The result, instead, was stagflation, and as foreign central banks converted their dollar holdings the U.S. gold stock was halved.
FORBES: Gold, Reagan and the Reds: From Degraded Dollar to Downgraded Debt
The euro has slumped in part because the Greek crisis makes it look a poor choice for reserve managers hoping to diversify their big dollar holdings.
ECONOMIST: In a world of ugly currencies, the dollar is sitting pretty
Asian central banks that want to balance their dollar holdings with euros may choose to park their cash in France or Germany and save themselves any worries about Greece and its politics.
The Asian governments and investors may be tempted to sell many of their dollar holdings in order to protect themselves - but this would have the effect of weakening the dollar further.
But with foreign central banks and investors seeing through this raw deal and cutting down their dollar holdings, it is unlikely that the U.S. will be able to revive its economy with monetary stimulus the way it did in 2002.
Faced with negative real interest rates, rapidly rising inflation, and a chronically weak dollar, foreign holders of US Treasury debt and other dollar-denominated holdings may begin to lose their nerve.
Asia's vast holdings of dollar reserves also expose the region to vast losses whenever the dollar falls in value.
Before that the ratio of dollar to euro reserve holdings was 3:1.
FORBES: Bulletproof Dollar Facing Tough Competition, Warnock Says
Look for this pattern to continue in 2013 as China continues to wean itself from the U.S. dollar and to diversify its holdings to include a larger basket of currencies, as well as hard assets in Europe, the United States, South America and Africa.
This is part of a continuing trend in which central banks have increased their gold reserves as a way of hedging or protecting against the fall in value of their holdings of paper money like the dollar and the euro.
FORBES: China May Buy More Gold; $1,100 An Ounce Appears To Be Support Level
For more than a year, Avis Budget Group and Hertz Global Holdings have been working on deals for Dollar Thrifty.
FORBES: Dollar Thrifty Ends Sale Process, Says Hertz Deal Didn't Eliminate Antitrust Risk
If a panic caused Japanese to flee yen-based holdings, the U.S. dollar could soar in value, creating a dollar bubble that could fuel a temporary speculative stock market boom here.
If a panic were to cause Japanese to flee yen-based holdings, the U.S. dollar might soar in value, creating a dollar bubble that could fuel a temporary speculative stock market boom.
However, the main way that investors responded to the Fed blowouts of the era was not to bid up consumer prices or anything like that, but to get their holdings out of asset classes that brought dollar returns.
Yes, people received dollars in return for their holdings of the yellow metal, but the dollar itself was formally devalued by 40%.
FORBES: Why A Cyprus-Like Seizure Of Your Money Could Happen Here
Over two restructurings, about 93% of bond holders took a massive haircut on their holdings, accepting about 30 cents on the dollar.
FORBES: Fed's $2.6T Payments System Risks Paralysis As Judge Orders Argentina To Pay Defaulted Bonds
Compiled by Central Banking Publications and sponsored by the UK's Royal Bank of Scotland, the survey found 39 nations out of 65 questioned were increasing their euro holdings, with 29 cutting back on the US dollar.
BBC: Recent rebounds in the dollar have proved to be short lived
Analysis of optimal gold holdings has normally been conducted in U.S. dollar terms since gold is traditionally denominated in the U.S. dollar.
The so-called Brady bonds, trading at 60 cents on the dollar, are supported by 30 cents per bond in U.S. Treasury holdings, making for a floor in value.
Private equity investors will soon get word about recent mark-downs to their holdings, losses that probably won't reflect the 60 cents on the dollar bids--which are, on average, the high bids--now seen in the secondary market, says Colin McGrady, managing director of Cogent Partners, which advises on secondary transactions.
FORBES: Will stressed firms sell their stakes for a song? Bet on it.
Considering the trading markets for currencies themselves, the dollar figures in 90 percent of those transactions, nearly 70 percent of global central bank holdings are denominated in dollars, and with cross border trade in mind for individuals in countries with thinly traded currencies, the dollar is the go-between currency of choice 90 percent of the time.
FORBES: Message To Greece: To Leave The Euro Isn't To Leave The Euro
Further confirmation that the U.S. dollar is gradually losing its reserve status came today from an International Monetary Fund report on global holdings of foreign exchange reserves by central banks.
FORBES: Dollar's Share Of Global Reserves Continues To Slide, Reserve Status Questioned
Erskine is principal of The Erskine Company LLC, a strategic advisory firm located in Worcester, Massachusetts, that offers expertise in the management of unique family assets, including multi-million dollar family businesses, numismatics collections, fine art and Americana collections, commercial and residential real estate holdings, and family compounds.
FORBES: "Canyon" Controversy - Blame The Advisers Not The IRS
应用推荐