off came on the heels of news of the People's Bank of China's surprise move to devalue its currency. The bank set the value of the currency, known as the yuan or renminbi, at 6.2298 versus the U.S. dollar, 1.85 percent lower than Monday's official fixing rate.

The move raised concerns about the Chinese economy as well as the possibility that it could start a currency war.

China’s Dangerous Currency Decision
Following weak export and import data from China over the weekend, the communist nation once again sought to control its own currency by devaluing it in order to prop up its slowing economy. The Yuan posted its biggest one-day loss in two decades.

This set off a chain reaction of events.
1. It makes it more difficult for Janet Yellen and crew to raise interest rates in September now that China just cheapen its currencies and goods. Raising U.S. interest rates would strengthen the dollar and make our goods even less competitive. As a consequence, US government bonds rallied sharply Tuesday on the notion the government isn’t likely raise interest rates.
2. Crude oil prices fell to a six year low on the growing global weakness if China has to devaluate its currency like this.
3. This should set off a currency war as other countries seek to protect its markets. China could devalue its currency further.
4. It doesn’t bode well for U.S. companies that sell goods to the Chinese.
5. It argues that a global recession is imminent.

The Atlanta GDPNow model recently projects that lower inventory investment will subtract 1.7 percentage points from third quarter real GDP growth. There is a key reason why there is a lower inventory investment and that is because inventories are soaring to recessionary levels!

Goods are backing up. The key point to remember is that building inventories are subtracted from the GDP and we are now at similar levels as we saw in the recession of 2008 and 2000.
China sees a recession coming as well and may well be sacrificing something it has keenly wanted for a very long time – for the Yuan to be part of the IMF special drawing rights, “SPR” when this decision comes due in the fall.
One of the reasons why China was rejected in 2010 was its currency was not widely held by the world’s central banks because of their constant manipulating and devaluing of their currency. If you’re a central bank who wants to hold an unstable currency that is constantly being devaluated.

Tuesday’s devaluation hardly argues that China’s currency is stable. Perhaps China has given up on the idea the IMF will grant its currency SPR, with the U.S. having veto powers. On the other hand, U.S., Japan and Euro zone have all been devaluing their currencies over the last few years, as well.

Will IMF ruling crush U.S. dollar? (Expected Oct 20th)
Currency Expert: Watch what happens to U.S. Dollar after big announcement from the International Monetary Fund rumored for Oct. 20th. This announcement could start a domino effect, that will basically determine who in America gets rich in the years to come... and who struggles. This story is likely to explode in the months to come and initiate a transfer of wealth, unlike anything we've seen in more than three decades...

Get all the facts about this announcement – including the surprising country behind it all – right here.

Now we see a possible reason why President Obama set up the Pacific Rim trade agreement – to stop having to be so dependent on trading with China. Let’s give the jobs to illegal immigrants coming to America rather giving jobs to enrich China.

This devaluation helped to boost the U.S. dollar and it sent crude oil prices down sharply by $1.88 to close at $43.08 and making an intraday low of $42.69. Oil should find support at the winter lows at $42.03. This is key test. If we breach this support, next support levels are back down to the lows of December 2008 at $32 a barrel.

WTF $32 a barrel oil what does that do to Russia's 5 and 10 year economic plans - with Oil the Chinese Stock market and Yuan collapsing the Chinese reneged on a $25 Billion USD payment to Russia to kick off their $400 Billion pipelines and oil and natgaz fields joint exploration projects.  So that's it for Putin's pivot towards the east.  Putin's Grand Master status on the Global Geopolitical chessboard of life is now seriously in doubt.  Can you say MEGAlomaniac FAIL?

Once again, the investment bankers kept the S&P 500 index above its 200-day moving average defending this support level while they can, while the broad market is clearly breaking down through key long-term supports.

Offline Manny

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Re: De-Dollarisation.
« Reply #5 on: August 12, 2015, 11:35:45 AM »
It isn't "anti-American" to point out the damage the US and the dollar have done to the world. Or why your economy needs continual war to stay afloat. Or to discuss why the world must de-dollarise.

I'm sure Andrew can explain this better than me Cuffy, but my understanding is that China choosing to devalue their currency also brings down the dollar.

Also, as they don't borrow externally, and have so much less exposure as their own currency isn't yet as widely used abroad (which is rapidly changing), it doesn't really hurt them. It simply makes their exports more competitive.

A reduced oil price means the shale operations in the US go bankrupt. Which will hit the economy there, along with all those previously exported dollars coming home to roost.

Remember, China and Russia are de-dollarising. Add to that Iran. India, South Africa, Kazakhstan and today Kyrgyzstan. Heck, even Nigeria is de-dollarising.

I'd vote Trump if I were you. Let a businessman run the country so you can once again make stuff and export it instead of just printing money, selling each other services and starting wars. If you did that, you wouldn't need to try to rule the world with the dollar and your continual wars. Try exporting something other than death and dollars.
Read a trip report from North Korea >>here<< - Read a trip report from South Korea, China and Hong Kong >>here<<

Look what the American media makes some people believe:
Putin often threatens to strike US with nuclear weapons.

Offline shakespear

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Re: De-Dollarisation.
« Reply #6 on: August 12, 2015, 01:00:28 PM »
A reduced oil price means the shale operations in the US go bankrupt. Which will hit the economy there, along with all those previously exported dollars coming home to roost.

They won't go bankrupt.  The wells will be capped and production will wind down, but the asset will still be there waiting to be harvested when the world prices rise again. 







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Offline Manny

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Re: De-Dollarisation.
« Reply #7 on: August 12, 2015, 01:27:30 PM »
A reduced oil price means the shale operations in the US go bankrupt. Which will hit the economy there, along with all those previously exported dollars coming home to roost.

They won't go bankrupt.  The wells will be capped and production will wind down, but the asset will still be there waiting to be harvested when the world prices rise again.

Doesn't it cost money to mothball a project like that? Which impacts machinery and equipment suppliers. And men must be laid off, which impacts not only them, but all the businesses down the line that feed the workers with products and services. The very mechanism that allows money to flow down the chain through business and families. Stop the money flow and it affects many. The US manipulating the oil price down to hurt Russia, as with sanctions in the EU, actually hurts the instigator just as much.

Own goal.
Read a trip report from North Korea >>here<< - Read a trip report from South Korea, China and Hong Kong >>here<<

Look what the American media makes some people believe:
Putin often threatens to strike US with nuclear weapons.

Online andrewfi

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Re: De-Dollarisation.
« Reply #8 on: August 12, 2015, 01:37:50 PM »
Yes, it is not as easy as some unknowing thought leaders have propagandised.
Loans need to be serviced from cash flows (there are no profits in most cases).
Drilling sites have leases that can not be walked away from.
Large numbers of trained and skilled staff are now being 'deactivated' many will be lost if there is an uptick but even if they can be reactivated there will be a lag between uptick and their productive deployment.
There are technical issues with closing wells down.
The industry is an ecosystem with dependent parts; closure will be at least a semi-permanent choice. Bearing in mind that the 'boom' /bubble only existed due to the availability of almost cost free capital where will that capital come from when risk is correctly priced in a normal interest rate environment?
If capital is not available at a price the market will bear who will reemploy the workers, hire the equipment, renegotiate the leases, reopen the wells?
...everything ends always well; if it’s still bad, then it’s not the end!

Offline shakespear

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Re: De-Dollarisation.
« Reply #9 on: August 12, 2015, 01:58:45 PM »
Doesn't it cost money to mothball a project like that? Which impacts machinery and equipment suppliers. And men must be laid off, which impacts not only them, but all the businesses down the line that feed the workers with products and services. The very mechanism that allows money to flow down the chain through business and families. Stop the money flow and it affects many. The US manipulating the oil price down to hurt Russia, as with sanctions in the EU, actually hurts the instigator just as much.

True that. 

Obama doesn't like the shale oil industry very much so he looks at it as "killing two birds with one stone".

As the owner of a shale lease myself (on the old family farm) their are contingencies put in place for such marketing changes.  The leases and up front payments are calculated to benefit the oil companies.  If the lease expires the owner can renew it again for a very small payment.   
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Offline shakespear

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Re: De-Dollarisation.
« Reply #10 on: August 12, 2015, 02:03:40 PM »
Are you people smokin' something good?

Exactly WHICH currency is going to replace the dollar?

The Ruble?  Bwhahahahahahahahahaha

The Yuan?  Just devalued

The Euro?  Greece, Italy, Spain and Portugal would love that.

The Pound?  Britiannia no longer rules the waves. 

Sorry all you America-Hating chappies out there - the Dollar is here to stay. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

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Re: De-Dollarisation.
« Reply #11 on: August 12, 2015, 02:12:34 PM »
Are you people smokin' something good?

Exactly WHICH currency is going to replace the dollar?

The Ruble?  Bwhahahahahahahahahaha

The Yuan?  Just devalued

The Euro?  Greece, Italy, Spain and Portugal would love that.

The Pound?  Britiannia no longer rules the waves. 

Sorry all you America-Hating chappies out there - the Dollar is here to stay.
Why does it need to be replaced. What if people simply want to trade in their own currency.

Gas/Oil from Russia -> Rouble
Gas/Oil from China -> Yuan,
etc.
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Offline shakespear

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Re: De-Dollarisation.
« Reply #12 on: August 12, 2015, 02:26:08 PM »

Gas/Oil from Russia -> Rouble
Gas/Oil from China -> Yuan,
etc.

American businesses prefer to reduce the cost of doing business by not having to hedge against currency fluctuation risk in each transaction. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

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Re: De-Dollarisation.
« Reply #13 on: August 12, 2015, 02:28:24 PM »
Shakespeare, I had always taken you for one who knows a little more than the (untrue) 'fact' that a 'strong' currency is better than a 'weak' one. The punctuation is purposeful.

As I'd have expected you to know pressure for replacement of the dollar is not for a single currency - you may have been misled by your thought leaders in this regard. China and Russia, among others, have suggested the use of a basket system that would not enable a single currency issue to game the system as the United States is still doing.

As the counterparty to these devaluation is always the US that currency is forced to appreciate. The US has tried devaluation but without success. The effects upon the US of an appreciating currency unsupported by economic growth is the situation you now see and deplore in the US.

As one who is most certainly not an American hater but one who understands the implications of a declining USA I most certainly do not want to see the end game resultant from a 'no change' policy on the part of your leaders.

Oh, and Mark is right. Bilateral trading agreements exclude the dollar and are becoming easier to implement as technology increases the speed and transparency of transactions. However they are probably a stepping-stone toward the goal of a non-hegemonic currency without transaction costs benefiting none of the trading parties.
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Re: De-Dollarisation.
« Reply #14 on: August 12, 2015, 02:43:30 PM »

Gas/Oil from Russia -> Rouble
Gas/Oil from China -> Yuan,
etc.

American businesses prefer to reduce the cost of doing business by not having to hedge against currency fluctuation risk in each transaction.
And Russian and Chinese et.al. business prefer exactly the same. When they will be strong enough to push other currency in their business contracts, it will be the point of no return for the dollar.

For me personally, I hope this doesnt happen before I am financially independent from working hard.

Mark.
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Re: De-Dollarisation.
« Reply #15 on: August 12, 2015, 02:45:35 PM »

Oh, and Mark is right. Bilateral trading agreements exclude the dollar and are becoming easier to implement as technology increases the speed and transparency of transactions. However they are probably a stepping-stone toward the goal of a non-hegemonic currency without transaction costs benefiting none of the trading parties.

We've already got that -

Called a "bitcoin"
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Re: De-Dollarisation.
« Reply #16 on: August 12, 2015, 02:54:32 PM »
Sorry fellas, interesting takes but I work in World Banking and Payments and have done for a while and the Dollar is still King and will be for the foreseeable.

I'd like to see another currency in the mix, the Euro is second best but the Rouble and Yuan, don't make me laugh, honestly it's risible, Zimbabwean Dollar has more chance or perhaps the Matabeleland Gumbo Bean....





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Offline shakespear

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Re: De-Dollarisation.
« Reply #17 on: August 12, 2015, 03:14:38 PM »
Zimbabwean Dollar has more chance

Isn't that the currency that uses a $10,000,000 note for daily grocery shopping?
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Re: De-Dollarisation.
« Reply #18 on: August 12, 2015, 03:15:33 PM »
Zimbabwean Dollar has more chance

Isn't that the currency that uses a $10,000,000 note for daily grocery shopping?

No, you mean the Rouble.......

Hehe..
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Re: De-Dollarisation.
« Reply #19 on: August 12, 2015, 03:37:34 PM »
Why does it need to be replaced. What if people simply want to trade in their own currency.

Gas/Oil from Russia -> Rouble
Gas/Oil from China -> Yuan,
etc.

^^ This.

We did this in Europe already before the Euro. It worked alright. Yes, it was a *little* more inconvenient to buy Guilders for Holland, two different types of Francs for France and Belgium, Kroons in Estonia and Deutschmarks in Germany, but we all got along and made money. Never was the dollar useful in Europe (except in the mid to late 90's in eastern Europe and the Baltics - but they would take Zloty, roubles or anything that could be spent someplace then).

What Americans probably don't get about Europe, or the EU bit, is that the dollar isn't something of value here. Its just another foreign currency among hundreds. Like a Russian rouble or a Polish Zloty, one must go into a bank to exchange it for something that can be used locally.

Was anyone in London or Manchester in the 80's or 90's when American tourists would stand at store tills, looking amazed that nobody wanted their dollars, or took Diners Club? Seriously, they used to stand in stores in major British cities and want to pay in dollars. They were about as useful here as South African Rand or Lithuanian Lita.

Nothing changed........

I went to China last year, I read some crap online and took some dollars (as I had some). People just laughed and pointed me toward a bank. I still have them...... the same ones my wife refused to take to Russia. She reminded me on the phone today that the dollars *came* from Russia in the first place, as her Dad got them in a deal and didn't want to get stitched up in a bank, so he gave them to her as we used to visit the US then, so he thought they may be more use to us.
Read a trip report from North Korea >>here<< - Read a trip report from South Korea, China and Hong Kong >>here<<

Look what the American media makes some people believe:
Putin often threatens to strike US with nuclear weapons.

Offline Texan77

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Re: De-Dollarisation.
« Reply #20 on: August 12, 2015, 05:16:28 PM »
It isn't "anti-American" to point out the damage the US and the dollar have done to the world. Or why your economy needs continual war to stay afloat. Or to discuss why the world must de-dollarise.

I'm sure Andrew can explain this better than me Cuffy, but my understanding is that China choosing to devalue their currency also brings down the dollar.

Also, as they don't borrow externally, and have so much less exposure as their own currency isn't yet as widely used abroad (which is rapidly changing), it doesn't really hurt them. It simply makes their exports more competitive.

A reduced oil price means the shale operations in the US go bankrupt. Which will hit the economy there, along with all those previously exported dollars coming home to roost.

Remember, China and Russia are de-dollarising. Add to that Iran. India, South Africa, Kazakhstan and today Kyrgyzstan. Heck, even Nigeria is de-dollarising.

I'd vote Trump if I were you. Let a businessman run the country so you can once again make stuff and export it instead of just printing money, selling each other services and starting wars. If you did that, you wouldn't need to try to rule the world with the dollar and your continual wars. Try exporting something other than death and dollars.

Trump want to sanction China not let many if any Chinese import into America. When he is president I think you will really love him.

He want to pull out of Europe and let you blots pay for you own defense. I know if sound great now but wait until you see what it will do to European economy.   

If the Yuan goes down the dollar goes up the dollar goes up. There is not another way. The US is concern that China lower Yuan means our export will cost more than Chinese exports in other countries. That is why the concern about the Yuan drop. China is bleeding money and really did not have much choice. China is exporting 8 plus per cent less this year than last year. We were going to think about raising interest rates from nearly zero percent to .25% but now it would send our dollar way to high.

China's currency problem makes it currency less usable as a reserve currency. This is how you know they really have to let the Yuan drop because they are in trouble.

The lower Yuan also means trouble for the euro zone. The Euro zone already down maybe down more as the Euro and British pound  has also risen against the Yuan making euro export more expensive.

De dollarization is really simple. China and Russia no long can afford dollars. Both countries are going broke.

Nearly all of Asia is having trouble with their economies because of the decline in China. This devaluation by China will make it worse for these other countries. 

WE are slowly going into a global recession and China and Russia is where it is starting and likely to spread to the rest of the planet.

Shoot! I can not easily spend dollars even in the Ukraine. It does not mean the country does not want my dollars but it is just not the currency in which local business is done in. I really hate it when I travel there and somebody want to be paid in dollars because I am sure I am being ripped off. Here when people want to pay me in Canadian dollars that is a problem also. Because  have to go to a bank and exchange and pay a commission. Nothing wrong with there money just not easy for me to spend.

In the Ukraine, US Dollars, Rubles and Euros are all easy to exchange.

Why in the world would you go to China with US dollars? Why not Euros? You could change dollars at an exchange to Yuan or you could exchange Euro just as easy.

By the way the Russian currency has performed about as bad as the Ukrainian currency over the last 12 months.
 
Reduction in oil prices causes our economy to do better. The shell oil business is a short term business. The wells only produce for about one year then they have to drill a new one. It is a business that has a very fast payout. Drilling in this area has slowed down and most wells have either paid or not by now. Anybody who still has a lot of active well only has themselves to blame. Lower oil prices is what is keeping the USA economy going for now.



 
3) There has been no "threat" to invade Ukraine. The US invented that and fed it to a complicit media.

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Re: De-Dollarisation.
« Reply #21 on: August 12, 2015, 10:03:16 PM »
I'm always amused, here, by the Johnny One Notes who believe their own biases and tell each other ghost stories around the campfire...

The Arabs could, of course, denominate oil in Euros or other currencies, including creating an oil-backed Dinar, one supposes, although they are not likely to do so.   

I'm sure Andrew can explain this better than me Cuffy, but my understanding is that China choosing to devalue their currency also brings down the dollar.

Not really.  The devaluation of the RMB actually weakens it against the dollar (although this has the effect of making US imports to China more expensive, in relative terms, and exports to the US from China less expensive).  It's that latter one that China was after, as they are going to have a bumpy ride with their economy in the coming months. 

China is focused on not becoming the next Japan....and they may be too late.  They are going to have something of a pension crisis and a health care crisis and a collapse of their real estate markets as their population declines over the next few years.  The drop after 2025 is going to be precipitous.

I would expect the dollar to rise as the Fed is expected to raise interest rates (depending on Yellen's view of the strength of the US economy (which ain't like it was, but is still better than most places are at the moment) and in particular, jobs) and the Euro nearly went down the EUrinal over Greece (Which is merely a rounding error to the US). 

Also, as they don't borrow externally, and have so much less exposure as their own currency isn't yet as widely used abroad (which is rapidly changing), it doesn't really hurt them. It simply makes their exports more competitive.

Yes, well, the RMB is actually, on any given day the 6th-9th most traded currency, but so long as China maintains capital controls on it (i.e. the foreseeable future) it's not going to become a reserve currency.  I realize how much you dislike the dollar, as an extension of your dislike for American foreign policy, however the dollar ain't goin' anywhere anytime soon.

I fondly recall the introduction of the Euro, and how the French, in particular pissed all over themselves at the prospect of dethroning the dollar as the world's primary reserve currency and....well, not much has changed. 

 :coffeeread:

B/B

Saving the World, One Clue at a Time
If your religion insults my intelligence, don't be surprised when my intelligence insults your religion.

Offline msmoby

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Re: De-Dollarisation.
« Reply #22 on: August 13, 2015, 02:12:08 AM »
BB doesn't post so often, but agree or not - his posts always make me smile.

To our cousins across the pond - please do not think the [derogatory term removed]'s of this world speak for anything like the majority of Europeans

If one opens a bank account in Russia, you are offered a Dollar and Euro account..... I though that spoke volumes  :coffeeread:
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Offline Steveboy

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Re: De-Dollarisation.
« Reply #23 on: August 13, 2015, 06:42:24 AM »
What is more important is the fact that history goes round in circles and EVERY empire eventually comes to and end and has done for thousands of years :)

So it really doesn't matter about the $ because sometime in the future the US empire will also come to and end. I prey it will not go on as long as the Roman empire :laugh:

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Offline Texan77

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Re: De-Dollarisation.
« Reply #24 on: August 13, 2015, 09:18:31 AM »
When Rome fell the whole planet went in to the dark ages for about a thousand years. Humans lived with very much less. Be careful what you wish for as you may get it. We are I believe on the verge of a world wide recession that could get much worse it there is some type of war or if the momentary system falls.

You guy across the pond read and believe everything anti American you read.  The picture you paint for yourself is much worse that what is real. When the system is replaced it is likely to be much less kind than what you now enjoy. 
3) There has been no "threat" to invade Ukraine. The US invented that and fed it to a complicit media.