John wrote:
...
If the world war completely destroys the US infrastructure, then the
dollar may indeed become worthless, but that scenario seems unlikely
to me.
...
John,
If no war destroy US infrastructure, but the US alone - what would happened?
With other words - the power of the dollar was always in connection to the US power... (mainly industrial power, but of course even military power.)
Today - US industry is almost destroyed (or outsourced).
Less than 15% of all jobs in USA are production... All others are service jobs.
It is enough to take look on the "automotive giants" from D. Now they are - midgets living only because the state giving help to them.
(
The producer of toy GM cars - Mattel - is more worth than completely GM)
And this is mass production.
Admittedly the automotive industry has also problem in the other part of world, but the "giant from D" had them almost a decade jet!
They were late in each aspect.)
So with best will I can not understand your stand point that "dollar is the value" and that people escaping to it, because "it " is not much on the market.
I can understand that creditors who have a huge amount of dollar in the treasuries (China, Japan, EU, Arabs and perhaps even Russia) would like to support dollar - even WITHOUT value behind, because of the own interest.
They can for sure try to keep "nothing" to the some level and for certain time. BUT not forever.
Moreover when "nothing" is multiplied - by "printhouse" with exceeded speed. (For sure that "printhouse" can "print", as many trillions you wish. They do not need paper for it, and logic that destroying of trillions on stock market is "faster" then printing and that is the main reason for "value" - I can not understand.)
Additional aspect:
You often talking about "war against China".
Why for Gods sake, China will credit US if it will be attacked?
With which money US can do it? ("Printed" of course, but is it logical to think that China (or Russia or even EU) - will just stupidly stay and look?)
What happened when all ballooned derivatives disappear from the market - and for sure trillions of the ballooned "value" clear off the stocks.
Definitely, many investors will loose money, because they invest in value backed by the US dollar!
But, on the end - I am sure that always remained the "real thing" (that is perhaps meaning of the deflation)
And "real thing" saying in my opinion:
1. US dollar has NO value when it counts.
2. The temporary "scarceness" of dollars - is just that - temporary... (Logic is simple. If you started to "print" and you can do it as you want in believe that other MUST take this "paper" as value - you are in great calamity. Because "the others" have own priorities and those are definitely NOT US and its "over-printed" currency.)
3. "Printing" are on the "table" now for all nations, but US is the great source for all these derivatives and "fast and easy money". The others will probably played for a while to winning "time" - and in same time try to get rid of the currency reserves of this kind.
4. In same time mainly creditors will try to organize and to establish a new system without US dollar as anchor.
Best regards
malleni