World's Strongest Currency?

Currencies of the worlds leading economicaly countries is always in a state of flux and everything changes as time goes by.

 

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I think its the Krugerrand

 

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As usual,Quad is correct with facts.

Faith that something with NO INHERENT VALUE does have value can quickly collapse, exposing the dollar for what it is - a geen piece of paper, not even big enough to wipe your ass.

 

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What makes it valuable is not faith, but the legal tender laws.

Its illegal to refuse payment in US dollars.

These laws were implemented because 'we the people' had no faith.

 

Not even Paper Billy. They got us all summed up with a bunch of 1s and 0s on a shitty old mainframe somewhere. This pyramid scheme has gone on long enough.

 

Rationally strongest currency is not the dollar. Perhaps it is the Chinese Yuan, but I will present some arguments for the Brazilian Real. I conclude with a few facts about the US and hope that someone will make a more direct comparison (give the corresponding data) for the US to the Brazilian data below:

BRAZIL:
Population: 187 million Brazilians living in Brazil
Debt (in Trillion R$):
Total Gov. = 1.150R$ = 639 billion dollars (at current 1.8R$/US$) = 42.8% of GDP or 341,652 dollars/Resident
Note this includes debt of all state and local governments plus debt of all government companies, etc. Most of this debt is now domestic debt and increasingly of longer period as the Real is stable and strong.
The federal debt is only 30.4% of GDP and that GDP is increasing at about 4% annually.

Foreign reserves = 186 billion dollars. Almost enough to pay ALL remaining foreign debts and much more than the 64 billion of short term (due in next 12 months) foreign debt, which typically “rolls over” instead of being paid. (All but recently issued Brazilian bonds trade at a significant premium.) Foreigners also own 204 billion dollars worth of Brazil’s companies and infrastructure, which they could sell, but not for that amount if done in short period. Brazilians and Brazilian companies own several times more than this in foreign lands, but I do not have the exact number.

In 2007 FDI into Brazil was 34.6 billion dollars but “profits and dividends” etc. returned to foreign lands totaled 21.2 billion dollars. A net “investment cash flow” of 13.4 billion for Brazil.
Brazil’s trade surplus in 2007 was 40.04 billion dollars; however, this was partially offset by interest paid on foreign debt, Brazilians visiting other lands (a growing effect of the strong Real) and other service payments totaling 19.33 billion. Brazilians living in foreign lands sent 4.09 billion back to their relatives etc. in 2007. Thus, the net “cash flow” into Brazil in 2007 was 38.2 billion dollars. This caused the Brazilian Real to grow stronger in 2007 by approximately 1/3 so Brazilian ADRs traded in US increased in dollars about 40% in 2007.

Net ’07 governmental income (excluding interest paid on debt) = +101,606 billion R$ (The “primary surplus,” which is slightly less than the total government expenses (including interest on all government debts.) I.e. total government debt is slightly growing still. However, unlike the US, Brazil is steadily reducing its total debt every year as a percent of GDP, but the interest paid as percent of GDP is actually slightly increasing, despite the significant reduction in interest rates in Brazil recently. This is because the internal debt is increasing more rapidly than the total debt as Brazil pays off external debt. The interest rates in Brazil are higher than external rates as Brazil controls inflation. The internal debt is held by relatively small fraction of the population. Thus, this conversion of external debt into internal debt tends to increase the economic inequalities in Brazil (which are already extreme); however, Government policies under President Lula, have more than compensated so the rich in Brazil have been in net transferring wealth to the poor via these government programs and the social inequalities are decreasing, especially for the poorest Brazilians. (Lula once was one – got his first pair of shoes at age 12, etc. Thanks to corruption, he and his brother are now millionaires.)

The greater purchasing power now in the hands of Brazil’s lower classes has caused a great increase in the internal market demand. This is true of all the “BRICs.” For example, Putin, like Lula, is very popular in Russia because Boris’s living standards are rapidly increasing. China’s middle class was able to buy 18.8% more in 2007 than in 2006, and is still debt free! (Once they learn what credit cards are, their purchasing power will surge enormously and China will not need to sell to the US and EU in less than a decade. Then there will be no need for China to finance the US deficits.) India’s poor are also gaining purchasing power, but not as rapidly as the urbanites. Inflation is being fought by all of the BRIC governments and still under control (about the same as in the USA)

USA:
USA federal government alone has debt of approximately 10 trillion dollars (more than 50% of GDP, which is hardly growing, but the debt is rapidly growing.) With about 300 million residents that is also $33,000 for each resident. I do not have data on the state and local debts, but they are significant, so Americans are more in debt than Brazilians, via their total government debt. (And deeply in debt personally with a negative net saving rate, especially now as their main asset, their house, is dropping in value.) US has large trade deficit, but as the economy falters, US is attracting considerable offsetting FDI. (US is “selling the farm” to foreigners.)

The US has relatively little, actually insignificant, foreign reserves as the US always assumes that foreigners will accept dollars “hot off the printing press.” US has neither trade nor fiscal surplus (It has the “twin deficits” to finance by borrowing from foreigners, mainly China, Japan and oil exporters.) US is very dependent upon foreign energy supplies but Brazil is self sufficient in energy; however, Brazil imports natural gas and lighter weight oil than the crude it exports in greater volume. Brazil has recently found large new deposits of light weight oil off its coasts but it is deep and will not be cheap. Brazil is a net exporter of energy, many raw materials, and food stocks. I.e. Brazil is well position to become an “economic colony” of Asia when the North America and Western Europe sink into depression.

 

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