patrick.net

The Professor says

Who actually thinks the dollar has a long term chance?

"Those that don't know their history are condemned to repeat it."

When was the last time the dollar died?
The only history that will continue is a decline in the dollar due to inflation, just like every other currency on the planet.
It's not a big deal, wages go up too.

The Professor says

Who actually thinks the dollar has a long term chance?

http://research.stlouisfed.org/fred2/series/FDEFX

is the true measure of strength/viability of the USD

The Professor says

What is this "lawful money" they talk about?

coins, of gold and/or silver.

http://en.wikipedia.org/wiki/Coinage_Act_of_1792

yeay, we get to carry around sacks of coins to buy shit I guess.

Well, actually, of course, paper bills are a better mechanism of trade, then we can carry those around instead.

Well, actually, of course, money is just an abstraction -- literally numbers on a sign -- and we don't actually need hard convertibility to PM etc. as long as our overall system is sustainable.

Bellingham Bill says

The Professor says

What is this "lawful money" they talk about?

coins, of gold and/or silver.

http://en.wikipedia.org/wiki/Coinage_Act_of_1792

yeah, we get to carry around sacks of coins to buy shit I guess.

Well, actually, of course, paper bills are a better mechanism of trade, then we can carry those around instead.

Our ancestors - you know, those people who lived before the Fed was created, and had simple, homespun, Godly values - agreed.

People hated using physical gold and silver, which is why vast quantities of pristine old gold coins exist today. They collected dust in vaults at the mint, because nobody would use them.

The Professor says

Are we there yet?

No, because we are also creating an immense amount of USD-denominated new wealth -- food, oil, movies, software, tech, each day.

Weimar and Zimbabwe happens when the monetary expansion outpaces the wealth production.

Our problem is different, we've got too many rent-suckers attached to the productive economy, and are using creative financing to keep the money flowing and thus the economy from crashing.

http://research.stlouisfed.org/fred2/graph/?g=CaR

blue is debt, red is annual wages of the productive sector, more or less.

The Professor says

Strategist says

When was the last time the dollar died?

You can only die once.

You can be dying for a long time.

Our money used to have "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank", printed on it. What is this "lawful money" they talk about?

Now all of our currency simply states: "This note is legal tender for all debts public and private"; valuable because it says it is.

Our Federal reserve notes are backed by nothing. The government can print as much as it wants to spend on war and bribes.

The dollar will die. The question is "when?"

The dollar does not ever have to die. They can keep adding zeros to the dollar bill all the way to infinity. Just like the might Zimbabwe currency.
Look at it this way....If the dollar is falling to it's death why does everyone want it? Because it represents the production capacity of the United States.
Drug dealers, terrorists, dictators and even bank robbers, all want our dollars.

The Professor says

Strategist says

Because it represents the production capacity of the United States.

While true of real money, fiat currency does not represent the production capacity of a country but rather its printing capacity.

Not true.

The Professor says

Do you trust our government?

Yes.

The Professor says

Do you believe in the word of the bankers?

No.

The Professor says

That is what backs our currency, the faith and trust in politicians and bankers.

Not really.

The Professor says

The power of the people IS their production. The wealth of our nation is NOT the ever growing accumulation of federal reserve notes.

True. The dollar still represents that wealth.

The Professor says

I am going to go wax my sports car and drive it out to my yacht for an afternoon of sailing the SF Bay. Real wealth is health, family, skills, and happiness. Paper money is nothing until traded for real goods.

Enjoy the car ride and sailing. Don't forget your wallet and money.
Yes, real wealth is happiness, and the most desired thing on the planet.

The Professor says

Strategist says

Drug dealers, terrorists, dictators and even bank robbers, all want our dollars.

Stop economic imperialism, the war on drugs, all wars for that matter, and most of these dollar consumers would be gone.

I doubt it. We did not have dollar consumers 500 years ago, but these guys were still there.
I hope I convinced you. :)

Iosef V HydroCabron says

The Professor says

What is this "lawful money" they talk about?

coins, of gold and/or silver.

http://en.wikipedia.org/wiki/Coinage_Act_of_1792

yeah, we get to carry around sacks of coins to buy shit I guess.

Well, actually, of course, paper bills are a better mechanism of trade, then we can carry those around instead.

Our ancestors - you know, those people who lived before the Fed was created, and had simple, homespun, Godly values - agreed.

People hated using physical gold and silver, which is why vast quantities of pristine old gold coins exist today. They collected dust in vaults at the mint, because nobody would use them.

The paper dollar currency was backed by silver and gold so that people wouldn't have to carry around the gold and silver. People hoarded the coins when the gold backing was removed in 1933 and the silver backing in 1964.

Digital currency is even better than paper as you don't need to carry bills around. Gold was digitized about 5-6 years ago by a company called egold and was shut down by the Feds.

The convenience factor is not what gives a currency its value, it's either what the currency is backed by (gold, silver) or the backing/promise of the issuer ( the fiscal policies of the issuer)

The Professor says

(27%) 156 were destroyed by hyper-inflation (caused by over-issuance of paper money by governments and central banks);

(28%) 165 were destroyed by war (deemed invalid through military occupation or liberation)."

Given that almost all hyperinflation is connected to war, would mean that 55% of all currency fails because of war?

The Professor says

Isn’t it spectacular the number of paper money currencies no longer in circulation?

Isn't it remarkable that in spite of all these currency disappearing, we are living at a time of incredible material wealth by historical standards.

This is not a big mystery or conspiracy: as long as by design the currency loses 2% value every year, it's purchasing power will decrease at an exponential rate, and eventually lose almost all value.

The question is: so what?

Heraclitusstudent says

The Professor says

Isn’t it spectacular the number of paper money currencies no longer in circulation?

Isn't it remarkable that in spite of all these currency disappearing, we are living at a time of incredible material wealth by historical standards.

This is not a big mystery or conspiracy: as long as by design the currency loses 2% value every year, it's purchasing power will decrease at an exponential rate, and eventually lose almost all value.

The question is: so what?

You would make a good economist. :)

The Professor says

"Debt accruing from money issued by central banks constantly compounds and unless capitalist economies also constantly expand, constantly compounding debt eventually overwhelms all economic activity, resulting in ’parcus nex’, i.e. economic death. "

Are we there yet?

This is true only if all interests from debts are returned strictly as debt, instead of banksters bonuses, bank dividends etc....

The Professor says

While true of real money, fiat currency does not represent the production capacity of a country but rather its printing capacity.

We keep coming to this point: as long as the productive capacity is there, standing idle, extra money in fact triggers extra production.

As long as people here don't wrap their heads around this, they can't make sense of what we are seeing: The dollar is not collapsing, interest rates are not jumping, capital is not fleeing the US, foreign countries are not dumping their US bonds.

Heraclitusstudent says

As long as people here don't wrap their heads around this, they can't make sense of what we are seeing: The dollar is not collapsing, interest rates are not jumping, capital is not fleeing the US, foreign countries are not dumping their US bonds.

You are smoking dope. You have it ass backwards.

The Professor says

"Debt accruing from money issued by central banks constantly compounds and unless capitalist economies also constantly expand, constantly compounding debt eventually overwhelms all economic activity, resulting in ’parcus nex’, i.e. economic death. "

Are we there yet?

Nonsense. The central bank can disappear it ad infinitum.

That US purchasing power graph is out of context, when not shown against the rest of the world's faltering currencies.
It might not be as pretty as it once were, but cash is still King.

Any dollar problems are the fault of Muslims,Illegal immigrants,Planned Parenthood,Corporation are People & Taxes.
Democratic & Republican voters want Fed money printing.
Gold & silver can't be printed. Their true value is created when there is a transaction & not based on some economic theology.

Some don't like metals because they failed to buy years ago when it was cheaper. Some probably bought paper metals.Absolutely brilliant!

The Professor says

The convenience factor is not what gives a currency its value, it's either what the currency is backed by (gold, silver) or the backing/promise of the issuer ( the fiscal policies of the issuer)

It's the dollar's acceptance as a medium of exchange, for whatever reason(s), that gives it value. Everything else is just an argument as to whether it should be accepted as a medium of exchange, or whether it should be at prevailing exchange rates.

"Vince Cate wrote an excellent piece that was presented by the well respected David Morgan during the Silver Summit 2012 (at the end of October). The researcher analyzed 599 paper based money forms over the past millennia."

I am the Vince Cate that writes about hyperinflation. I might have linked to such a study but did not do the research. Does anyone have a link to the study?

Here's an idea: the reason why the war on drugs continues unabated is due to the Federal Reserve trying to make US debt disappear.
This doesn't make sense at first blush, given that literally tons of cash is leaving the country because people are buying drugs from cartels. But if you think that this paper money is in fact an issuance of debt, an IOU that can be traded, then the more of it that disappears, the better for the bank of issuance (the Fed).
Lots of it is destroyed this way, or disappears into cash repositories of gang lords. Either way it's off the market and this helps to keep the price of the dollar higher.

indigenous says

Heraclitusstudent says

As long as people here don't wrap their heads around this, they can't make sense of what we are seeing: The dollar is not collapsing, interest rates are not jumping, capital is not fleeing the US, foreign countries are not dumping their US bonds.

You are smoking dope. You have it ass backwards.

Now Indigenous, 2 years later, the dollar is in a bull market, interest rates are super low, and... oh yes foreign countries ARE dumping US bonds, but only to prevent their own toilet paper from collapsing.
Care to apologize?

Yeah man, I'm getting almost 6000 guaranies to the dollar. A few years ago it was less than 5000. My Purchasing Power for local items like Chicken and Rent and Electric is up over 20%!