Replies to post #5352 on Banro Corp. fka BAA

[nutsyprofessor]

You're statement is totally inaccurate and it's obvious that you do not understand the advantages of having world reserve currency.

While the benefits of a reserve currency to its issuer is a matter of some debate, most economists agree that the nation providing a reserve currency enjoys some key advantages. The United States is able to borrow money from foreign governments more cheaply because it can both accept a loan and pay it back in U.S. dollars. The U.S. dollar also enjoys an inflated value due to global demand for the currency...as more nations need U.S. dollars to hold in reserve and facilitate transactions, this demand requires them to pay more for it, increasing its value.

Here's where your statement falls apart: what most dont realize is that there is a lot less US spending on Chinese products than one is led to believe. For example, in 2010, imports accounted for only about 16 percent of the U.S. Gross Domestic Product, with Chinese goods accounting for about 2.5 percent of the GDP. Even today it's not that much more. Yes it is true that the act of China gaining ground on world reserve currency would mean that the US dollar would become more and more deflated but the Chinese would not look at this as negative impact, on the contrary, the Chinese know that the US consumer has an incredible thirst for demand and the resulting deflated US dollar would simply mean that a larger and larger percent of US spending would go towards Chinese made products. Of course, this will lead to a greater loss of good paying US manufacturing jobs and an increase in lower paying service jobs. Also, the cost of borrowing will increase. The US will have to re-invent itself but during that process there WILL be a lot of financial pain for millions of people. One of the beneficiaries during this economic and financial downturn will be GOLD.

This is not a matter of IF it happens, it's a matter of WHEN. China's recent moves in working trade deals with other nations by using their currency is getting us closer and closer to the above scenario.

[Techamental Logic]

I will have to do more research. I believe China is no longer as eager to loan us money not because the dollar is weak but because lenders make money on interest and interest rates are near zero.

China's worst nightmare is that we default. We can't do this forever but unless the lies are beyond our worst nightmares the US is a long way from defaulting on anything.

Both China and Russia are hard at work building their economies outside of the US. They are signing deals not only between themselves but also between dozens of countries in Asia, Africa and even Europe. China and Australia just inked some huge iron ore deals.

Russia is hard at work building ties with Latin America. Putin is actually headed out there next week. I know both Russia and China are eyeing Mexico. I understand how crazy that sounds but I think they are tighter with Mexico than we know. We can't even get a Marine out of a Mexican prison! Something is wrong there.

http://news.yahoo.com/putin-visit-cuba-other-latam-nations-171447044.html