US dollar collapse possible

[Ludi]

How should we prepare?

"The dollar may fall this March
01/14/2006 16:41
America's foreign debt currently standing at $8,184 trillion will hit the debt ceiling as early as February-March 2006

The United States is heading to financial crisis at top speed. That is correct, America will default on its foreign debt sooner or later if the actual trends remain unchanged. Consequently, the whole dollar-based world (including savings in U.S. currency) may crumble. In actuality, the public have grown tired of numerous forecasts regarding an imminent collapse of the U.S. economy. The picture looks pretty grim this time around. Several factors will have an extremely detrimental effect on the dollar, according to U.S. Secretary of the Treasury John Snow who forwarded a letter full of ominous predictions to 21 members of U.S. Congress. The letter was made public after the markets had been closed for Christmas and New Year's holidays - a rather appropriate precautionary move in terms of the international foreign exchange market, which is extremely sensitive to any sound produced by U.S. bureaucrats.

In his letter, Snow predicts a crisis in February this year. Citing U.S. government forecasts, Snow believes that America's foreign debt currently standing at $8,184 trillion will hit the debt ceiling as early as February-March 2006. For decades the White House has been borrowing money to cover expenditures that exceeded the real economic growth rates. As a result, the U.S. public debt currently totals to $8.1 trillion, a huge figure compared to the U.S. GDP that is slightly above $11 trillion."

http://english.pravda.ru/world/20/91/368/16741_dollar.html

[Tesseract]

OK, now I'm nervous... *bites nails*

[tricia soup]

there's not a whole lot we can do to prepare for a depressed economy. even stockpiling cash won't do a whole lot of good because if the economy collapses, that money won't be worth much anyway.

the worst thing people can do is panic - panic creates chaos. if we can manage to stick together and maintain peace, we can make it through any hardship.

with the way our country is run, this was bound to happen someday... but we'll make it through! :up:

[Daral]

I don't see the U.S. defaulting on its debt, because that will only happen if other countries (china,japan) call in their debt. However, a U.S. depression would have world-wide repercussions, so I expect other countries will be extremely measured in their actions; thank you globalization. However, I think everyone (including conservatives) agree that americans will have to begin saving more money (currently we save about 2%, I think, of our disposable incomes). This will reduce consumption, which will have a negative impact on the economy. There really isn't anything we can do about it, other than try to start saving soon to minimize the impact.

I should point out, though, that this will most likely not be as apocalyptic as may be predicted. There will be some backlash, but the rest of the world (especially the export-heavy countries that own so much of our debt) is too strongly dependent on a good global economy to allow us to collapse.

[Ludi]

US citizens average savings rate is less than 1% of our income.

'When the Commerce Department recently tallied up consumer finances for November, it found that Americans shelled out more money than they took in. It was the seventh such month of red ink during 2005.

Kevin Lansing, an economist with the Federal Reserve Bank in San Francisco, tracks the personal savings rate -- the Commerce Department's measure of how much consumers have left after spending is subtracted from income. In November the savings rate was a negative 0.2 percent.

Given how much red ink households racked up in the first 11 months of last year, Lansing said the nation's personal savings rate could well be negative for all of 2005.

That, he added, would be "the first such occurrence since the Great Depression."'

http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/01/08/BUG7IGJHEK1.DTL&type=business

[Daral]

Wow, I didn't realize we had hit negative already. Even so, my analysis still applies; Americans will need to save more money sooner or later, and it'll cause a recession at least, especially since we're on shaky economic ground, even now when we're spending everything we have.

[Ludi]

How will we save what we don't have?

[Kyo]

The dollar has already fallen about 25% in the last few years. The trade deficit isn't getting better so it probably needs to fall more. A simular thing happened in 1985 and the deficit was squashed after the dollar dropped almost 50%. Hopefully the fall will be orderly and foreign bond investors won't pull too much money out. The US government needs to do everything they can to encourage people to save more and borrow less so we aren't so dependent on foreign investors. The higher interest rates that exist today will help.

As Daral said, foreign governments don't want to see the dollar collapse; it will hurt them also. They are being very careful about what they say and do. Many countries are slowly and quietly diversifying out of US dollars. They are still holding onto dollars but at the same time putting more money into other currencies. In the long run the devaluation should help the US economy, in some ways. It will make US products cheaper abroad so it will help export industries. But it will make imported products more expensive though.

[MollyGoat]

Well, that will suck. I don't know what I can possibly do about it, though, so I'm just going to try not to worry about that.

[DMZdogs]

Um, yeah and North Korea will attack South Korea ANY MINUTE NOW!

Doomsday stuff makes me laugh. :D

Don't forget about the world-wide collapse because the computers couldn't handle the change to the year 2000. How EVER did we survive?

[catdance62]

FOr those of you that are interested, you can invest start foreign bank accounts in Euros, Yen, Deutshmarks, etc. (and others, but some can be quite volatile) You can make some money doing this, but you have to watch the markets consistently. Unfortuantely, some countries have their currency's value pegged at a ratio with the US dollar, and once you open an account it may be hard to get your money exchanged into US$s should you need them.

[Ludi]

Um, yeah and North Korea will attack South Korea ANY MINUTE NOW!

Doomsday stuff makes me laugh. :D

Don't forget about the world-wide collapse because the computers couldn't handle the change to the year 2000. How EVER did we survive?


A US economic depression is hardly "doomsday" and actually did happen once, if you recall.

[soilman]

tricia soup "there's not a whole lot we can do to prepare for a depressed economy."

Not so. We can learn to grow our own food, make our own clothing from cotton, linnen, etcetera, and make our own shelters from wood, stone, mud, thatch, etcetera. We can congreate in small villages where life is centered around farming. Very much the way this is done today by mennonites. Yes, it is hard work, but with the addition of just a few industrial contraptions, it becomes easier. I would start with alcohol production and farm machinery that runs on alcohol. Even the earliest most primative tractors are way ahead of using a horse or a donkey to pull soil-cutting tools. Yes we will need to make steel tools. There is a huge stockpile of scrap iron and steel, so we will not need to find new iron ore. Yes, the cost of this scrap will rise from nearly worthless, to a significant cost. But it will still be cheaper than making iron from iron ore.

An ideal starter community would be about 20 people and 20 acres. I would start growing soybeans right away. Then potatoes. For nuts, I would start with almonds. Then I would plant vegetables that over-winter in temperate climates -- the rutabagas, or giant turnip. Melons would provide fruit right away, but I would also plant fruit trees, which would differ depending on the climate.

I would start thinking about refrigeration and freezing technology. Refrigerants: freon is difficult to make; ammonia requires petroleum or natural gas. I could use some suggestions re refrigeration.

[Ludi]

In a cold climate like yours the old fashioned icehouse is a possibility.

[Daral]

A US economic depression is hardly "doomsday" and actually did happen once, if you recall.

Once.... hahahahahaha. I know what you meant, but come on. We've had a few more than one depressions. Of course, we've only had one serious global depression, which I believe is the event you're referencing.


Not so. We can learn to grow our own food, make our own clothing from cotton....

Ummm..... I think in the circumstances we're likely to see in the medium term future, you'd have a higher standard of living staying in a city and trying to adjust your job to match the new economic situation than if you started civilization over from scratch...

A low dollar just means that import costs will explode, which will reverse the outsourcing trend we've seen over the past 5 years. Of course, the problem is that we've become economically dependent on outsourced jobs, so the crunch is going to be significantly a result of the higher costs associated with moving labor back into our high-cost labor market, combined with the resultant wage drop as people are forced into the low-paying jobs we've previously outsourced.

The other major factor is how much capital is pulled out of the U.S. by investors when the dollar starts falling. In short, there's a high risk for many americans defaulting on their debt burden (think morgages).

[Diana]

FOr those of you that are interested, you can invest start foreign bank accounts in Euros, Yen, Deutshmarks, etc. (and others, but some can be quite volatile)

Buying Euros is not a bad idea. If the dollar collapses, the Euro will take over as the main world currency. (Catdance: DeutchMarks no longer exist - they were replaced by the Euro). Swiss Francs could also be a good option.

One day, the Chinese will take over the world economy, but we still have a couple of decades I think before that happens. But they are slowly buying up things quietly (and not so quietly) all over the world. They're the next World Rulers when the USA has finished its descent.

[soilman]

Ludi transporting ice from frozen lakes is a rather complex business that pretty much depends on specialization of duties and exchange of money, and long distance transportation. also, many of the frozen lakes we used use as a source of ice, are now severely polluted (they are nearly sewage) -- which would reduce the supply of ice and make it very expensive. Further, ice is nearly useless for keeping any significant quantity of food frozen.

If there was a drastic devaluation of the dollar, I believe ice, from frozen lakes, would become extraordinarily expensive, and more expensive than ice made by, what would become very expensive electricity, or by burning of fossil fuels, or alcohol.

[catdance62]

One day, the Chinese will take over the world economy, but we still have a couple of decades I think before that happens. But they are slowly buying up things quietly (and not so quietly) all over the world. They're the next World Rulers when the USA has finished its descent.

I agree. And I don't think the rest of the world is taking notice.

[tricia soup]

tricia soup "there's not a whole lot we can do to prepare for a depressed economy."

Not so. We can learn to grow our own food, make our own clothing from cotton, linnen, etcetera, and make our own shelters from wood, stone, mud, thatch, etcetera. We can congreate in small villages where life is centered around farming. Very much the way this is done today by mennonites. Yes, it is hard work, but with the addition of just a few industrial contraptions, it becomes easier. I would start with alcohol production and farm machinery that runs on alcohol. Even the earliest most primative tractors are way ahead of using a horse or a donkey to pull soil-cutting tools. Yes we will need to make steel tools. There is a huge stockpile of scrap iron and steel, so we will not need to find new iron ore. Yes, the cost of this scrap will rise from nearly worthless, to a significant cost. But it will still be cheaper than making iron from iron ore.

An ideal starter community would be about 20 people and 20 acres. I would start growing soybeans right away. Then potatoes. For nuts, I would start with almonds. Then I would plant vegetables that over-winter in temperate climates -- the rutabagas, or giant turnip. Melons would provide fruit right away, but I would also plant fruit trees, which would differ depending on the climate.

I would start thinking about refrigeration and freezing technology. Refrigerants: freon is difficult to make; ammonia requires petroleum or natural gas. I could use some suggestions re refrigeration.

soilman, i'm all for this way of living if the going gets tough (my parents live on a farm, so i'll probably be ok if the sh*t hits the fan). but you have to be realistic and look at the general mindset of most people in this country. we're talking about preparing for a depression, not reacting to it. most people aren't concerned enough about the possibility of a depression to start preparing for it in this way. and it's definitely great to promote this way of life, but until the worst actually happens, you're going to find a very small percentage of people who are willing to start living their lives in communal farming environments. but i'm glad you're encouraging this lifestyle, because it may come down to this someday. but then again, maybe it won't...doomsday scenarios are predicted quite frequently but rarely happen.

[Ludi]

soilman people used ice from lakes and ponds for cooling during the summer months. It's ok if you don't believe in that technology, but it is what people used in the old days. Whatever. I get tired of debating you over everything. Really, it's just tiring. So, whatever...

[Ludi]

Here's another kind of low-tech refridgerator. No doubt it doesn't work worth poopy either...

http://www.worldaware.org.uk/awards/awards2001/mobah.html

I totally give up, this is it, the end, the end, the end.

No more helpful suggestions, no more discussion.

[soilman]

"Here's another kind of low-tech refridgerator. No doubt it doesn't work worth poopy either..."

No, that is a good idea. Excellent insulation, coupled with evaporative cooling using water is effective for short term storage and much easier than transporting ice over huge distances, in a situation where that would be expensive, due to the high price of gasoline or fuel oil, or require the days and days of hauling in human-pulled carts, or require an animal bred for pulling cargo, and therefore animal husbandry.

[soilman]

tho cooling by evaporating water from the sand in between the 2 pots, would work very nicely in the (dry air) desert, it wouldn't work so well, in the summer, where I live, on an island surrounded by ocean, where the air is rather humid all summer.

[Diana]

I agree. And I don't think the rest of the world is taking notice.

I think the world is pretty much aware but due to their numbers in population, we are absolutely helpless to do anything about it. It's like watching a tank coming towards your house to bulldoze it down and all you have are your bare hands to push it back.

It's going to be a strange world for us all when they impose THEIR rules and regulations and customs.

In England, there are already a few private schools where learning Mandarin is a compulsory subject. Those students have got their professional futures assured for good.

[tricia soup]

china is certainly on the up and up...if they DON'T surpass us as the world power within 10 to 20 years, then i'll have to give our government more credit than i thought they deserved. which at this point, is very little...it might even fall into the negative credit range. :stinkeye: