Sorry, I forgot to address that. You see, there's a difference between "denominated in USD" and "paid in USD". The latter requires the US dollars at hand (=printed). The former does not. So, that does not mean there are $50 trillion actually circulating in the world.Originally Posted by Ramil
I really hope you haven't reached your conclusion based on that number.
Oh, all right.You happened to pick a bad year, and the 2006 was far from being the best for the US economy.
Yep, I did point it out.Also, the way you reduce the GDP is totally up to you
I still think that the 'official figures' do not match the reality.and does not match the reality.
Yes, right until the inflation catches up with them.The "virtual added value" does count as people are willing to exchange their hard work (=services) for those items under normal conditions.
There's a large part of the corporate stock value in the US's GDP. And many corporations are made out of the air (lawyer agencies, investment funds, media, etc). I don't argue about the fact that their goodwill still worth something but I don't think the rest of the world should owe the US because of that.
Yes, another useless layer in the 'added value pie'.Also, not only the real assets matter. If you buy a house, you still have to pay the agent and the lawyer fees
If we were speaking of US only I would agree with you. But things are a bit complicated by the fact that the amount of 'virtual dollar' transactions in the world market is much higher than US economy could possibly compensate even with their virtual 'added value'.And I would agree with you that the US government might be trying hard to blow their own horn and sell their currency for a couple of cents more, but that does not mean "there's nothing but the dollars".
Every central bank MUST buy out all its national currency at first request. That's the whole problem. The more intense the world economy is the less chances for the US to secure all its liabilities. The risk of US's default will only increase with time and that wouldn't play for the value of corporate stock and goodwill either.
Normal conditions you're speaking of is a very fragile thing and they can end at any moment.
What currency, do you suppose, Zambia is paying to Ephiopia with? 90% of world's trade is carried out in US dollars (denominated and paid). And you don't have to have cash, by the way, ever heard of bank transfers?Sorry, I forgot to address that. You see, there's a difference between "denominated in USD" and "paid in USD". The latter requires the US dollars at hand (=printed). The former does not. So, that does not mean there are $50 trillion actually circulating in the world.These are also money and MUST be converted by the FR into any other currency or gold at the current market price at first request. If nothing else, one can always sell dollars on the exchange market and the greater the amount the noticeably lower the current market price would be after this.
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Ok but hasn't the USA been living largely off:
1) Cheap labour in South America / Asia - particularly in such countries where they have more or less installed a pro-US government and/or actually have a military presence..
One can think that the USA uses force (installed government, military presence...) But look at China, Vietnam, India. They do provide cheap labour, but where's the US influence?
2) Credit (loans from other countries) and the power of the dollar and their ability to "create money" out of thin air - just by printing more dollars....
Yes. But this is the pay for the European nations' behaviour during WWII (excluding the UK). They lost economic power while the USA kept theirs. Butm the USA isn't just printing dollars. It develops technologies, conducts fundamental research, markets, manages and finances.
Society's development level differs in different part of the world. That's not news.There is no "divine law" that says that an American industrial worker should have a better standard of living than a Chinese industrial worker.
It exploited its own people instead like the USA never did. Look at the countries the USA once stationed its troops: South Korea, Japan, West Germany... They don't look that worn-off.The USSR for example didn't really exploit third world countries as far as I know, and it didn't play the credit / loan / money printing game either... I think that would have been against pretty much all of its' policies...
Nope. Socialism works if it imprisons people for being late for work. Once it dropped doing it, it chose the way to its death. On the other hand, no nation can last for long under that conditions.I guess one of its' major stratic fault was that it thought too much of the future glorious vision of Communism while forgetting to consider that normal citizens compared their lives to what they knew about capitalist countries.
Please correct my English
Yes, I agree that won't happen. Do you remember an old saying: if you owe me $10 it's your problem, but if you owe me $1,000,000 it's my problem. There are all those funny "debt restructuring" things that, alas, do not apply to the normal human beings. Those are all kind of gimmicks of the type "I promise doing less trade in favour of your trade and I support your government doing that and that for the next 10 years, etc." That is also capital that countries possess.
My first guess is - they don't pay anything to each other, perhaps forget each other some debts. Both countries, at the best, would only pay to the WMF and specific banks. And if the loaning institution requires USD or euros, those USD or euros are purchased in the market at the market price at that moment and wired to the loaning institution. But I definitely hear what you're saying. There seems to be too much US currency outside of the US. That makes a wrong impression. Don't forget how much investment the US is carrying out abroad. I'm sure you heard that countries are crying for the investment into their infrastructure. And who is investing? And in what currency?
Ok, I'll give you an example from the real life. I know that in Israel all apartment renting contracts (and some IT job contracts) are done in USD amounts. But those amounts are to be paid with the NIS (the local currency) on the day of exchange. So why the contracts are in the USD? Because the USD historically is more stable than the NIS. That makes the contracts more predictable for longer periods of time. USD is a lower-risk currency comparing with the NIS. I would say that might be the same reason "90% of world's trade is carried out in US dollars". (I wouldn't start disputing the 90% as I think that number is a pure guess.)90% of world's trade is carried out in US dollars (denominated and paid). And you don't have to have cash, by the way, ever heard of bank transfers?
You're speaking about nominating liabilities in US dollars, but I was speaking about commodities. About import and export. There are really huge turnovers and the contracts ARE executed in US dollars.
Banking system is built this way. Somebody has to push a button and 'wire' some amount from one account to another. Then the receiving bank will decide what to do - either to sell the currency (wire it to another bank in fact) or to keep it. If you deposit, say $10 million overnight to a bank at 3 per cent, tomorrow you'll discover that during the night your deposit increased by somewhat less than $1,000. These are 'real money' that can be sold. The bank would receive even more, since your money had been probably working on the Forex all night. Every time money cross some border and with every bank they get multiplied. But the question is - does real GDP keep up with the rate money are multiplied? I seriously doubt that.
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Umm, I feel totally confused right now. My understanding is that you tried to estimate the amount of the printed USDs based on the global debt (denominated in USDs) as follows:
And what is a debt? Isn't that a [long] list of liabilities?!
So, please spell it out for me, as now I'm under impression that you let that T$50 go without letting me know, and quietly switched to the other approach based on the commodities. (Which, by the way, I like much better.) Did I get that right?
I wasn't estimating the amount of printed dollars, but all dollars, printed or not.Umm, I feel totally confused right now. My understanding is that you tried to estimate the amount of the printed USDs based on the global debt (denominated in USDs) as follows:
You spoke of the contract where the price is set in US dollars, but the execution is carried out in different currency. Such contracts are common in countries where national currency is not very strong, but I was speaking of the international trade where nobody would be interested in your 'colored beads'. About 90% of such contracts are executed in dollars.
And, I was trying to estimate the total amount of US dollars in the world (existing in either printed or electronic form). Why are you taking only cash into consideration?
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I'm also ok with the electronic funds. So, are you saying that a country's debt denominated in USDs is effectively an instance of the USD (in either format)?
Sometimes I get the feeling that you are simply trolling me 'for lulz'I'm also ok with the electronic funds. So, are you saying that a country's debt denominated in USDs is effectively an instance of the USD (in either format)?
Read my posts. I'm saying that contracts for import and export which are taken into account at calculating the GDP are executed (read: paid) in US dollars. And the amount of virtual dollars circulating in the world's markets is much higher than US's GDP. And these dollars CAN be sold in the market. We can't look at US's economy and disregard the international trade (even if US is just a 'third party').
Also I pointed out that present interest rates are higher than the US's GDP growth rate.
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Sometimes I get the feeling that you are simply trolling me 'for lulz'
Right, but from what I read so far I couldn't accept your figures, so the "much" in "much higher" is a pure speculation IMHO.
Dollars are not born because someone agrees to pay $500 a month (as I explained in the contracts example). And if someone else agrees to pay B$500 that still does not give birth to the new dollars. And no debt of B$500 is actually paid in pure money, let alone completely as an entire amount AT ONCE! So, there are NOT enough USDs in the world to cover all debts of all countries denominated in USDs.
All the fuss around the demise of "the evil green paper" has been just a fuss so far. I remember the fuss 9 years ago when the "experts" predicted the fall of the USD in months, and that didn't happen. The article that I mentioned (and the similar ones) ALSO predicts the "fall of the USD in months"! The article is out there since last year and nothing happened! Why?
If that article was written by a real expert and not a PR guy, he should have been fired so far with his false predictions.
To sum it up, the FR is partially private, I think, because Americans are really paranoid about someone (=the government) having too much power, so they tried to distribute the responsibilities. Not because the FR is controlled by the "shadow masters of the world".
You can't accept the 'fuss' - it's your right, but mind the fact that in my speculations I used official figures of the US governent and you ignored everything I wrote about interests.
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Moribund capitalism! As long as my children-to-be in the future cannot support their education, cannot afford to eat early breakfast, and cannot afford the medicines in the pharmacy shelves, there is no alternative to communism or Marxism-Leninism.
Socialism is nice?
i don`t think so
someday.....
But very hard in implementation.
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