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I don't know about that. It could. But the US dollar is basically the world's reserve currency. If was devalued as much as the krona, I have no idea what would

I don't know about that. It could. But the US dollar is basically the world's reserve currency. If was devalued as much as the krona, I have no idea what would happen to the entire world, not just us.

daniel-cussen 18y ago
It's the world's reserve currency, true. But how hard is it to turn dollars into gold? It takes like two days and is practically free. It's not like there's anything stopping countries from going off the dollar and onto gold. It could happen in a week, and no individual country shorting the dollar would incur any cost.
- jhickner 18y ago
  That seems true but it's not. If any country with large dollar holdings were to begin dumping them, they'd saturate the market and devalue the rest of their own dollars. For instance, if China were to begin dumping dollars, it's estimated they could sell maybe 25% of their holdings before the remaining 75% were worthless.
  - david927 18y ago
    So, with the same reasoning, no one with many shares of a company would dump them? China's been divesting dollars for a while and will dump to get that 25% if it has to.
  - daniel-cussen 18y ago
    True, this might not be an option for China, Japan or Saudi Arabia, but Egypt, Switzerland, and Hong Kong are small enough not to get ruined.
- nradov 18y ago
  That wouldn't work. Any large-scale move to switch from US Dollar reserves into gold would quickly drive the gold price through the roof. There just isn't much gold available. http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.html http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.ht...
  - daniel-cussen 18y ago
    There's about three trillion worth of gold, not all of it for sale of course. But there are enough precious metals for a lot of dollar holders to get off said currency if they feel it is not in their interest to keep it. Alternatively, they can buy machines to dig for gold or invest in publicly traded gold companies, which also amounts to shorting the dollar. This might not be easy or even possible for China or Saudi Arabia, but it is certainly possible for Egypt and other small countries with US treasury bonds. If a few countries short the dollar, the price of gold in dollars would rise accordingly, making gold reserves enough to accommodate the next few stages of a run on the dollar. Not enough gold? The price goes up.
    - nradov 18y ago
      A steep increase in the price of gold would carry horrific consequences in human suffering and environmental damage. http://ngm.nationalgeographic.com/2009/01/gold/larmer-text http://ngm.nationalgeographic.com/2009/01/gold/larmer-text Even if our current fiat currency system is untenable we have to find a better solution than a gold standard.

daniel-cussen 18y ago

It's the world's reserve currency, true. But how hard is it to turn dollars into gold? It takes like two days and is practically free. It's not like there's anything stopping countries from going off the dollar and onto gold. It could happen in a week, and no individual country shorting the dollar would incur any cost.

jhickner 18y ago
That seems true but it's not. If any country with large dollar holdings were to begin dumping them, they'd saturate the market and devalue the rest of their own dollars. For instance, if China were to begin dumping dollars, it's estimated they could sell maybe 25% of their holdings before the remaining 75% were worthless.
- david927 18y ago
  So, with the same reasoning, no one with many shares of a company would dump them? China's been divesting dollars for a while and will dump to get that 25% if it has to.
- daniel-cussen 18y ago
  True, this might not be an option for China, Japan or Saudi Arabia, but Egypt, Switzerland, and Hong Kong are small enough not to get ruined.
nradov 18y ago
That wouldn't work. Any large-scale move to switch from US Dollar reserves into gold would quickly drive the gold price through the roof. There just isn't much gold available. http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.html http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.ht...
- daniel-cussen 18y ago
  There's about three trillion worth of gold, not all of it for sale of course. But there are enough precious metals for a lot of dollar holders to get off said currency if they feel it is not in their interest to keep it. Alternatively, they can buy machines to dig for gold or invest in publicly traded gold companies, which also amounts to shorting the dollar. This might not be easy or even possible for China or Saudi Arabia, but it is certainly possible for Egypt and other small countries with US treasury bonds. If a few countries short the dollar, the price of gold in dollars would rise accordingly, making gold reserves enough to accommodate the next few stages of a run on the dollar. Not enough gold? The price goes up.
  - nradov 18y ago
    A steep increase in the price of gold would carry horrific consequences in human suffering and environmental damage. http://ngm.nationalgeographic.com/2009/01/gold/larmer-text http://ngm.nationalgeographic.com/2009/01/gold/larmer-text Even if our current fiat currency system is untenable we have to find a better solution than a gold standard.