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Title: The Death of the Dollar
Source:
American Thinker
URL Source: http://www.americanthinker.com/2010/08/the_death_of_the_dollar.html
Published: Aug 6, 2010
Author: Vasko Kohlmayer
Post Date: 2010-08-07 14:20:58 by Capitalist Eric
Keywords: None
Views: 22232
Comments: 51
Nothing can save our financial system in the long run. It is doomed to collapse. This is inevitable, because our government controls and manages its very foundation -- the dollar. The federal government began its takeover of the dollar in 1913 when it established the Federal Reserve Banking System. Prior to that, the dollar was a real store of value. In the period from 1783 to 1913, there was a long period of currency stability with virtually no inflation. If you saved one dollar in 1800, your great-grandchild could buy roughly the same amount of goods with the same dollar one century later. In 1913, five dollars could get you the following: 15 pounds of potatoes, 10 pounds of flour, 5 pounds of sugar, 5 pounds of chuck roast, 3 pounds of round steak, 3 pounds of rice, 2 pounds each of cheese and bacon, and a pound each of butter and coffee ... two loaves of bread, 4 quarts of milk and a dozen eggs. In 2010, five dollars barely gets you two pounds of cut chicken meat. Since the establishment of the Federal Reserve in 1913, the dollar has shed more than 90 percent of its value. The loss of value has been especially pronounced since 1971, when Richard Nixon took the dollar off the last vestiges of the gold standard. In that year, the dollar became a pure fiat currency, grounded in nothing but the whims of politicians and technocrats. The consequences have been disastrous. One thousand 1971 dollars would buy only $185 worth of goods today. This represents a loss of some 80 percent in purchasing power. The dollar has already entered its terminal phase. The word "doom" is written across it for anyone with the eyes to see. Sad to say, there is no way to reverse its downward slide. With more than $13 trillion in public debt and some $100 trillion in unfunded mandates, our federal government has assumed far more obligations than it can ever make good on. Worse still, these figures are growing larger every year. To put it bluntly, our federal government is flat-out bankrupt. Currency disintegration is always the unavoidable result of government bankruptcy. The dollar -- which has been weakening for many decades -- will at some point go into a sudden death spin. The only question is when. It may happen six months from now or six years from now. The timeframe is impossible to predict, but we can now be certain that happen it will. No one -- not even the federal government -- can escape the numbers. And the numbers are hideous. One hundred trillion-plus is a killer. Under normal circumstances, the dollar would have collapsed already, given how impossibly indebted our government is. Some people are puzzled by its continued survival. They say this is just another sign that we live in a crazy world. But there is nothing crazy about it. The dollar is still alive because there is no ready alternative. Doomed though it may be in the long term, big-time holders of U.S. dollars keep desperately hanging on because they have nowhere else to go. Where else could China invest its nearly one-trillion-dollar reserves? There is no easy option. So China keeps propping America's federal debt by purchasing Treasury notes and thus keeping the dollar afloat. It is a bad deal for China and a fortuitous one for the U.S., at least for the time being. But things cannot go on like this forever. Eventually, something will give in, and the whole gargantuan house of debt will come crashing down. When that happens, things will get ugly. Some people may say this situation has been brought about by reckless fiscal and budgetary policies rather than by the government's management of the currency. But the ability of government to run deficits is directly tied to its power to manage money. It is very difficult for politicians to run large deficits if the currency is anchored in something intrinsically real and valuable -- let's say gold. This is because when they post large budget shortfalls under a gold standard, people naturally ask them, "Where in the world are you going to get all the gold to pay for all this spending?" And since politicians do not know how to make gold, they are forced to admit: "We are going to get it from you, the people, of course. Where else could it come from?" As you can imagine, such answers do not usually go well with the voting public. The restrictive quality that real money exerts on the profligacy of politicians is often referred to as "the golden handcuffs." As it is now, most people do not think that they will have to pay for the spending incurred by their representatives in Congress. They think that deficits are something that does not concern them directly. They somehow assume that if the government needs more money, it can simply issue more bonds. But this way of living is unsustainable, and sooner or later, the inflow from abroad will stop. Then we will all pay for our government's extravagance by the disintegration of the currency. Traumatic as it may be, we should not be surprised by this. It has to end this way. This result became ineluctable the moment the American people gave government control over their money. Let's hope that we will learn from our mistakes. Let's hope that when the present monetary regime finally unwinds, we will have the wisdom to lay a more solid foundation for our money than the whims of politicians.
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#1. To: Capitalist Eric (#0)
15 pounds of potatoes, 10 pounds of flour, 5 pounds of sugar, 5 pounds of chuck roast, 3 pounds of round steak, 3 pounds of rice, 2 pounds each of cheese and bacon, and a pound each of butter and coffee ... two loaves of bread, 4 quarts of milk and a dozen eggs. Good luck storing them.
In Zimbabwe, they painstakingly count out grains of gold to buy things today. I suspect that once the dollar collapses, you'll see some bright entrepreneurs create a new private money system that's probably backed by gold or another commodity and that will likely be tied to your cell phone. Hayak advocated a competing, private monetary system way back in 1974. Now, we have the technology to make it practical, viral, and quickly adoptable.
The United States isn't some backwards third-world shit-hole. What an idiotic analogy.
Being a Democratic shill means you check your humanity at the door.
What an idiotic analogy. Germany in the 1920s wasn't some backwards third-word shit-hole either. Their currency collapsed into a massive hyperinflation overnight when people lost confidence in it. When currencies collapse today, there is some buffer in the world called the U.S. dollar, which is the world's reserve currency. People of those countries refuse to take their national currency and insist on dollars or a commodity like gold. What is going to buffer us when the rotten government finally destroys the dollar? Nothing. The U.S. government is setting us up for a much worse situation than the world has seen in modern times. Hyperinflation Can Not Just Happen, But Can Be Sudden ...Even though huge money creation has occurred because of the Credit Crisis, we still haven't seen significant inflation yet. Indeed, the American government claims the U.S. inflation rate has fallen close to zero. How is this possible? The answer can be found in the banking system. The feds have pumped huge amounts of money into it (U.S. bank reserves have increased approximately 100 times or 10,000% since the Credit Crisis began) and banks have received this money at close to a zero percent interest rate. Yet, if you look at commercial and consumer bank lending, you will see that they have been declining. So where did all this money go? It was used to buy treasuries and this is what is allowing the federal government to fund its massive deficits. For all intensive purposes, this is a massive Ponzi scheme being run by the U.S. government. Ponzi schemes though don't follow the same rules as normal businesses or economic statistics. They build to a crescendo over time and then suddenly collapse to zero instantly. The analogy for inflation will be the opposite however. Inflation will go to zero and then suddenly jump up to some very high level. In theory, zero interest rates should produce infinite inflation (hyperinflation), but nothing mandates that this has to be a gradual, long-term process.
What? You sleep through European history? Germany sure was a hell-hole where people didn't have enough food to eat! Did you not read how bad 1917-1918 was in Germany? They'd add saw-dust to wheat to supplement their diet. Duh! If you think you can compare war-torn Germany and backwards Zimbabwe to a super-power like the US then you're ignorant.
Being a Democratic shill means you check your humanity at the door.
If you think it can't happen here, then you are the one who doesn't understand history. Those who cannot remember the past are condemned to repeat it. -- George Santayana
The Federal Reserve is unconstitutional.
What was the average weekly wage in 1913? $10.00?
Those who cannot remember the past are condemned to repeat it. -- George Santayana Never said it can't, I have been saying we have to worry about deflation, not inflation.
Being a Democratic shill means you check your humanity at the door.
If you think you can compare war-torn Germany and backwards Zimbabwe to a super-power like the US then you're ignorant. Fine. Look at Argentina. One of the secretaries in my office if from there, she's got some ugly stories to tell.... Look at the following link... http://ferfal.blogspot.com/2008/10/thoughts-on- urban-survival-2005.html It's got some surprising insights into what happens, the results, the behaviors of people afterwards, etc. All since the 2000 decoupling of the Argentine peso to the dollar, and the resulting collapse(s). BTW, while their government was different in most ways (yet, not so different any more, given the overt corruption of all levels of our government, today), the financial aspects and natural reactions give a good example of what'll probably happen here.
True, you have been saying that... Unfortunately, you're wrong. How strongly do I believe that? Well, let's just say I've structured all of my finances for the next five years (minimum) with high inflation (or even hyperinflation) in mind. We'll see soon enough, though...
Yep. But our government "representatives" never let some silly thing like the Constitution get in the way of their agenda. You realize that Obama suing the state of Arizona on the issue of immigration, is treason? It's treason for the Federal government to sue a state or individual on the behalf of a foreign power... But who's gonna' arrest Obama or his "justice" department for treason? I'll say it again: the only way we'll take our country back, is by the force of arms. Nothing less.
Read the article I posted above. The government has cranked up the money supply too much and is using it to fund a big part of it's deficit spending. This is going to come back to haunt us just like it did in Germany. As the article explains, hyperinflation can be triggered overnight as people wake up to the fact that government as been debasing their currency and lose confidence in it. It will be even worse here than elsewhere because the dollar is the reserve currency of the world. Most U.S. government debt is short term debt (5 years or less). What happens when China, Japan, and the rest of the world refuse to renew their treasury holdings? The government will have no choice but to cover their payments and continued spending with more debasement. Then it will be all over. Even if they Chinese, et al., choose to slowly walkaway from the dollar, we're still in for rougher times because of all the new money that's already been pumped into the system and that is continuing to be pumped into the system to cover the deficits.
You've already received the proper information that renders your statement incorrect. Since you've been given the proper foundation for why it exists, I can only conclude that you are deliberately engaging in contrariety contention hostility...
The MOney Supply got cranked up because for years Greenspan kept it firmly under his thumb and allowed the market to create dollars though esoterica and derivatives. The fact, they still aren't anywhere near sating the demand for dollars. In Weimar, the opposite was true. Germany was in debt but there really was no demand for any German assets let alone specie.
The MOney Supply got cranked up because for years Greenspan kept it firmly under his thumb and allowed the market to create dollars though esoterica and derivatives. That is definitely true. The .com bubble can be laid squarely at Greenspan's feet. The housing bubble can be laid squarely on Greenspan's and Bernacke's feet. Today, the money supply is growing to fuel federal spending. In Weimar, the opposite was true. The culprit in the Weimar hyperinflation was the French government who insisted on war reparations in the Treaty of Versailles. The German government grossly inflated the money supply in large part to meet the obligations it had under this treaty to a foreign government. The U.S. government is going to have to continue inflating the money supply as well, not only to meet domestic spending obligations, but also pay off the debt we owe to China and other foreign countries.
Look at Argentina. Again, another flawed analogy. Argentina, like all of latin American sans Chile, is nothing but a stinking shit-hole.
Being a Democratic shill means you check your humanity at the door.
No, you're wrong. We're not in danger of high-inflation, but of deflation. Look at gasoline and housing prices. BOOM!!!!
Being a Democratic shill means you check your humanity at the door.
Chuckles...it's funny watching two people who know zip about the economy argue over it...
We'll see. I think it's gonna' suck to be in your shoes, when I'm proven correct. LOL. Time will tell.
A small suggestion: check facts, so you don't look like an ignorant ass. Clearly, you don't know shit about the countries you're talking about. Have you ever travelled? I don't mean to Disneyworld, or Canada, or even England... I'm talking about countries outside the Western/W.European culture... Until you see for yourself, really see... there's no way for you to know how much you don't know.
You love to call other countries from Germany to Argentina "stinking shit holes". What countries have been in? I've been in 26 countries on six continents. I've been to several countries 10, 20, 30 or more times each. I've been in industrial countries, third world countries and those in the middle. Where have you been? Please tell us so that we can understand your first hand experience in evaluating the countries you berate.
Well, aren't you a nasty cuss. Give us your stock picks, Mr. "I'm ready for high inflation". #shares, prices you bought them. We'll see how you do.
Being a Democratic shill means you check your humanity at the door.
Oh come on. He's been to Vegas. He's seen it all -- the big Pyramid, the mini Eiffel Tower, and even the huge cowboy. He's a world sophisticate!
Argentina income per person: 14,000. US income per person: 47,000. All figures are 2008. Now that you've been schooled, again, by me, go back to the library and educate yourself. It really is painful trying to discuss difficult concept with people who are as ignorant as you and Capitalist Eric.
Being a Democratic shill means you check your humanity at the door.
US income per person: 47,000. Cost of designer jeans in Argentina: 7.00 Cost of designer jeans in America: 100.00 You've never been overseas which is why you have no clue on why the statistics you site are irrelevant. I'll bet that you've never even been out of your state. Maybe not even your county. Again, I've been to 26 countries on six continents. I've been to many of them 10, 20 or 30 more times. Tell us where you've been. What are your international experiences? Tell us about your first hand international experiences so that we know you aren't the ignorant one in this conversation. Enlighten us with your worldly ways.
Hmm... if I was a "nasty cuss," I'd be calling other countries "stinking shitholes." RIGHT? For someone who thinks they've got a "good bead" on things, you don't seem to understand much... Let me put this in simple words, so you can understand... Okay???? I.... don't.... buy.... stocks.... OR.... bonds.... be...cause... the.... game..... is.... RIGGED..... Do.... you..... under....stand.... NOW....?
Do.... you..... under....stand.... NOW....? Agreed, the game is rigged. I suggest you take advantage of said rigging. I'm sorry, I thought you said you had adjusted your portfolio to take advantage of the "expected hyperinflation". If I'm wrong I apologize.
Being a Democratic shill means you check your humanity at the door.
I'll bet that you've never even been out of your state. Maybe not even your county. Lies, I have been to many 3rd world nations.
Being a Democratic shill means you check your humanity at the door.
It really is painful trying to discuss difficult concept with people who are as ignorant as you and Capitalist Eric. Now that you've SCHOOLED us??????? LOL
GREAT! I love that. Please tell us which ones. Honestly, I'd love to hear a story about one of your third world experiences. I have some great ones too. Let's share.
My wife thought I was crazy to not invest in the 401k, when I had the chance... We fought bitterly about it, but I won that argument. We've eliminated all debts, except those that will essentially be erased in a high or hyperinflationary scenario, and put money into tangibles (as well as some gold and silver) that will gain or be useful when the dollar becomes toilet-paper.
Before I do, tell me how that is germane to this discussion that you can't compare Zimbabwe or post-WW1 Germany to the US? I've shown by CIA statistics that Argentina is but a tiny fraction of the US economy, thus another flawed analogy.
Being a Democratic shill means you check your humanity at the door.
Besides Au and Ag, what "tangibles" are you referring to? Also, is your house paid for or do you owe money on it? or do you rent?
Being a Democratic shill means you check your humanity at the door.
Nothing can save ANY fiat money financial system in the long run. Fiat money is doomed to collapse. This is inevitable, because ALL goobernments control and manage its very foundation -- FIAT MONEY. Fixed it for ya Crapweasel. DUH.
Quoted by PDS insane assholes every where.
Being there is important to understanding. You've never been anywhere, otherwise you would have piped right up. So, you don't understand much of anything.
Let's share. I have no interest in your sordid third-world exploits. As far as I know you've been on one of those child-sex tours in Thailand and I don't care to hear about your travels.
Being a Democratic shill means you check your humanity at the door.
You've never been anywhere, otherwise you would have piped right up. So, you don't understand much of anything. Again, I'll ask you one more time: How is this important to the thread at hand? And no, I don't "pip right up" because some trash demands that I do. You don't call the shots, Mr. Pip.
Being a Democratic shill means you check your humanity at the door.
Fixed it for ya Crapweasel. DUH. Go back to liberty post you fuck-head. We uniformly despise you and your sodomite lover yukon. Joke for the day Mad Dog: Q:What spreads faster than butter? A: Bristol Palin's legs.
Being a Democratic shill means you check your humanity at the door.
Also, is your house paid for or do you owe money on it? As paraphrase what you told JW, you don't call the shots, at least where I am concerned... So forgive me, if I don't lay my cards on the table for you (and the government spies) to see... While precious metals can be stolen (hence, my reluctance to put all my eggs into that basket), I have particular skills that will be valuable in a SHTF scenario, as we have coming. The "tangibles" I am acquiring, will allow me to make full use of those skills. Let's leave it at that.
Comments (41 - 51) not displayed.
Top • Page Up • Full Thread • Page Down • Bottom/LatestIn 1913, five dollars could get you the following:
#2. To: Capitalist Eric (#0)
(Edited)
#3. To: jwpegler (#2)
In Zimbabwe.....
#4. To: Nebuchadnezzar (#3)
The United States isn't some backwards third-world shit-hole.
#5. To: jwpegler (#4)
Germany in the 1920s wasn't some backwards third-word shit-hole either.
#6. To: Nebuchadnezzar (#5)
(Edited)
#7. To: Capitalist Eric (#0)
#8. To: Capitalist Eric (#0)
In 1913, five dollars could get you the following:
#9. To: jwpegler (#6)
If you think it can't happen here, then you are the one who doesn't understand history.
#10. To: Nebuchadnezzar (#5)
What? You sleep through European history? Germany sure was a hell-hole where people didn't have enough food to eat! Did you not read how bad 1917-1918 was in Germany? They'd add saw-dust to wheat to supplement their diet. Duh!
#11. To: Nebuchadnezzar (#9)
(Edited)
Never said it can't, I have been saying we have to worry about deflation, not inflation.
#12. To: A K A Stone (#7)
The Federal Reserve is unconstitutional.
#13. To: Nebuchadnezzar (#9)
(Edited)
I have been saying we have to worry about deflation, not inflation.
#14. To: A K A Stone, Captain LunchPail (#7)
The Federal Reserve is unconstitutional.
#15. To: jwpegler (#13)
#16. To: war (#15)
#17. To: Capitalist Eric (#10)
Fine.
#18. To: Capitalist Eric (#11)
Unfortunately, you're wrong.
#19. To: Nebuchadnezzar (#18)
#20. To: Nebuchadnezzar (#18)
Look at gasoline and housing prices. BOOM!!!!
#21. To: Nebuchadnezzar (#17)
Argentina, like all of latin American sans Chile, is nothing but a stinking shit-hole.
#22. To: Nebuchadnezzar (#17)
(Edited)
Argentina, like all of latin American sans Chile, is nothing but a stinking shit-hole.
#23. To: Capitalist Eric (#21)
Until you see for yourself, really see... there's no way for you to know how much you don't know.
#24. To: Capitalist Eric (#21)
(Edited)
Have you ever travelled? I don't mean to Disneyworld, or Canada, or even England.
#25. To: jwpegler (#22)
Where have you been? Please tell us so that we can understand your first hand experience in evaluating the countries you berate.
#26. To: Nebuchadnezzar (#25)
(Edited)
Argentina income per person: 14,000.
#27. To: Nebuchadnezzar (#23)
Well, aren't you a nasty cuss.
Give us your stock picks, Mr. "I'm ready for high inflation". #shares, prices you bought them. We'll see how you do.
#28. To: Capitalist Eric (#27)
I.... don't.... buy.... stocks.... OR.... bonds.... be...cause... the.... game..... is.... RIGGED.....
#29. To: jwpegler (#26)
You've never been overseas which is why you have no clue on why the statistics you site are irrelevant.
#30. To: Nebuchadnezzar (#25)
(Edited)
Now that you've been schooled, again, by me, go back to the library and educate yourself.
#31. To: Nebuchadnezzar (#29)
I have been to many 3rd world nations.
#32. To: Nebuchadnezzar (#28)
I'm sorry, I thought you said you had adjusted your portfolio to take advantage of the "expected hyperinflation".
#33. To: jwpegler (#31)
#34. To: Capitalist Eric (#32)
#35. To: Crapweasel (#0)
Nothing can save our financial system in the long run. It is doomed to collapse. This is inevitable, because our government controls and manages its very foundation -- the dollar.
#36. To: Nebuchadnezzar (#33)
(Edited)
tell me how that is germane
#37. To: jwpegler (#31)
I have some great ones too.
#38. To: jwpegler (#36)
Being there is important to understanding.
#39. To: Mad Dog (#35)
Nothing can save ANY fiat money financial system in the long run. Fiat money is doomed to collapse. This is inevitable, because ALL goobernments control and manage its very foundation -- FIAT MONEY.
#40. To: Nebuchadnezzar (#34)
Besides Au and Ag, what "tangibles" are you referring to?
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