The Coming Dollar Devaluation

[bill still]

The 800 lb, yet invisible gorilla in the room is simply interest on the debt money system -- the National Debt. It has finally reached the tipping point.

So much helicopter money has been thrown at the problem, how can it be argued that anything but inflation can result? It just takes 18-24 months for this new money to work it's will.

And all that new money is all created at interest, thereby increasing the severity of the basic problem -- the interest on the National Debt. In the US, were we to issue our money without this debt, we could nearly wipe out income taxes! Now there's a stimulus we could all love!

DB - Fact is that the economy is currently driven by the politics of bailouts and market manipulation. The natural conclusion of this, if they keep bailing out every sod will be hyperinflation. Does not take a genius to see that.

The point of this response is that it really does depend on what the CB's do and how the politics of the situation plays out.

'They' are spinning plates - keep ZIRP, lie about inflation, keep pumping the economy, and wait and hope that it turns out nice and dandy.

The fly in the ointment is when those nasty investors take fright and decide that they take their money out of UKPLC - this will force IRs back up and then your prediction will ring hollow. Faced with the prospect of a worthless currency and the real threat of lynch mobs, gallows and guilotines lining Westminster - they will chose to throw swaths of people onto the street - they are cowards afterall - and the police and army will not turn their fire on their own people when push comes to shove.

I too fear hyperinflation - but you would need to get a serious fashcist state to be able to control the masses through force before they would attempt this scenario. I see them (NuLabour) trying to, but no cigar - they are pretty incompetent when it comes to serious endevoure.

[roman holiday]

May I ask what do you think was going on with the unloading of the Fort Knox Bullion Depository ending in 1972 when Nixon closed the gold window making the dollar "no longer convertible in gold"?

The collapse of Bretton Woods.

The problem was that after the second war the US dollar effectively took the place of gold. And though the dollar was backed by gold initially, the US abused its position as the reserve currency. Countries, in particular a resentful France, saw through the exploitive advantages that accrued to the US and it didn't take long for gold to start flowing out as dollars were redeemed. This could not last and the window was slammed shut. the dollar easily remained central due to its own momentum and the fact that the important commodities were traded in dollars [thining oil primarily here].

The imbalances that have built up have only been made possible by the position that the US dollar has enjoyed. From an economic perspective it really is Pax American [or should I say Ponzi Americana].

I agree with you that the debt-based currency system we currently have is hopeless... and will have to be revamped internationally. Where I disagree, is that the money system can not be fully rationalized, and accordingly I would not be at all surprised if the "mythology" of gold is once again instituted insofar as it can cut across all cultures and due to the pragmatic necessities of international trade.

I wonder if they might try a compromise with paper and gold in the SDRs of the IMF.

btw I am not a gold bug. I am hedged in many currencies.

Edited August 17, 2009 by roman holiday

[bill still]

So where do we disagree?

My entire point in bringing this up is just that; an attempt to bring about a world currency somehow tied to gold has perhaps been the plan for many decades.

I believe that the reason the US gov still makes such a steadfast pretense that good delivery gold still exists in Ft. Knox -- which I unequivocally do not believe -- is that at some point of extreme economic pressure -- fast approaching -- the President will tell Congress that there is no alternative but to abandon the dollar and throw in with this gold-backed world currency. This would be politically impossible if the true state of the nation's gold reserves were known.

This is the very core of the beginning of my quest into this topic. We have been trying for the last 40 years to get the US govt to provide a physical audit of gold reserves in Ft. Knox. This is discussed at about hour 3 of The MoneyMasters -- so only the stoic would ever see it.

Hmmm, I need to expand on this on my site.

The collapse of Bretton Woods.

The problem was that after the second war the US dollar effectively took the place of gold. And though the dollar was backed by gold initially, the US abused its position as the reserve currency. Countries, in particular a resentful France, saw through the exploitive advantages that accrued to the US and it didn't take long for gold to start flowing out as dollars were redeemed. This could not last and the window was slammed shut. the dollar easily remained central due to its own momentum and the fact that the important commodities were traded in dollars [thining oil primarily here].

The imbalances that have built up have only been made possible by the position that the US dollar has enjoyed. From an economic perspective it really is Pax American [or should I say Ponzi Americana].

I agree with you that the debt-based currency system we currently have is hopeless... and will have to be revamped internationally. Where I disagree, is that the money system can not be fully rationalized, and accordingly I would not be at all surprised if the "mythology" of gold is once again instituted insofar as it can cut across all cultures and due to the pragmatic necessities of international trade.

I wonder if they might try a compromise with paper and gold in the SDRs of the IMF.

btw I am not a gold bug. I am hedged in many currencies.

Edited August 17, 2009 by bill still

[roman holiday]

So where do we disagree?

My entire point in bringing this up is just that; an attempt to bring about a world currency somehow tied to gold has perhaps been the plan for many decades.

If I am correct in assuming that you approach gold pragmatically and do not count out a priori some practical gold component to the new monetary system, then I would say we pretty much agree.

As I have mentioned before, I do not think money can be completely rationalized - as the economists would like - which makes the project of a new purely fiat system problematic.

Edited August 17, 2009 by roman holiday

[grumpy-old-man-returns]

So where do we disagree?

My entire point in bringing this up is just that; an attempt to bring about a world currency somehow tied to gold has perhaps been the plan for many decades.

I believe that the reason the US gov still makes such a steadfast pretense that good delivery gold still exists in Ft. Knox -- which I unequivocally do not believe -- is that at some point of extreme economic pressure -- fast approaching -- the President will tell Congress that there is no alternative but to abandon the dollar and throw in with this gold-backed world currency. This would be politically impossible if the true state of the nation's gold reserves were known.

This is the very core of the beginning of my quest into this topic. We have been trying for the last 40 years to get the US govt to provide a physical audit of gold reserves in Ft. Knox. This is discussed at about hour 3 of The MoneyMasters -- so only the stoic would ever see it.

Hmmm, I need to expand on this on my site.

what if silver as the peg was the goal here, whilst the majority are looking at gold ? because of the availability of silver, surely this would be the better option.

although I still think gold will hold......

personally I don't think any new currency will be metal backed, because TPTB need to move to a digital era for total manipulation. Although this may be 20 years away (picking a number from thin air)

[roman holiday]

So where do we disagree?

My entire point in bringing this up is just that; an attempt to bring about a world currency somehow tied to gold has perhaps been the plan for many decades.

Hmmm... maybe the disagreement lies in the fact that I do not see the "authorities" in such a dark light, or as imimical to our liberties. From my perspective, it is about avoiding chaos.

"I wonder if they might try a compromise with paper and gold in the SDRs of the IMF."

When writing this, I considered it a solution of sorts. Though some monetary ideas are agreed on, I think we may have fundamentally different political views.

I am just a humble loyal subject. Long live the Queen.

Edited August 17, 2009 by roman holiday

[grumpy-old-man-returns]

Hmmm... maybe the disagreement lies in the fact that I do not see the "authorities" in such a dark light, or as necessarily imimical to our liberties. From my perspective, it is about avoiding chaos.

"I wonder if they might try a compromise with paper and gold in the SDRs of the IMF."

When writing this, I considered it a solution of sorts. Though some monetary ideas are agreed on, I think we may have fundamentally different political views.

I am just a humble loyal subject. Long live the Queen.

yes, that's also what I find wrt your pov on these things.

That's why you sat (still sitting ?) in the deflation camp for so long imo.

[roman holiday]

yes, that's also what I find wrt your pov on these things.

That's why you sat (still sitting ?) in the deflation camp for so long imo.

A fully paid up member.

[grumpy-old-man-returns]

A fully paid up member.

hey, don't get me wrong RH, I value your opinion & analysis very highly though.

[roman holiday]

hey, don't get me wrong RH, I value your opinion & analysis very highly though.

That's cool, no certainties and all that.

[roman holiday]

yes, that's also what I find wrt your pov on these things.

That's why you sat (still sitting ?) in the deflation camp for so long imo.

I think you could be onto something there. Perhaps our economics is coloured by our politics.

Of course, when you think about it this is obvious, yet we all pretend to discuss it so objectively.

Edited August 17, 2009 by roman holiday

[bill still]

Gold money is fine with me --just not gold-only money systems.

I don't understand your use of the word "rationalized".

If I am correct in assuming that you approach gold pragmatically and do not count out a priori some practical gold component to the new monetary system, then I would say we pretty much agree.

As I have mentioned before, I do not think money can be completely rationalized - as the economists would like - which makes the project of a new purely fiat system problematic.

[bill still]

I certainly have no problem with your patriotism. Long live the Queen.

Hmmm... maybe the disagreement lies in the fact that I do not see the "authorities" in such a dark light, or as imimical to our liberties. From my perspective, it is about avoiding chaos.

"I wonder if they might try a compromise with paper and gold in the SDRs of the IMF."

When writing this, I considered it a solution of sorts. Though some monetary ideas are agreed on, I think we may have fundamentally different political views.

I am just a humble loyal subject. Long live the Queen.

[Pearshape]

The debt on the dollar is looking show

For those that dont know the link takes you to something called a point and figure chart - that tells you at the top where the graph is heading, in this example (current!) it shows that the dollar is likely to make a new low.

http://stockcharts.com/def/servlet/SC.pnf?...;USD,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G