I have read on various forums that people believe the dinar will be a reserve currency. Reserve currencies were first set up under Bretton Woods. This is where a country would hold a certain amount of another nation’s currency as a reserve to give that nations currency value and worth.
So does the dinar qualify, or will it qualify after the mythical revalue happens? How likely do you think it is that they will replace the US dollar (an over printed fiat currency) with the dinar (another over printed fiat currency) as a reserve in the event of a complete global collapse?
I have another blog that I maintain called Biblical Views and World Economics. It really has little to do with biblical views and more of a focus on world economics. I have about 4 years of research on global economics that is displayed through this blog. Lately I have been writing for that blog. I just finished an article called, The Monetary History of America. This topic is so important to our understanding of money that I decided to make this a page on the site instead of an article or post.
It is amazing to me how the bankers, central banks, and the money changers have been screwing things up for the last 300 years. There is a lot of doom and gloom with the economy and our current financial system. A lot of prophets are predicting the end of the dollar and the reign of some other standard overnight, but is this a practical point of view? Will the dinar be the savior of the monetary world like all the forums and gurus predict? Highly unlikely! In fact this is not at all possible.
Will the dollar crash overnight? Even if this was the case it is highly unlikely that the new standard will be another over printed fiat currency from a country with no infrastructure and whose entire GDP depends only on oil given the track record of such currencies.
So people are returning to real money. (Gold and Silver) Prices for these metals have soared as people stock-pile them and as nations add them to their reserves. The main reason people are stocking up on gold and silver is because they can see what is happening with the dollar. In my new blog page we cover the history of money in America. When you study this out some interesting things come to light. I will talk about just a few highlights here. If you want to read the whole thing just click on the link below
“James A. Garfield became president in 1881.Throughout Garfield’s extended Congressional service after the Civil War he fervently opposed the Greenback, and gained a reputation as a skilled orator. President Garfield advocated a bi-metal monetary system”.
Under this system the metal was the money and the currency was merely the receipt for the money.
“Ulysses S. Grant was our 18th president. There was a panic in 1873 which led to a depression for 5 years. People wanted more paper currency in circulation. The Inflation Bill was pushed through on April 14, 1874 to increase the nation’s tight money supply as a result of the contraction act. Many farmers and working men favored the bill, but Eastern bankers wanted a veto because of their reliance on bonds and foreign investors. On April 22, 1874, Grant unexpectedly vetoed the bill on the grounds that it would destroy the credit of the nation.”
“Stephen Grover Cleveland was the 22nd and 24th President of the United States. He is the only president to serve two non-consecutive terms. (1885–1889 and 1893–1897) In his second term the panic of 1893 struck the nation. The panic was worsened by the acute shortage of gold that resulted from the free coinage of silver. Cleveland oversaw the repeal of the Sherman Silver Act. At the time the repeal seemed a minor setback to silverites, but it marked the beginning of the end of silver as a basis for American currency.”
“William McKinley is our 25th president. He secured the passage of the Gold Standard Act”.
Every major currency left the gold standard during the Great Depression. This put and end to what is known as the classical gold era. Some of the doom and gloom prophets that are forecasting and end to the dollar are calling for a return to the gold standard. While this idea may have some merit, the gold standard did not protect anyone during the great depression and in fact the faster nations removed themselves from this standard the faster their economies recovered. (Sources and links provided from original article on my other blog)
The big mistake in my opinion was the removal of silver and that gold was the only metal used for money, or to back money. I think James Garfield had it right. A bi-metal monetary system would be better. But whatever system winds up replacing the dollar just know it won’t be like anything we had in the past. In fact I believe that when the dollar is replaced it will be a whole new system of exchange. Gold and silver will serve to protect people while the new system is being set up. That’s why prices are going through the roof. Fear is driving the market. Whenever people panic they always run back to real money. (Gold and Silver) paper fiat currency is not real money. It might as well be monopoly money. For now though, the dollar has value.
I don’t agree that the dollar will crash overnight like some people think. I think the dollar will meet a gradual demise. The indicator is oil. Two thirds of our currency is overseas and it is used to buy and sell oil. Since the dollar is the medium of exchange for oil, other nations secure the dollar by their oil supplies. It does not matter what quantity The Federal Reserve puts out. Although this weakens the dollar it won’t destroy it. When nations start to use some other medium to exchange for oil, then those dollars overseas will no longer be needed. When that happens most of all the foreign U.S. dollars will make their way back to the United States where they originated. When this happens hyperinflation will set in as there will be too much money in circulation.
The cause and effect of this will mean several things. First we as Americans will see a dramatic fall in our standard of living. America’s credit rating will plummet. And the economy will adjust accordingly. The adjustments will be gradual. Second, America could face a redenomination of its own. We should be familiar with this process after we watch what happens with the Iraqi dinar. Third, there will be a new global exchange that could move beyond the medium of fiat currencies, or the nations that held our debt will be the new reserve currencies. What will the new system be?
Who really knows for sure. What will America do when our dollar is no longer the medium and standard for the world? Simple, they will start drilling for oil here in America and tap America’s vast oil reserves that until now remain untouched. For more information on this, research the petro dollar and see its global impact. This is also talked about in great detail on my other blog about global economics. (BVAWE)