World War 3?

I have mentioned nothing of financially about Russia, so I find it strange that you accuse me of doing so. I simply talk about China and the 'propaganda' I talked about came from CNN, which is a liberal media source which is also strange.

You still have not addressed the fact that we went off the gold standard and by doing so we are backed by what?

Henry Kissinger did make a deal with Saudi Arabia in 1973 as Secretary of State (once again I implore you to look it up).

Furthermore, I am fully aware of the other reserve currencies, but I ask you to think to yourself what those that you listed might have in common: may it be that they are all U.S. allies? This could be why I mention the Yuan becoming 11% of the World Reserve Currency might be a strategic move. But who is to say. China has always been in favor of the U.S......

Also, while the U.S. might be the biggest economy, China is a very close second and it appears their agenda is to become number 1.

I never said it hurt the Japanese, I merely stated that one of our allies must provide us with goods so they may get U.S. dollars in order to buy oil from the Middle East.

We always make payments on time is an interesting statement. I'm sure the Chinese think so as well since they have loaned us 1.3 trillion dollars, which we pay back in dollars...which the Federal Reserve controls and has printed trillions before without any government oversight. Why?

Because the Federal Reserve is not actually a part of the U.S. government.

If you pull out a dollar it will say, "Federal Reserve Note," which is saying it is a bond from the Federal Reserve to the U.S. government.

Do a little research, for real, because if you are going to blame this on Russian propaganda, then maybe there is a far more nefarious propaganda war going on at hand.

P.S. The AIIB, which you have never mentioned once, and the Chinese Yuan could actually undermine the IMF and World Bank in future years:/

Umm, do you think the only reason Japan trades with us is to get dollars to buy oil? We're the world's number one economic market, they trade with us for a million reasons that don't have anything to do with oil. And the Japanese don't have to trade with us at all if they don't want to, they can just convert yen to dollars to make any purchase which requires dollars five minutes before the deal goes through. So how does this hurt Japan? Whether or not Saudi Arabia requires dollars for payment is a moot point-money can be converted from one currency to the next easily.

You might not have mentioned the Russian internet troll effort, but your ideas are the exact ones they push. Of course, they don't call themselves Russians on the internet, since the idea of Russians telling anyone about economics is hilarious. But this "US is only number one economic power because of the petrodollar" is the stupid crap the Russians put out on the internet.

Quote saw:

Chinese never loaned us a single goddamn nickel. The Chinese purchased, of their own free will, valuable US securities which, at maturity, get paid back with interest. That is not a loan, though the Russian propaganda machine says so on the internet. It is a business deal which China as well as a whole host of other countries chose to make, since the US securities are a very safe investment. Loans, my foot.

1. I never said it hurt Japan, nor was it the only reason they traded with us.
2. How have we paid back China?
3. 1.3 trillion dollars is owned by the Chinese 1.3 is owned by the Japanese and the rest is owned by the US

(http://money.cnn.com/2016/05/10/news/economy/us-debt-ownership/)
of course, CNN is likely a mouthpiece for Russia.

4. You never addressed the issue of the Federal Reserve issue which I raised (probably because of Russia).
5. The Petrodollar is real here are some articles:

http://www.wsj.com/articles/SB119629687498907262

https://www.washingtonpost.com/opinions/saudi-arabia-is-no-friend-to-the-united-states/2015/05/29/64f24bac-0588-11e5-8bda-c7b4e9a8f7ac_story.html?utm_term=.f6e3fef9f8a1

http://www.nytimes.com/2005/10/16/business/worldbusiness/waiting- for-the-petrodollars-to-trickle-down.html?_r=0

6. But the Wall Street Journal, the Washingtonpost, and The New York Times are probably nothing but Russians in disguise, who knows.

Really? Then what is this quote of yours?

Sounds like you are saying the Japanese are forced to trade with us against their will. We're the number one market in the world, the Japanese would go crazy if they were not allowed to trade with us. Even if somebody found a way to turn water into fuel, (thus obviating petroleum), Japan would want to still trade with us big time. We're not forcing Japan to trade with us in any shape size or form.

If Japan needs dollars to buy something, they can just convert yen to dollars on the open market five minutes before the transaction with Saudi Arabia takes place. It doesn't matter that Saudi Arabia only takes dollars. You ARE aware that almost all NON-petroleum international deals are done in dollars as well, correct? Why? Because if you don't use dollars, then the international transaction is dependent on two variables, the buyer's currency vs the dollar and the seller's currency vs the dollar. Deal in dollars and it cuts one of those variables out. Since a great deal of the time most of the countries will be dealing in dollars anyway when they sell to the US, it really doesn't make a big difference that Saudi Arabia requires dollars.


Do you even know how securities work? The US sells securities for X number of dollars. That security has a maturity date some years in the future. Until the maturity date, the US doesn't pay a single dime to the owner of that security. When the maturity date arrives, the US pays the security owner the agreed upon amount that was due on the maturity date. Of course, the amount the US pays back years later is somewhat greater than the amount the buyer paid for the security some years before.

Point is, it's a one time payment. No payment is made until that maturity date. So when you say, "you owe China 1.3 Trillion", that is incorrect. We owe China whatever portion of that 1.3 Trillion that is due on the maturity date. Which is what we have been doing for a long time. And we never, ever, miss a payment, making US securities a highly valuable thing to have.

Fact is, we don't give a crap if China wants to buy our securities or not. If they don't want them, there's a line around the block of countries and institutions who do. And the percentage of the Federal revenues which paying back these matured securities cost is about 8 or9 percent of Federal revenues. So we can keep doing this forever. And the Russians can keep screaming bloody blue murder on the internet about it forever, not that it will do them any good. But then, economically, nothing ever does.

Oil is priced in dollars, it's not necessarily paid for in dollars.



http://www.reuters.com/article/us-oil-iran-exclusive-idUSKCN0VE21S

Much thanks, Izzy, I wasn't sure about that but decided to give saw the point. This clears it up.

I think Iran have got a particular axe to grind. Ultimately they want to price oil with another currency. I can't see it happening, if nothing else it's too much bloody hassle.

I think I'm just going to ask the simply question because while you both make good point regarding Japan and some about the debt...they were never my originally point:

What is the U.S. dollar backed by?

"Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month's sanctions relief."

This quote sort of goes to my point especially the part "to reduce its dependence on the U.S. dollar."

Regardless, I think I'm just going to ask the simply question because while you both make good point regarding Japan and some about the debt...they were never my originally point:

What is the U.S. dollar backed by?

America. The last time the UK adopted the gold standard it was disastrous economically.

We've all accepted that national governments can issue their own currency, and the value of the currency is dependent upon many things, most importantly the economy. That's why the US dollar is accepted in banks throughout the World while other currencies, most notably the Zimbabwean dollar, are only good for wiping your arse with.

Just so you know that is literally the definition of what a Fiat currency that you just stated, so I guess that word wasn't Russian propaganda after all.

Either way it still doesn't make sense how we are backed by us and our economy. Though our GDP, though the largest in the world, doesn't even surpass our national debt, which is also by far the largest in the world.

I just don't see how our paper or electronic money nowadays really has anything propping it up.

Pretty much every currency in the World is based on the country's economic performance including Russia. And economically Russia is in the khazi, so why are you bothering with their nonsense?

And why does that matter?

Tell you what, if you don't want your electronic or paper money you can always give it to me.

No thanks:) because I use it buy assets such as land, houses, water and gold. Things that have intrinsic value.

Maybe gold has intrinsic value, maybe it doesn't. Right now all the geniuses who listened to Glen Beck and all the other doomsayers a few years ago and decided to brag to their friends about how they were loading up on gold because the modern financial world is a complete Ponzi scheme, there's nothing holding it up so you can bet it's going to come crashing down at anytime and only they and their gold laden pals will be owning anything are facing big losses. They even had a word for the supposed financial Armageddon that is supposedly coming-SHTF, for **** Hits The Fan. Go to YouTube and check out one of the innumerable "it's all coming crashing down any minute" videos-most of which are put out by obvious Russians-and you see all the respondants talking about SHTF like it's a sure bet.

It's a right wing fantasy, oddly pushed by the Kremlin online in an attempt to weaken America's and the West's financial position-which has met with no success whatsoever except for those weird little groups who dress up in militia uniforms, play at survivalist games, and think that maybe Trump can save America after all.

Thinking about it what intrinsic value does gold have? It's a good conductor of electricity but really it's just decorative. People attach value to it, just like cash.

Or people attach value to cash like it's gold? Gold has been around for years and extremely necessary for NASA and space technologies for it definitely has more of a purpose than paper money or numbers on a screen.

Cash has been around for years too.

Yeah, well gold has been used as currency from about 800-600 B.C., so I think it beats cash by a lot.

We are in an ever expanding economy. If the economy was declining over a long period of time or even just staying even, then you might have a point about "Fiat currency". But for the past 100 years the economies of the advanced nations and the world in general have been getting larger and larger almost every year, and that real improvement in economic production is why Fiat currencies can work.