A random collection of things I come across.

Thursday, November 15, 2007

Is the dollar safe?

Recently I had some thoughts on money: What does it mean when you say "the economy grew by 3%".... where did this 3% appear from? Is there something like the principle of conservation of money, similar to the principle of conservation of energy? If you are making a profit then somebody is making a loss. Or does the 3% represent the transformation of raw material, resources from nature in to goods that can be measured in currency?

I came across this article which is somewhat related: "http://www.mondovista.com/money.html" . DISCLAIMER: I have no idea regarding the authenticity of the information in this article. And, I have my doubts about all these "conspiracy theories".



The article explains the origin of the currency,paper money, the recent process of 'printing as much money as you want'. It also explains how the US is able to withstand such huge trade deficits (another question that was on my mind). See the following graph:



The article also talks about why the US dollar is in so much demand world-wide: basically the dollar is a currency for oil.

From the article: "Oil and dollars have become the blood of our present civilization. A collapse of this fiat dollar system will not only destroy America's economy and lifestyle but it will have devastating impact throughout the entire planet. Since virtually all wealth is based on this dollar-for-oil scheme, a collapse of the system will send the entire world into an economic depression. This is what the politicians and decision makers are trying to avert. But the collapse is predictable and inevitable."


If the article is indeed true and given the uncertain future of oil, what does the future hold for the dollar and the US economy?

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