[Prince]

British pound breaks $2

What does this mean for the US? Is this good for the US or the UK... or neither? The GBP hasn't been $2 USD in 15 years, and the the increase has been going up the last few years. Take that and the fact that the Euro is pushing 2+ year highs against the USD.

Is this a non-event, and what are the implications if the dollar continues to fall against the European currencies? In terms of debt the UK isn't in much better shape than the US.

[Eli]

Well it is not a non event more like the first shot in the biggest economic crisis that mankind has ever seen.

As things stand now, this not good for anyone.

What is happening is the US is broke, and the world economy is waking up to that fact. We owe trillions around the globe now those trillions are worth less and less with each passing day.

No one will want dollars anymore, the US Fed will be forced to raise rates but that will collapse the Stock Market and the big money players in the US will move and have moved on to China.

[I_Like_Plants]

Indeed. This is not mentioned in the news because subjects of the Empire are not supposed to be troubled by such thoughts.

[perdition79]

This isn't good for anyone's economy. The pound is worth $2.01, the euro is worth over $1.35, and the stock market could break 13,000 this week. If we don't bust soon in America, we're going to hyperinflate into oblivion.

[Newsseeker]

The cards that hold this whole thing together are beginning to shake. I think changes are coming soon.

[Kingcoal]

It's basically a repeat of the early seventies, there are many similarities. Crude has tippled in price in the space of a couple of years and that’s the same thing that happened in the early seventies. There is a full scale currency war going on between the dollar and the euro. In the early seventies, there was an effort to crash the dollar by some European nations - it worked, and resulted in the US abandoning the gold standard for international commerce. There was an internationally unpopular war going on in the early seventies, like the Iraq war today.

In the late seventies, we had stagflation, which is when you have rising prices and no economic growth. America eventually dealt with this situation by massive economic restructuring. Fortunately or unfortunately, depending on your perspective, the US was saved by two things: a fractured OPEC, which lowered crude prices and the emerging workshop of the third world, which allowed the US to export its inflation. Thus thereafter, the US was able to produce economic growth by creating asset bubbles driven by the import of ultra cheap goods from China and others. It works this way: the US creates markets in need of cheap products and China produces them. Sometimes it works the other way around, but you get the picture. One problem with the system is that the US must constantly export more and more of it’s production overseas, displacing workers, however that might not be a bad thing.

Right now, that whole system is being tested. Neither the US, nor Asia want the dollar to crash. Asian countries have too many people to keep employed and the US does keep them employed. The central problem is that the US is having problems with keeping commodity prices under control, which is the backbone of the dollar.

Personally, I think we are just going to see the same thing as the late seventies, minus the cheap oil that came to the rescue. If you lived through that time, you'll remember that the US took real steps towards becoming more energy efficient. Most of that was derailed by Bush 1 and Bush 2. This time, the US and nations who export to it will have to face the music and deal with expensive commodities, in particular, expensive oil and NG. I'm not a believer in "collapse" which seems to be a favorite word around here. I've lived through several "collapse" events and it's not bad. As long as you still have electricity and something to eat, what's to complain about? Look at it this way: today (excluding real estate) we have the cheapest everything compared to previous generations. We are going to pay FAIR prices in the future. What's wrong with that? It's simple market economics, of which Americans should be respectful of.

In other words, instead of looking at things in terms of bending until they break, you have to look at it as actions forcing reactions.

[cynicalheretic]

Don't forget we are also now 9 trillion in the hole