If not the dollar, then no other fiat currency either

Most of the world´s concern with the dollar is in fact not with the dollar itself but more of the “if not the dollar then what?” type, since, if looking at the forest and not the trees, makes it clear that no country´s fiat money stands a chance to survive a dollar failure. That is how globalized we have become… that is why some non US are even toying with the notion of supporting a tea party, no matter how doubly distant they feel from some of those partying there … no matter they serve corn on the cob instead of cucumber sandwiches… and others buy gold.

Let us suppose the US officially presented to the world the possibility of a 40% haircut on its debt. Would that be the same as an Argentinean haircut? No way José, since the day after the US would again find unwilling willing takers of US debt, and at quite low rates, because it would think that the day after the US imposed some debt ceiling that really became a real roof.

China, India? Good luck Warren Buffett, but we do not have all that much money to afford the luxury of trying.

In truth, if we would still use fiat money, then the Dollar II would still be better positioned than all other.

In a world with reduced lebensraum it might be time for the Dollar II

Sir Jeffrey Gartner tells us “We must get ready for a weak-dollar world” November 30. It sounds like wishful thinking since what we need to get ready for is for a weak world, since it looks like the business model of most countries is out of synch with so many realities, among others the diminishing lebensraum that energy scarcity and environmental threats are signalling.

Also, when Gartner writes about a multi-currency framework as an alternative to the dollar, but says that”this regime will take time to devise” this is just another way of ignoring that, if we do not want to use gold, the only alternative to the dollar, for the time being, is the dollar II, to which the old baby-boomer dollars can be converted at a rate of ??? The dollar II would be a more transparent and perhaps even less socially traumatic than that of “camouflage a slow-motion default” by means of inflation.

What a world! A citizen admonishing monetary authorities “to meet secretly”, “perhaps between Christmas and New Year, to start discussions... (to avoid spooking the markets)” Has Gartner not heard about gate-crashers, twitter and facebook?

We´re stuck in an unsafe to be dollar safe-haven, most probably waiting for the Dollar II.

Sir Martin Wolf writes that “The rumours of the dollar´s death are much exaggerated” October 14, but the discussions have really been about who could take over some of the dollar´s job so that it would not die of a heart attack. And the dollar´s job is not an easy one, as it has the USA suffering from the curse of exporting safe-haven permits, which creates few jobs of that sort the world likes to qualify as “real sustainable” jobs, while importing products produced by real jobs abroad.

Will the dollar suffer the agony of a slow death or fade away like a soldier? Not likely, once the rumour of the safe-haven is having become dangerously overcrowded starts, death will be swift. Strangely though, as things currently stand, the most likely heir of the dollar would be the Dollar II.