What dangers does the USA face if the Euro replaces the Dollar as the international currency?
There was a time that the free world once needed a strong U.S. military backed by a strong dollar to offset a Soviet threat. Since abandoning the gold standard, the only thing that has supported the value of the dollar has been the international currency market.
After WWII, the U.S. dollar replaced the British pound as the international currency. Countries across the global hold trillions of U.S. dollars to back their own currency.
Times are different today. There is no Soviet threat. What motivates the capitalists world to support the dollar today?
International trade in Euros is on the rise. What will the USA face if the dollar loses hegemony?
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Tagged with: currency • currency market • dollar • gold standard • international currency • soviet threat • strong dollar • threat • Today • U.S. • USA • world
Filed under: Currencies
It’ll cost us more to finance our huge national debt, for starters.
The biggest threat comes from the US getting more and more financing from EU countries. If the dollar slides against the Euro it becomes more expensive to pay back the loans.
That will never happen.The Euro is artificially high-Europe’s trade is way down,the Euro will have to drop-no one will trade with them.
Annilation.
OK the strength of the currency is only indirectly related to the strength of the military – the currency is NOTES. Other countries’ central banks buy reserves and they buy Treasurys for those reserves. The strength of these assets is that they are risk free – the US government has never defaulted. I guess our military strength might on some level add to the confidence that we will never default, since we will never be taken over, but it’s a pretty thin link.
There ARE only so many other currencies, and the Euro has already gained ground and established itself as a major currency. But as the other economies grow, their money supply, thus their reserves, must grow, and those reserves must be held in other currencies – simply put the supply / demand equation points to further support for the dollar in the long term.
But one might change one’s portfolio gold allocation from 10% to 15%.
And I don’t understand the worker productivity argument below – in 2007 productivity gains were only 2.5%, which is the lowest in several years.
To add to some of these other answers, the Euro is also facing separate national calls (Italy, etc) to be scrapped in favour of their original currency due to the ill effects from the change…can’t be good for long term stability
Workplace depression
American workers after WWII were the world most productive. But recent changes in the work environment has brought on Workplace depression lowering the productivity rate.
The failing dollar will add to this problem and further snowball the decline in the US economy.
Go big Red Go
The Europeans seem to hate us so much, they can’t see sense. They appear to be angry because we stood up against terrorism, and they didn’t. They moaned about it instead. I have a few European friends who always wanted to know why USA didn’t fight their battles for them. There will be nothing but destruction for them if they discount the US dollar. Their Euros are not strong enough to hold them up. They want a Euro Union, they have it, but it doesn’t work, will never work, because they will never be ONE country. The best they can hope for it to become another United States, and become separate states. Like Texas, California, New York, etc. They are separatists already. None of their countries agree with the other. Imagine France and England being best friends? LMAO! That will NEVER happen!
What has to be understood here, is the ‘transnational corporates’ love the idea of a single world currency!.these corporates have no loyalty to anyone but themselves and their profits!.Dont believe because they claim to be ‘American’ that they are!..They dont give a bent rats tail about America!..Many corporate exec’s are saying openly that they like the idea of a ‘single world currency’!..It all fits in just nicely with the new corporate world order that people like GW Bush and others are trying to establish..The front running currency is, of course, the Euro!..As the US dollar fluctuates in value on the open currency market, being bought and sold on the basis of oil prices and war, the less useful it becomes to big business simply because of its instability!..There is more trading in US currency..Than there IS US currency!..They are trading American currency that doesn’t exist!…Currency debentures and stock and credit lines, created by banks and international money traders based on the US dollar!..This is now all US debt!..Trillions of non existant dollars that one day Americans are going to have to pay for!..And you cant do it!..Crash goes the American currency..In comes the new world currency..The Euro!..Its all very simple really…Isn’t it?..