The US Federal Reserve has doubled the amount of money in the US economy in the last 12 mnths.It is now filtering down to the real economy.China is not happy since it owns $1 trillion in US debt.
What we don't know is;how many of Aust financial institutions still have investments in the USA?

China is loaning us over $300 billion for infrastructure and stimulus packages.China like other countries is slowly divesting themselves of US dollars.

I just wonder if Kevin Rudd has read the fine print of our loan agreements with China.Could China be loaning us US dollars in order to reduce their exposure to the inevitable collapse of the dollar?

Does anyone have the terms and conditions of this loan agreement?

obama is to make a statement on monday
about finance
could it be the long awaited audit of the fed
yeah i know im dreaming

could it be the introduction of the amero?
yeah i know name changing cant eradicte the debt
but embassies have been busy converting their us dollars into local currency units

all that cash could cause hyperinflation
but those troubled securities..[constructive treasonous fraud..stil sits on the books]

anyhow that cash wont cause inflation...cause the dollar is deeflating..meaning american prices will be going up..as the dollar or euro falls...fiat money for ursury is the real issue...and all bills being debt..clever lawyers have inverted things as they are...

but all debt ursury money was created on our signature [our promise to repay...that is what has gone wrong...we created it with a blue ink sig-nature..that created a security..they on sold

anyhow the new reserve currency will be the carbon credit..a compulsory global tax going direct to bankers...who rebuild industry...while doubling the cost of everything..

with a carbon tax who's price will be speculated up..by the securities traders...who via deception even securitised/monetised bad debt...lol...who..via an ever fewer carbon credits cap..furtyher speculate raioty bonus..upon its an ever shrinking carbon credit issue...

that wil get ever more bonus for the smartest guys in the room..who know the value of scarcity/and need...restrict supply..insures good bonus

Sheesh, I did not need to guess who had started this thread :)

Arjay, just relax and see the big picture here. China has been trying
to manipulate things for years, by purposefully keeping their
currency low, hoarding US dollars and flooding them back to the
US as cheap loans.

If they land up losing value on their hoarded $, well it serves them
right. If they try to liquidate their $, the rest of their reserves
will crash in value and they will burn their main export market.
So they are kind of caught between a rock and a hard place.

Yes, they are now realising that they are trapped, so are diverting
resources to other stores of value, like Australian mines,
commodities like copper, etc.

The thing is, the American $ has been overvalued for ages, as
America becomes poorer and Asia becomes wealthier. At some point
this has to be reflected in the currencies, something which
the Americans have stated for ages. Now the realities of the
market place will eventually make it happen.

Given Australia's huge current account deficit, at some point the
Aussie $ needs to join the US $ in going down, although our healthy
mining sector has prevented it from happening so far.

The rest of the Australian economy is largely uncompetitive in global
terms

A poorer US will mean a shrinking market for Chinese products, & thus a shrinking market, or a reducing price, for our raw materials.

I think it would be a good idea to tighten our seat belts, & our purse strings, to prepare for some bumpy road ahead.

Certainly not the time to be playing silly buggers with any cap & trade rubbish. My electricity bill has doubled in 6 years, with a slight reduction in usage. I don't need any ideologically driven extra costs, with a fixed income, now.

I would love to see my kids build some safty margin into their expenditure, especially as a couple are in good time industries.

Yes it is a worry. As well I see we have done exactly the same,
borrowed very large sums of money which can only be paid back by
printing it.
No matter however they did it we are heading for inflation.

The politicians do not understand control engineering.
Binary Kevin must have either a fire hose or nothing.
He has no idea that as things improve you start backing off with the
water flow. It is known as Proportional, Integral and derivative.

If you do not apply these terms to a control system it will go into
either a wild oscillation or just sag.

We are in the hands of fools who know it all.

Yabby.This collapse is unpresidented in our history.Never before has the world been so awash with inflated currencies.It is not business as usual.The real productive economy has been perverted by the monetary greed.So with the next stage of collapse ,do they simply create more cyber money?The Banks and their parasites have to take a loss at some time.They can not keep stealing from the people by creating money from nothing.There is no productivity to it!

OUG the Ron Paul movement have 282 Congressmen supporting an audit of the US Federal Reserve.Barney Frank says there will be a complete audit of the US Fed.Barney said that the house will probably pass it in October 09.The devil will be in the detail and the constraints put on any investigation.There will be much stalling so don't expect too much.

Hasbeen;don't take this lying down.We are being shafted to save banks/corporates and impotent Govts.Let your local member know how you feel.

Bazz I totally agree.Kevin must stop the borrowing for stimulus and borrow only for infrastructure that will add to productivity.Had we not signed th Bretton Woods agreement of 1940, we would be able to create our own credit like Hitler did and make this country much stronger and prosperous.We are borrowing from an international system that create money from nothing and loan it back to us at interest.It is theft!

Yes I too knew who started the thread without looking.
In so many such threads we have never heard one word about alternatives.
The world today is in trouble.
Very big trouble.
But without the borrowing it would be so many times worse than the not so great depression we would never recover.
China would have.
Much could be said about why we are in trouble but in truth you will not find the reasons in posts from one under god or arjay.

Arjay, you still don't get it and I don't think you ever will :)

The economic gurus will these days largely confirm that it was
Bernanke acting as he did, which prevented a global depression.

Now if you think that would have been a better option, then I think
you are rather foolish, for the global pain would not have been
a pretty picture.

So Reserve Banks globally agreed to increase liquidity to overcome
the depression threat, then decrease it again, which they can easily
do, as economies pick up and inflation sets in.

It makes perfect sense.

I remind you that most of the money lent to US banks has been repaid,
with a profit to the Fed. The big losses have been from AIG, an
insurance company and from Fanny and Freddie, basically Govt institutions.
Stimulus packages have taken up a big chunk.

Your problem is that you still see money as a store of value, rather
then as a means of exchange and a commodity, to be traded easily for
any others.

You are free to store your assets as gold bars, oil, or in OUGs case
silver bars and perhaps tulip bulbs under his bed :)

So the present problem is not the system, but your mindset. Get
over it and accept the new reality, or go to your grave complaining.

Yabby,You cannot keep on inflating currencies with no increase in productivity.We are headed for hyper-inflation/stag-flation with rising unemployment and falling demand/productivity.Banks will be forced to put up interest rates and this will further add to unemployment.You cannot keep on paying for debts and spending by trashing a currency.Have we not learned from the past?

If our $ goes down with the US $ then the loans we have from China will be affected.If it is in Yuan and it holds it's value, then we pay more back to China in principal and interest.If it is in US $ and it's value is halved ,so is it's purchasing power.We buy much from OS when these stimulus packages are initiated.Most of this money goes back to China.We are borrowing from China so we can buy from China to consume and work.It does not add up to me since there is very little productivity involved.

Arjay, productivity keeps increasing, in efficient sectors of
the economy. Farming, mining etc, never stop investing in better,
more efficient equipment, as do most industries.

Loans from overseas would be hedged for currency shift, the cost
of hedging is included in the cost of interest.

If interest rates go up, then so be it. People might think twice,
before bidding up the price of houses.

If the Australian $ goes down in international terms, so be it.

The Australian Govt provides no incentives for people to save,
rather the opposite, they earn income from taxing people on
the inflationary component of interest payments. So Australians don't
save, but live for today and spend up bigtime!

No wonder we have to borrow from overseas, Govt policy encourages it,
so that is what people do.

Eventually Australia will pay a price, through a devalued currency
and higher interest rates.

So be it, people have voted for it and it is never questioned

Cobblers, Arjay.

>>You cannot keep on paying for debts and spending by trashing a currency.Have we not learned from the past?<<

Surely, what we have learned from the past is exactly that. We can.

You yourself have been going on like a two-bob watch forever and a day about how the US dollar has "lost 98% of its value" since 1900. Surely, that is a long enough period to prove that such a "devaluation", as you call it, is, on its own, entirely harmless?

All the time this "devaluation" of yours has been taking place, the US dollar has achieved, then maintained, a position as the world's default currency.

That may not, of course, last much longer. Nothing is forever, after all.

But it won't be caused by a systemic issue. Just the normal shifts in the balance of world trade.

Incidentally, the first three sentences in your paragraph on its impact on our economy each started with the word "if".

That's an old sixth-form debating trick. String together three speculative "ifs", then draw conclusions as if they had each been factual.

Typical.

Pericles the "ifs" are more than plausable and you have not found a flaw in my arguments.Just follow the end result of your argument.Are you saying that it is OK to trash your currency in order not to pay your debts? I cannot believe this nonsense you are writing!

When,not if the US $ seriously depreciates,this means the great masses of poor and not so wealthy in the US will suffer serious losses in living standards.They will buy less form China and thus China will buy less from us.Hopefully the internal Chinese market will continue to expand,off setting this.

We have to get away from this notion of trade and financial deficits since the strong just put the weak into debt slavery.
Every country on this planet should be allowed to balance their expenditues with income and have no sanctions placed on them in their international standing.We need to foster national sovernignity and not this totalitarian corportate rubbish that seeks monopoly power.

You know, Aejay may have a couple of points here.
The US dollar is in for big trouble. There are still a very large
number of debts outstanding that have not yet been taken into account.
From some of the information I have seen it is far from over yet.

Our balance of trade is not in a good position and our oil imports are
rising at around 4% per year. If we start to see a recovery we can
probably add another 1 to 2 % on top of that.
If however oil prices rise again we might have to add another 5% on
top again.
The government does need to get us out of debt as a matter of urgency.
It will end up being cheaper to pay out the dole rather than large
interest bills and capital repayments with a devalued currency.

If the US$ crashes it will be easier to repay our US$ loans.
What effect would a US$ crash have on the Australian dollar ?
Would a flight to the Euro crash the Aussie dollar ?
If it is true that many of the government loans and commercial debt
that we have is in US dollars, then if the US$ crashes we could be in
considerable difficulty.

This assumes that the A$ falls more than the US$

Does anyone know what proportion of our debt is in US$ ?
It all makes a good case for localisation.

Bazz, few doubt that the US dollar is in for a prolonged period of pain.

>>Aejay may have a couple of points here. The US dollar is in for big trouble<<

The discussion here is whether it is a fault of the system itself, or just the result of the system in its normal operation.

Arjay, don't try to manufacture a new argument - stick to the one that you started.

>>Are you saying that it is OK to trash your currency in order not to pay your debts? I cannot believe this nonsense you are writing!<<

The reason you can't believe it is because I didn't say it.

I merely pointed out that if the US dollar has "devalued" by 98% as you keep rabbiting on about, and is still a viable currency, then "devaluation" by itself cannot be a problem.

Exchange rates fluctuate substantially over time. But you are seriously misled if you believe that they automatically create misery for the poor.

>>When,not if the US $ seriously depreciates,this means the great masses of poor and not so wealthy in the US will suffer serious losses in living standards<<

The point about an exchange rate is that it affects the price of what you buy from overseas. If it is more expensive to buy from China, this will encourage US companies to fill the gap, creating jobs and fuelling internal prosperity.

Which is a Good Thing, right?

The losers in all this will be the rich, who would find it more expensive to ski in Val d'Isère.

The sixties in Europe - especially Britain - are a fertile field for research into "what actually happens when a currency is devalued".

In fact, far more recently, Sterling lost 32% of its value during 2008. Was this i) a good thing ii) a bad thing iii) a necessary correction iv) just another result of Gordon Brown's loony-tunes economic policies?

Or was it those nasty evil people at the Fed?

Pericles the losers are hardly ever the rich.1% of the US pop own most of the wealth.The US Fed loaned trillions to the US Govt and then took it to bail out their mates charging the people interest to boot.Do you call that fair?Don't you remember the Alan Grayson interview with Elizabeth Coleman the Inspector General for the Fed Rep of the Govt.She didn't have a clue to where a $ one trillion of public money had gone.

By the way Ron Paul now has 285 Congressmen for bill HR1207 to audit the Fed.4 more and not even Obama or the senate can stop it.