Australian Money Forum

[archilles]

Hi Guys,

New to this forum and as matter of fact new to the subject of politics. Recently i've taken an interest in politics after hearing about the crisis in the US economy.

I'm young ( 25 ) and until the age of about 20 i never had never taken much of an interest in the topics of money, investing, budgeting etc..

Now i can't seem to get enough of it and after exercising a plan to make wealth in property i've almost hit a brick wall after hearing about the state of the US economy.


I know i have alot to learn, and some of this may not make an sense but isn't our monetary system based on the US monetary system ? If so, the us seems to be creating

money out of thin air ( not backed by anything ) and getting themselves further into debt. There's talk that the currency could fail and if that happens all hell would break loose.


Does anyone think this will affect us and if they do, how should we prepare in case it does ?

[wulfgar]

Hi archillies. I've been looking at this question for a few years and reached a conclusion. The effect of a US dollar collapse would mean massive deflation.

Basically a huge quantity of the world's monetary capital would vaporize. Those holding their reserves in US dollars would find themselves instantly broke. And general prices would fall against whatever qualifies as currency after that.

[learn2investmoney]

Hi archillies. I've been looking at this question for a few years and reached a conclusion. The effect of a US dollar collapse would mean massive deflation.

Basically a huge quantity of the world's monetary capital would vaporize. Those holding their reserves in US dollars would find themselves instantly broke. And general prices would fall against whatever qualifies as currency after that.

I agree with you 100%. This is a tragic situation for all the investors out there. So the best we can do as investors is to keep our eyes opened at all time knowing the risks involved.

[azeemi]

hi there,
I am not Australian but i am a property developer in Dubai and i have to much investments in real estate market my focused clients are Europeans and many of them has nearly done their deals.

I ask the same Question with a friend he replays if the US currency collapses "Many people would cry but the rich would laugh and go on a vacation." I think this is not jock he says right.
If the US currency collapses it effect whole world market which deals with USD.

[Stucke]

The US is the most important economy in the world, and the US Dollar is the most important currency in the world, although the Euro is rapidly closing the gap in that case.

If the US went bankrupt, the entire world's economies would implode into the worst depression ever seen. Imagine 40% unemployment worldwide and go from there. The best thing to be would be a farmer in Cuba.

[wulfgar]

Let's say you have to pay a bill in AUD of $100. In your wallet you have a "world basket" of 66 USD, 27 Euro and some various others at $7. You go to the currency trader to get AUD. But they won't trade for US. So you only got 34 AUD and have to default on your bill.

You'd be limited as to what you could buy on the US market. Because the US would only allow you to buy what the US can produce. They'd introduce exchange controls to prevent you trading your USD, for US held foreign reserves (which there is very little of). You'd have to buy US produced goods and sell them at a loss, to get other currencies.

This is nothing new. This what happened to the Pound as world reserve in 1933. Nominally the Greenback may not dive in value. But you'd be stuck as to what you could buy with it. OPEC will have a sign saying no greenbacks. The greenback would become rather illiquid in terms of world trade. General prices would start diving against what is ever accepted in its place.