Dollar Devaluation

Why would you think that? Is it because you read it on the internet? Americans know more about money than anybody else in the world. There are certain risks that go along with operating a fiat currency on a global scale, and currently nobody can do it except the US. Your standard of living would be much lower than it is if we didn't.

 

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Actually I did read it on the internet - in I believe the 2nd post of this thread.

 

Our standard of living will be lower at some point? Why in the 1920s did it take a wheel barrow of $$ to buy a loaf of bread? I am not being a smart a*s here really trying to learn. I try to work in the would of common sense and it just seems to me if you printing $ w/o a means of supporting it it becames paper w/ink on it?

 

JustAFarmer, Let me ask you this ... if you and everyone in the US had a printing press for money ... and you could just go into your basement and print off a few thousand dollars ... then you went to the feed store to buy some feed ... but you and everyone else there had also just printed off a few thousand dollars ... but there was just 1 bag of feed ... cant you see everyone saying ... i'll pay $1000 ... $2000 ... $10,000 for that bag of feeed

That's basically what's happening (albeit slowly) on a global scale

Countries can just print whatever money they need -- there is no currency in the world that is backed by a hard asset.

 

we are lulled into a sleep here because all currencies are devaluing together ... and it happens slowly over time

Americans have gotten used to things getting more expensive over time (think about health care, food, energy, housing, etc)

 

Ok new spin here? Thats why our will come to us as AMERICANS and push for a one world currance? Or at least something to compete against the euro?

 

The problems in the 20s were caused by the British. They demanded that Germany pay war reparations in the form of gold and foeign currencies, not German Marks. They also insisted that Germany ship about 1/4 of their total exports to Britain as partial payment. Of course Germany could not pay and the rest is history. No such situation exists in the US today.

 

Interesting conversation so far. Lets consider the future now. At 3% inflation, prices should double every 20 years. Some prices double faster. If you are 40 years old now, and plan on living to about 80, consider what a hamburger will cost you. Consider what a car will cost. Consider what renting an apartment will cost you. Now, consider what you make as a wage today, and consider if it will be able to support the prices you've generated for that hamburger, car, rent. If you had 1 million dollars today, without investing it to get a return (or putting it in a bank which basically gives you .025% return a year), you wouldn't be able to retire....even though you are a millionaire. Why? Because 40 years from now, a million dollars won't be much if things keep on the way they are. Lastly, when more money is created, prices lag the introduction of this new money (the time scale on the lag is debatable). But a lag does exist. So, if you are the first people to get your hands on this money, you can use more money to buy at current prices. But, if you are the last people to get this money, prices have already increased.....and the extra you get usually isn't the same percentage as those that got it first, as it now has to go around to more people. This is the main reason why the rich get richer, and the poor get poor. The trickle down effect it responsible for this.

 

None of this is new. I doubt that inflation has been less than 3% annually for more than a couple of years during my lifetime, and people get by. You just have to expect it and adjust to it. When I was a kid, hamburgers were $0.35. My first new car [a Mustang] cost $2,400. A three bedroom garden apartment rented for $250. But wages adjust when prices adjust. If they didn't nothing would be sold or bought -- highly unlikely as long as there is a free market economy. If you purchase a home and keep most of your savings in the stock market, gold, real estate and whatever else looks good at the time, it is possible to keep up with inflation. If you keep it in a checking account or under the bed, it will naturally lose purchasing power. The rich aren't rich because they use the money first. They are rich because they invest it in businesses or other things that adjust to inflation and grow over time.

 

Howdy,

I've read that it's lost 96% of its value since 1913 and the Federal Reserve was created. However, it's still an eyeopening figure.

I've also read that in ancient rome you could be a goog toga and sandals for an ounce of gold, in the 1920's, you could be a good suit of clothes - for an ounce of gold and at $1125 as I write, you can still buy a good suit of clothes for an ounce of gold.

By personal experience, I could go to the store in 1959 and buy a loaf of bread for a quarter. That same quarter is worth about $3.50 today in silver content alone . . . and would buy me a loaf of bread.

Now are you ready to puke? The official debt is ~$13T but the unfunded liabilities are pushing $70 Trillion. This includes social security, medicare-aid, the various trust funds and service on the debt. There is no combination of tax increases and benefit reductions that can cover this tab so the only viable option is to monetize it. This means simply printing dollars until it's brought down to a manageable level. In order to do this, it's been estimated they will have to halve the value of the dollar over the next 12 years.

peace,

rono

 

i have also read that if the US decided to go back to a gold standard

it would have to raise the price of gold to something like $8,000 an ounce to be able to back every dollar

i am not sure if these numbers are exactly right ??? but it is an interesting thought.

 

Absolutely!! Who's math is it and what hidden agenda do they subscribe to that they are touting that amount? What is the real story behind it all?

 

the real story is most americans are dullusional about the value of paper currency and it's ability to hold it's value over time

 

I dont like the paper money,and though i am not chicken little and the sky is not falling, i do believe we are moving towards a day where all of this print it like there is no tomarrow will come back to haunt us?

 

Of course there is. If you raised the tax rate a little, raised the social security and medicare eligibility age by something up to ten years, means tested the payments, and stopped cost of living adjustments for ten years, the social programs would survive until the boomers clear the system and the number of people working vs retired come more into balance. The fix isn't pretty, but it will happen because the alternatives are unthinkable and unacceptable.

 

Under a gold standard there is a policy to control the money supply such that you can always exchange your money for a fixed amount of gold.

This is just a policy. The government could always go off the gold standard.

Under a central bank with a mandate for price stability, there is a policy to control the money supply so that you can always exchange your money for a fixed amount of useful things.

In other words, a central bank with a mandate for price stability is a "basket of useful things" standard.

 

I have read lately of a bank (i am not sure where) that deals in the gold standard as of now? I am more then alittle scared to talk about it (it seems alittle fishy) to me but as /or if /when i find out more i will let you all know. A private bank that takes direct deposit and turns(paper green) into gold (yes it can go down) sounds like a damn good idea to me?

 

I don't believe that the FDIC covers ancillary products even if delivered by a bank. I suspect that since stocks, annuities, etc., aren't covered, neither would a bullion based product. If no FDIC insurance, and the bank goes under. I think the bullion would be part of the banks assets and not the depositors, but maybe a lawyer would know for sure. I am not a lawyer ( nor do I want to be one
Jim

 

By my "ignorant" statement in the 2nd post, I meant that most Americans have no idea the difference between a Federal Reserve Note which they use today, and the dollars used for most of the USA's history prior to 1933. (or 1971 in terms of gold backed currency) Without this understanding of how FRNs work they pretty much don't understand why there is inflation and what steps can be performed to preserve wealth. It's not all their fault because the current relationship between the Federal Reserve, the retail banking system, the Treasury, the US government, and gold & silver is highly obfuscated to keep people in the dark. This obfuscation allows for slow gradual changes to the money system, which has taken place since The Depression that has converted the USA's money system from one based on assets to one based on debt. It takes a lot of work to understand how it works.

Americans might not be alone in understanding how their fiat currencies work, I suspect they are not, but I am only commenting on Americans since this is where I live.

On the latter comment about banks issuing their own currency, as they once did, I don't believe it is possible now. In 1980 or so, during the economic crisis that was occurring at the time, at the hands of the Federal Reserve again, Congress passed another innocent sounding law, the monetary stabilization act or something similar. This law forced all banks in the USA to join the federal reserve system. There were a number of banks that had left the system or were going to leave it and this law stopped it. I am pretty sure this will limit all these banks to using nothing but Federal Reserve Notes.

The one exception to this would be if the states themselves decided to get back into banking and then only if they decided to coin silver or gold for currency as specified in the US Constitution. The ability to do this may be unique to the USA as the USA is one of the few countries where soverignty is shared between the states and the federal government. Last month a bill was introduced in the SC Legislature to do this very thing. You can read this interesting bill here.

http://www.scstatehouse.gov/sess118_2009-2010/bills/4501.htm

Commentary on this bill pretty much states that it has no chance of passing, and may be true, but it isn't as much due to constitutional issues but rather due to the fact that FRNS are so ingrained by decades of culture that it's hard to think of money in any other terms. This of course was ultimately the desired result. I suspect that if SC did pass it, it would bear the full brunt of the banker's wrath in this country.

 

Cloudsweeper ... i hate this idea of yours ...

If you raised the social security and medicare eligibility age by something up to ten years, means tested the payments, and stopped cost of living adjustments for ten years, the social programs would survive until the boomers clear the system and the number of people working vs retired come more into balance. The fix isn't pretty, but it will happen because the alternatives are unthinkable and unacceptable.

they aleady raised the age for full SS benefits from 62 years to 66 years and 10 months ... now you want to raise it to 76 and 10 months ... screw that!!!

Ive been paying into this system for 30+ years ... and it ****ed me off that the Govt gives AIG and GM trillions of dollars but wont stand behind their promises to the public that's been paying into the system since their youth.


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