Other countries that use U.S. currency

This country is already bankrupt, and the fate of the dollar is pretty much out of our hands. If the dollar loses its status as the world's reserve currency (i.e., to the yuan, or a basket of currencies), this drastically reduces the demand for the dollars we print by the billions. At that point, foreign creditors demand a higher interest rate (no more of this phony-baloney ZERO rate), and the interest paid on new Treasury bonds and notes skyrockets. The dollar plunges, and hyperinflation results, as we will have to print even MORE money to cover the interest on government obligations. If we try to maintain the same interest rate, or an artificially low rate, no one will buy the Treasury instruments. The outlook is grim.

 

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That's because the useful life of paper currency in that humid tropical shoe-wallet country -- is about 15 minutes.

 

NP, he'll just monetize
the bar tab and...

 

Thanks for all the responses.

It's interesting how the Ecuadorians are using those coins that aren't used here: Sacagaweas and Kennedys. How did they do that? Did they ask US banks to send them the coins that they don't use much?

BTW, What's wrong with inflation?

Here's a kid in Zimbabwe walking to school with his milk money.
So, this is going to happen to the USA?

 

Panama not only uses American currency but there is no exchange rate - its dollar for dollar. Because of the canal the US had a large influence on the country.
Canal is the country's number one commerce and it was easier globally to have ships pay toll in US dollars. Even with them turning over the canal to the country.
bb

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What's wrong with inflation? Let's say you have 5 grand in the bank, and today it will buy $5,000 worth of stuff, clothes, electronics, coins, car parts, whatever. Now add a few years of serious inflation. You still have 5 grand in the bank. Now it buys $3,000 worth of stuff, and, prices have increased.The camera that cost $200 on Day One now costs $325. So inflation has screwed you twice; rising prices coupled with reduced buying power.

Did you sell some of your gold and silver because you were a little short? Hmmm. You took in rapidly-depreciating Federal Reserve notes in exchange for the only REAL money you'll ever possess. But admittedly, some folks have no choice.

 

Yeah Zimbabwe money in the last forty years has moved its decimal 25 places! Edited: Religious /religion related comments are not allowed on this forum. Please read thee rules. Click on 'forums' and it is the 2nd one down.

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Speaking of Zimbabwe... here is an article that relates.
http://allafrica.com/stories/201404101330.html

 

Yeah, I saw that on www.24hgold.com - another stupidity by our government, to even consider such a thing...

 

The problem will never be debt as long as we have the best defense. It will only become a problem when we stop having the best military.

 

Interesting. Very interesting.

 

Defense has NOTHING to do with the collapse of the dollar and the resulting hyperinflation, other than its incremental cost. NOTHING.

What are we going to do, declare war against the whole world? Accept our depreciating dollars or we'll bomb you back to the Stone Age? The middle class was already whacked once in this century, with the best-informed estimates that the average household lost about 30% of its net worth due to a decline in housing values. The middle class will get whacked again if hyperinflation prices all but the most essential goods beyond the means of the average family. It's imports that will surge in price, not so much domestic products. Small businesses will go under, and that's where the majority of our workforce earns its living.

In addition, that military has to be funded somehow. Worst case, you will see the ranks rapidly diminish. There will be only a fraction as many new weapons systems as there are now, along with much less manpower. No new bombers, fighters, tanks, missiles, you name it, there won't be as many. That, in turn, decimates the income of the various defense contractors and all their suppliers -- high tech small town America.

I know the thought process -- don't worry, be happy. My contemporaries, many of whom fought in Viet Nam, understand the dangers; their adult children are too busy scraping by to worry about a maybe-so economic catastrophe. The final answer will be that the US Government will repudiate its trillions of dollars in debts, wiping them out with a pen stroke, probably within 5 years. It is inevitable. I'll probably be gone, but it's a great incentive to HANG ON, just to see what will happen. The PM's and food I've hoarded likely won't help me a bit -- my particular vulnerability is prescription medicine, which will disappear, and with my ten prescriptions, I will soon follow. I actually think there may be a military coup at some point, and I would support it 100%.

[My friend in the cheese business thinks I'm nuts, but that's OK...]

 

I agree. it will happen without warning and catch 98% of the population by suprise.

 

Don't think that the JFK half dollars are used much in Ecuador. The country has its own coins for denominations up to 50 cents - same sizes and other specifications as the corresponding US coins. But just like the US half, the 50 centavo coin is not exactly "handy", and so neither the Ecuadorian nor the US version is used much.

For anything above 50 centavos, they use US coins and bills. And that includes the $1 coins. As for how the cash gets there (apart from individuals bringing them in), I suppose that the Central Bank of Ecuador imports them.

Moderate inflation is, by itself, nothing to be worried about. If other economic factors are primarily positive, it may even be helpful. But if the inflation rate is just one part of a worsening economic situation, you get into trouble. Besides, imagine ordering a cup of coffee at 5,000 CU (currency units), then ordering a second one, and at the end getting a 14,000 CU bill. Feeling cheated? Nah, hyperinflation.

Christian

 

I will start this post with a thankyou with a thumbs up with a previous post!
9/11 put this country to its proverbial knees! OKC did well to get the ball rolling..in that direction.
I really don't think power absolves debt!?!.. (If anyone knows an example please disclose!) If anything? debt shows a lack of power! Alexander the Great kingdom was divided among 4 generals which was wealthy but a conflict of interest reduced the kingdom.
The US has not only debt but a conflict of interest (House and Senate; not exclusive or inclusive), will result in what?
Debt puts pressure on residents, and when pressurized they respond not in unity!
I detect loyalty In your comment, which is an excellent quality, but can be misplaced, unless put in the right place!
Individuals have put forth effort in one direction and seeing events take a detour according to expectations? Circumstances beyond their control, nope. Really should not they yield to logic?
The genuine answer lies in recognizing the reality; if we combat our own emotion and heritage we will



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End up with the answer!



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Money was literally being thrown in the streets nearly 70 years ago in Hungary

http://upload.wikimedia.org/wikipedia/commons/0/0e/Inflació_utan_1946.jpg

 

Will it happen in a larger scale? It looks like it will run its course in global decomposition.

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No doubt about that. It's just that for the low denomination coins (0.01 to 0.50) they have Ecuador-specific designs. From what a friend told me (two or three years ago), those do circulate, along with the corresponding American coins. He never came across a half, and the $1 coins were "Sac & Co." from the US.

Christian