Is the dollar doomed?

No…not by a long shot! No ther country has the collateral the US has. Obamas collection of golf clubs could collateralize a medium sized 3rd world country! ;)

Not necessarily, but debt and spending must be reigned in.

We are in the run up to an election year, which, IMHO, means that both sides have a vested interest in “playing ball”. Therefore, I am fairly confident that an 11th hour deal will be struck. However, you can probably expect some hard politicking/posturing to build the arsenal for the future round of finger pointing during the coming presidential debates between now and then.

Where are you getting those numbers though? I thought we were currently at a ~95% debt/GDP ratio. But I have heard reports saying 90% is the “bad” number where things start to sour.

All but doomed. If the US is downgraded from AAA to AA there will be more consequences that the average person has been made aware of.

ummmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm

Problem #1 with your premise…. The US debt is around 14.2 trillion dollars right now.

The US GDP last year 14.7 trillion dollars….. or 96.6% debt/GDP…....... we are not now, nor for that matter have we ever been, near 250% or 400% debt/GDP

In fact the largest ratio we’ve ever had was after the Civil War and World War 2, when the ratio was ~150%.

No,but what backs it may have to change.

@lucillelucillelucille Since we went off the gold standard, I’m not exactly sure what backs it now other than the perception of the strength of our economy.

@YoBob

The good faith and credit of the US government. For what that’s worth.

well I don’t know if its a rumor but they say china has a huge reserve of dollars and the day it decides to sell all of it America will be done for.

@Jaxk The full faith and credit merely applies to the principle that the US will pay back what it borrowed.
It says nothing about the value of the money that it uses to pay it back. If the US tries to pay its bonds with worthless fiat money, no fool on earth will lend it a penny and any interest rate.

@sophiesword The reserve you’re thinking of I would assume is simply US bonds. The Treasury dept. knows exactly how much money is out in the world right now (I mean not down to the cent, but within a few hundred million I would assume). For that matter, everyone else knows how much is out there. So if China was hoarding some, it would have to be money that we didn’t know exists, an impossibility.

China currently is the largest single state owner of US treasury bonds. But to put it in prospective, they own something to the tune of ⅓ of international owners US bonds, Japan and Europe (combined) both own more than China…. US native entities own more than 50% of treasury bonds, with the largest single holder of US treasury bonds is…. dun dun dun… the US government, via the different agencies (for example Social Security owns several hundred billion in bonds).

I think @sophiesword has a point

@YoBob That is true.Nothing really backs it and when they print money and Bernanke is doing today,it becomes worth-less.

Money is trust. It doesn’t matter what you back it with, it will still be about trust. You have to believe that all the money in the system accurately reflects the value of all the capital and goods and services.

People lost confidence when the mortgage loan crisis occurred. That’s because the mortgage companies were misrepresenting the value of the properties underlying their mortgages. This crisis in confidence led to many businesses pulling back because they had no confidence that money was worth what we thought it was worth.

So there we are with all kinds of excess capacity that is unused. If we could stimulate the economy by pumping enough money into it, then people would spend enough to make it worth reopening those factories. Did we do that? No. People believe the axiom that when the Fed prints money it leads to inflation. People believe this because they don’t know what money is.

Since they don’t know what money is, they come up with all kinds of other stupid ideas like going back to the gold standard, which we have discussed ad nauseum here. They come up with ideas that I truly hope are just provocative, such as the dollar is doomed. Nothing could be further from the truth. The dollar is still the gold standard (irony intended) currency of the world. Even if we default, it will be. Remember, the amount defaulted on will be small compared to the amount of debt out there.

But the Republicidiots along with the Flea Party are making such a huge fuss about it, that their idiocy reigns supreme over an accurate understanding of how the economy works. Everyone knows that you spend your way out of a recession, and you cut taxes and spending in order to keep the economy down. When the economy is down, then rich people like the Republicidiots can make more money. Too many workers chasing too few jobs means lower labor costs. The Republicidiots don’t want to come out of recession. They are making too much money. Never mind that they would make more if the recession were gone.

The dollar is fine. The debt load is fine. The Congress is fucked. It’s ass is jammed with a butt plug. It thinks as if its ass was blocked up that way. Congress needs a laxative, I think. Boehner especially. If they ate the paper legislation was printed on, and blew it out their asses, we’d get better legislation then they come up with on their own.

Well. Can’t really blame them. Got to blame the idiots that put them in office. That would be you….. and even me!

It doesn’t need to be. But is seems a sufficient number of us have decided that we don’t do big things anymore. We can’t afford to do what other nations do routinely. We instead are going to shrink our way to greatness. The new American exceptionalism. I just don’t get it.

Not doomed. In some trouble perhaps. The same applies to the euro.

It seems, @ETpro, that you believe that it is the government rather than the individual that should be tasked with doing big things. To be sure, there are things that governments are better at doing than individuals, but these, IMHO, are the exception rather than the rule.

The American economy rose to be the dominant economic force in the world through the innovations of private enterprise, driven by the profit motive. Removing the profit opportunity by taxing the snot out of the innovators, thus making it wiser in the case of the smaller mom and pop players to simply not participate, or in the case of larger enterprises, to simply go global, is a recipe for economic stagnation.

Work programs to build infrastructure are a wonderful idea that will both create jobs and provide end products that are of national value. I would far rather spend money paying for useful work rather than funding a dead end poverty cycle driven social welfare system. But at the end of the day I would far prefer private enterprise to be the engine that produces the most jobs rather than “Uncle Sugar”.

@YoBob Who built the Transcontinental Railroad? Who built the Panama Canal? Who built Hoover Dam? Who built the Interstate Highway System. Who sent a man to the moon?

I believe in things that I can actually see—things there is evidence for. Even though there is no country on Earth that does big things because their private industry finds that the most profitable thing to do, right-wing ideologues believe that is the only way to do great things. Evidence, results, what actually happens when you follow a given policy. Theyse things are meaningless to the faith based community. Their faith in their political ideology trumps reality for them. And tere are enough of them in the US now that we are going to try to shrink our way to greatness even though there isn’t a shred of evidence that can be done; and there are mountains of evidence showing it can;t work.

I’m not against private enterprise. I’m just not so lost in ideological BS that I think private enterprise without government is the way to go. When we built the middle class in the post WWII boom, we had a sensible balance of private enterprise and public policy. Neither one works well all by itself.

@ETpro – I quite agree that there are some things that government does better than private industry. The projects you mentioned are great examples. Once again, and as previously stated, “I would far rather spend money paying for useful work rather than funding a dead end poverty cycle driven social welfare system.”

There is, however, a huge difference between the desire to remove the pork from a budget when our government is approaching $14,3 trillion in debt and is running an annual deficit of somewhere around 1.5 billion dollars. Alas, it seems the mere mention of considering reigning in our spending causes many from the left side of the isle to go into spasmodic fits.

While it is true that government works projects gave us things like hydro electric power and water management (as a side note I would love to see us start building pipelines from those areas with water to spare into those places that experience periodic severe drought, and I would darned sure rather pay somebody to do that than to simply collect a welfare/unemployment pittance), it is private enterprise that has given us pretty much everything else that we take for granted while enjoying the highest standard of living ever known in the history of humanity.

While we are in agreement that neither private enterprise nor government social programs work well all by themselves, we have a difference of opinion as to where that balance point should be. I favor tilting the playing field towards private enterprise and the entrepreneurial spirit.

Alas, one of the side effects of trying to Fluther while attending to an actual job is a tendency to create sentence fragments.

The first sentence of the second paragraph above should have read something like:

There is, however, a huge difference between the desire to remove the pork from a budget when our government is approaching $14,3 trillion in debt and is running an annual deficit of somewhere around 1.5 billion dollars and a desire to gut any and all social services that we currently fund.

Of course, I’m sure most jellies are quite smart enough to have caught the jist, even though the sentence was incomplete.

@YoBob

deficit of somewhere around 1.5 billion dollars – S/B – 1.5 trillion

But yes we understood your point.

@Jaxk Sorry, my head spins when so many zeros are involved… ;)

@YoBob We haven’t had a debate on what government properly should do, and what should be left to private enterpris or even to individuals. It’s high time we do debate that. If the Tea Party can take credit for anything good for this country, it is for getting that debate underway.