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SUNIL JAIN

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Will the G-20 ever like to break or reverse the global economy spiral? If so, why?

Post world-war-II, US Dollar banished British Pound as the de-facto global currency, and post 1971, the need of benchmarking US Dollar against weight of gold or any other physical object vanished. Now in the current era, US Dollar is THE ‘Reserve Currency’ of our planet.

Exporters send ‘goods’ across borders, and importers send ‘dollars’ in return. Exporters exchange the dollars into local currencies at their local banks, and purchase their desired ‘goods’ including the ones needed to export more… and an eternal spiral continues to grow.

Now that US Dollar is the THE reserve currency for the foreseeable future, and all other regional currencies seem to float well with the US Dollar (even in the times of extreme chaos), and adequate supply of US Dollar can be maintained to keep the global demand satisfied, will the G-20 ever like to break or reverse the global economy spiral? If so, why?

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Topics: 2012 US election Bush UNITED STATES OF AFRICA United States United States Treasury higher education bubble housing bubble
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    Chrissy Michelle Strawn 20+

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    Dec 27 2012: I don't think it is in the best interest of the G20 to get off their collective behinds and do something about it. It was said by Rupert Murdoch that he could turn the USA around and balance the bank with his money alone. But has he done it? No way. If I had the money to buy out all the USA debt I would consider it seriously. So why don't the top 1% get their butts and help out the economy of the USA? I can only hope this will happen.
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    Robert Winner 50+

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    Dec 23 2012: I am new at this, but here are my thoughts. The G-20 are in essence centralized planning groups or a "collective" approach. This is the basis of keynesian economics. What starts as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and individualism.

    Since these meeting have occured since 1996 with no favorable recommendation are significant impact ... I would conclude that the meetings are for the expressed purpose of the Central Banks to gain more power and to impose their will on the economic community.

    Having said that .... the answer is no ... they are not here to solve anything ... only to maintain their power.

  • richard moody jr 10+

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    Dec 21 2012: Unless the G-20 can find a way to finance new energy schemes that are cheap and reliable, I see no way out. With cheap energy, the cost of manufacturing goes down, the cost of transportation goes down, the cost of food goes down and new and better products will receive a wider circulation. With cheap energy, we free up, perhaps, $1 trillion world wide for consumerism.

    We need worldwide a balance between the kind of "over" infrastructure building of the Chinese with the overconsumption of the West. If we can find a way to balance infrastructure growth with increased consumerism (Without destroying the planet---a tall order to be sure!) this will lead to millions of new jobs world wide, the only way out of the coming World Wide Depression.
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      David Fuchs

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      Dec 21 2012: Richard it occurred to me a while back that, creating really cheap energy, and removing energy as a commodity and replacing it with energy production as a commodity, creates a fixed one time cost for corporations that would change the world. It would destroy every financially strapped government on earth, and wipe out every government pension fund, plus it would destroy the defense budgets of many nations.

      The money you free up with really cheap energy is far more than 1 trillion a year. Think about it, roughly half the cost of all manufactured goods is energy.

      • richard moody jr 10+

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        Dec 21 2012: With cheaper energy (not really cheap energy which I regard as unlikely) we should see a sharp reduction in the very things that require vast defense expenditures. Think of what it would mean to the Middle East if we didn't have to undertake military options like the War in Iraq. I guess we disagree about the fundamental argument you make.

        We would have more jobs because of increased consumerism; this would lead to the collection of more taxes funding pensions. With a healthy economy world wide, it would permit the weaker, financially-strapped governments to grow their way out of debt.
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          David Fuchs

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          Dec 21 2012: The current lowest price for energy is that of Combined Cycle natural gas at $66 USD per MWh. The project I am currently working on is has a target of sub $20 per MWh energy. I am going to be Kickstartering it in about 2 months. I have given a large amount of thought to the ramifications of really cheap energy over the past 9 months. Here are the conclusions I have come to.

          - 6 of the top 10 most profitable companies on earth will fail. They are the sellers of carbon based fuels.
          - The OPEC nations will fail. Most of them are one trick ponies maintained by oil profits.
          - There will be deflationary pressure on every nation on earth as the cost of goods, salaries, and tax revenues decline. The falling tax revenues will cause heavily leveraged countries to go bankrupt.
          - Pension funds in the western world will fail as they are heavily invested in carbon based fuels.
          - Many companies will see their share prices artificially skyrocket as money is transferred out of carbon.

          On the flip side other than wrecking countries and destroying companies it has its good side.

          - It reallocates wealth from corporations and governments to the people of the world.
          - It reduces the amount of time people need to spend working in order to just survive.
          - It decreases poverty worldwide.
          - It removes peak water from the equation.
          - It reduces the costs of all manufactured goods.
          - It opens up unknown new opportunities. (ie things I haven't thought of)
          - (added 12-21-2012, 23:17) It puts a huge dent in terrorism. With several of the OPEC states funding terrorism, the removal of their cash cows creates other other concerns for them at home.

          On average the good out weighs the bad. And don't get me started on what happens at sub $10 per MWh. That is a bit of a game changer.

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          David Fuchs

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          Dec 21 2012: "what you don't mention is the response of the carbon-based fuel distributors when they see the cash cow of carbon fuels die off. How will they respond?"

          Locally they will respond with ordinances making it difficult, costly and time consuming to install renewable energy systems. Energy as an appliance is a way to get around this so individuals can self install. We already see companies running down this path with PV solar panels you hang and then plug into a wall outlet.

          At the state and federal levels, they will push for laws and regulations that force people to remain connected to the grid, and force people to pay for it right to do so. They will try to limit the number of people allowed to generate their own energy to some percentage, due to variations in renewable energy output. They will probably also apply this percentage to units that generate consistently 24 x 7. They will probably use the phrase "for the security of our nation and its infrastructure".

          All in all it is a losing battle they will be fighting. In the end, the economics of low cost locally produced power will bankrupt the carbon based energy companies. And public outrage over being forced to pay more to be grid connected than people pay for energy will end that scam if it occurs.

          I follow most solar and wind news, I hadn't heard about the Stanford research though. Pretty neat.

      • richard moody jr 10+

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        Dec 21 2012: Hi David!

        Because of a redundant paragraph I removed the post and replace it here: The power of the utilities' lobby cannot be overstated; after all oil, coal and natural gas are a multi-trillion dollar industry and will not go quietly into the night. Here is a reduced account of the Stanford Research:

        "Peel-and-Stick solar panels from Stanford engineering
        Decal-like application process allows thin, flexible solar panels to be applied to virtually any surface.

        For all their promise, solar cells have frustrated scientists in one crucial regard – most are rigid. They must be deployed in stiff, often heavy, fixed panels, limiting their applications. So researchers have been trying to get photovoltaics to loosen up. The ideal: flexible, decal-like solar panels that can be peeled off like band-aids and stuck to virtually any surface, from papers to window panes.

        Now the ideal is real. Stanford researchers have succeeded in developing the world's first peel-and-stick thin-film solar cells. The breakthrough is described in a paper in the December 20th issue of Scientific Reports.

        Unlike standard thin-film solar cells, the peel-and-stick version from Stanford does not require any direct fabrication on the final carrier substrate. This is a far more dramatic development than it may initially seem. All the challenges associated with putting solar cells on unconventional materials are avoided with the new process, vastly expanding the potential applications of solar technology."
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          David Fuchs

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          Dec 21 2012: See my comment above.

          I would like to add that I know they will go kicking, screaming and clawing. The problem is the economics of energy production is changing. Renewables are becoming cheaper than carbon in many places. In a year it will be cheaper in most places. In two to four years home based system will be cheaper than grid based power. In ten years home based will cost half as much as grid power. Those predictions are just charting out the current trends that go back 30 years and forecasting it forward.

          With the rate of change in technology that we are currently seeing I believe (gut feeling) that these changes will happen more quickly.
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    Gail . 50+

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    Dec 20 2012: Yup. When the economy collapses, as it is mathematically guaranteed to - minus another short bubble (strategy) or two at the outside - then the spiral will end. There will be nothing of value left to spiral.

    I am preparing for the collapse of our monetary system. Not in a prepper way, but in a way that makes sense to me given my own unique worldview.

  • John Smith 30+

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    Dec 19 2012: Define "the economic spiral".
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    pat gilbert 50+

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    Dec 19 2012: No because they want power which has to be centralized through the central banks. It is the epitome of evil. I would not be surprised to see Bernanke pushing toward a world currency as a reset to our money problems.

    • John Smith 30+

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      Dec 19 2012: The G20 is too divided to do anything of the sort, it contains not only Western countries but also China, Russia, India and Brazil.
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