The U.S. Dollar Is In Trouble

[mamboni]

Monday, September 13, 2010

The U.S. Dollar Is In Trouble

“Gradually the dollar is being eliminated from the foreign-trade settlement flows,” said Dariusz Kowalczyk, a Hong-Kong based senior economist at Credit Agricole CIB. “People are beginning to trade Asian currencies without intermediation via the dollar.”

This quote comes from a Bloomberg article last week which reported that China and Russia will bypass the U.S. dollar and engage in trade with each other using yuan and rubles. This could start freely occurring sometime this month.

In the words of one analyst: “Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency...” Here's the link to the article: Dollar R.I.P?

Here's a chart of the U.S. Dollar thru today. It does not look good:


http://2.bp.blogspot.com/_J8L-e47yFE0/TI5NGHpF74I/AAAAAAAAAm0/YCnqHf-RSJU/s400/USD.jpg
(click on chart to enlarge)


This bearish chart is reinforced by the poor fundamentals supporting the dollar. The latest of which is an arguably de facto failure of last Thursday's 30-yr Treasury bond auction. Although this factoid received very little media commentary, the Primary Dealers (Wall Street banks) were forced to buy 62% of the long bond auction last week. In and of itself, this means that the traditional buyers of long-dated Treasury bonds - the Japanese, foreign Central Banks and institutional asset/liability fund managers - were reluctant to make a long term bet on the dollar.


The weak dollar may be supporting the surprising strength in the precious metals market, especially among big foreign buyers, who are vacuuming up physical gold and silver right now. In one of his daily "quickie" reports which can be accessed in the Midas report at http://www.lemetropolecafe.com/, "JB" reports: "India is booming and the “wealth effect” for the world's largest gold buyer cannot be ignored." In addition, per JB, Standard Bank of London reports:
Demand for physical gold remains robust out of Asia and India ahead of Q4:10. Our Standard Bank Physical Gold Flow Index remains in positive territory indicating that buying in the physical market continues to outpace selling, even at this near-record high gold price.
So there you have it. Many newsletters writers issued bearish short term trading calls this past weekend on gold based on the technical patterns of the charts. Absurdly, there are still a lot of lemmings who live and die by their favorite newsletter writer. Newsletter peddlers are usually wrong, by the way. It is with dry humor that JB's report today is titled: "NY Chart anxiety = Happy Indians."

My best advice would be to start unloading your bond portfolio holdings before the dollar really starts to flush down the toilet and use the proceeds to buy a lot more physical gold and silver. I would like to point out that premiums for 1 oz. silver eagles on Ebay are back over $3/oz. This is indicative of strong retail demand and waning supply.

http://truthingold.blogspot.com/2010/09/us-dollar-is-in-trouble.html

[Ponce]

How can something that is DEAD be in trouble?........to me trouble mean hope because sometimes you can get out of trouble but not if you are dead.

[1970 silver art]

How can something that is DEAD be in trouble?........to me trouble mean hope because sometimes you can get out of trouble but not if you are dead.


Ponce? The U.S. dollar is "brain dead" but the "brain dead" U.S. dollar is "alive" on "life support". In other words, the U.S. dollar is "brain dead" but it's "heart" and "other functions" are still in working order. Once the U.S. Dollar's "heart" and "other functions" stop functioning, then the U.S. dollar is "completely dead" (i.e. complete dollar collapse).

[mrnhtbr2232]

Great post. As it says, erosion of faith in the long term stability of the dollar and forcing Wall St. to mop up the slop is a key indicator. China and Russia desire to move away from the hemorrhaging recklessness of American book cooking ("poor fundamentals" is being charitable), and it's likely the dollar will go south on a permanent vacation within the year since artificial support is all that's left. I'm in the camp that says the collapse is imminent - nine months to a year at the rate we're going before the greenback hits the cliff. With housing and jobs crushed (and I love the amusing attempt to pretend they will rebound) there's nothing out there to juice the economy and putting that on top of the deficit and continuing criminal strip-mining of wealth means it's all down from here with the occasional sucker's rally.

[Workaholic]

WTF? I thought mamboner was out of here :boohoo.

Now I tune in and see you have started a thread? ???

Anyway, glad to see you are still posting. I was watching for you over at the shitco.

[palani]

The PARADOX ....

As the dollar SINKS the number of them to gain possession of PMs RISES. Everyone CHEERS these rising prices.

This to me seems pretty clueless. If you have them in your possession then you have gained some degree of isolation from the increase in cost of materials we all need to survive. If you have to buy PMs now it can only mean that you have excess funds above those you need for your immediate survival and recognize that some protection from future inflation is needed.

There is nothing about the rising PM prices to be enthusiastic about unless you are absolutely CLUELESS.

[mamboni]

WTF? I thought mamboner was out of here :boohoo.

Now I tune in and see you have started a thread? ???

Anyway, glad to see you are still posting. I was watching for you over at the sh*tco.


Well, I was exasperated by the slow intermittent server here and did say I was leaving. Then I read Saul Mine's admonition to be more patient and decided to try to work with it. I am still having the server freeze up or just disconnect me from the forum several times per day and I just grit my teeth and say "pins and needles, needles and pins, it's a happy man who grins!"

If the server was not so problematic I would be posting twice as many good articles.



WTF? I thought mamboner was out of here :boohoo.

Now I tune in and see you have started a thread? ???

Anyway, glad to see you are still posting. I was watching for you over at the sh*tco.


Well, I was exasperated by the slow intermittent server here and did say I was leaving. Then I read Saul Mine's admonition to be more patient and decided to try to work with it. I am still having the server freeze up or just disconnect me from the forum several times per day and I just grit my teeth and say "pins and needles, needles and pins, it's a happy man who grins!"

If the server was not so problematic I would be posting twice as many good articles.

(Just lost the server again while posting this. MODs will you PLEASE ADDRESS THE PROBLEM. I never run into these problems at other much busier sites like ZeroHedge and Jesse's American Cafe!)

(Just lost the server again! This is fricking unbelievable! I will try posting this for the THIRD time!)

(Just lost the server for the FOURTH time. This is a ******* joke).

(Still no server! This is gross incompetence and it is killing this forum.)

[madfranks]

mamboni - I sent you a PM regarding the slow server.

Back to the article at hand, I heard an interesting interview last week with Andy Gause and he mentioned that the "dollarization" (the process in which a country adopts the U.S. dollar as its official currency) of the world is gaining speed due to the global economic crisis. Apparently more and more nations are officially adopting the dollar because weaker currencies are dying off quicker than the relatively stronger dollar. It was his opinion that this trend will continue, and that the dollar will continue to be the world reserve currency for a long time.

[mamboni]

mamboni - I sent you a PM regarding the slow server.

Back to the article at hand, I heard an interesting interview last week with Andy Gause and he mentioned that the "dollarization" (the process in which a country adopts the U.S. dollar as its official currency) of the world is gaining speed due to the global economic crisis. Apparently more and more nations are officially adopting the dollar because weaker currencies are dying off quicker than the relatively stronger dollar. It was his opinion that this trend will continue, and that the dollar will continue to be the world reserve currency for a long time.




Well the dollar is a great currency compared to most others because even in decline the US is the pre-eminent economy. But we are living off our past accomplishments and headed down. If one is thrown from a sinking ship into deep water, he will willingly grab on to anything that is still floating, no matter how flimsy! The dollar is a sad second to the ultimate money and store of wealth, gold.

[Ash_Williams]

The PARADOX ....

As the dollar SINKS the number of them to gain possession of PMs RISES. Everyone CHEERS these rising prices.

This to me seems pretty clueless. If you have them in your possession then you have gained some degree of isolation from the increase in cost of materials we all need to survive. If you have to buy PMs now it can only mean that you have excess funds above those you need for your immediate survival and recognize that some protection from future inflation is needed.

There is nothing about the rising PM prices to be enthusiastic about unless you are absolutely CLUELESS.

If you are planning for a total collapse scenario, then there's no point cheering.

If not, and you've taken advantage of that isolation you have from the raw prices of materials, then you are doing better than other people. That's really all you can hope for. There are deals to be had when everyone is broke. I am looking at 170 acres of really nice land right now that I couldn't have dreamed of purchasing 4 years ago. I didn't get a whole lot richer since then, but everyone else got poorer, and that's resulted in the land being for sale (the owner got poor too) and the price being great.

[Workaholic]

WTF? I thought mamboner was out of here :boohoo.

Now I tune in and see you have started a thread? ???

Anyway, glad to see you are still posting. I was watching for you over at the sh*tco.


Well, I was exasperated by the slow intermittent server here and did say I was leaving. Then I read Saul Mine's admonition to be more patient and decided to try to work with it. I am still having the server freeze up or just disconnect me from the forum several times per day and I just grit my teeth and say "pins and needles, needles and pins, it's a happy man who grins!"

If the server was not so problematic I would be posting twice as many good articles.




That's good enough for me....

[Neuro]

mamboni - I sent you a PM regarding the slow server.

Back to the article at hand, I heard an interesting interview last week with Andy Gause and he mentioned that the "dollarization" (the process in which a country adopts the U.S. dollar as its official currency) of the world is gaining speed due to the global economic crisis. Apparently more and more nations are officially adopting the dollar because weaker currencies are dying off quicker than the relatively stronger dollar. It was his opinion that this trend will continue, and that the dollar will continue to be the world reserve currency for a long time.

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.

[madfranks]

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.


Yeah, but gold is not a currency. It's simply a commodity with no actual monetary designation. I don't see gold becoming a currency again, TPTB don't want to give up their fiat empire.

[Neuro]

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.


Yeah, but gold is not a currency. It's simply a commodity with no actual monetary designation. I don't see gold becoming a currency again, TPTB don't want to give up their fiat empire.
Trading internationally will either require bartering or gold. Hyperinflation will lead to difficulty in setting up contracts. Gold is the ultimate currency, always was TPTB was just very successful for a few decades to suppress it's role by artificially suppressing it's price with papertrade. That is coming to an end...

[DMac]

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.


Yeah, but gold is not a currency. It's simply a commodity with no actual monetary designation. I don't see gold becoming a currency again, TPTB don't want to give up their fiat empire.



I think this is a common misconception! Gold was a currency for at least 5000 years. The past 70 or so man has changed his mind and says gold is no longer a currency. Men say lots of things and that doesn't always make it so.

Gold is the primary reserve held by countries and more importantly, central banks.

Gold is money! I know we all have a disconnect to that phrase lately but some internet/gov jerks cannot take that phrase's meaning away.

[madfranks]

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.


Yeah, but gold is not a currency. It's simply a commodity with no actual monetary designation. I don't see gold becoming a currency again, TPTB don't want to give up their fiat empire.



I think this is a common misconception! Gold was a currency for at least 5000 years. The past 70 or so man has changed his mind and says gold is no longer a currency. Men say lots of things and that doesn't always make it so.

Gold is the primary reserve held by countries and more importantly, central banks.

Gold is money! I know we all have a disconnect to that phrase lately but some internet/gov jerks cannot take that phrase's meaning away.


I think we are getting confused over semantics. When I say currency, I think of a legal tender money designated by a State as legal payment for goods and services. With this definition, gold is not a currency. If you mean currency to be simply a medium of exchange, than I completely agree with you. My point is that gold has been de-monetized across the world and exists now only as a commodity that happens to be a great medium of exchange. If fiat currencies collapse or get close to it, then gold would be in a good position to be the reserve medium of exchange. The breaking point will be when trade is simply between x ounces of gold for x number of something else. As long as the trade is still x dollars worth of gold for x dollars worth of something else, than gold is not the medium of exchange, dollars are.

[Uncle Salty]

The PARADOX ....

As the dollar SINKS the number of them to gain possession of PMs RISES. Everyone CHEERS these rising prices.

This to me seems pretty clueless. If you have them in your possession then you have gained some degree of isolation from the increase in cost of materials we all need to survive. If you have to buy PMs now it can only mean that you have excess funds above those you need for your immediate survival and recognize that some protection from future inflation is needed.

There is nothing about the rising PM prices to be enthusiastic about unless you are absolutely CLUELESS.


The rising PM prices indicate that the fiat game is coming to an end. at least in its current form. That is good. The system needs a reboot and the sooner the better.

[palani]

I am looking at 170 acres of really nice land right now that I couldn't have dreamed of purchasing 4 years ago. I didn't get a whole lot richer since then, but everyone else got poorer, and that's resulted in the land being for sale (the owner got poor too) and the price being great.

Yet have the foresight to look down the road 30-40 years and you will find yourself in the same position as the present owner.

[palani]

The rising PM prices indicate that the fiat game is coming to an end. at least in its current form. That is good. The system needs a reboot and the sooner the better.

I don't believe for an instant this fiat thing is going to come to an end. Any remaining value will simply be diluted. To be terminated entirely there would have to be some form of moral shift back to substance and this is only going to happen on an individual basis.

All this means is that there is currently less that $.01 of value (1%) left of a currency that was valued at $1.00 (100%) in 1933. To someone who is ten years old now that 1% value LOOKS like 100% ... that is all he has known. Give him 40 - 50 years under his belt and his is going to crying about the .0001% (to us) value of the currency. To him that is merely a loss of 99% of the value he understood as a child.

[Dogman]

I don't believe for an instant this fiat thing is going to come to an end. Any remaining value will simply be diluted. To be terminated entirely there would have to be some form of moral shift back to substance and this is only going to happen on an individual basis.

All this means is that there is currently less that $.01 of value (1%) left of a currency that was valued at $1.00 (100%) in 1933. To someone who is ten years old now that 1% value LOOKS like 100% ... that is all he has known. Give him 40 - 50 years under his belt and his is going to crying about the .0001% (to us) value of the currency. To him that is merely a loss of 99% of the value he understood as a child.





Agree!

If one lives long enough, The 1960's sawbuck went a lot farther than now! Lot's of value has been lost
in the last 40 years, from my watching it happen. Hell even the Penney's had value!

[Ponce]

madfrank? to me gold is better than money because it means SECURITY.........money may come and go but gold will always be there.

[Ash_Williams]

Quote from: Ash_Williams on Today at 08:32:53 AM
I am looking at 170 acres of really nice land right now that I couldn't have dreamed of purchasing 4 years ago. I didn't get a whole lot richer since then, but everyone else got poorer, and that's resulted in the land being for sale (the owner got poor too) and the price being great.

Yet have the foresight to look down the road 30-40 years and you will find yourself in the same position as the present owner.

The present owner is lucky to have 170 acres of land that he can sell now that he's been unemployed for a while. Much better to lose your job while you have assets that you can sell, than lose your job when you have nothing. The selling price will give him a few years of middle-class life even if he has no other source of income. (Assuming he doesn't still have a mortgage on the place to pay off.) That being said, had he purchased metals instead of the land, he'd be better off today.

You have to always be moving ahead, so that when you inevitably get knocked back, at least you don't get knocked back to nothing.

I would like to design and build a nice little place on that land. If I get that done, I'll have a place that I can heat for free in the winter, as well as a great hunting/fishing location. The property tax also happens to be 1/9th what I pay for my place in the city (this property tax is actually my largest monthly expense.) If I found myself out of work, and out of money, I'd still have a place I could live for cheap.

[SLV^GLD]

When I say currency, I think of a legal tender money designated by a State as legal payment for goods and services. With this definition, gold is not a currency.
The very definition of fiat is literally by decree. Currency is, by definition, the current medium of exchange. If the decreeing authority declares gold to be the legal tender for goods and services then gold will become a fiat currency. Gold remains currency regardless of it's binary state of fiat because for as long as recorded history and for as long as we can see into the future people have and will continue to accept gold as a medium of exchange; or currency.

Just clearing that up for you.

[Joe King]

The rising PM prices indicate that the fiat game is coming to an end. at least in its current form. That is good. The system needs a reboot and the sooner the better.

I don't believe for an instant this fiat thing is going to come to an end. Any remaining value will simply be diluted. To be terminated entirely there would have to be some form of moral shift back to substance and this is only going to happen on an individual basis.

All this means is that there is currently less that $.01 of value (1%) left of a currency that was valued at $1.00 (100%) in 1933. To someone who is ten years old now that 1% value LOOKS like 100% ... that is all he has known. Give him 40 - 50 years under his belt and his is going to crying about the .0001% (to us) value of the currency. To him that is merely a loss of 99% of the value he understood as a child.

If, as you point out, it's taken 77 years to inflate away 99% of the Dollars value, how is it possible that the remaing 1% could take another 4-5 decades?

[palani]

If, as you point out, it's taken 77 years to inflate away 99% of the Dollars value, how is it possible that the remaing 1% could take another 4-5 decades?

The currency will not deflate linearly. It will deflate logarithmically.

[Joe King]

If, as you point out, it's taken 77 years to inflate away 99% of the Dollars value, how is it possible that the remaing 1% could take another 4-5 decades?

The currency will not deflate linearly. It will deflate logarithmically.
Right. But each successive bite out of it represents a much smaller amount going forward at a time when the system is needing increasingly bigger bites just to keep going.

It just seems to me that the constant need to inflate is on a collision course with the law of diminishing returns.
Can they really just keep inflating away the Dollars purchasing power to infinity?

[palani]

Right. But each successive bite out of it represents a much smaller amount going forward at a time when the system is needing increasingly bigger bites just to keep going.

It just seems to me that the constant need to inflate is on a collision course with the law of diminishing returns.
Can they really just keep inflating away the Dollars purchasing power to infinity?



Each generation has a different view of what "normal" is. If a man lives 90 years he compares the "value" at his early age with the "value" near the end of his life.

The next generation will have a different view of "value".

For any generation if the jobs/wage/cost to survive equation doesn't balance properly then politicians decorate trees or we blame it on foreigners and start a war.

[Joe King]

Right. But each successive bite out of it represents a much smaller amount going forward at a time when the system is needing increasingly bigger bites just to keep going.

It just seems to me that the constant need to inflate is on a collision course with the law of diminishing returns.
Can they really just keep inflating away the Dollars purchasing power to infinity?



Each generation has a different view of what "normal" is. If a man lives 90 years he compares the "value" at his early age with the "value" near the end of his life.

The next generation will have a different view of "value".

For any generation if the jobs/wage/cost to survive equation doesn't balance properly then politicians decorate trees or we blame it on foreigners and start a war.


I don't know. With all the monetary inflation I see the gov pumping, I have a hard time not seeing that small bit of remaing value getting eaten up rather quickly going forward.
I see it like a moth flying into a flame. And we're gettin' pretty close to the flame.
That is of course if the inflation they're pumping actually takes hold in the economy.

But, only time will tell.

[Bigjon]

Quote from: Ash_Williams on Today at 08:32:53 AM
I am looking at 170 acres of really nice land right now that I couldn't have dreamed of purchasing 4 years ago. I didn't get a whole lot richer since then, but everyone else got poorer, and that's resulted in the land being for sale (the owner got poor too) and the price being great.

Yet have the foresight to look down the road 30-40 years and you will find yourself in the same position as the present owner.

The present owner is lucky to have 170 acres of land that he can sell now that he's been unemployed for a while. Much better to lose your job while you have assets that you can sell, than lose your job when you have nothing. The selling price will give him a few years of middle-class life even if he has no other source of income. (Assuming he doesn't still have a mortgage on the place to pay off.) That being said, had he purchased metals instead of the land, he'd be better off today.

You have to always be moving ahead, so that when you inevitably get knocked back, at least you don't get knocked back to nothing.

I would like to design and build a nice little place on that land. If I get that done, I'll have a place that I can heat for free in the winter, as well as a great hunting/fishing location. The property tax also happens to be 1/9th what I pay for my place in the city (this property tax is actually my largest monthly expense.) If I found myself out of work, and out of money, I'd still have a place I could live for cheap.



Where is this land thats going down in price?

All the farm land around here is going up, last price I heard was 5800/acre.

[gunDriller]

There are deals to be had when everyone is broke. I am looking at 170 acres of really nice land right now that I couldn't have dreamed of purchasing 4 years ago. I didn't get a whole lot richer since then, but everyone else got poorer, and that's resulted in the land being for sale (the owner got poor too) and the price being great.

that sounds great !

get much rain there ?

[k-os]

Right. But each successive bite out of it represents a much smaller amount going forward at a time when the system is needing increasingly bigger bites just to keep going.

It just seems to me that the constant need to inflate is on a collision course with the law of diminishing returns.
Can they really just keep inflating away the Dollars purchasing power to infinity?



Each generation has a different view of what "normal" is. If a man lives 90 years he compares the "value" at his early age with the "value" near the end of his life.

The next generation will have a different view of "value".

For any generation if the jobs/wage/cost to survive equation doesn't balance properly then politicians decorate trees or we blame it on foreigners and start a war.




Thanks for this. I had not ever thought of it this way, and it makes complete sense.

[palani]

Thanks for this. I had not ever thought of it this way, and it makes complete sense.

It also helps explain why the government has no reluctance to kill off older generations. These older folks have some idea of why they should be dissatisfied. The younger ones have no clue.

[k-os]

Thanks for this. I had not ever thought of it this way, and it makes complete sense.

It also helps explain why the government has no reluctance to kill off older generations. These older folks have some idea of why they should be dissatisfied. The younger ones have no clue.


Well, to be fair, they don't seem to have any reluctance to kill or poison anyone, young or old.

[mick silver]

It is a general Fiat problem, some unbacked currencies are weaker than others. Gold is becoming the new reserve currency, and it appears that the Russian Chinese deal is a bartering contract.


Yeah, but gold is not a currency. It's simply a commodity with no actual monetary designation. I don't see gold becoming a currency again, TPTB don't want to give up their fiat empire.
their fighting to keep there paper money alive ... one can only hope it end

[1970 silver art]

One thing's for sure and it is this..........The U.S. Dollar is not only in trouble but it is FUBAR.

[keehah]

Same old same old. The looting of North America (source of Spanish excess wealth).

Washington's Blog: SEPTEMBER 11, 2010
United States Joint Forces Command Warns that Huge U.S. Debt Might Lead to Military Impotence, Default or Revolution (http://www.washingtonsblog.com/2010/09/united-states-joint-forces-command.html)


[William R. Hawkins] Yet, Spanish leaders were deluded by a sense of false prosperity. This is testified by the statement of a prominent official, Alfonso Nunez de Castro in 1675: “Let London manufacture those fine fabrics of hers to her heart's content; let Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocade, Italy and Flanders their linens...so long as our capital can enjoy them; the only thing it proves is that all nations train their journeymen for Madrid, and that Madrid is the queen of Parliaments, for all the world serves her and she serves nobody.” A few years later, the Madrid government was bankrupt. The Spanish nobleman had foolishly elevated consumption, a use for wealth, above production, the creation of wealth.

Historians have traced the flow of Spanish gold and silver across the markets of Europe. Those who “served” Spain by establishing industries to manufacture goods for the Spanish market gained the money. Spain’s rivals, France, Holland (which started a successful revolt in 1568) and England, prospered by their trade surpluses, and reinvested the money to expand their own capabilities. Another modern expert on Hapsburg history, Henry Kamen, has cited contemporary sources who referred to 17th century Spain as “the Indies for the foreigner.” The military empire of the Hapsburgs became the economic colony of other powers, or, to use a current phrase, Spain was the “engine of growth” for the rest of the continent.

Where there were jobs and prosperity, there was also rapid population growth, and rising tax revenue. Rival powers were able to field and finance military forces that could defeat the once superior Spanish forces both on land and at sea. The irony of this is that Spain was ruled by a warrior aristocracy tempered by centuries of constant warfare against Islamic hordes and Christian heretics. These nobles looked down on merchants and manufacturers and disparaged their mundane professions only to find that without a strong domestic business class they could not afford the fleets and armies that guarded the empire they had built.

[Sparky]

The rising PM prices indicate that the fiat game is coming to an end. at least in its current form. That is good. The system needs a reboot and the sooner the better.

I don't believe for an instant this fiat thing is going to come to an end. Any remaining value will simply be diluted. To be terminated entirely there would have to be some form of moral shift back to substance and this is only going to happen on an individual basis.

All this means is that there is currently less that $.01 of value (1%) left of a currency that was valued at $1.00 (100%) in 1933. To someone who is ten years old now that 1% value LOOKS like 100% ... that is all he has known. Give him 40 - 50 years under his belt and his is going to crying about the .0001% (to us) value of the currency. To him that is merely a loss of 99% of the value he understood as a child.




Thanks for this concise explanation, as well as the follow-up clarifications. This logarithmic decay is why inflation (not hyperinflation) can continue indefinitely, for many more generations.

[FunnyMoney]

Of course numbers can be divided forever. As long as people can work and produce things they can be stolen from. You would think that after all these thousands of years with criminals stealing things that it would end and everything would have been already stolen. But look around, criminals still exist and theft still continues. This is the problem with the "matrix", it is very difficult to frame a question or a debate and take into account how the root problems mask the true nature of the situation.

The question should not be: How long can the inflation continue to bleed the workers, or at what point will the inflation pain become so great or be delivered at such a fast pace as to wake up the spectators and send them into a revolt?

The question should be instead: When the dollar reaches a penny in terms of original value, where did the other 99% go? Most people (the spectators) don't understand this question and that's why everyone gravitates to the wrong debate.

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.

[Joe King]

If fiat can be extended to infinity, why have all the others from the past always failed? Why aren't they still here?
What's different about ours that it can supposedly last forever?
Is it simply because the rest of the World uses it in trade?

When does the law of diminishing returns come into play?

What happens when interest rates go back up?

[Joe King]

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.

I'd say it was moreso diluted away by the FED

Similar to mixing a gallon of paint with a gallon of paint thinner. Hey! Now you've two gallons of paint.

Except relative to our money the FED has diluted one gallon of paint with 99 gallons of thinner and are trying to call it 100 gallons of paint. So in order to get the same coverage, you're now forced to buy 100 gallons of "paint" to cover an area that one gallon used to be able to cover.

[FunnyMoney]

The other fiats died usually because the rate of deterioration became so great that the masses or other nations rejected them.

But look, do you notice what they were replaced with?

Please go back and examine the debate.
A Focus on what I presented above as the first question simply keeps the status quo (name changes only).

Only by rejecting the first debate, and instead taking on the real question (2nd question I presented above) , can fiat systems be really destroyed.

[vacuum]

There is nothing wrong with fiat in and of itself. The real problems are 1) usury, and 2) fractional reserve banking (fraud). Even gold backed notes suffered inflation and destruction (booms and busts) because fractional reserve banking created more notes than gold and usury demanded that this creation keep increasing....or bust. The problem there was the limited gold.

For the last 70 years our GDP has had to increase exponentially in order to match the forced exponential increase of the money supply due to the action of (1) and (2) above. Thats because the money is now based on credit (debt), and credit is proportional to GDP (collateral).

[SLV^GLD]

There is nothing wrong with fiat in and of itself. The real problems are 1) usury, and 2) fractional reserve banking (fraud). Even gold backed notes suffered inflation and destruction (booms and busts) because fractional reserve banking created more notes than gold and usury demanded that this creation keep increasing....or bust.
Precisely, I had written similar in my 1st post in this thread but removed it so as not to dilute the statement I was making and presumed the discussion would uncover this fact.

[palani]

Money can be separated into two types: of exchange or of account

Money of exchange is specie or metallic and is capable of extinguishing any debt associated with it.

Money of account is the FRN you are familiar with and is capable of discharging a debt without extinguishing it.

This paper script is a WARTIME instrument only. Historically it was issued in time of war when there was insufficient specie to cancel debts but where a war needed to be prosecuted.

Possibly it could be said that it is not the FIAT that will fail but rather the associated WAR.

The victor gets the public buildings, public papers and public land. I guess he gets to cancel the debt of the loser as well.

[Sparky]

If fiat can be extended to infinity, why have all the others from the past always failed? Why aren't they still here?
What's different about ours that it can supposedly last forever?
Is it simply because the rest of the World uses it in trade?

When does the law of diminishing returns come into play?

What happens when interest rates go back up?



Yes, it is primarily because the rest of the world uses it in trade. Also supporting it on a fundamental is that the U.S. has more resources than most country, and an unrivaled military.

The law of diminishing returns actually supports the argument that there will be no collapse. As its value decreases, there is diminishing incremental impact on a potential collapse. Think about it. If something is worth 100 units, and I lose 50%, then I have lost 50 units. If I lose another 50%, then I've only lost 25 more units. That's diminishing return.

When interest rates go back up, the rate of devaluation slows down, or even reverses.

[Sparky]

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.

I'd say it was moreso diluted away by the FED

Similar to mixing a gallon of paint with a gallon of paint thinner. Hey! Now you've two gallons of paint.

Except relative to our money the FED has diluted one gallon of paint with 99 gallons of thinner and are trying to call it 100 gallons of paint. So in order to get the same coverage, you're now forced to buy 100 gallons of "paint" to cover an area that one gallon used to be able to cover.


This isn't a very good analogy, because the effectiveness of the paint is tied to real physical properties, whereas the effectiveness of currency is abstract, and depends upon faith of the users.

We're missing an important dimension in this debate, which is why the government gets away with inflation. You could argue that something that cost $1 in 1910 now costs $50. This represents a 98% reduction of purchasing power of the currency. However, at the same time, in 1910 it may have taken two hours of labor to earn the $1. Now, perhaps it still takes two hours to earn the $50. In that case, the devaluation of the currency has been exactly offset by the compensation for my labor. If this is the case, the devaluation of the currency is really of no significance, as it is merely an artificial framework for pricing and wages.

But two other things come into play.

First, in my example, the ratio stayed the same, implying no real impact. However, this ratio may be different based on 1) the product or service I am purchasing, and 2) the type of labor for which I am being compensated. For instance, if I was a nurse in 1970 making $5/hour, I would have to work about 40 hours to buy a mediocre television for $200. Today, I'd be getting paid $30/hour, and would only have to work 20 hours to buy a middle-of-the-road television for $600. In terms of buying televisions, each dollar has lost 2/3 of its buying power. Yet I only have to do half as much labor. Where has the devaluation hurt me? In contrast, I may have been a day laborer making $2/hour in 1970, trying to rent a vacation home on a lake for $100. That would require 50 hours of labor. Today I might be earning $10/hour, and the same rental would cost $1500. I now have to work 150 hours instead of 50! The value of my labor has decreased at a slower rate than the value of a nurse's labor, and the vacation home has increased at a faster rate than the television. My point is, to say that the currency has lost 98% of its value is not significant in terms of what product or service you can acquire for your labor.

The second inequity has to do with the international economy. I may be able to actually get more "value" for my fiat per unit labor because some poor slob in another country is producing the product I want on a completely different pay scale. Yes, the price has gone up, but it requires much less of my labor to acquire it.

These important considerations are not taken into account in the "thinned paint" analogy, and they explain why the "nominal" devaluation of the fiat currency can continue for a long, long time.

[k-os]

Of course numbers can be divided forever. As long as people can work and produce things they can be stolen from. You would think that after all these thousands of years with criminals stealing things that it would end and everything would have been already stolen. But look around, criminals still exist and theft still continues. This is the problem with the "matrix", it is very difficult to frame a question or a debate and take into account how the root problems mask the true nature of the situation.

The question should not be: How long can the inflation continue to bleed the workers, or at what point will the inflation pain become so great or be delivered at such a fast pace as to wake up the spectators and send them into a revolt?

The question should be instead: When the dollar reaches a penny in terms of original value, where did the other 99% go? Most people (the spectators) don't understand this question and that's why everyone gravitates to the wrong debate.

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.


This post made me think about standing on top of a Mayan Temple and thinking "who built this place?" The answer, of course, was slaves. Over decades they carried, dragged, pulled, and hoisted the stones to create those giant structures.

And this post made me think that if in 2000 years people were to look at our bridges and buildings and someone were to ask "who built this place". The answer would be the same - slaves. We work all day, most of us until we are too old to do anything else, building, creating, servicing, and for what?

I know we talk about being slaves all the time, but for some reason, it really hit me.

[DMac]

Of course numbers can be divided forever. As long as people can work and produce things they can be stolen from. You would think that after all these thousands of years with criminals stealing things that it would end and everything would have been already stolen. But look around, criminals still exist and theft still continues. This is the problem with the "matrix", it is very difficult to frame a question or a debate and take into account how the root problems mask the true nature of the situation.

The question should not be: How long can the inflation continue to bleed the workers, or at what point will the inflation pain become so great or be delivered at such a fast pace as to wake up the spectators and send them into a revolt?

The question should be instead: When the dollar reaches a penny in terms of original value, where did the other 99% go? Most people (the spectators) don't understand this question and that's why everyone gravitates to the wrong debate.

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.


This post made me think about standing on top of a Mayan Temple and thinking "who built this place?" The answer, of course, was slaves. Over decades they carried, dragged, pulled, and hoisted the stones to create those giant structures.

And this post made me think that if in 2000 years people were to look at our bridges and buildings and someone were to ask "who built this place". The answer would be the same - slaves. We work all day, most of us until we are too old to do anything else, building, creating, servicing, and for what?

I know we talk about being slaves all the time, but for some reason, it really hit me.


Welcome to modern Feudalism k-os. We are, without a doubt, a feudal society.

[Ash_Williams]

The very definition of fiat is literally by decree. Currency is, by definition, the current medium of exchange. If the decreeing authority declares gold to be the legal tender for goods and services then gold will become a fiat currency. Gold remains currency regardless of it's binary state of fiat because for as long as recorded history and for as long as we can see into the future people have and will continue to accept gold as a medium of exchange; or currency.

Just clearing that up for you.

Pretty sure madfranks was saying gold wasn't a currency because, right now, no sale price is denominated in gold. Obviously you can convert but the constant is the dollars. So if snow tires are $1250 I can trade 31 grams of gold for them... but next week they will still be $1250 except I might need to trade 30 or 32 grams. If the price was just "31 grams" then gold would be more of a currency. I think some places in the world do have things priced in gold, but not here.


Where is this land thats going down in price?
All the farm land around here is going up, last price I heard was 5800/acre.

It's not farmland, it's more "recreational" land. It's 170 acres of bush with a hunting trail up to the waterfront of one of the great lakes. I don't know how good it would be for growing food - there are no farms nearby so I assumed it's not. People bought it up before there were even roads or powerlines there, as hunting land and for future investment. They figured by now, rich people would be paying 300k an acre to build their fancy waterfront cottages there. But that didn't work out as the expansion in that direction stopped a few years ago so this is mostly considered hunting land again. The waterfront in this particular location isn't exactly sandy beach either, it's more "put on bug spray and launch a canoe". That knocks down the value of it.

[etc]

Stop using garbage terminology. The Federal Reserve Note is not the dollar. The dollar is not the Federal Reserve Note. The architects of this know full well they are confusing sheep with this almost-correct terminology. They took the dollars, gave out paper tokens and start calling these paper tokens dollars.

If you want the fraud to collapse, start using precise terms. A 85% cotton paper is not the dollar, not cash, not legal tender and not even a Note.

[FunnyMoney]

There is nothing wrong with fiat in and of itself...


You better go back and study the quote by Lord Acton again. Somebody is always in control of fiat and fiat ,when it is the global medium of exchange, is an extremely powerful item.

The RMB is nice and strong right now, but are you certain you will be happy trusting the Chinese inner party with the future of your children? Do you want to trust your fellow man or do you want to trust the Creator? Fiat is a man made, man controlled illusion, it is the counting numbers (with some zeros attached) printed on a piece of power and implies trust in those who print it and inject it into the system, the Creator created silver. Be careful where you put such great trust.

[Joe King]

Most people simply think that the 99 cents of every dollar simply vanished over the last hundred years. Allow me to make this extremely clear: it did not vanish, it was transferred somewhere.

I'd say it was moreso diluted away by the FED

Similar to mixing a gallon of paint with a gallon of paint thinner. Hey! Now you've two gallons of paint.

Except relative to our money the FED has diluted one gallon of paint with 99 gallons of thinner and are trying to call it 100 gallons of paint. So in order to get the same coverage, you're now forced to buy 100 gallons of "paint" to cover an area that one gallon used to be able to cover.


This isn't a very good analogy, because the effectiveness of the paint is tied to real physical properties, whereas the effectiveness of currency is abstract, and depends upon faith of the users.

We're missing an important dimension in this debate, which is why the government gets away with inflation. You could argue that something that cost $1 in 1910 now costs $50. This represents a 98% reduction of purchasing power of the currency. However, at the same time, in 1910 it may have taken two hours of labor to earn the $1. Now, perhaps it still takes two hours to earn the $50. In that case, the devaluation of the currency has been exactly offset by the compensation for my labor. If this is the case, the devaluation of the currency is really of no significance, as it is merely an artificial framework for pricing and wages.

But two other things come into play.

First, in my example, the ratio stayed the same, implying no real impact. However, this ratio may be different based on 1) the product or service I am purchasing, and 2) the type of labor for which I am being compensated. For instance, if I was a nurse in 1970 making $5/hour, I would have to work about 40 hours to buy a mediocre television for $200. Today, I'd be getting paid $30/hour, and would only have to work 20 hours to buy a middle-of-the-road television for $600. In terms of buying televisions, each dollar has lost 2/3 of its buying power. Yet I only have to do half as much labor. Where has the devaluation hurt me? In contrast, I may have been a day laborer making $2/hour in 1970, trying to rent a vacation home on a lake for $100. That would require 50 hours of labor. Today I might be earning $10/hour, and the same rental would cost $1500. I now have to work 150 hours instead of 50! The value of my labor has decreased at a slower rate than the value of a nurse's labor, and the vacation home has increased at a faster rate than the television. My point is, to say that the currency has lost 98% of its value is not significant in terms of what product or service you can acquire for your labor.

The second inequity has to do with the international economy. I may be able to actually get more "value" for my fiat per unit labor because some poor slob in another country is producing the product I want on a completely different pay scale. Yes, the price has gone up, but it requires much less of my labor to acquire it.

These important considerations are not taken into account in the "thinned paint" analogy, and they explain why the "nominal" devaluation of the fiat currency can continue for a long, long time.


If one silver quarter bought a gallon of gas in 1963, and when converted to todays unit of exchange that same silver quarter will still buy that same gallon of gas, how is that not exactly what it seems like?
i.e. a dilution of "moneys" purchasing power over time due to monetary inflation. You get less stuff for the same unit of exchange.

The purchasing power of a quarter has been diluted and it now takes more quarters to get the same thing as before.

As you point out about the $600 TV, the only reason it hasn't gone up in price to the same degree as the vacation lake home is because the inflation in the price of a TV has been mitigated due to being built off-shore.
Which gets back to the point I made in an earlier thread as to why the popularity of off-shoring is but a symptom of monetary inflation.
It's a tool that has to be used in order to not have the monetary inflation show up as price inflation to the degree it would if we had to still make all our own stuff here.
i.e. at some point you will no longer be able to afford to make the product here for less than the price people expect to be able to buy it for. Then you either off-shore, or go out of business ala Curtis Mathes in the '80s

IMHO comparing the prices of things that are off-shored to the prices of things that can't be off-shored is like comparing apples to oranges.

[madfranks]

If one silver quarter bought a gallon of gas in 1963, and when converted to todays unit of exchange that same silver quarter will still buy that same gallon of gas, how is that not exactly what it seems like?
i.e. a dilution of "moneys" purchasing power over time due to monetary inflation. You get less stuff for the same unit of exchange.

The purchasing power of a quarter has been diluted and it now takes more quarters to get the same thing as before.

As you point out about the $600 TV, the only reason it hasn't gone up in price to the same degree as the vacation lake home is because the inflation in the price of a TV has been mitigated due to being built off-shore.
Which gets back to the point I made in an earlier thread as to why the popularity of off-shoring is but a symptom of monetary inflation.
It's a tool that has to be used in order to not have the monetary inflation show up as price inflation to the degree it would if we had to still make all our own stuff here.
i.e. at some point you will no longer be able to afford to make the product here for less than the price people expect to be able to buy it for. Then you either off-shore, or go out of business ala Curtis Mathes in the '80s

IMHO comparing the prices of things that are off-shored to the prices of things that can't be off-shored is like comparing apples to oranges.


But a gallon of gas in the early 60's and a gallon of gas today are not "the same thing". Technology and improved methods of obtaining and refining the gasoline make the gas from the 60's more expensive than the gas today. Same thing for the TV. A TV 50 years ago required more resources, time and man power to build than one today, so much so that TVs are less expensive today, even after factoring in inflation. A new Ford Model T cost $850 in 1909 (http://en.wikipedia.org/wiki/Ford_Model_T#Price); equal to roughly 42.5 ounces of gold. Using the strict logic you use above, a basic new car today should cost over $50,000. But when you consider that production efficiencies have risen dramatically from when cars were first built to the way cars are built today, you see that cars are less expensive today than they were in 1909, even though their price in nominal dollars is much higher.

Of course it's very convenient that the price of fuel coincides so nicely with inflation; it makes for a strong and easy to understand example of the theft of inflation. But you have to consider production magnitudes and costs over time as well.

[Joe King]

I see how production costs can change over time due to technology, but iIf 100% of that basic new car was designed and built from parts that were all mfg here as opposed to abroad, wouldn't the final cost be a lot closer to your $50,000 figure?

I always hear about how cars "made in America" are assembled from components that are oftentimes made overseas.
Perhaps not all cars, but the cheaper ones for sure.


As far as the TVs go, I keep thinking back to Curtis Mathes and how by choosing to continue manufacturing everything here, they reached a point of not being able to compete due to rising costs that could not be recouped via higher prices and they went bankrupt.

IMO, had the gov not over inflated the money supply, price inflation wouldn't have happened to the degree it did and they very well may have been able to stay in business building TVs here in America.

[palani]

History shows that money will multiply in volume and divide in value over the long run. Or expressed differently, the purchasing power of currency will vary inversely with the magnitude of the public debt.
~ William Herbert Peterson, in Challenge (November 1959). Peterson's Law: An Economist's Foray Into the Nature of Money and the Declining Value Thereof

[Sparky]

History shows that money will multiply in volume and divide in value over the long run. Or expressed differently, the purchasing power of currency will vary inversely with the magnitude of the public debt.
~ William Herbert Peterson, in Challenge (November 1959). Peterson's Law: An Economist's Foray Into the Nature of Money and the Declining Value Thereof


Yes, I think we all agree on that. At issue is whether the US Dollar will exist in 10 years, or continue on as it has for the last 100 years.

[palani]

At issue is whether the US Dollar will exist in 10 years, or continue on as it has for the last 100 years.
The US Dollar today September 17th, 2010 is not the US Dollar of yesterday September 16th, 2010. Its value is a function of national debt and the national debt is not the same today as yesterday.

Talis non est eadem, nam nullum simile est idem. What is like is not the same, for nothing similar is the same. 4 Co. 18.

[Sparky]

At issue is whether the US Dollar will exist in 10 years, or continue on as it has for the last 100 years.
The US Dollar today September 17th, 2010 is not the US Dollar of yesterday September 16th, 2010. Its value is a function of national debt and the national debt is not the same today as yesterday.

Talis non est eadem, nam nullum simile est idem. What is like is not the same, for nothing similar is the same. 4 Co. 18.


Gawd. Word games. You're not the same person you were yesterday, so forgive me for addressing this response to the poster formerly known as palani.

At issue is whether the Federal Reserve Note will continue to effectually serve as the nominal fiat currency of the United States into the next decade.

[palani]

If fiat can be extended to infinity, why have all the others from the past always failed? Why aren't they still here?
What's different about ours that it can supposedly last forever?
Is it simply because the rest of the World uses it in trade?

(1) France is still here yet her experiment with fiat ended 10 years before ours began in 1861.
(2) The education system in the U.S. is second to none for brainwashing
(3) Fluoride in the water and toothpaste guarantee a dumb populace
(4) Anyone who shows signs of awakening awareness is analyzed with mental disorders and forcefed drugs.



When does the law of diminishing returns come into play? The person who cannot justify producing won't produce. Someone else takes his place.


What happens when interest rates go back up?
Stimulus = Carrot. Interest = Stick. These are elements of control used to excite the economy to higher performance or to inhibit the economy from overheating by too much excitement.

What happens when interest goes up and you owe nothing? ....

What happens when interest goes up and you have nothing to loan? ...

The answer to the last two questions is: Why should you care about interest under these conditions?

Does this sound like a worthwhile destination as long as you are going for a journey anyway?

[palani]

At issue is whether the Federal Reserve Note will continue to effectually serve as the nominal fiat currency of the United States into the next decade.

The several States of the union are required to make nothing a tender in payment of debt except gold or silver (article 1 section 10, U.S constitution). The FRN does not fit this requirement. No amendment has been proposed to alter the U.S. constitution to make FRNs an acceptable payment method either within a State or between States or between a State and the Feds.

12 USC 411 provides


Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized.

ONLY agents of the Federal Reserve System are in possession of FRNs. These notes ARE NOT in general circulation. They are circulated between AGENTS. Nothing is bought with them. They are not REAL.


Reality is an illusion that occurs due to the lack of alcohol.
~ W.C. Fields

[StackerKen]

the dollar is not completely dead yet

http://i67.photobucket.com/albums/h298/sanctusreeaal/dollar_menu_04.gif




:-\

[Joe King]

If fiat can be extended to infinity, why have all the others from the past always failed? Why aren't they still here?
What's different about ours that it can supposedly last forever?
Is it simply because the rest of the World uses it in trade?

(1) France is still here yet her experiment with fiat ended 10 years before ours began in 1861. I realize that France itself is, but what about the currency type they used back then? Still using the same thing? Are Notes from back then still spendable today as is our paper currency?
(2) The education system in the U.S. is second to none for brainwashing Good point
(3) Fluoride in the water and toothpaste guarantee a dumb populace Another good point
(4) Anyone who shows signs of awakening awareness is analyzed with mental disorders and forcefed drugs. Gee, thanks for the rosey outlook! {sarcasm}



What happens when interest rates go back up?
Stimulus = Carrot. Interest = Stick. These are elements of control used to excite the economy to higher performance or to inhibit the economy from overheating by too much excitement.

What happens when interest goes up and you owe nothing? ....

What happens when interest goes up and you have nothing to loan? ...

The answer to the last two questions is: Why should you care about interest under these conditions?

Does this sound like a worthwhile destination as long as you are going for a journey anyway?

I was asking about what would be the impact on our Dollars current status if the interest rates on Tbills were to go up 3-6 times from where they are now.
What impact would that have on our current situation within the debt/credit matrix of gov finances?

[Sparky]

...
The several States of the union are required to make nothing a tender in payment of debt except gold or silver (article 1 section 10, U.S constitution). The FRN does not fit this requirement. No amendment has been proposed to alter the U.S. constitution to make FRNs an acceptable payment method either within a State or between States or between a State and the Feds.
...


I must be fortunate, then, because my local grocery store allows me to exchange them for food.

[palani]

I realize that France itself is, but what about the currency type they used back then? Still using the same thing? Are Notes from back then still spendable today as is our paper currency?
I would guess these old French notes are as valuable as the Confederacy notes from the (un)civil war. Here is a free ebook on the topic. http://www.gutenberg.org/ebooks/6949



I was asking about what would be the impact on our Dollars current status if the interest rates on Tbills were to go up 3-6 times from where they are now.
What impact would that have on our current situation within the debt/credit matrix of gov finances?
You might have heard that the power to tax is the power to destroy. Interest is to the creditor what taxation is to the government. If interest is set arbitrarily then it can destroy. If interest is set logically then it will be used for control. I would speculate that if the FRN survives in its current form that this would only happen if the creditor decides to actually let it survive.

[Joe King]

...
The several States of the union are required to make nothing a tender in payment of debt except gold or silver (article 1 section 10, U.S constitution). The FRN does not fit this requirement. No amendment has been proposed to alter the U.S. constitution to make FRNs an acceptable payment method either within a State or between States or between a State and the Feds.
...


I must be fortunate, then, because my local grocery store allows me to exchange them for food.
I believe his point to be that they could accept tree bark for food if they wanted to, but that doesn't mean that tree bark would fit the requirement any better than an FRN

Besides, you're argueing from a defacto point of view and palani from a dejure POV.
It's as though you two are both speaking english yet attempting to communicate in foreign languages. :D

[palani]

I must be fortunate, then, because my local grocery store allows me to exchange them for food.

If the business owner doesn't WANT to take them they you point to the "note" where it says "LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE" and raise the issue that he might be a lawbreaker if he REFUSES to take them. On this turn of events then you have received a benefit from government. The businessman is engaged in commerce (as you are) and is hardly master of his own domain.

[Joe King]

I realize that France itself is, but what about the currency type they used back then? Still using the same thing? Are Notes from back then still spendable today as is our paper currency?
I would guess these old French notes are as valuable as the Confederacy notes from the (un)civil war. Here is a free ebook on the topic. http://www.gutenberg.org/ebooks/6949
Then it did not survive in a spendable form of currency accepted at face value and backed by the current gov.
i.e. it is a failed currency.

Which is evidence that even if the Nation survives in the long-term, the Dollar may or may not.



I was asking about what would be the impact on our Dollars current status if the interest rates on Tbills were to go up 3-6 times from where they are now.
What impact would that have on our current situation within the debt/credit matrix of gov finances?

You might have heard that the power to tax is the power to destroy. Interest is to the creditor what taxation is to the government. If interest is set arbitrarily then it can destroy. If interest is set logically then it will be used for control. I would speculate that if the FRN survives in its current form that this would only happen if the creditor decides to actually let it survive.

Right. Debtor is always a slave to the creditor.

So if intreset rates go up substantially, and they will, we won't be able to afford the promises to pay we made in the past while looking to live larger than our means.
i.e. our future ability to pay will become overshadowed by debts from the past.

[Joe King]

I must be fortunate, then, because my local grocery store allows me to exchange them for food.

If the business owner doesn't WANT to take them they you point to the "note" where it says "LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE" and raise the issue that he might be a lawbreaker if he REFUSES to take them. On this turn of events then you have received a benefit from government. The businessman is engaged in commerce (as you are) and is hardly master of his own domain.
They don't actually have to take them if they don't want to and are not breaking any laws if they refuse.

[palani]

Then it did not survive in a spendable form of currency accepted at face value and backed by the current gov.
i.e. it is a failed currency.

Which is evidence that even if the Nation survives in the long-term, the Dollar may or may not.

France is a nation or a nation/state or just "state". The U.S. is a federation of independent nations (nation/state or "states).

The U.S. only survives if its constituents survive. You don't really want to mistake the servant for the master.


I was asking about what would be the impact on our
i.e. our future ability to pay will become overshadowed by debts from the past. Hard to argue a debt that (when viewed under the lens of Law) has already been declared void:


But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Many people think this is in reference to the just ended (un)civil war but think about it for a moment. If you should get a divorce you place a public notice in the legal section to the effect that the debts of the ex-spouse are no longer the worry of the spouse posting the notice. This legal notice ONLY takes effect AFTER the date of the notice and not before. So this phrase in the 14th amendment has absolutely no effect at all on the war debts from the (un)civil war. Instead congress is recognizing that they are implementing an insurgent government to the organic constitution as an EXPERIMENT and the lawful government is making the claim that they will have nothing to do with the debts incurred by the communist government they are putting in place.

So if you are not a part of the 14th amendment system you are entitled to say "WHAT DEBT"?

[Joe King]

I understand what you're saying and agree with you.

However, it seems that this discussion is about wheter or not the "Dollar" {FRN} in its current form and as it is currently used will survive in the long term in the way that FRNs from 80 years ago can still be used at face value today as a means of exchange for goods and services.

[palani]

I understand what you're saying and agree with you.

However, it seems that this discussion is about wheter or not the "Dollar" {FRN} in its current form and as it is currently used will survive in the long term in the way that FRNs from 80 years ago can still be used at face value today as a means of exchange for goods and services.


Just laying foundation. The question of whether the FRN is to survive or not depends greatly upon each individual. For me the FRN has already expired. For you, if your condition is that you exchange your work for these paper "credits", then it still survives.

In a way the FRN is similar to food stamps. I have been fortunate enough never to have received food stamps and for me they do not exist (as a benefit). There are people though who depend upon them for either short term or long term survival because of conditions of poverty. When poverty is no longer evident then food stamps will no longer exist. [I don't expect poverty to disappear anytime soon.] [I don't expect the FRN to disappear anytime soon either.]

[StackerKen]

Just laying foundation. The question of whether the FRN is to survive or not depends greatly upon each individual. For me the FRN has already expired. For you, if your condition is that you exchange your work for these paper "credits", then it still survives.



What do you use to buy food and pay bills with?

[palani]

What do you use to buy food and pay bills with?

How do you buy food?

How do you pay bills?

As you are not able to EXTINGUISH any bill with a FRN you lack the capacity to buy anything. You are only acting in the role of AGENT to discharge these bills in your name. My own solution has been to let corporations deal with their own coupons (FRNs) and contracted with one for that purpose.

[palani]

The issue is FINALLY being considered by the States.


http://www.thenewamerican.com/index.php/usnews/politics/2987-sc-bill-seeks-to-refuse-federal-reserve-notes-as-legal-tender

On February 2, 2010, former college baseball coach and retired police officer, Mike Pitts submitted bill number 4501 to the clerk of the South Carolina House of Representatives. The title of the bill, “Gold and Silver Coins as Legal Tender,” reveals the constitutional and controversial purpose of the measure. Representative Pitts, a dedicated constitutionalist, wrote the bill to fight what he describes as “constant federal intrusion into states’ rights.”


Actually this bill has very little chance as the states recognized long ago (1971) that they were being coerced into violating the U.S. constitution gold/silver clause. Their universal approach has been to construct a fiction called "this state" (as opposed to "the state"). Searching through the various state codes is fairly interesting when using the phrase "this state" as it refers to the entity within the state that is a federal colony and that does accept FRNs. This lets the real constitutional state ("the state") pretend to be merely insolvent rather than bankrupt.

The pretend world is analogous to the ostrich sticking its head in the sand.

[StackerKen]

What do you use to buy food and pay bills with?

How do you buy food?

How do you pay bills?

As you are not able to EXTINGUISH any bill with a FRN you lack the capacity to buy anything. You are only acting in the role of AGENT to discharge these bills in your name. My own solution has been to let corporations deal with their own coupons (FRNs) and contracted with one for that purpose.


I buy food with the FRNs and credits I am paid with.

But you didn't answer my question (in a way I could understand anyway)

What do you use to buy food?

[palani]

I buy food with the FRNs and credits I am paid with.

And I am saying you don't have the capacity to buy ANYTHING with a FRN.


But you didn't answer my question (in a way I could understand anyway)

What do you use to buy food?

I don't BUY food.

You don't really seem to understand. BUYing is associated with ownership and the 10 planks have pretty much effectively abolished ownership of private property. These government people really seem to get agitated (and homicidal) when this is pointed out to them so rather than argue (and shed blood) I choose to appear to agree for the moment and let corporations deal with the problem for the time being. Everybody leaves happy!!!!

[Joe King]

What do you use to buy food and pay bills with?

How do you buy food?

How do you pay bills?

As you are not able to EXTINGUISH any bill with a FRN you lack the capacity to buy anything. You are only acting in the role of AGENT to discharge these bills in your name. My own solution has been to let corporations deal with their own coupons (FRNs) and contracted with one for that purpose.


I buy food with the FRNs and credits I am paid with.

But you didn't answer my question (in a way I could understand anyway)

What do you use to buy food?

Again, you guys are sort of speaking different languages.

He's talking about "money" in a dejure sense and most everyone else is talking about it in a defacto sense.



It's actually kind of humorous sometimes to see the obvious confusion in people when they've tried debating stuff like this with him before. lol


I know it just about drove Wildcard nutz a few times, or seemed to anyways.

[palani]

He's talking about "money" in a dejure sense and most everyone else is talking about it in a defacto sense.
It is a serious business. Private property is the holy grail of common law. Removing gold and silver from circulation was an act of war on ALL religions.



I know it just about drove Wildcard nutz a few times, or seemed to anyways.
A short journey.

[Book]

When poverty is no longer evident then food stamps will no longer exist.



Yeah...just like after WWII when the Pentagon closed up shop and had that GOING OUT OF BUSINESS SALE.

:oo-->

[palani]

Yeah...just like after WWII when the Pentagon closed up shop and had that GOING OUT OF BUSINESS SALE.

Are you suggesting the War on Poverty has no possibility of victory?

When there is no hope of victory wouldn't surrender be considered an option?

[StackerKen]

I don't mean to drive anyone nuts...no matter how short the trip is.

But let me see if I can get this straight......You Don't "buy" food with FRN's. You rent it?

Then it goes in your stomach and out your other end and you flush it back to the owners?

Ok I think I get it. ;)

[palani]

You Don't "buy" food with FRN's. You rent it?
No rent involved.


Then it goes in your stomach and out your other end and you flush it back to the owners
You are describing a temporary form of possession. Pretty much the same way you "own" your car wouldn't you say? You use it for a while then send it to the scrap yard. You really don't "own" it. You really don't "own" anything. You could be said to be exercising an equitable privilege to USE something. Just don't make some politico communist really angry or you will find your privilege overwhelmed by the states right. This is a far cry from PLENUM DOMINIUM: The unlimited right which the owner has to use his property as he deems proper, without accountability to any one.

[StackerKen]

You could be said to be exercising an equitable privilege to USE something

ok i get that...that may apply to land or a car...But with food and other things that are "consumed"

Its a bit different don't you think?

[palani]

ok i get that...that may apply to land or a car...But with food and other things that are "consumed"

Its a bit different don't you think?

Land is never bought. Instead the rights of the previous owner are transferred in a grant of some form. They come up with several names for this (warranty deed, land grant, quitclaim deed, land patent). These days these are all lumped under the catchall phrase "real estate" as the object is real and it will be contained in your estate when you pass on without being specific as to what actually is being transferred. What is being transferred is whatever rights the granter had to pass on or whatever rights he chooses to pass on (he might retain water or mineral rights). If he has no rights or considers himself to possibly have future rights (an heir-apparent?) then he call sell you these as well in the form of a quit claim.

A car is not "consumed"? Admitted a car is more durable than food but still after 200,000 miles how much "life" is left? Unless you have a true collectible a car generally won't appreciate in value.

[StackerKen]

I pretty much understand what you mean about not owning anything...and just having a privlage to use it, and pass it on to your family..

palani; the only reason I got into this with you is because you said
For me the FRN has already expired.

And you still have NOT answered my original question.

I will ask a bit differently...

If FRN's are worthless/expired, What do you use to Acquire food?

You must hunt and farm all your own food?

[Joe King]

I pretty much understand what you mean about not owning anything...and just having a privilege to use it, and pass it on to your family..

palani; the only reason I got into this with you is because you said
For me the FRN has already expired.

And you still have NOT answered my original question.

I will ask a bit differently...

If FRN's are worthless/expired, What do you use to Acquire food?

You must hunt and farm all your own food?


Pardon my interjection again, but the definitions of terms that Palani is using are derived from a finely tuned, highly technical interpretation of what the laws regarding this subject actually say.

You, on the other hand, are asking your question strictly from that of a laypersons point of view. Same as most people do in questioning anything.


It's as though you guys are speaking two different languages but trying to talk slow so that the other might understand more better. lol


BTW, no offense intended to either of you guys, as I like you both. :)
...but Palani, perhaps if you were to give a lil' background on where your interpretation of terms is rooted, it might help others to see why you state things the way you do.

[StackerKen]

Joe; Well...Maybe he could quit the fancy lawyer talk and speak layperson for a minute :D

We all know that fancy lawyer talk is meant to confuse. :)

[palani]

If FRN's are worthless/expired, What do you use to Acquire food?
I do garden but most all necessities are provided by a contract with a corporation.

[palani]

...but Palani, perhaps if you were to give a lil' background on where your interpretation of terms is rooted, it might help others to see why you state things the way you do.

Sure.

Bible is the ultimate source of Law.

Lots of free mp3s to listen to at www.georgegordon.com that contain some common sense.

Words that don't shift meaning can be found at http://www.constitution.org/bouv/bouvier.htm

British common law as it existed at the time of the revolution can be found here http://avalon.law.yale.edu/subject_menus/blackstone.asp

The Law of Nations (natural law) can be found here http://www.constitution.org/vattel/vattel.htm

Do a google search in their BOOK section for anything law related an you will be able to download entire books 100 years old or older. Much common sense can be found in them. A lot of "restatement" of law went on in the '30s and what it accomplished is not favorable.

[palani]

Joe; Well...Maybe he could quit the fancy lawyer talk and speak layperson for a minute :D

We all know that fancy lawyer talk is meant to confuse. :)


It is confusing because present practice is mixed up with terms that are centuries (or millennia) old. I am not a lawyer (I did take a law course in Law for Contractors though). The Bouvier dictionary link should help some. Be aware that English is a living language and words take on new meanings every generation. The Blacks law dictionary series really stopped being of much value at the 4th edition. The slope has really gotten slippery since then.

[ bought a Blacks 4th edition several years ago off the net. It has what looks to be a .38 cal bullet hole in it but I find that just lends it more character. I have a hard copy of Bouviers 1855 Law Dictionary as well. That was quite a find. It took me several years of looking to locate it and it cost a little under $1k. I value it much more than the equivalent in gold.

[StackerKen]

palani;

Thanks for putting up with me and helping me understand a bit :)