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Report: Former Fed Boss Says Euro Could Replace U.S. Dollar As Favored Reserve Currency

yahoo.com ^ | September 17, 2007 | staff

Posted on by kellynla

FRANKFURT, Germany (AP) -- Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice. According to an advance copy of an interview to be published in Thursday's edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore.

The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.

Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar.

In terms of being used as a payment for cross-border transactions, the euro is trailing the dollar only slightly with 39 percent to 43 percent.

Greenspan said the European Central Bank has become "a serious factor in the global economy."

He said the increased usage of the euro as a reserve currency has led to a lowering of interest rates in the euro zone, which has "without any doubt contributed to the current economic growth."



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Kermit the Frog has "foot in mouth disease"...every time he opens his mouth, he puts his foot in it. Maybe all these Lefties should just move to Europe since they hate America and love Europe so much. Do ya suppose GWB has figured out "Benedict Arnold" yet...between Putin & Greenspam; Bush is certainly no judge of character!



To: kellynla

Ah yes—That towering economic engine that is Europe.



To: kellynla

The Euro vs. The Dollar is the Special Olympics of currency races. They are both going down the toilet.



by 3 posted onby AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)

To: kellynla

Can’t help but think this bastard’s policies helped get us where we are, but then I guess that’s too pointed an observation for the poor fellow. Let’s see, we’ve got the democrats and fellow travelers like this puke, than we’ve got what passes for the marxist revolution inside the U.S., and then European knees a knocking... the U.N. a trying to take over 75% of the earth’s surface, and what’s under it... Boy we sure are a lucky nation to have these people for friends...



by 4 posted onby DoughtyOne (Sorry Hillderella, but the Hsu fits...)

To: Arm_Bears

Maybe gold could make a comeback, or even silver? Gosh, gee whillikers, wons, dongs, yen, rubles and rupees could be reserve currencies given enough interest, transfer of wealth, construction of carrier groups, etc. Bowing head slightly, raises hands to touch fingertip to fingertip in the prescribed lotus fashion and says "All things are possible" in a soft Brahmin accent! Desert finger lightning flashes in the background, and then the thunder rolls in as he exits stage left.



To: kellynla

hitting all-time high of $1.3927 last week What idiot is going to buy and hold Euros when they are at an all-time high? "Buy high, sell low" is a strategy for bozos.



To: kellynla

I guess we’re all gonna die. If the dollar were to cease to be the “reserve currency of choice”, we’d all die. Mark my words. WE. WOULD. DIE.



To: Dr. Frank fan

...no need to be silly. Realistically, though, what do you think would happen to American society if unleaded was $5 a gallon?



by 8 posted onby Old_Mil (Rudy = Hillary, Fred = Dole, Romney = Kerry, McCain = Crazy. No Thanks.)

To: Old_Mil

I’ll buy a bigger truck just to piss off the weenies..



by 9 posted onby Crim (Dont frak with the Zeitgeist....)

To: kellynla; All

the euro introduces the one thing the world never saw before: a viable competitor to the dollar for capital. as a nobody, I put this in an email in 1998 or so to the professor at Columbia credited with starting this whole thing and responded, basically, "bosh." I stated that this competition would invariably drive up interest rates which would be a significant burden on a country with a large debt service. As pitiful an economic engine as the EU is, it is still another game, a place for capital that is hostile to America to be stored. They can promise rates as high as the moon; and by the time they finally default, the bad money might just have driven out the good. This calls for vigilence among the governed in America.



by 10 posted onby the invisib1e hand (life is like "a bad Saturday Night Live skit that is done in extremely bad taste.")

To: Arm_Bears

OMG! I am so glad I have already transferred all of my money market savings into Euros. Thank you dems! Soon, if the Dems keep up their treasonous campaign, I will be transferring all my Uros into Iranian Rials. The dems are THAT bad for our economy, and they are responsible for the skitterish markets , caused by their get out of Iraq campaign. Well, you don't have to have more than Economics 101 to know what will happen if the USA leaves Iraq prematurely. One result is that the Euro will become the reserve currency with which oil is traded internationally. And the financial markets now show that they think the Dems are winning the battle to leave Iraq. A pox on you Dems. I hope you collectively lose billions in your personal investments in the fracas you have caused. And thank you Alan for leading the way to the demise of the US dollar! What a POS you are.



To: Old_Mil

Realistically, though, what do you think would happen to American society if unleaded was $5 a gallon? Far as I can tell Greenspan didn't say that. Article didn't say that. That's a totally different thing from what Greenspan said. Are you saying that $5/gallon gasoline would be an automatic result of the prediction Greenspan made? What's your argument for that? Anyway, to answer your question, quite honestly I don't think $5/gallon gasoline would make much of a dent in the lives of most people. Demand for gasoline is rather inelastic, and prices would adjust. You will recall of course that just a few years ago gasoline was under $1, and it seems to have almost tripled, and somehow we've survived. I'd rather it not happen, obviously, but if it does, I don't think it will mean the apocalypse.



To: kellynla

If he thought he had so much more to contribute, why did he retire? I personally feel I am in the minority (based on latest Greenspan hysteria) when I say he was a lousy Fed Boss. Intellectual but slow to respond. Caused more problems then he fixed. just my personal opinion and not worth much.



To: Dr. Frank fan

Greenspan has dementia,

he needs to be committed.

Lock the old boy up, he has lost it.

Soon he will be eating creamed corn fed by a candy striper.

Drooling insane comments about how he could have saved the world if not for those terrible republicans.

Wacko nutjob....Allen Greenspan...

That is what happens when someone is told too many times that he is the smartest man on earth.

Pretty soon he begins to believe it.

Then he thinks he can SAY no wrong!



by 14 posted onby 9422WMR (Allah akbar fumar blacktar)

To: kellynla

I received this in an email recently....

Money is one of the most important inventions of humankind. Without it, a complex, modern economy based on division of labor, and the consequent widespread exchange of goods and services, would be impossible. Unfortunately, many experts believe we are on the verge of a financial crisis. In recent years the value of the US dollar has dropped significantly, inflation has increased, consumer debt has reached an all-time high, and the US housing market has become dangerously unstable. At present, approximately two thirds of world trade is conducted in dollars and two thirds of central banks’ currency reserves are held in the American currency which remains the sole currency used by international institutions such as the International Monetary Fund. This confers on the US a major economic advantage: the ability to run a trade deficit year after year. US always spends more than it earns, whereas the rest of the world always earns more than it spends. The strength of the dollar is closely related to the fact that oil, the most important commodity traded in the world, is priced in US currency. The majority of countries that are oil importers have to buy their oil in dollars, which forces them to keep most of their foreign currency in dollars. However that could change. More and more nations are moving away from the dollar. China, Sweden, Italy, Switzerland, Iran, Russia, the United Arab Emirates and others have already announced plans to gradually move their reserves from the dollar into other currencies such as the euro. A widespread move away from the dollar could cripple the US economy - a sudden shift could even cause the US dollar to crash. David M. Walker, Comptroller General of the United States, has warned that the nation is on the path to financial ruin: “What they don’t talk about is a dirty little secret everyone in Washington knows, or at least should. The vast majority of the economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it.” If the US government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. A hole that big could paralyze the US economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today. And every year that nothing is done about it, the problem grows by $2 trillion to $3 trillion (yes, that’s with a “t”). It doesn’t take a genius to recognize that an economic upheaval is in the making.



by 15 posted onby BigFinn (Isa 32:8 But the liberal deviseth liberal things; and by liberal things shall he stand.)

To: kellynla

Everyday now Greenspan is in the news. What gives? The dollar is low now, but that will change. Europe will not be able to take the dollar off the map. In the end the US will stay the financial leader of the world, as it still is. He needs to shut up.



To: Dr. Frank fan

Most miss the boat on figuring this out. Russia, China and Iran all want to take us down. The only way to make us stumble is to hit us in the pocket book. They are doing a fine job with a slow drip right before our eyes. President Bush is heading right into it with eyes wide shut.



To: BigFinn

I remember Saddam converted to the Euro for oil and we shortly invaded. I don’t think it was a coincidence.



To: Old_Mil

“Realistically, though, what do you think would happen to American society if unleaded was $5 a gallon?” Realistically, what do you think will happen to American society if unleaded stays in that $2.50 to $3.50 a gallon range? Same answer. Lip service to alternative fuels or alternative energy sources; then pay the bill at the pump. Until alternative energy sources emerge, nothing will change, except the pump price will continue to go up. Want to know another way to change this? => Get crude oil, gasoline and other petroleum products out of the futures markets. Of course, when another energy source does emerge and the people in this country believe it, the futures markets will collapse and lots of big guys will get what they deserve. (Maybe Hillary will be persuaded to put her campaign funds into these futures markets just before the collapse occurs.)



To: mefistofelerevised

“What gives?” He selling a book



by 20 posted onby kellynla (Freedom of speech makes it easier to spot the idiots! Semper Fi!)

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