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Screw USA ??

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Kartik Raichura
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Thumbs up Screw USA ?? - August 22nd, 2006

Screwing USA , the easy way !!

Below is a email I received. Comments expected

Quote:
Hello folks,

Yesterday I recieved a mail with a powerpoint attachment containing a
presentation about how USA can be humbled from it's percieved status of a global bully.

So I thought of verifying it from reliable sources / experts in economics and finance if
any on this group.............in theory, it does look plausible, atleast to simpletons
like me.

Has anybody else seen that mail ? Here is the crux of that presentation which exhorts
everybody to sell-off US dollars and explains how it will work.............

Mehatire Mohammad, the prime minister of some Islamic country (naturally !! ) has
presented the following plan of action urging everybody to :-

-Sell a US $1000 each.
-Buy gold or any other currency in lieu
-convince 10 friends to do the same
-Stop dealing in USD altogether
-After 10 rounds, market will be flooded by 1.1 trillion USD

( this has been illustrated using a arithmetical table ). He claims that doing so :-

- Will cause a drop in the rate for USD
-Which will cause panic among investors and institutions, who, as a result of this will
start selling their USD.
- All Govt cash reserves will gradually change to Euro /Yen or other currencies
-Oil producing countries will shift to other currencies
-USD will become as good as the paper it is printed on, as the US federal reserve does not
back it's currency with gold.
-In a nutshell, it will break the backbone of US economy and bring it to it's knees.

I think this provides a good topic for atleast a sincere discussion / analysis to prove or
disprove whether the US economy is, in fact, as fragile as it has been portrayed
above............

Awaiting........

AY
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shrijit_s
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Re: Screw USA ?? - August 22nd, 2006

Hey

Though I haven't recd this mail, but I have read similar articles in some magazines. Which also says the same thing that a number of countries like Japan, China, India etc help US in maintaining a huge deficit. US literally lives on borrowed money and other countries help it in doing so.

One very big flaw of the suggested route is global trade. Lets assume that countries start selling dollars and thus convert USD into junk. US falls into a debt trap and goes into a full fledged recession, which would be more severe than the great depression. This will automatically lead to a global recession. Because many US is one of the biggest market for countries like India, China, Japan etc. Their exports will be hampered severely leading to surplus supply and no matching demand in the domestic market. This will lead to a huge price fall maybe evenleading to deflation or stagflation (a la faced by Japan in the lase decade or so). So a global recession does not seem far away.

If we take the example of India. Companies like Infosys, Wipro, Ranbaxy etc depend a lot on the US market for their operations. A good part of their revenue comes frm US. If US goes down, these companies will either go down with US or they will be severeal affected.

But I dont forsee such an event in future. It depends on many political considerations.

My though. Dont know if it makes any sense to u guys!!

Cheers!!


Cogito Ergo Sum
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hawk31981
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Re: Screw USA ?? - August 23rd, 2006

This idea can succeed as discussed in a one of the classes i had taken in world economy however there will be consequences for other countries when this happens we have to realise that allmost all countries have their debts and trade nominated in USD and the effect of this crash will also take them down besides that consider that most countries in the world by and park their excess funds in US government securities what will happen to all that money the point is that it will be simply wiped out and its not possible to just convert all those reserves into gold the market does not work that way. The moment the run on the USD begins the value of the dollar will begin to fall and those who hold USD wil suffer. This theory is therefore possible but highly unlikely to actually happen because of the consequences to the others.
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Re: Screw USA ?? - August 31st, 2006

brilliant... how all of us can fool the international market and rates
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Priyesh Thakker
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Re: Screw USA ?? - March 26th, 2010

wow .. i never taught of this .... !!!

i think this can surely work ... bt d pll will be in suffer after all ... juss like d fall in share bazar !!

Bt making USD value to decrease does nt bring ny profit 2 us .. as we r trying 2 make d US Suffer .. later that will come back 2 us !!

As IT IS SAID WHT GOES ARouND COMES Around !!!

Plzz Correct Me If Im Wrong ... Im Nt A EXPERT Or Ny economics !!! :P
Juss My View !!
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Vibha Vaidhya
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Re: Screw USA ?? - March 28th, 2010

China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral.

What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of re balancing, but the Greenback will bear the brunt.

here's the theory.
It is well known that the U.S. Federal Reserve continues to print money to pay down debts owed to countries such as China. It is also known that the Fed printed billions to “bail out” banks and create “stimulus” plans to boost the economy.

There are a lot of doomsayers on the internet and in media that say this devalues the U.S. dollar both locally and globally. Technically their claim is correct: each dollar used to be backed by actual gold; that backing was removed in the 1970s and ever since then money could basically just be printed up.

But this is where the doomsayers logic ends. Their belief is that because money’s value is only as good as the economy’s belief in it, the value can disappear because there is no gold backing the paper money. Once confidence in the dollar is lost, many doomsayers say that the U.S. economy will completely collapse.
A few popular predictions are being made across the internet and in the media by doomsayers:

1.) The U.S. will end up like Zimbabwe where the government printed so much money so quickly that inflation rose by thousands of percentage points. Soon there were currency bills that red “One billion dollars.” Eventually no one could afford anything since something like a loaf of bread cost a few billion. The value of their currency vanished and now gold is the only accepted currency. The concept cited is “hyperinflation.”

2.) Since other countries are trying to move the World Reserve Currency away from the U.S. dollar due to decreasing value, the U.S. will be left high and dry by the other countries.

What is likely to happen if the U.S. dollar collapses (based on something known as “logic”). Here are a few possible situations:

1.) The U.S. dollar collapses and there will be a brief time of chaos. However the U.S. chief export is consumption, they consume the highest amount of resources and goods in the world. Countries that once sold to the US can no longer sell if there is no money, so the dollar could in theory be propped up by another currency. Imagine a dollar backed by the yen, the Euro, or once again by gold.

2.) There are over 300 million “consumers” in the U.S. Other economies would suffer if U.S. citizens suddenly lost all of their money and their spending power. The U.S. could adopt another currency or begin consuming using multiple currencies and abandon the dollar. Financially, it makes little sense to let a huge consumer base collapse and vanish so global companies and countries that export often to US will step in.

Technically you could pick up an orange and claim that oranges are equivalent to what was once $100. If a lot of people also believed it, you’d be buying and selling in oranges instead of dollars.

just an overview of ideas form various posts
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