If the world economy ever dumps big time...

[VetLegion]

Re: If the world economy ever dumps big time...

Originally posted by Lancer If you had your savings in one sort and they moved to another sort, what determined the value of your savings? Or property, one day your property is worth 5000 riechmarks, if the next day it's deutchmarks, what determines how many?

When notes are converted, the state (the sole tender issuer in modern countries) sets some official conversion rate.

Say you have 5000 Reichmarks and Deutschmarks are being introduced.

The state says that the conversion rate is going to be 10:1. This means that when you change money, you get 500 new DM for your 5000 old RM.

You are not any poorer because of this, as everybody else has to convert at the same rate. The actual conversion rate is irrelevant to you. It could be some wild figure like 3,14:1 or 10732:1 -- without that having any effect on the value of your savings. That is, on the amount of things you can buy with them. It remains the same.

[Lancer]

So if the dollar ever plummets into obscurity the dollars in foriegn hands wouldn't lose real value, the denomination would just change? That wouldn't solve anything really regarding our particular problem of having so much money out.

[Kidlicious]

Re: If the world economy ever dumps big time...

Originally posted by Lancer
How do you jumpstart things after they get royally screwed up?

The conservative way is to raise interest rates to the ceilling and let everyone starve.

The liberal way is to raise taxes and spend it.

The commie way is to have a revolution.

[VetLegion]

Originally posted by Lancer
So if the dollar ever plummets into obscurity the dollars in foriegn hands wouldn't lose real value, the denomination would just change? That wouldn't solve anything really regarding our particular problem of having so much money out.

What do you mean by the dollar plummeting into obscurity?

The US dollar is legal tender, but it is a tradeable item like any other and it behaves by market principles of supply and demand. You can't change its value (relation to other goods) simply with a decision. You have to increase or decrease the supply (or the demand) to do that.

When the US government prints money dollars in foreign hands lose value via inflation - but so do domestic dollars

[Lancer]

If the Chinese (for example) sell off their dollars then the value would plummet to obscurity. We here in the US would need a currency of value in order simply to trade amongst ourselves.

I'm having a tough time expressing myself.

[Kidlicious]

Originally posted by Lancer
If the Chinese (for example) sell off their dollars then the value would plummet to obscurity. We here in the US would need a currency of value in order simply to trade amongst ourselves.

I'm having a tough time expressing myself.

The central bank will increase interest rates and that will bring down inflation. It will also cut off business investment and consumer spending.

[VetLegion]

Originally posted by Lancer
If the Chinese (for example) sell off their dollars then the value would plummet to obscurity. We here in the US would need a currency of value in order simply to trade amongst ourselves.

I'm having a tough time expressing myself.

I don't know what would happen if China dumped all its dollars at once and if that is even possible (I doubt it). Lots has been written about it on the internets.

But, say that someone dropped enough dollars to the US (using some magic) for the prices to quadruple. It would still not render the dollar impractical to be used as tender, requiring a conversion of notes. It would take a hundredfold increase or something like that (paper is light, people can carry a lot of it around ). Chinese certainly don't hold enough dollars for that.

[Dis]

Originally posted by General Ludd
Learning how to grow vegetables is good, serious, advice in any situation.

I live in the desert

[DaShi]

Re: If the world economy ever dumps big time...

Originally posted by Lancer
Assuming a nation's paper money is just so much pulp, what next?

In the past Germany went from pre WW2 marks worth billions to one dollar to Riechmarks and then Deutchmarks. How did this transition function? If you had your savings in one sort and they moved to another sort, what determined the value of your savings? Or property, one day your property is worth 5000 riechmarks, if the next day it's deutchmarks, what determines how many?

How do you jumpstart things after they get royally screwed up?

According to Tingkai, China would rise as an economic superpower.

[Dis]

it could happen if they become a consumer economy. And judging by the fact more and more are owning cars, they may be heading that way (correct me if I'm wrong). At that point they won't rely on the U.S. to buy their products.

[Kidlicious]

Originally posted by Dis


I live in the desert

Suck a cactus

[Kidlicious]

Re: Re: If the world economy ever dumps big time...

Originally posted by DaShi


According to Tingkai, China would rise as an economic superpower.

It makes him feel good.

[Kidlicious]

Originally posted by Dis
it could happen if they become a consumer economy. And judging by the fact more and more are owning cars, they may be heading that way (correct me if I'm wrong). At that point they won't rely on the U.S. to buy their products.

Yea sure, and you can grow veggies in the desert too.

[Vanguard]

Originally posted by VetLegion


What do you mean by the dollar plummeting into obscurity?

The US dollar is legal tender, but it is a tradeable item like any other and it behaves by market principles of supply and demand. You can't change its value (relation to other goods) simply with a decision. You have to increase or decrease the supply (or the demand) to do that.

Um, well, yes and no. You could decide to repudiate or replace the dollar (without exchange). That would change it's value to zero instantly.

Or you could put in price controls.


To answer the main question, if your currency becomes worthless, then you just print a new currency in a different color. Try to take better care of this one.

[General Ludd]

Originally posted by Dis


I live in the desert

Then obviously, the first lesson you would have to learn is to get the **** out of las vegas and live somewhere sensible.