Euro almost at it's introductory value vs the Dollar!

[TCO]

Originally posted by Kidicious


The value of the dollar would collapse. There would be a massive shift in resources, which would take a long time for the efficiency to recover, and a Global Depression would either coincide or follow the collapse of the Dollar.

I'm not agreeing or disagreeing yet. But could you tell me exactly how that would unfold?

[Kidlicious]

Originally posted by GP


I'm not agreeing or disagreeing yet. But could you tell me exactly how that would unfold?

If the Euro were to gain key currency status the demand for it will increase, and the demand for the dollar will fall. Plus, when you enjoy key currency status you have significantly more control over your own economy and the world economy. A complete transformation would have to take place. The US would have to stop using monetary policy to stimulate the economy, and they would have to worry most about maintaining the value of the currency. The result would be high interest rates and inflation in the economy. Shall I go on?

[DanS]

The US would have to stop using monetary policy to stimulate the economy

Roo?

[Kidlicious]

Originally posted by DanS
The US would have to stop using monetary policy to stimulate the economy

Roo?

The US enjoys more foreign investment, because of its key currency status. If it were to lose its status it would need higher interest rates to attract this investment.

[TCO]

We enjoy foreign investment because capital flows to oopportunity. Most people beleive that in the modern world, capital moves extremely readily. Even if there were a step decrease in the value of the dollar, that would not change the incentive for future investment. Also, my impression is that foreign capital flows are often hedged on the currency issue. So they can just invest in the growth projects or invest in the currency independantly.

[TCO]

What does it mean to be a "key currency"?

[Kidlicious]

GP,

You are neglecting the importance that risk, uncertainty and expectations will play. Also, the Euro would start getting more foreign investment, and that would cut into the US share.

[DanS]

You are neglecting the importance that risk, uncertainty and expectations will play.

What's that have to do with the US currency? Wouldn't it rather be based on the actual on-the-ground realities?

[TCO]

Originally posted by Kidicious
GP,

You are neglecting the importance that risk, uncertainty and expectations will play. Also, the Euro would start getting more foreign investment, and that would cut into the US share.

Now I understand why you could only contribute a semantic argument in the Exxon Mobil thread. You are a bit light on this topic, no? You just mutter platitudes without really understanding.

I adressed the currency risk uncertainty with the hedging comment. Project uncertainty exists regardless. If you are trying to connect the two, you need to explain how this occurs.

[TCO]

Originally posted by DanS
You are neglecting the importance that risk, uncertainty and expectations will play.

What's that have to do with the US currency? Wouldn't it rather be based on the actual on-the-ground realities?

Great minds think alike. We need a piling-on smilie.

[Kidlicious]

Originally posted by GP
What does it mean to be a "key currency"?

International trades are usually denominated in the key currency. In order to deal in the key currency you have to keep or store of the key currency. This creates more demand for your currency. There are lots of benefits to it. One is that you get more trade opportunities.

[TCO]

Originally posted by Kidicious


International trades are usually denominated in the key currency. In order to deal in the key currency you have to keep or store of the key currency.

So what are the amounts of these offshore pots of money. And why assume that the rate of exchange will crater because of exchange?

And even if it did, wouldn't this be a step change? How would that affect normal operations going forward.

This creates more demand for your currency. There are lots of benefits to it. One is that you get more trade opportunities.

What trade opportunities? How does this work?

[Kidlicious]

Originally posted by GP
So what are the amounts of these offshore pots of money. And why assume that the rate of exchange will crater because of exchange?

The trade deficit is what creates these the dollars (also called Eurodollars. Nations that have a favoralble trade ballance end up with these dollars. Since we enjoy key currency status nations what to keep getting and using these dollars. If a nation takes over key currency status nations will want to trade more with them so that they can get their currency which they will need to make international transactions.

Originally posted by GP
And even if it did, wouldn't this be a step change? How would that affect normal operations going forward.

The US would have to change its whole economic strategy, and who knows how that would work out and how long it would take the US o recover.

Originally posted by GP
What trade opportunities? How does this work?

Demand for your currency determines demand for investment and exchange in your nation. The best way to get a currency is to export to that nation.

[DrSpike]

I think this Kidicious character is Roland trying to wind everyone up.

The key currency nonsense was highly amusing. For that I thank you.

[TCO]

Kid, you are really, really silly. Even as you examine your own comments, you must realize that you don't actually know how these things work. You certainly can't give insightful comments.