Faber: Dollar Will Eventually Go to ‘Value of Zero’
By Barry Ritholtz - October 26th, 2009, 12:31PM
Marc Faber, publisher of the Gloom, Boom & Doom Report, talks with Bloomberg’s Deirdre Bolton and Erik Schatzker about the performance of the dollar and U.S. economic outlook.
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Bloomberg, October 26 2009
4 minutes
Hat tip Laura!
October 26th, 2009 at 1:05 pm
Eventually… He says in 20 years I think, with intermittent dollar rallies… Doesn’t everything eventually go to zero? My thing is, the high likelihood that another currency scheme would be instituted before the dollar hits zero… Just like the entire financial system went to zero, but then a bailout occurred and money was printed, so it never got to zero…
October 26th, 2009 at 1:10 pm
I agree with you, Singer. If the dollar goes to zero, where will the other currencies be? Less than zero? One of the huge fallacies of the dollar bears is they ignore the fact that it’s all relative. You think the dollar is in lousy shape? Take a gander at the Euro and the Yen. And if China ever told the truth about their economic bust-in-progress, the Renimbi wouldn’t look so hot, either.
If the dollar goes to zero, then all fiat currencies go to zero. That assumes a cataclysm on a scale that puts us back in the stone age…
October 26th, 2009 at 1:15 pm
“That assumes a cataclysm on a scale that puts us back in the stone age…”
Exactly. Perhaps not in twenty years, but eventually. All things return from whence they came. So will we.
But really, all that would be required for the dollar to go to zero, either relative to other currencies, or relative to a hard currency, like oil, is for there to be continued increases in the growth rate of the dollar supply while there is a decline or stasis in the growth rate of the value a dollar purportedly represents. Before it reaches that point, though, velocity will have to approach zero as well.
October 26th, 2009 at 1:22 pm
I think you fellows are whistling past the graveyard. This is part of the problem of categories..conservative or liberal…actually doesn’t matter..they both treat the budget in a damaging fashion. Reagan, Carter , Bush, Clinton, Obama…doesn’t really matter. The economics of it all have been ignored, when in fact each country is all about the Benjamins.
The financial underpinnings of these countries will be the future growth or hardship for their individual populations. Could the dollar go to zero? I haven’t seen anything in your “If we go to zero everyone else is in even deeper do-do…” statement that rebuts it. Will our dollar become worthless? I don’t know, but I know it could.
You want to give health care to everyone ? Pay for it.
You want to bring down communism? Pay for it.
Could the dollar become worthless? Certainly. Will it? Probably not, but recent spending by everyone in power has been less than comforting…just because a thing hasn’t happened doesn’t me it can’t happen.
October 26th, 2009 at 1:32 pm
http://www.bloomberg.com/apps/news?pid=20601089&sid=aS7bHzA2hh0E
China Should Raise Euro, Yen Holdings, News Reports (Update2)
By Bloomberg News
Oct. 26 (Bloomberg) — China should increase the representation of the yen and the euro in its foreign-exchange reserves, the Financial News, a newspaper affiliated with China’s central bank, reported today.
The U.S. dollar should retain the largest weighting in the reserves, at a smaller proportion than now, according to an article by Zhou Hai in the Beijing-based newspaper. Holdings in euro and yen should increase to reflect China’s growing trade with the European Union and Japan, according to the report, which didn’t give Zhou Hai’s job description.
The dollar declined against 11 of its 16 major counter parts after the report today and touched a 14-month low versus the euro. China’s foreign-exchange reserves, the world’s biggest, increased by about $141 billion in the third quarter to $2.273 trillion, the nation’s central bank said Oct. 14.
…And those who say that a mismanaged dollar will continue to be the world’s currency are wrong, too, imo. My target date for the world to effectively move to some other way to transfering money between countries with a vehicle other that the dollar is 2012.
October 26th, 2009 at 4:16 pm
This is all bollocks. The dollar will decline on and off in a zig-zag way, Japanese style, until we get our act together and have real growth and savings and write down our malinvestments.
October 26th, 2009 at 6:43 pm
If memory serves, Communism was brought down quite a while ago.