Saturday, March 1, 2014

Unfinished Business (part 4) - "Dollar Peg", the "Petro Dollar", Currency Manipulation, and Currency Devaluation

A Dollar peg is a fixed exchange rate between the Dollar and another currency in order to control the value of its currency and to make their exports to America cheaper.

In countries that maintain a Dollar peg, which are inherently unstable countries in the southern hemisphere, it is the only way they can prop up their currency and then use their currency to settle international trade. However, this practice also limits the convertibility of that currency into Dollars in its own currency.

Without a Dollar peg, the currency would simply fall apart.  The currency can no longer be used as a medium of exchange in international trade.

When there is a black market, it tells you that people are scrambling to convert their currency into Dollars while the converting is good and they're prepared to pay a premium for it because they think the government in power won’t be able to maintain a Dollar peg for much longer.

This has happened in virtually every "developing" country south of the hemisphere, meaning Africa, South America and Asia.

“If the dollar loses the reserve currency role, the US becomes just another country with balance of payments and currency problems and an inability to sell its bonds in order to finance it’s budget deficits”

With the US dollar weakening since 1913 and countries presently running to stock up on gold and silver, the "Dollar Peg" is no longer sustainable.  Countries who hold a lot of US currency such as Russia, China, Brazil, and India are now looking to dump the US dollar and in doing so, bring down the old existing monetary system in place.  This is why many countries presently are stocking up on gold and silver, devaluating and manipulating their own currencies in order to export to other markets, and why the US is reacting defensively and imperially all over the world.

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