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The world is caught in a debt trap...

FunnyMoney

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#2
Yep, seems so. Usually a very high rate of inflation solves a debt problem.

But for a world reserve currency , typically hyperinflation isn't involved and debts are more slowly unwound, restructured.

This is a 'creditor beware' situation (expect bank bailouts at taxpayer expense) but so far the world has continued to use and accept dollars as much or more so than other currencies.
 
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chomper

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#3
Irrespective of which currency is used as the reserve unit, the creditors will demand their pound of flesh at some point.
 

FunnyMoney

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#4
Irrespective of which currency is used as the reserve unit, the creditors will demand their pound of flesh at some point.
Holders and users of the USD will feel less pain due to world currency status. Euro and others are close behind. Debts don't unravel all at once but in a chain reaction. How fast could it reach the American homeowner, that's usually the only question people worry about.
 

chomper

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#7
^ Won't happen, such an act would legitimise (in the minds of the masses) the notion that the debts aren't real.
 

GOLDBRIX

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#8
How fast could it reach the American homeowner, that's usually the only question people worry about.
The PIIGS go down the tube first and when that happens the rest of the world will follow with the U.S. being last unless Commie China takes over as the World Currency. If that happens the U.S. will be next to last. My WAG.
 

Silver

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#9
^ Won't happen, such an act would legitimise (in the minds of the masses) the notion that the debts aren't real.
It's being implemented in Argentina, first attempt was not successful, but they are consolidating power with a new President - Patagonia for debt relief. In America, it will be Federal Land for debt relief - the massive Federal Debt and Deficits are not without intentions.