Economics Questions

Re: How quickly can a currency collapse transpire (considering history and theory)?

arbitraryvote — Mon, 29 Nov 2010 19:30:26 GMT

I agree that countries currently still have a lot at stake with the dollar, however, am I mistaken in thinking that they are now gradually diversifying out of this risk (i.e. with moves toward the use of other currencies with their trading partners along with other non-u.s. investments)? Is there not a considerable chance that there will come a time when the lowering of their dollar exposure and our continued dollar debasement will give them good financial reason to drop the dollar?

Couldn't any given country or perhaps some type of private fund with significant dollar holdings make the conclusion that dumping the dollar is the right move, thus triggering a sudden waterfall?

You mention that other countries would likely want to work something out, but how likely is the U.S. to want to do this given that it would likely be at a disadvantage to itself and considering the conflicting interests from international entities amongst one another?

Re: How quickly can a currency collapse transpire (considering history and theory)?

GooPC — Sat, 27 Nov 2010 16:29:46 GMT

In my opinion, China, Japan, and other dollar holders are way too invested in dollars to just drop it overnight and let it crash. Combined, they have trillions in treasury bonds and trade surpluses. It seems they would want to work something out with the US to slow the decline and prevent a complete crash and hyperinflation.

Re: How quickly can a currency collapse transpire (considering history and theory)?

arbitraryvote — Sat, 27 Nov 2010 15:13:45 GMT

This movie seems a bit more realistic and instructive.

I assume the lack of answers to my question is due to the unprecedented nature of the potential catastrophe. I assume that a sudden collapse like this is possible. Given that there are endless scenarios of how it could play out (how it starts, types of intervention, etc) I imagine there might be several near misses before an all out dollar collapse would happen. However, is it more likely that there would be a large-scale "coordinated" shift in the monetary system with a "voluntary" devaluation of the dollar (more modest than an all out collapse scenario, yet still painful) with a move toward some other type of reserve currency or even a single global currency before a true currency collapse takes place?

Re: How quickly can a currency collapse transpire (considering history and theory)?

arbitraryvote — Thu, 25 Nov 2010 00:18:07 GMT

Historical and theoretical are both welcome. Thanks. Within this video there are some aspects that seem realistic and some that don't. I would love to hear thoughts on economic theory that back up a total collapse in a single day.

Re: How quickly can a currency collapse transpire (considering history and theory)?

MisguidedThoughts — Wed, 24 Nov 2010 23:13:10 GMT

Not really a historical example, but this may be interesting..

How quickly can a currency collapse transpire (considering history and theory)?

arbitraryvote — Wed, 24 Nov 2010 22:47:56 GMT

Of the examples of past currency collapses I have reviewed, it looks like there is always a decent amount of warning (rising inflation over extended periods) before hyperinflation. Are there any cases of a currency collapse (to near zero) within a day or even a week for that matter? I know that history can be very different from the future, and given the dollar is the reserve currency, is it likely that the speed of a U.S. dollar collapse could be much faster than historical cases? I guess my bottom line question is: is there a considerable chance that one day the dollar is where it is now, and the next morning you wake up and it is near worthless?