Is this the end of the dollar

[lucy]

You will know when the Value of the US Dollar looses all of its value when you go to your Local Big Box Store, or Pharmacy etc to buy a Small Bag of Chips and or Can Of Pop and there is a Sign over it that says "Financing Is Now Available" for these items

Financing for everyday purchases has been available for a long time already. It's called credit card.

Also, the US is very cheap to go to, at least when you can buy your Dollars with Swiss Francs. On the other hand, if you're not so smart, like me, and forget that you have several hundred bucks in an envelope buried in an office drawer and then have change them back with a loss of 150 it's kind of a pain in the ass. *rolls eyes*

Also, devaluation isn't only a bad thing. Exports profit. Paying debts gets easier, too. Traveling abroad, though, gets more expensive.

[leo9]

Also, devaluation isn't only a bad thing. Exports profit. Paying debts gets easier, too. Traveling abroad, though, gets more expensive.

Which is why one of the bones of contention with China is their artificial depreciation of their currency. Of course, travel abroad is not a priority for their government.

It's also one reason the Southern members of the euro are having such troubles. Normally, one of the consequences of an economic crash like theirs would be a massive fall in their currency value, which would help their recovery by boosting exports and discouraging imports; but that's not an option.

Too much pride in the value of your currency goes before a fall, as the Thatcher government discovered when they nearly bankrupted the Treasury trying to support the GBP above the market's valuation.

[js207]

Which is why one of the bones of contention with China is their artificial depreciation of their currency.

Yes - as noted earlier, that's one of the reasons China can't currently be considered as a realistic contender for a reserve currency, let alone a viable replacement for the USD.

Too much pride in the value of your currency goes before a fall, as the Thatcher government discovered when they nearly bankrupted the Treasury trying to support the GBP above the market's valuation.

It was Major, not Thatcher, and it wasn't pride but their ERM obligations to other EU countries which required them to prop up the currency value - but yes, it was disastrously stupid to make the attempt (they managed to burn £3.3 billion before figuring that out!) - though in the long term, that damage 20 years ago is probably a fraction of the damage we'd have suffered if the crisis had hit later on when it was harder to escape, as Greece and Ireland have found.

[leo9]

It was Major, not Thatcher, and it wasn't pride but their ERM obligations to other EU countries which required them to prop up the currency value - but yes, it was disastrously stupid to make the attempt (they managed to burn £3.3 billion before figuring that out!) - though in the long term, that damage 20 years ago is probably a fraction of the damage we'd have suffered if the crisis had hit later on when it was harder to escape, as Greece and Ireland have found.

The pride was in the decision to join the ERM at an unrealistic valuation fo the GBP. Once they had, in effect, bragged of the strength of their currency, they were committed to backing their boast with money. And not just their own money. I was following the crisis on the radio in the shop, and at one point a fellow in a sharp business suit asked me for the latest. When I told him interest rates had gone up to 15% he went white as a sheet.

And as many commentators pointed out at the time, if they had managed to stay the course it would have crippled our trade balance. I was one of many businessmen who were very relieved when the GBP was allowed to drop to a value where we could export again.