Friday, July 11, 2014

The US Dollar Is Worth More Than The Sum Of It's Parts: Reports that the US Dollar is Dying Are Premature. Just The Fact That The US Is Becoming The World's Largest Energy Producer Can Make The Dollar Shine.

Reports that the US Dollar is Dying Are Premature Reports that the US Dollar is Dying Are Premature The Mighty Greenback is Still More Than Just the Paper it is Printed On Lex Loeb Contributor Network . Right from the start it should be noted that the former Administration under G.W. Bush might be credited for creating the housing loan crisis, Their attempts to try making the US more competitive as an exporter with a policies that intended the dollar's devaluation is what ultimately led to interest rates rising and world traded commodity prices exploding in a bubble prior to the housing loan crash. The dollar has been in a mode of devaluation since the great depression when it actually appreciated due to wholesale deflation. The deflation of 2007-2009 does not really compare to what happened in the 1930s. The dollar has been on a steady path of decline and there maybe precipitous drops coming in the near future because of the so called stimulus spending. The danger signs are in the explosion of US dollars being printed but this does not necessarily mean the demise of the US dollar. The Mexican Peso still exists after a century or more of devaluations. The dollar is a completely different animal than the peso and this is because besides being the world's default reserve currency it is also a currency that "dollarizes" foreign economies. Zimbabwe which suffered one of the worst hyper inflations in all of history has finally put that to an end by becoming a dollarized economy. Dollarization means that our US dollar , as of this year-2009, essentially became the currency of choice in that no where African basket case economy. The important thing to pay attention to in this story of Zimbobwe is that they could have chosen Swiss Franks, British pounds, Euros, Yen , Pesos, Yaun , Gold or Silver but instead dollars, US dollars became the instant currency of stabilization. The little lesson from Zimbabwe is repeated all around the world. The US dollar may be a rapidly declining currency but it is not in hyper inflation mode instead it is absorbed around the world as if the world is a US dollar sponge. Parts of Eastern Europe are still more dollarized than they are Euroized or Rubbleized. The US dollar is an important currency to countries that include Cuba, Much of Latin America, Venezuela because of the oil industry there and because of the volume of trade with Canada they are more US dollarized than they might like to admit they are. Just because the dollar is being devalued by the US treasury, federal reserve thanks to US congressional spending gone wild does not mean it cannot remain the medium of exchange in distant dollarized foreign lands just as it is here. After nearly 100 years of dollar devaluations and it's being delinked from Gold and Silver leaving it in free float conditions there are virtually no major currencies anywhere on earth that have a gold or silver set conversion ratio but we do find set dollar conversion ratios for currencies like the Chinese Yuan. The last thing the Chinese or any foreign government are going to do to stabilize their own paper currencies is to link to Gold, Silver or any other monetizing commodity because they then are at risk of having to go out and purchase reserves of these precious metals , stock pile them for safe keeping and then find them self at some point in their world currency transactions having to actually pay out the hard currency reserves. No paper money printing government in existence is going to want to settle it's internal and external debts with hard currency. There are are number of reasons. Paper money gives them instant tools for having a monetary policy. Imagine what would happen if the IRS decided it wanted income taxes paid in gold and silver and not dollars--they probably would not be able to collect taxes if you were paid 40 once coins of gold instead and equal to $40,000 for your annual salary and you owed the government 25 percent of that in income taxes they would have to physically withhold 10 coins from you earnings or you would later have to send them in by US mail with your tax return. Once the government grabbed that gold they would want to keep it in reserve or settle important debts with it. Government just loves giving money to its friends so they might get gold but otherwise the government will hoard the gold as if by nature and find some way to issue an IOU for that gold which brings us right back to a new form of paper money. A piece of paper representing one once of gold that might be your tax refund is a lot easier and cheaper to send to you in the mail than an actual gold coin. A gold coin weighing an once and worth one week's salary is a lot of risk leaving in your pocket. It is easy to loose a coin but a coin for $1000 or more is trouble. If the Chinese have a big trade export surplus to the US and they get US gold coins in exchange for goods that takes money supply out of circulation that might not be as easily replaced by a government hoarding it's own gold reserves. The Chinese would be expected to melt down the US species and mint their own coins but will the Chinese government want to circulate those coins or send out their own paper IOU money? History tends to show that government hoard gold when gold is appreciating and tend to sell it when it is depreciating. Gold tends to go into public circulation in a national emergency when there is need to go to war primarily. The first thing governments do to mercenaries is weigh them down with gold. Without some national emergency most governments just keep hoarding. IOUs are not as acceptable when it comes to a national emergency. When Spain became Gold rich because of their conquest of Mexico and Latin America, gold deflation was on and the Royal Government of Spain completely blew away their gold reserves on building programs and Military extravagance that proved no match for the British who were not swimming in gold at the time . The British practically hired mercenary pirates to seize as much Spanish Gold on the high seas as was possible after the conversion of land and idolic gold treasury pieces from the Roman Catholic Church under King Henry the Eighth. Gold proved to be a lot less civilized than the US dollar as the world reserve default currency has. To the effect that the world is dollarized the US treasury and the Federal Reserve actually have to consider the international use when making monetary decisions. Dollars abroad tend to stay abroad. In a real sense the Chinese and the Japanese before them, practically destroy US currency by hoarding it in reserves instead of spending it in the US before it depreciates due to inflation. They do this to protect their mercantilism export businesses by trying to keep the home currency at an exchange rate that favors a stronger US Dollar. This policy only hurts their own people and does not hurt US consumers or workers. Hoarding US dollars means that people working for them by selling exports in the US are not reaping any benefit in doing so because they don't get to spend the US dollar cash where it buys actual us dollar goods. There is a strange academic brotherhood of central bankers who seem to understand the idea that earning interest on a currency in perpetual declining value due to more and more being printed makes no sense. So then we hear about secret meetings to replace the US dollar with a basket of currencies or commodities by countries suddenly afraid they are being short changed taking US dollars in payment. It makes no sense when you see the same government entities holding or rather hoarding in reserve US dollars. It is actually a financial comedy of sorts. The central bankers seem to be as dumb as the people accepting paper money they print with no actual backing. Thus the dollars is as good as any currency and probably just as good as Gold to the effect it would actually circulate in the world economy. It probably would not circulate very much at all just because if a $400,000 house had to be purchased with 400 one once coins of gold someone might go out on the street with a brief case weighing just a bit more than 25 lbs and risk having it stolen and melted down anywhere at anytime. The myth that gold could replace the dollar is a cliche'' and very absurd. Even a gold backed dollar is absurd since government will hoard rather than pay. The whole nastiness of the world war one reparations owed by Germany to the allies was because Germany had to find Gold or the equivalent to pay back. That government resorted to hyperinflation which led to the catastrophe of Hilter not too long after. He who owns the gold makes the rules is the old saying. It might as well apply to the US dollar as the world's default reserve currency too because as quickly as gold might become a substitute currency for the rest of currencies. He who has the gold makes the rules is one more reason governments never part with the stuff till they see it as a declining asset as opposed to one appreciating. With Gold or Oil as a substitute for US dollars first you get the IOUs for Gold and then you end up back with the dollar all over again. There is one more problem. When it comes to energy resources, world wide , US corporations actually control a very large share of these resources. Yes they pay royalties to foreign countries to pump out their oil and natural gas but in a real way the US dollar is already amazingly backed by a big basket of commodities and even by petroleum. Oil cartel countries might want to forget that they may set the world price for oil but they also have substantial competition from US entities in their same business. The Obama administration might want to Venezuela's the US by backing up the dollar by nationalizing the countries oil , gas, coal and electric resources but that means excess new production required to keep enough currency in circulation. If the government owns the means of production it merely substitutes its ability to tax corporations for government run inefficiency and that leads to potential disaster making petroleum the backing for the dollar. The demise of the dollar means foreign holders of US dollar treasury notes and all countries that are dollarized would be sent into a financial tailspin. The big talk about killing and replacing the dollar is nonsense until you see a country or countries ganging up and backing their own paper money with hard assets of any kind and that you probably won't see. The United States currency is backed by more than just hard assets. It is backed with more trust than foreign competitor currencies seem to have or they would have already replaced the US dollar. It comes down to goodwill and that sounds funny. Think of the one dollar as worth a few cents of what it was a century ago but as having a lot more goodwill than ever before. Certainly more goodwill than anyother currency in world history. The United States with this Good will given to it's currency should be doing the right thing now and backing the dollar with more than that but like everywhere else we have the same sorts of academic central bankers who tend to buy high and sell low. You would think that governments would be smarter than they do exactly the same thing with taxes which is effectively buying high and selling low because they will raise taxes when they should be lowering them to produce more revenues by virtue of the fact that productivity rises when taxes are lower. This problem is world wide. The Japanese are astronomically in debt as a country compared to the USA if had to settle debts with gold or petroleum their government treasury would collapse. China is moving in the same direction but the numbers are not published the way they are in Japan. If you watched the Chinese summer Olympics on television you should imagine that their government has significant debt even when sitting on a trillion or two US dollars in treasury notes. If the Chinese want to diversify into other currencies, gold or petroleum it is the same stupid solution as hoarding the dollars. A better plan for China, concerned about what do do with the dollar reserves is to buy oil for delivery and hoard it instead. Problem is they will hoard it just the same as opposed to just making gasoline prices lower for their general population which was the reason in the first place for no longer liking the US dollar. US oil companies have all the oil and gas and coal China could buy but instead they would have preferred to buy a US oil company, which we should have just let them buy, like Chevron Texaco. New oil companies grow on trees just because you sell one to foregoing company that when it wanted to buy Chevron was willing to pay a top of the market price before the market totally collapsed. The Chinese are looking foolish for making plans that might be worse than just spending US dollars and even letting their own currency float on an open market in terms of dollars and all the rest of the currencies it can be converted to. The dollar could be backed by gold but soon after it just goes back to a paper IOU. No major currency is monetized with hard assets as collateral. All precious metals are ultimately commodities which mean they are commonly available and subject to price liquidity issues subject to supply and demand forces. Go to a hard asset and end up with paper all over again. It might as well be the US dollar and that is why it just may remain that way. When the price of Gold surges and assuming it only costs $300 for the average mine to mine it with most of the cost being diesel fuel then we end up with a tremendously wasteful process burning a non renewable resource in record amounts to supply the world with species currency. If Gold stays at $1000 an once it means that mining companies can just take a huge supply of diesel and burn it to dig up the earth and waste huge mountains to essentially triple their money overnight while demand for Gold remains high. Assuming then that gold continues going up and goes to $6000 an once because of dollar devaluation then mining companies have a license to print money just the way the US treasury does because they get 20 times their money invested over night. Gold can spike in a bubble but it is probably unlikely it will stay so inflated in value for long. Governments would be buying high as much gold as possible as the price skyrocket waiting to sell very much lower later on and so Gold would not be much better in the long run than just staying with the besieged US greenback dollar. In a previous article I suggested that the US government should just do the right thing and back up the US dollar. I suggested using fresh water in the great lakes and/ or surplus wheat , corn and soybeans that the US takes off the market for farm supports as a form of backing. The US should do this as the responsible owner of the default international banking currency. Another resource that lies untapped in the US is the labor of the unemployed. Government can actually back the dollar with work of the unemployed by promising to pay workers who are otherwise not employed at half of the minimum wage but offering the labor on a credit basis as if it were minimum wage. That is a better way to put more people to work than with creating community service programs or having America or conscription suck up young employed laborers. The reason for labor is that work being done does add to the prosperity of the country in a general way that gold reserves in a safety deposit vault or fort Knox never will. It is rather strange how a people oriented government never seems to invest in paying for low wage jobs for the people who most desperately need some or any work and instead tend to invest in high expense worker who spend most of their time subcontracting all the work they are supposed to be doing by a variety of methods. In conclusion , yes it might as well be the dollar. If it were the Euro, petroleum , gold, the Chinese Yuan , it sill might as well be the US dollar because it ends up an IOU otherwise. It is possible for the US to back up the dollar and it already does with one of the more efficient taxation systems found around the world. Unfortunately there is a vast amount of dilution going on because of Congress spending way beyond it's means. Strangely enough the United States is not the only country with the exact same problem. The world default reserve currency might as well be the dollar and the US government should be backing it up instead of trashing it. This is the main reason people are scared that the Obama administration may intentionally be trying to destroy the economy. The US government has vast assets it can use in IOU to back up every dollar bill to every cent if it wanted to instead the government hoards land which once it does it cannot tax anyone for it's productive value. The dollar is not dead and is unlikely to be replaced by anything that makes a lot more sense. It might be replaced just as a convenience or concession in politics but that would be nearly as great a mistake with far reaching consequences as debasing it. In history we find that the home currency tends to be replaced immediately but a new home currency not a foreign home currency. This is seen in the US when silver coins get replace with base metal ones and base metal coins ultimately get replaced with paper or plastic (coins). History suggests the new US dollar worth a fraction of our present dollar or denominated in ten or 100 times the value of an old dollar will happen before the dollar is replaced by some foreign currency or commodity basket. . Lex Loeb Contributor Network . Right from the start it should be noted that the former Administration under G.W. Bush might be credited for creating the housing loan crisis, Their attempts to try making the US more competitive as an exporter with a policies that intended the dollar's devaluation is what ultimately led to interest rates rising and world traded commodity prices exploding in a bubble prior to the housing loan crash. The dollar has been in a mode of devaluation since the great depression when it actually appreciated due to wholesale deflation. The deflation of 2007-2009 does not really compare to what happened in the 1930s. The dollar has been on a steady path of decline and there maybe precipitous drops coming in the near future because of the so called stimulus spending. The danger signs are in the explosion of US dollars being printed but this does not necessarily mean the demise of the US dollar. The Mexican Peso still exists after a century or more of devaluations. The dollar is a completely different animal than the peso and this is because besides being the world's default reserve currency it is also a currency that "dollarizes" foreign economies. Zimbabwe which suffered one of the worst hyper inflations in all of history has finally put that to an end by becoming a dollarized economy. Dollarization means that our US dollar , as of this year-2009, essentially became the currency of choice in that no where African basket case economy. The important thing to pay attention to in this story of Zimbobwe is that they could have chosen Swiss Franks, British pounds, Euros, Yen , Pesos, Yaun , Gold or Silver but instead dollars, US dollars became the instant currency of stabilization. The little lesson from Zimbabwe is repeated all around the world. The US dollar may be a rapidly declining currency but it is not in hyper inflation mode instead it is absorbed around the world as if the world is a US dollar sponge. Parts of Eastern Europe are still more dollarized than they are Euroized or Rubbleized. The US dollar is an important currency to countries that include Cuba, Much of Latin America, Venezuela because of the oil industry there and because of the volume of trade with Canada they are more US dollarized than they might like to admit they are. Just because the dollar is being devalued by the US treasury, federal reserve thanks to US congressional spending gone wild does not mean it cannot remain the medium of exchange in distant dollarized foreign lands just as it is here. After nearly 100 years of dollar devaluations and it's being delinked from Gold and Silver leaving it in free float conditions there are virtually no major currencies anywhere on earth that have a gold or silver set conversion ratio but we do find set dollar conversion ratios for currencies like the Chinese Yuan. The last thing the Chinese or any foreign government are going to do to stabilize their own paper currencies is to link to Gold, Silver or any other monetizing commodity because they then are at risk of having to go out and purchase reserves of these precious metals , stock pile them for safe keeping and then find them self at some point in their world currency transactions having to actually pay out the hard currency reserves. No paper money printing government in existence is going to want to settle it's internal and external debts with hard currency. There are are number of reasons. Paper money gives them instant tools for having a monetary policy. Imagine what would happen if the IRS decided it wanted income taxes paid in gold and silver and not dollars--they probably would not be able to collect taxes if you were paid 40 once coins of gold instead and equal to $40,000 for your annual salary and you owed the government 25 percent of that in income taxes they would have to physically withhold 10 coins from you earnings or you would later have to send them in by US mail with your tax return. Once the government grabbed that gold they would want to keep it in reserve or settle important debts with it. Government just loves giving money to its friends so they might get gold but otherwise the government will hoard the gold as if by nature and find some way to issue an IOU for that gold which brings us right back to a new form of paper money. A piece of paper representing one once of gold that might be your tax refund is a lot easier and cheaper to send to you in the mail than an actual gold coin. A gold coin weighing an once and worth one week's salary is a lot of risk leaving in your pocket. It is easy to loose a coin but a coin for $1000 or more is trouble. If the Chinese have a big trade export surplus to the US and they get US gold coins in exchange for goods that takes money supply out of circulation that might not be as easily replaced by a government hoarding it's own gold reserves. The Chinese would be expected to melt down the US species and mint their own coins but will the Chinese government want to circulate those coins or send out their own paper IOU money? History tends to show that government hoard gold when gold is appreciating and tend to sell it when it is depreciating. Gold tends to go into public circulation in a national emergency when there is need to go to war primarily. The first thing governments do to mercenaries is weigh them down with gold. Without some national emergency most governments just keep hoarding. IOUs are not as acceptable when it comes to a national emergency. When Spain became Gold rich because of their conquest of Mexico and Latin America, gold deflation was on and the Royal Government of Spain completely blew away their gold reserves on building programs and Military extravagance that proved no match for the British who were not swimming in gold at the time . The British practically hired mercenary pirates to seize as much Spanish Gold on the high seas as was possible after the conversion of land and idolic gold treasury pieces from the Roman Catholic Church under King Henry the Eighth. Gold proved to be a lot less civilized than the US dollar as the world reserve default currency has. To the effect that the world is dollarized the US treasury and the Federal Reserve actually have to consider the international use when making monetary decisions. Dollars abroad tend to stay abroad. In a real sense the Chinese and the Japanese before them, practically destroy US currency by hoarding it in reserves instead of spending it in the US before it depreciates due to inflation. They do this to protect their mercantilism export businesses by trying to keep the home currency at an exchange rate that favors a stronger US Dollar. This policy only hurts their own people and does not hurt US consumers or workers. Hoarding US dollars means that people working for them by selling exports in the US are not reaping any benefit in doing so because they don't get to spend the US dollar cash where it buys actual us dollar goods. There is a strange academic brotherhood of central bankers who seem to understand the idea that earning interest on a currency in perpetual declining value due to more and more being printed makes no sense. So then we hear about secret meetings to replace the US dollar with a basket of currencies or commodities by countries suddenly afraid they are being short changed taking US dollars in payment. It makes no sense when you see the same government entities holding or rather hoarding in reserve US dollars. It is actually a financial comedy of sorts. The central bankers seem to be as dumb as the people accepting paper money they print with no actual backing. Thus the dollars is as good as any currency and probably just as good as Gold to the effect it would actually circulate in the world economy. It probably would not circulate very much at all just because if a $400,000 house had to be purchased with 400 one once coins of gold someone might go out on the street with a brief case weighing just a bit more than 25 lbs and risk having it stolen and melted down anywhere at anytime. The myth that gold could replace the dollar is a cliche'' and very absurd. Even a gold backed dollar is absurd since government will hoard rather than pay. The whole nastiness of the world war one reparations owed by Germany to the allies was because Germany had to find Gold or the equivalent to pay back. That government resorted to hyperinflation which led to the catastrophe of Hilter not too long after. He who owns the gold makes the rules is the old saying. It might as well apply to the US dollar as the world's default reserve currency too because as quickly as gold might become a substitute currency for the rest of currencies. He who has the gold makes the rules is one more reason governments never part with the stuff till they see it as a declining asset as opposed to one appreciating. With Gold or Oil as a substitute for US dollars first you get the IOUs for Gold and then you end up back with the dollar all over again. There is one more problem. When it comes to energy resources, world wide , US corporations actually control a very large share of these resources. Yes they pay royalties to foreign countries to pump out their oil and natural gas but in a real way the US dollar is already amazingly backed by a big basket of commodities and even by petroleum. Oil cartel countries might want to forget that they may set the world price for oil but they also have substantial competition from US entities in their same business. The Obama administration might want to Venezuela's the US by backing up the dollar by nationalizing the countries oil , gas, coal and electric resources but that means excess new production required to keep enough currency in circulation. If the government owns the means of production it merely substitutes its ability to tax corporations for government run inefficiency and that leads to potential disaster making petroleum the backing for the dollar. The demise of the dollar means foreign holders of US dollar treasury notes and all countries that are dollarized would be sent into a financial tailspin. The big talk about killing and replacing the dollar is nonsense until you see a country or countries ganging up and backing their own paper money with hard assets of any kind and that you probably won't see. The United States currency is backed by more than just hard assets. It is backed with more trust than foreign competitor currencies seem to have or they would have already replaced the US dollar. It comes down to goodwill and that sounds funny. Think of the one dollar as worth a few cents of what it was a century ago but as having a lot more goodwill than ever before. Certainly more goodwill than anyother currency in world history. The United States with this Good will given to it's currency should be doing the right thing now and backing the dollar with more than that but like everywhere else we have the same sorts of academic central bankers who tend to buy high and sell low. You would think that governments would be smarter than they do exactly the same thing with taxes which is effectively buying high and selling low because they will raise taxes when they should be lowering them to produce more revenues by virtue of the fact that productivity rises when taxes are lower. This problem is world wide. The Japanese are astronomically in debt as a country compared to the USA if had to settle debts with gold or petroleum their government treasury would collapse. China is moving in the same direction but the numbers are not published the way they are in Japan. If you watched the Chinese summer Olympics on television you should imagine that their government has significant debt even when sitting on a trillion or two US dollars in treasury notes. If the Chinese want to diversify into other currencies, gold or petroleum it is the same stupid solution as hoarding the dollars. A better plan for China, concerned about what do do with the dollar reserves is to buy oil for delivery and hoard it instead. Problem is they will hoard it just the same as opposed to just making gasoline prices lower for their general population which was the reason in the first place for no longer liking the US dollar. US oil companies have all the oil and gas and coal China could buy but instead they would have preferred to buy a US oil company, which we should have just let them buy, like Chevron Texaco. New oil companies grow on trees just because you sell one to foregoing company that when it wanted to buy Chevron was willing to pay a top of the market price before the market totally collapsed. The Chinese are looking foolish for making plans that might be worse than just spending US dollars and even letting their own currency float on an open market in terms of dollars and all the rest of the currencies it can be converted to. The dollar could be backed by gold but soon after it just goes back to a paper IOU. No major currency is monetized with hard assets as collateral. All precious metals are ultimately commodities which mean they are commonly available and subject to price liquidity issues subject to supply and demand forces. Go to a hard asset and end up with paper all over again. It might as well be the US dollar and that is why it just may remain that way. When the price of Gold surges and assuming it only costs $300 for the average mine to mine it with most of the cost being diesel fuel then we end up with a tremendously wasteful process burning a non renewable resource in record amounts to supply the world with species currency. If Gold stays at $1000 an once it means that mining companies can just take a huge supply of diesel and burn it to dig up the earth and waste huge mountains to essentially triple their money overnight while demand for Gold remains high. Assuming then that gold continues going up and goes to $6000 an once because of dollar devaluation then mining companies have a license to print money just the way the US treasury does because they get 20 times their money invested over night. Gold can spike in a bubble but it is probably unlikely it will stay so inflated in value for long. Governments would be buying high as much gold as possible as the price skyrocket waiting to sell very much lower later on and so Gold would not be much better in the long run than just staying with the besieged US greenback dollar. In a previous article I suggested that the US government should just do the right thing and back up the US dollar. I suggested using fresh water in the great lakes and/ or surplus wheat , corn and soybeans that the US takes off the market for farm supports as a form of backing. The US should do this as the responsible owner of the default international banking currency. Another resource that lies untapped in the US is the labor of the unemployed. Government can actually back the dollar with work of the unemployed by promising to pay workers who are otherwise not employed at half of the minimum wage but offering the labor on a credit basis as if it were minimum wage. That is a better way to put more people to work than with creating community service programs or having America or conscription suck up young employed laborers. The reason for labor is that work being done does add to the prosperity of the country in a general way that gold reserves in a safety deposit vault or fort Knox never will. It is rather strange how a people oriented government never seems to invest in paying for low wage jobs for the people who most desperately need some or any work and instead tend to invest in high expense worker who spend most of their time subcontracting all the work they are supposed to be doing by a variety of methods. In conclusion , yes it might as well be the dollar. If it were the Euro, petroleum , gold, the Chinese Yuan , it sill might as well be the US dollar because it ends up an IOU otherwise. It is possible for the US to back up the dollar and it already does with one of the more efficient taxation systems found around the world. Unfortunately there is a vast amount of dilution going on because of Congress spending way beyond it's means. Strangely enough the United States is not the only country with the exact same problem. The world default reserve currency might as well be the dollar and the US government should be backing it up instead of trashing it. This is the main reason people are scared that the Obama administration may intentionally be trying to destroy the economy. The US government has vast assets it can use in IOU to back up every dollar bill to every cent if it wanted to instead the government hoards land which once it does it cannot tax anyone for it's productive value. The dollar is not dead and is unlikely to be replaced by anything that makes a lot more sense. It might be replaced just as a convenience or concession in politics but that would be nearly as great a mistake with far reaching consequences as debasing it. In history we find that the home currency tends to be replaced immediately but a new home currency not a foreign home currency. This is seen in the US when silver coins get replace with base metal ones and base metal coins ultimately get replaced with paper or plastic (coins). History suggests the new US dollar worth a fraction of our present dollar or denominated in ten or 100 times the value of an old dollar will happen before the dollar is replaced by some foreign currency or commodity basket. .

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