The Coming Collapse of the Dollar
The following article is translated on google from german into english, i hope you understand although the importance of the message...
The Coming Collapse of the Dollar
From Gabor Steingart, Der Spiegel, 18.9.06
Still the dollar is the reserve currency of the world, but it does not earn this role already today any longer. Its fall can be only retarded, not prevented. The consequence could be a global economic crisis. Two things are it above all, which each money investor wishes itself: high net yield and high security. Because both to together never have are, are the investors of House from contemporaries with varying Mind condition.
Fear and greed alternate each other, whereby the large money investors, for example companies and states, who prefer security clearly. Their fear is larger than their greed. They do voluntarily without the completely large profit, if only the durability of their Billions is secured. They are afraid political unrests, it hate all too violent currency fluctuations and already the thought to a creeping monetary depreciation it can shift in panic tendency. There are only few countries, which offer a greatest possible relative security in view of these dangers: the USA and Switzerland. Therefore the dollar is not only handels and plant currency, it is above all also the reserve currency of the world.
Nearly all states distrust to their own Currency and put the money from the safe deposit area to their national issuing bank rather in the United States on, in debenture bonds, shares or government loans. Political unrests are there so well impossible. The inflation is fought against the issuing bank. Those Speculators can in view of the size of the Currency area and the quantity on world-wide circulating dollars no somersaults strike. Thus the world-wide owners of money buy the U.S. currency in rauen quantities. The USA possess almost a monopoly on the commodity security. The acquisition of a US government loan is for many investors nothing else as the purchase of a preservative. 2005 only 20 became world-wide Per cent of all foreign exchange reserves in euro, but over 60 Per cent in dollar held.
The euro-introduction was a considerable success, which is not diminished here is. But the dollar is the anchor currency of the world remained. If this anchor lies due to, that means large stability for the attached National economies. If it tears itself loosely and begins to float in the sea of world finances, comes more into disorder than only the exchange ratio of currencies. One buys the dollar, in order not to have to sell it. But why the same buyers are, those in former times goods bought, now in such a manner närrisch on dollar lights?Why they do not trust security, those in the commodity is arbitrarily increasable? Each student of the national economy learns nevertheless that the currency of a country is only so stably and thus as valuable as what the national economy of this country to offer has and produced.
Sees and none feels that a tension constructs itself there between the dream and the reality, itself the one Daily to the damage of millions humans unload becomes? And whether that is seen! The investors see it, it are astonished, they vibrate the head, it shivers them even, but: They buy far dollar. Like the possessing they do it. The more largely the doubt, the greedy orders it after. Because crazy people at this investors and their Business manners are even: The buyer is not only buyer. By buying the product security, he produces it.
If it stops tomorrow with the purchase, that melts Confidence and the uncertainty grow. The dream would be expenditure-dreamed, the dollar would come into wobbling and everything past dollar wealth would lose at value, which the investor does not want naturally. The only means against dollar weakness is therefore its stabilization. It plays for many already no more role whether the American currency the confidence still justifies or not. The new, for all fire-dangerous play functions exactly differently around: The dollar earns the confidence, because it loses it otherwise. One buys it, in order not to have to sell it.
The dollar is strong, because only against its weakness helps. It is angeträumt with large persistence against the reality and purchased, because that the dream for some time the reality become actual leaves. Or still more clearly said: Everyone behaves thereby rationally by it itself irrationally holds back. All know around the danger Naturally the participants of the play know that Currencies in the long term to be stronger do not know than them at the basis lying national economies. Consumption without production, import without export, growth up Credit, which cannot give everything it durably only in the the other world, in the local life it existence will have.
It was the former IMF Chefökonom Ken Rogoff, a man also clear head and loose mouth work, that the US politics recently praised, in order to criticize it in truth: That Upswing in the USA is “the best upswing, that one for money to buy can ". But if the things are in such a manner obvious, why don't the investors twitch then back? Why leave itself foreigners and US president more diversely Couleur, even for their seriosity admitted Notenbankgoverneure on a so risky play, that at the end everything to burn can?
Why those do not seize Mechanisms of market control, nevertheless straight the those capitalistic systems in relation to the plan systems to distinguish should? The answer is frightening simply: All know around the danger of the play, but it seems to far-pass on them less dangerously it, than stepping out. Because which they have from an all too hectic reaction to expect? The investors are years ago already into those Case of dollar groped, from which there is no simple escaping. Begin they with it, their notes and Government loans on the market to throw, lose them its money, tröpfchenweise or in a slide.
They would avoid and are both gladly, it only for one while. That President, who recognizes the situation also only as topic, possibly loses his office, because the displeasure of the governed ones will look for itself a valve. The issuing bank governors, although still earliest commits to the truth, have the time for intervention misses. Control rooms on a signal to the trend reversal Legendary issuing bank president Alan Greenspan did much to feed the dollar illusion. Whenever those Doubts strengthened, increased it the interest, which is always also a risk premium for the investors.
Became loud doubts about the lastingness of the economic growth, the large Nuschler, which holds the financial world otherwise so gladly in the unclear one, with amazing precision steered on the other hand. “Unterm line seems the sector that", He said private households in good condition last in October 2004. The managers of the world financial markets admire it above all, because it their dream over Years extended.
Now right would leave itself to object with joins and that those Financial markets normally wanting the policy not to obey. Why thus does not take place with the help of that Self adjustment a correction of this teuflischen Driving? Who or which prevents the financial investors, with the dollar similarly to proceed as with the shares that New Economy? They will do it. The question is only when. Those Financial investors are not financial officials. They love the excess, in always recurring distances bring they the markets to exceeding. They are now times of occupation because of speculators, who live with the risk of the exaggeration. Their occupation attitude resembles from Formel-1-Piloten, their goal the victory and not that accident-free driving is.
Unclear is only, with which force occurs the large event. Often already experts played the consequences to the end of a dollar melt. If the downtrend began, rising became in stages Credit interests follow, in order to stop the depreciation. Those Dollar crisis became thereby within fewer days from that World of the currencies into the material world of the factories, Business and family budgets jump over. Private investments from large and small are rising interest less rentierlich, humans would save, the economy stottern, before it finally to shrink begins. First Mass redundancies would be to be deplored.
The consumption that American would have again drastically gone back become, because now unemployment and failure waves that Country shook became. Millions households could not serve their bank credits any longer. Now became also the real estate prices and the share quotations sink, those were superelevated for many years and as Lending basis for Konsumkredite were used.
If the real estate blister bursts, inevitably also that sags Consumption further in itself together, which became import suction to the rivlet, with which now also the supplier countries in Difficulties turned out. It would be only a question of days, in the newspapers decades ago gone down word again emerged: World economic crisis. The giant is doped Already once only America slipped and then the remaining World into a deep crisis. It was called “the large depression”, because it took ten years and the USA Mass unemployment and hunger-dead brought.
Those Resource of the country sank around approximately a third. The crisis virus raged finally everywhere in the west. In Germany were on the high point of the fever curve six million humans unemployed. The today's investors live in a Zwiespalt, around which they are not to be envied. They see the relative And those register weakness of the US economics tectonic shift in the world economy. It it knows that at large statistic expenditure tries becomes, the American dream into the future too extend. Thus the government statisticians announce since longer sensational productivity successes of US Economics, those strange to say for years to none Wage increase lead.
However is more than strangely: Either the capital side takes the fruits of the risen productivity completely alone, which even in the heartland of capitalism a Politikum would be. Or it it gives these productivity progress only in the statistics for which much speaks. The half world is astonished at low unemployment in the USA. The other half of the world knows that these Statistics official statistics is not, but the result of a freiwilligen telephone inquiry. Many those, which spend themselves as persons employed, are helpers and Tagelöhner. Who also only one hour per week works, becomes as “Persons employed” led.
Since it is considered as antisocial to admit itself unemployed the American statistics says to that possibly more about the valid standards American society as over their actual condition. Also the high growth rates of the United States is not to be trusted so easily. They are also a consequence of the high private and national Debt admission. They do not show by any means one out own Kraft increased output at domestic goods and services, remind rather of those Sales impacts by Asians and Europeans. However those New indebtedness of the government was 2001 for a third the economic growth responsible, 2003 for Quarter one. The restaurant giant the USA is doped, so that its power loss is not noticeable in such a way.
God confidence, based on the markets For the investors on the capital markets is one Reality only then reality if those Majority of the investors of it convinces itself actual and accordingly holds back. At present everyone belauert the others. All know: The dream of the stable Restaurant economics is actually expenditure-dreamed, but all keep the eyes still another one while closed. Government loans and shares possess now once none objective value, nothing which one see, weigh, to taste or also only feed could.
Their value it is measured at the God confidence of the investors that the purchasing power of one million dollar also in ten years still another one million dollar behaves and not in that Meantime halved. This God confidence becomes almost in the 1-second pulse based on the markets and the unit is nothing else as the confidence other investors. As long as it gives more confidence-blessed than distrustful ones, is the world of the dollar (and that World economy) in order.
The problems begin on the day, on which the relationship tilts. The procedure is complicated by the fact that it by any means blind confidence is not, which drives the investors. There is apparently partially hard facts, it in it encourage to grant their confidence bonuses further. The economic growth of the USA, on the paper durably and impressively year by year, an important index is for it. If it precipitates highly, they feel in their confidence into the Leistungskraft of the American National economy encourages. The commercial balance sheet deficit is since its emerging in the middle of the seventies exploded.
But, the dreamers say the economy also increasing self-confident its, grows nevertheless much properly; not as steeply as nevertheless in China, but twice as fast as in Europe. Is not straight also this index like that reliably, as it looks. The confidence of the investors brought this number out with. Because the purchase price of the loan flows on almost direct way into the consumption the state, the purchase price of the share stimulates those Consumer desire of the companies and extends the credit basis of Millions of private households, which again that Consumption benefits. Thus those transform Expectations of the investors, also those that the USA continue to grow, nearly of alone in certainnesses.
The confidence capital brings thus even those Growth rates out, it for its authentication needs. Because driving Kraft behind growth the American national economy is an expansion the consumption; which in view of more shrinking Deliverability of the industry and sinking wages of the persons employed everyone to actually surprise must. But all know the mystery solution. The increasing consumption been based not on an expansion of production, a rise of the wages or the increase of the exports, separate to its largest part on rising debts.
But why the banks grant always new credits? They do it, because them as lending basis those risen prices for shares and living real estates accept. Thus a cycle of the wondrous money geldvermehrung closed in itself developed. Extent the self-deception in the bank balance sheets is that To visit extent of the self-deception: Those Saving in America came to succumbing. The foreign debt of the USA grows at everyone Weekday around approximately one and a half billion dollar and is appropriate with for altogether three trillion dollar.
Those Private households are meanwhile at home and abroad indebted with nine trillion dollar, whereby 40 per cent these debts alone since 2001 developed. Those Americans enjoy a present, for which they sell ever larger pieces of the future. With join and right can one today say: The economic crisis, which is to the world forthcoming, is the bestprognostizierte of newer history.
The today's boom in the United States is not the refutation of the crisis, but its harbinger. The biologists have similar symptoms with plants observed, those under the entry of pollutants suffer. Before they offense, they bring a last mark of such strong impulses out that they are hardly to be differentiated of their healthy kind comrades. The vernacular speaks of panic bloom. But who first to be, the dollar illusion destroyed? Not all investors are connected by an invisible volume, because each attack against the key currency their own Value existence possibly diminish and large parts of it would destroy? Why the issuing banks should from Japan or Peking their dollars on the market throw?
The US pension funds, their would have which interest To destroy dollar wealth deliberately? Which sense does it result in to send the USA into a heavy crisis which will possibly drag all states along? It is the same motive, which made the investors once dollar buyers: Fear. This time it is the fear that others are faster; the fear that the dollar strength does not hold anyway; the fear that each day of the Zuwartens is one day too much. The fear finally that that Herd impulse of the world financial markets begins and one even hinterhertrottet.
More weakly than the dollar maintains many became uncanny. One morning the many will wake up its owner, over also new to look highly transparent view of the data of the US economy. As the private investors of one morning also clear view of the shares that new Economy looked and companies saw, whose value could be justified by no still so large profit jump. Turnover prognoses had been set up, those that Total market around a multiple exceeded.
At that Technology stock exchange Nasdaq was a stock market too admire been, its added value within fewer years around 1000 per cent had added, meanwhile the US economy in the same period nominally only around 25 Per cent had grown. Greed had overcome the fear for some years, returned then however it. The courses of the technology shares lost within less Months over 70 per cent of their value and lie today still with less than half their at that time Quotations. Even the Dow Jones, a stock price averages, in which the most important and largest companies of the United States are summarized, paid for scarcely 40 per cent its value. Something similar is approaching for the dollar and the dollar bonds. The USA have more security sells, when they have to offer.
Expectations were acted, which will prove as worthless, because they are not fulfillable. As those new Economy neither growth nor the profits to supply could, she had prophesied the investors, becomes those Currency salesmen of a daily to grant must that the economy behind the currency is weaker than stated. The fall can be only retarded, does not prevent dependence more foreign Its fall will retard issuing banks of the dollar, but do not prevent. A snow-sore has itself in an educated manner, which will become the avalanche. It grows in breath-robbing speed. It can separate tomorrow, in a few months or also only in years. Much, from which the contemporaries believe, it is unsterblich, becomes a global monetary crisis under itself bury; possibly also the guide roller of the USA. Of Clinton assigned commission for investigation that negative commercial balance sheet by the way came to the clear Conclusion that the government everything must do, around that further increasing of the unequal weights with out and To stop imports.
The public is to finally return from the optimism to realism; those Citizens would have to be stopped for saving, that State is the imported goods gently to throttle to help, around that To escape force of a hard landing. Nothing since that time of it happened. In truth happens of everything that the experts, even that had recommended Opposite. The indebtedness grows, the import suction does not strengthen, by the reality a no more covered optimism became the Staatsräson. Committee member Lester Thurow pulls today one ernüchternde balance: “Nobody becomes an American Consider, say balance of payments crisis possible " he. “Occurs to it.”