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Old 12-17-2008, 11:20 AM   #6
Project Avalon Moderator
Join Date: Sep 2008
Location: Northeastern Brazil
Posts: 1,259
Default Re: If the Dollar was officially devalued say 2 to 1 world wide. What would happen ?

Hi crazycharlie,

The price of oil in doilars would go up, only if the oil producers sold their oil in currencies other than dolars. At the present moment, most of the world uses dolars as international trading currency. The tendency is for this to change to something like the Euro (one of the reasons why the war in Iraq was started).

Once the world uses another currency to trade, the devalued dolar (2 to 1 as you put it) would mean higher imported goods. Since most goods sold in the US are imported, prices will at least double in the space of weeks, once the old stock as been sold off the shelves and new stock brought back on at a new price, if brought back at all.

There would need to be more money printed to buy these things and this would mean inflation, which in turn would lead to higher interest rates in your local banks for loans and also higher prices as the dolar would be further reduced in value and so the vicious circle begins.

Raw materials (commodities) would also go up in price as they are world controlled and as the world currency would no longer be the dolar, probably would make even manufacturing within the US borders more expensive. Energy in dolar would be more expensive.

National debt would become rife (we've already seen some of the States in the US crying out for help from the Federal government to balance the books) which would mean a freeze or reduction of public services. Of course the spin off to that would be a reduction in the quality of education generating a generation of lower educated people and lowering standard of health care which would create public health problems. You can't leave law and order from the equation either.

The biggest problem you will face is source of income, as there will be many company directors who will not understand what is happening and make bad decisions and others who won't stand the heat and sell up and get out, leaving workers high and dry. That could lead to civil unrest.

Brazil has passed through this type of crisis during the late eighties / early nineties and is managing to pull through, slowly. The interest rates over here for credit cards are between 10 and 15% per MONTH and interest on savings is around 0,60% just below the rate of inflation an improvement from ten years ago when, if you could get hold of a credit card, interest rates for loans were well aboove the 50% monthly inflation rate.

for you to get a better insight as to what will happen, look for a country where this already has and see how the people coped with the situation.

Best regards,


Originally Posted by crazycharlie View Post
Say, They announced an official devalued dollar against most other
money. What would happen right away, say in the first few months
Two to One or more. Petrol would go up.What else?
I'd just like some opinions on this, especially the first few months.
If that is what we should "Gird our Loins" for I'd like to know a little
of what to expect?
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