Can America go bankrupt as long as it has the world's reserve currency ?

[cbc58]

America has the world reserve currency. America cannot go bankrupt. Not as long as the Dollar remains the worlds reserve currency.

Someone posted this statement on another message board. Is this true?

The banking system (FED) is separate from the govt. - and is privately owned. "America" is in debt up to it's eyeballs and would be considered bankrupt under any normal accounting standards.

Can you have the worlds reserve currency and go bankrupt? I can understand that it can happen the moment people refuse to acknowledge it as the reserve currency but up until that point...

 

[Acala]

It depends on what you mean by bankrupt. The government can never be out of money, since it creates its own, so it can never fail to pay its bills. But it can destroy the value of the dollar such that it cannot buy any goods or services in the open market.

 

[tod evans]

Let's see what the rest of the world thinks.....

 

[willwash]

This is true because although the usd is worthless, other nations accept dollars, so the usd is underwritten by the productivity of the rest of the world. That is, until the rest of the world dumps the dollar.

 

[CBC4L]

We won't go bankrupt as long as we have more guns and drums to take what we want.

 

[heavenlyboy34]

We won't go bankrupt as long as we have more guns and drums to take what we want.

Pretty much that^^ The regime has already defaulted, but there won't be a "bankruptcy" as we commonly speak of it for a long time.

 

[libertywanter]

Absolutely it could go bankrupt and the USD can be thrown out as the worlds currency. Many countries have already held talks getting rid of the US dollar as the world currency, cant remember the details on that, so dont quote me. I dont think it could ever happen in the near future and agree with the comments above about us have more guns and drums, but guns and drums can be lost too under many different circumstances. Just because a country is great once does not give it any guarantee it can continue to be. Rome

 

[DFF]

The regime has already defaulted, but there won't be a "bankruptcy" as we commonly speak of it for a long time.

Hahaha...+1776 for usage of the word "regime."

 

[oyarde]

As far as I am concerned , all these bullshit , debt/deficit ridden , flea bag , dog shit currencies are dead.I plan for something different , in case I live long enough to do so .I can use the crap paper as long as someone takes it .

 

[James Madison]

The US is basically playing a giant game of Chicken with the other world powers. Everything that was once backed by sound economic policy and industrial output is now defended at gunpoint with bullets and bombs. You could say we've replaced the Gold Standard with a standard made of gold.

 

[heavenlyboy34]

As far as I am concerned , all these bullshit , debt/deficit ridden , flea bag , dog shit currencies are dead.I plan for something different , in case I live long enough to do so .I can use the crap paper as long as someone takes it .

You can always use your old FRNs for kindling, , lighting cigars, and such, uncle Oyarde.

 

[oyarde]

You can always use your old FRNs for kindling, , lighting cigars, and such, uncle Oyarde.

When the time comes , I will have lit a cigar with the last one I have .Then I will go hunting.

 

[Zeeder]

Someone posted this statement on another message board. Is this true?

The banking system (FED) is separate from the govt. - and is privately owned. "America" is in debt up to it's eyeballs and would be considered bankrupt under any normal accounting standards.

Can you have the worlds reserve currency and go bankrupt? I can understand that it can happen the moment people refuse to acknowledge it as the reserve currency but up until that point...

The Federal Reserve isn't a private institution. Does The President nominate the president of Walmart, Kroger, or your local Burger King? No? Then it's not private.
Calling the Federal Reserve "private" is an insult to actual businesses that provide a good or service despite the governments constant tax/regulatory burdens.
It is the opposite of private. It was regulated into existence.

 

[buenijo]

Someone posted this statement on another message board. Is this true?

The banking system (FED) is separate from the govt. - and is privately owned. "America" is in debt up to it's eyeballs and would be considered bankrupt under any normal accounting standards.

Can you have the worlds reserve currency and go bankrupt? I can understand that it can happen the moment people refuse to acknowledge it as the reserve currency but up until that point...

Yes, this is true. As long as other nations continue to import our inflation, then we can print dollars to our hearts' content. However, it is NOT accurate to state that the FED is separate from the govt - it is only nominally privately owned (Federal Reserve Act authorizes it and codifies it - this is federal legislation). It cannot be understood without considering it as a hybrid. The FED is part govt, part private, and all corrupt.

Note that today most of our inflation is exported to countries that take it into reserve, then pyramid their money system onto the dollar much like was done during the Bretton Woods system. They have been slowly unwinding things with such things as bilateral trade agreements between nations that sidestep the dollar in trade, and with some countries reducing their dollar holdings (or not expanding it as quickly), but the dollar is still the only game in town until an viable alternative is presented. Note that we have been expanding the U.S. dollar over the last 5 years very rapidly, but most other countries are expanding their currencies just as rapidly, and sometimes even faster, and this has a lot to do with our avoiding some price inflation since these countries take the dollars we export through our trade deficit, hold the dollars in reserve, then expand their own currencies. About 60% of the value of all currencies in the world is represented by U.S. dollars, and about half of these dollars are outside the U.S. The dollar is ubiquitous on the international scene, and hard to get rid of.

 

[cbc58]

I am not so sure the FED isn't a private entity. From what I have read it has stockholders who are the member banks and it can do pretty much anything it wants - same as any private corporation that operates in this country. I'd compare the arrangement to a dining hall in a university. It may be the universities dining hall, but it is normally run by an outsourced for-profit company. The govt can come in and replace that outsourced company if it wants - but it doesn't. Think the appointment of the FED chair is yet another smoke screen to convince the sheeple that it is part of the govt. I understand it is a hybrid but the banking system IS separate from the govt. (from a legal framework) even though they are inextricably intertwined.

 

[buenijo]

I am not so sure the FED isn't a private entity. From what I have read it has stockholders who are the member banks and it can do pretty much anything it wants - same as any private corporation that operates in this country. I'd compare the arrangement to a dining hall in a university. It may be the universities dining hall, but it is normally run by an outsourced for-profit company. The govt can come in and replace that outsourced company if it wants - but it doesn't. Think the appointment of the FED chair is yet another smoke screen to convince the sheeple that it is part of the govt. I understand it is a hybrid but the banking system IS separate from the govt. (from a legal framework) even though they are inextricably intertwined.

I think you nailed it with the statement "I understand it is a hybrid". Recognizing this is what matters most. However, if you take the position that the FED is the "same as any private corporation that operates in this country", then you imply that private corporations are also hybrids. I think there is truth to this. Clearly, "private" corporations are not the same as "private" companies of the past. In all cases these ostensibly "private" corporations of today have legal privileges that did not apply in the past. However, it also seems clear to me that the legal structure of the FED is more complex and more far reaching. The FED is not merely a business interprise with the same legal privileges afforded to other corporations. Rather, the FED is a banking cartel in partnership with the federal government. In other words, the legal framework around the FED deserves special distinction. There are many differences worthy of note. For example, where can I buy stock in the FED? How is the stock sold? Who owns it? How do they manage a constant 6% dividend when this seems to vary over a wide range with other "private" corporations? Why is the FED Chairman appointed by the President? While the line between what's "private" and not is blurry today, the FED is clearly not the same as ostensibly "private" enterprises of today. Considering the FED as a "private entity" without distinguishing its nature from other "private entities" is disingenuous or just plain sloppy.

Most important to emphasize at this point is that "private" doesn't appear to mean the same today as it did in the past. Are any companies "private" today in the same sense as the past? The same phenomenon applies to many other relevant concepts. For example, many consider the U.S. as a "capitalist" economy, but most here properly understand this to be nonsense. Being a "liberal" today is not the same as being a "liberal" of the past. There are countless other examples. It seems the more significant problem is the corruption of language. Perhaps Orwell was right.

 

[Madison320]

I think the dollar will stop being the reserve currency in years not decades.

 

[jllundqu]

China has already called for its currency to be the world reserve, and to create a de-americanized world.

This is how the country ends...
Not with a bang, but a wimper...

The other nations of the world will simply move away from the dollar and leave us to our self inflicted fiscal death spiral. What happens next depends on how far the PTB are willing to go to prevent that. Currency War? Cold War? Hot War?

It all depends on how much the money powers are willing to risk to maintain dollar hegemony.

 

[MoneyWhereMyMouthIs2]

China has already called for its currency to be the world reserve, and to create a de-americanized world.

This is how the country ends...
Not with a bang, but a wimper...

The other nations of the world will simply move away from the dollar and leave us to our self inflicted fiscal death spiral. What happens next depends on how far the PTB are willing to go to prevent that. Currency War? Cold War? Hot War?

It all depends on how much the money powers are willing to risk to maintain dollar hegemony.

The warfare state starts bending in on itself. We're already seeing it. Wars outside the borders will eventually not be viable for those who profit from them.

If it turns into a hyperinflation scenario, it's more of a bang than a whimper. Balkanization sounds like a possibility as well.

 

[oyarde]

The warfare state starts bending in on itself. We're already seeing it. Wars outside the borders will eventually not be viable for those who profit from them.

If it turns into a hyperinflation scenario, it's more of a bang than a whimper. Balkanization sounds like a possibility as well.

Balkanization is how strong empires end .