Quixote2
15th November 2010, 01:36 PM
Some Thoughts on Money and the Future
I have been trying to get my brain around the future of money, gold, debt, our government, etc. I am not an economist or expert, I am merely trying to survive. What are your thoughts on these subjects?
Gold, money, fiat, inflation, deflation, etc
Gold and silver are money, the constitution defines the dollar in silver.
Fiat money is debt, generated out of thin air by borrowing by individuals; businesses; and local, state, and Federal government agencies. The Fed issues generic notes or electronic notations for this debt where the generic note has no distinction between the landscape laborer who bought the $300,000 house with nothing down or the US Treasury.
Deflation is a reduction of money in circulation with a resulting reduction in prices due to less money available.
The amount of gold and silver (money) available in circulation is falling.
The price of stuff (commodities, stocks, food, real estate, etc) is falling when priced in gold or silver (money).
The price of debt notes (including fiat) priced in money is also declining. Or, gold and silver (money) is increasing when priced in fiat units. Or, in other words, the real rate of return on fiat is negative. Zero % interest rates with approximately 10% inflation (my assessment). Thus gold with zero dividends or interest appears to give a positive 10% return when priced in declining fiat. Any excess return on gold over the negative real return of fiat (on a global fiat average) is due to speculation and might return to the mean.
We are in deflation/depression as in the early 1930’s when we were on a money (gold) standard. We are currently in an era of deflation/depression when viewed through the lens of gold/silver money.
Because the money (gold/silver) price of fiat is declining faster than the money (gold/silver) price of stuff, the price of stuff in fiat units is increasing. This price increase in fiat units is price inflation and often confused with the economic term of money inflation or the increase in money (gold/silver) in circulation. Thus, we are experiencing fiat price inflation while we are in deflation/depression. There is nothing that says we cannot have hyper fiat price inflation while we are in money deflation and depression (see Zimbawe).
In the future, guaranteed Social Security benefits will be reduced to 50% (your contribution) the other 50% (employer contribution) will be used to fund means test SS payments. The reductions will be 5% per year over a 10 year period with the existing Federal Reserve Bank fiat system.
Medicare benefits will be reduced, and price schedule based on taxable income and a means test (net worth statement). Some life extension procedures will be based (denied) on age.
How to fix things in the future
Issue treasury gold certificates at $1 per mg of gold, $1,000 per g of gold, $31,103 per troy ounce of gold. Issue silver certificates at $50 per g of silver, $1,555 per troy ounce silver. Let the market sort out if you want to carry Federal Reserve notes, treasury certificates or metal coins in your pocket or in your mattress.
Physical gold and silver will find its way to the treasury to be converted into coin of the realm. Most people will be content to carry and spend treasury certificates in daily commerce instead of the easily lost/misplaced gold coins of great value. The Federal Reserve note will find its real value, approximately zero in the market as people convert to treasury certificates. This proposal has the benefit of effectively eliminating the Federal Reserve Bank printing worthless fiat. The treasury gold and silver certificates are freely converted between certificates and metal and back.
Previous loans, obligations, and notes made with Federal Reserve Notes are paid back with fiat notes. Future loans or obligations are specified in notes or certificates. The loans owed to China are paid back with fiat notes. They can be purchased in the market with gold or silver certificates and will approach their inherent value.
China is not singled out, all past obligations made in fiat FR Notes (including home mortgages and all other countries) are paid back in Federal Reserve notes purchased on the market (the political third rail of Social Security gets special consideration). Future wages are paid in treasury certificates and the banks can readily do an exchange value to fed reserve notes similar to your purchases in Euros or other currencies. The US will operate for a period with two currencies in circulation. If I had to guess, today’s value would be approximately $20 in Fed notes equal to $1 in Treasury certificates. One day’s pay at minimum wages would be roughly equivalent to one gram of silver or a $50 silver certificate. (The pre 1965 dime, containing 0.0715 troy ounces or 2.224 grams of silver, would be worth $111.18.)
The new treasury certificate currency requires controls to be fully backed by metal in the treasury without any fractional reserve trickery.
The banks and previous lenders get paid back in the currency they loaned out, Federal Reserve notes, they are not cheated. The notes were originally generated out of thin air and to thin air they will return. The banks are saved from the mortgage foreclosure mess as the underwater debtors can make their payments with treasury certificate wages converted to FR notes for payment. Unfortunately, the value of the too big to fail banks will drop approximately a factor of 20 (shed crocodile tears here).
For the complainers of windfall profits. The increase in gold and silver prices will be taxed at the collectible rate when the investments (include mining stocks) are converted to treasury certificates (40% or so taxes). The net 60% windfall will probably pass into an inheritance and have another 50% federal tax, thus less than 30% net into the economy stimulation. The supposed windfall achieved by mortgage holders paying off their previous loans at approximately 5 cents on the dollar would be taxed on any gain from the date of the act incorporating gold/silver certificates currency to the date of the real estate sale. The capital gain would be calculated in terms of treasury certificates and taxed at the rate of gold collectibles. Approximately 40% of the real estate gain due to change of currency would go to the government. If part of an estate, some inheritance taxes might also apply. If the sale is to move to another house, the tax cannot be rolled over but paid at the closing. The sellers can use the remaining approximately 60% less fees to pay the new required 20% or greater down on the next house with the provision that payments are calculated assuming a single wage earner. House prices will return to the previous nominal standard of a loan approximately twice the buyer’s annual gross wages.
Most pensions will result in the purchasing value of their payouts reduced. The amount of the reduction will depend on the investments in the pension plan. Fixed income assets will decline, stocks will probably ultimately increase in price. The pensions have the requirement of minimum payout of benefits in FR notes. With stock asset increased prices, the payout will be greater than the minimum of previously quoted FR notes but will be less than the same dollars in treasury certificates. Below a to-be-determined payout the pension is nontaxable, in excess of that value the income is taxed at the collectible rate.
Social Security. 50% of your social security is paid in treasury certificates instead of FR notes (the special political consideration for reelection purposes). The 50% employer contribution from the past and in the future is used for means testing social security payouts in excess of your 50% contribution payout. The value increase of treasury certificate over FR note social security payments is treated as taxable income.
Medicare. Medicare benefits will be reduced, and price schedule based on taxable income and a means test (net worth statement). Some life extension procedures will be based (denied) on age.
United States balance of trade and industry. This is an effective factor of 20 devaluation of the dollar and the price of imports will spike up until other countries devalue a comparable amount. The US government should start a program to rebuild infrastructure and US manufacturing. We should immediately offer assistance (tax rebates) in retrofitting automobiles, trucks, etc to dual fuel natural gas and require all new autos, trucks, etc to be dual fuel natural gas within two years. We should start a national program to convert our rail system to electric within 10 years and include high-speed passenger rail. We should require all government purchases to be greater than 80-90% domestic manufacture. We should significantly increase tax on corporate profits derived from US corporate foreign manufacturing imported into the US. We should provide incentives to take back manufacturing and jobs within the US borders.
Future bank loans. In the future, you go to the bank with your 20% down. The bank goes to the treasury and funds the remaining 80% with 72% borrowed from the Treasury and 8% from their bank capital. The Treasury has the note and the originating bank receives a fee for originating the loan and servicing the loan in the future. The Treasury receives the bulk of the interest for a loan. The banks no longer receive debt servitude payments for generating fiat out of thin air. The Treasury receiving the nations interest payments instead of the banks should go a long way to balancing the budget or even an excess. The banks may have to go back to paying salaries and bonuses at the level they are worth (shed more crocodile tears here).
I have been trying to get my brain around the future of money, gold, debt, our government, etc. I am not an economist or expert, I am merely trying to survive. What are your thoughts on these subjects?
Gold, money, fiat, inflation, deflation, etc
Gold and silver are money, the constitution defines the dollar in silver.
Fiat money is debt, generated out of thin air by borrowing by individuals; businesses; and local, state, and Federal government agencies. The Fed issues generic notes or electronic notations for this debt where the generic note has no distinction between the landscape laborer who bought the $300,000 house with nothing down or the US Treasury.
Deflation is a reduction of money in circulation with a resulting reduction in prices due to less money available.
The amount of gold and silver (money) available in circulation is falling.
The price of stuff (commodities, stocks, food, real estate, etc) is falling when priced in gold or silver (money).
The price of debt notes (including fiat) priced in money is also declining. Or, gold and silver (money) is increasing when priced in fiat units. Or, in other words, the real rate of return on fiat is negative. Zero % interest rates with approximately 10% inflation (my assessment). Thus gold with zero dividends or interest appears to give a positive 10% return when priced in declining fiat. Any excess return on gold over the negative real return of fiat (on a global fiat average) is due to speculation and might return to the mean.
We are in deflation/depression as in the early 1930’s when we were on a money (gold) standard. We are currently in an era of deflation/depression when viewed through the lens of gold/silver money.
Because the money (gold/silver) price of fiat is declining faster than the money (gold/silver) price of stuff, the price of stuff in fiat units is increasing. This price increase in fiat units is price inflation and often confused with the economic term of money inflation or the increase in money (gold/silver) in circulation. Thus, we are experiencing fiat price inflation while we are in deflation/depression. There is nothing that says we cannot have hyper fiat price inflation while we are in money deflation and depression (see Zimbawe).
In the future, guaranteed Social Security benefits will be reduced to 50% (your contribution) the other 50% (employer contribution) will be used to fund means test SS payments. The reductions will be 5% per year over a 10 year period with the existing Federal Reserve Bank fiat system.
Medicare benefits will be reduced, and price schedule based on taxable income and a means test (net worth statement). Some life extension procedures will be based (denied) on age.
How to fix things in the future
Issue treasury gold certificates at $1 per mg of gold, $1,000 per g of gold, $31,103 per troy ounce of gold. Issue silver certificates at $50 per g of silver, $1,555 per troy ounce silver. Let the market sort out if you want to carry Federal Reserve notes, treasury certificates or metal coins in your pocket or in your mattress.
Physical gold and silver will find its way to the treasury to be converted into coin of the realm. Most people will be content to carry and spend treasury certificates in daily commerce instead of the easily lost/misplaced gold coins of great value. The Federal Reserve note will find its real value, approximately zero in the market as people convert to treasury certificates. This proposal has the benefit of effectively eliminating the Federal Reserve Bank printing worthless fiat. The treasury gold and silver certificates are freely converted between certificates and metal and back.
Previous loans, obligations, and notes made with Federal Reserve Notes are paid back with fiat notes. Future loans or obligations are specified in notes or certificates. The loans owed to China are paid back with fiat notes. They can be purchased in the market with gold or silver certificates and will approach their inherent value.
China is not singled out, all past obligations made in fiat FR Notes (including home mortgages and all other countries) are paid back in Federal Reserve notes purchased on the market (the political third rail of Social Security gets special consideration). Future wages are paid in treasury certificates and the banks can readily do an exchange value to fed reserve notes similar to your purchases in Euros or other currencies. The US will operate for a period with two currencies in circulation. If I had to guess, today’s value would be approximately $20 in Fed notes equal to $1 in Treasury certificates. One day’s pay at minimum wages would be roughly equivalent to one gram of silver or a $50 silver certificate. (The pre 1965 dime, containing 0.0715 troy ounces or 2.224 grams of silver, would be worth $111.18.)
The new treasury certificate currency requires controls to be fully backed by metal in the treasury without any fractional reserve trickery.
The banks and previous lenders get paid back in the currency they loaned out, Federal Reserve notes, they are not cheated. The notes were originally generated out of thin air and to thin air they will return. The banks are saved from the mortgage foreclosure mess as the underwater debtors can make their payments with treasury certificate wages converted to FR notes for payment. Unfortunately, the value of the too big to fail banks will drop approximately a factor of 20 (shed crocodile tears here).
For the complainers of windfall profits. The increase in gold and silver prices will be taxed at the collectible rate when the investments (include mining stocks) are converted to treasury certificates (40% or so taxes). The net 60% windfall will probably pass into an inheritance and have another 50% federal tax, thus less than 30% net into the economy stimulation. The supposed windfall achieved by mortgage holders paying off their previous loans at approximately 5 cents on the dollar would be taxed on any gain from the date of the act incorporating gold/silver certificates currency to the date of the real estate sale. The capital gain would be calculated in terms of treasury certificates and taxed at the rate of gold collectibles. Approximately 40% of the real estate gain due to change of currency would go to the government. If part of an estate, some inheritance taxes might also apply. If the sale is to move to another house, the tax cannot be rolled over but paid at the closing. The sellers can use the remaining approximately 60% less fees to pay the new required 20% or greater down on the next house with the provision that payments are calculated assuming a single wage earner. House prices will return to the previous nominal standard of a loan approximately twice the buyer’s annual gross wages.
Most pensions will result in the purchasing value of their payouts reduced. The amount of the reduction will depend on the investments in the pension plan. Fixed income assets will decline, stocks will probably ultimately increase in price. The pensions have the requirement of minimum payout of benefits in FR notes. With stock asset increased prices, the payout will be greater than the minimum of previously quoted FR notes but will be less than the same dollars in treasury certificates. Below a to-be-determined payout the pension is nontaxable, in excess of that value the income is taxed at the collectible rate.
Social Security. 50% of your social security is paid in treasury certificates instead of FR notes (the special political consideration for reelection purposes). The 50% employer contribution from the past and in the future is used for means testing social security payouts in excess of your 50% contribution payout. The value increase of treasury certificate over FR note social security payments is treated as taxable income.
Medicare. Medicare benefits will be reduced, and price schedule based on taxable income and a means test (net worth statement). Some life extension procedures will be based (denied) on age.
United States balance of trade and industry. This is an effective factor of 20 devaluation of the dollar and the price of imports will spike up until other countries devalue a comparable amount. The US government should start a program to rebuild infrastructure and US manufacturing. We should immediately offer assistance (tax rebates) in retrofitting automobiles, trucks, etc to dual fuel natural gas and require all new autos, trucks, etc to be dual fuel natural gas within two years. We should start a national program to convert our rail system to electric within 10 years and include high-speed passenger rail. We should require all government purchases to be greater than 80-90% domestic manufacture. We should significantly increase tax on corporate profits derived from US corporate foreign manufacturing imported into the US. We should provide incentives to take back manufacturing and jobs within the US borders.
Future bank loans. In the future, you go to the bank with your 20% down. The bank goes to the treasury and funds the remaining 80% with 72% borrowed from the Treasury and 8% from their bank capital. The Treasury has the note and the originating bank receives a fee for originating the loan and servicing the loan in the future. The Treasury receives the bulk of the interest for a loan. The banks no longer receive debt servitude payments for generating fiat out of thin air. The Treasury receiving the nations interest payments instead of the banks should go a long way to balancing the budget or even an excess. The banks may have to go back to paying salaries and bonuses at the level they are worth (shed more crocodile tears here).