No Way Out: A 50% Dollar Devaluation

[Jcrowley]

NO WAY OUT: A 50% DOLLAR DEVALUATION
by Robert McHugh, Ph.D.
January 14, 2007

Artificial Economics, the brainchild of the Master Planners, has focused on building an economy where debt — not income — pays for goods and services. The emphasis upon debt instead of income via hyper-inflating the money supply in stealth fashion, has destroyed the dreams of millions of Americans. Artificial Economics is a silent economic disease. A coming significant devaluation of the dollar is a likely and necessary consequence.

The use of hyper-inflated money supply to postpone a recession over recent years has served to create an imbalance between income and assets. Debt covered the gap for a while, but now debt is extreme, with a limited useful life. With high paying jobs being exported, and a limit to what is essentially slave labor from illegal immigrants, future productivity gains which translate into income are almost entirely technology dependent. If technology fails us, then the debt-to-income imbalance, then the asset-to-income imbalance must be reckoned with. Undoubtedly, that reckoning will either be a nasty recession/depression — where asset values drop below debt levels, leaving us with an imbalance between both assets and debt, and income and debt — or a significant and sudden devaluation of the dollar.

What is accomplished by a significant and sudden dollar devaluation? It is a way to pay off debt with suddenly-more-available dollars; cheaper dollars. We have been witnessing a slow meticulous devaluation of the dollar over the past two decades, with an acceleration over the past decade. This has come from an increase in the money supply via the credit creation route — debt. But that has served to replace income, and postpone a recession, at the great cost of hyperinflation of real estate, related taxes, and just about everything you buy. The result is debt. Once the debt creation train stops, then there will be no way to pay for things; no way to pay off that debt. There will soon be a point of no return, with an inevitable sudden and significant dollar devaluation as the only solution. It would require the Treasury printing an amount of money equal to the current entire money supply, more than 11 trillion dollars, and literally handing it out to each household so that the broadest spectrum of people have the ability to payoff their debt. Debt does not rise in value as the dollar devalues. It is a contracted amount in former-dollar-value, notional terms. Thus, if we suddenly hand several hundred thousand dollars to each and every household, a dollar will become worth 50 cents in real terms, but in debt terms, it will still be worth a dollar, and folks will have more of them.

http://www.financialsense.com/fsu/editorials/mchugh/2007/0114.html

[Rex]

1. Credit cards are evil, one of the many 'miracles' destroying our country.

Thats why I refuse to get one and will never have debt. If it can't be bought with real money then it just ain't worth having.

[Lucky Luciano]

3. Get a card - establishing a credit history is

important. In fact, your credit rating is affected VERY positively when you have a lot of credit extended to you via CCs that you do not use. They often calculate the ratio (CC Balance ) / (CC Limits). A low number with a large denominator is considered good.

[Rex]

5. I know, a new way to control society, just what we needed.

I'm old enough to remember when you didn't need a credit rating. Hey, I'm not complaining. If it wasn't for credit cards, we would have never won the Cold War! :rofl:

[IntravenousDemilo]

14. The next step will involve everyone having to get microchips implanted into themselves...

And bingo! that's the final nail in the coffin where privacy lies.

[Odin2005]

35. Exactly, I find having to have a credit card to "establish a credit history" pathetic.

[Lucky Luciano]

50. Then don't complain when nobody wants to lend you money

to buy a house.

[Deep13]

7. It's important if you want to go into debt.

:-(

[Lucky Luciano]

16. Not the point...

Have the cards and don't use them!

[barb162]

60. or pay them off fully each month

[specimenfred1984]

15. It's fun for medical bills, bankruptcy and slavery too!

Get sick, bankrupt and enslaved today!

BARFFFFFFFFFFFF

[roamer65]

19. Absolutely true.

That's how I repaired my credit, but it does require fiscal restraint.

[dysfunctional press]

55. it's only important if you want to borrow money.

i don't.

[pitohui]

91. people who want to improve themselves do borrow money

people who buy such important things as homes for their families and educations for themselves and their children do borrow money

subsistence living is a miserable existence once recognized to be "ugly, brutish, and short" and romanticized today only because so many of us are distanced from the reality of it

a society without a credit is a society that does not believe in the future and hence is anxious to grab what can be grabbed for today

is our credit system perfect or without predators? no it isn't, and you can thank reagan for much of the predatory practices legalized in the 80s, nonetheless, people who never use credit are people who have made the decision that they don't trust the future or their ability to earn in the future, a sad comment on their faith in their country and in themselves

[dysfunctional press]

98. we paid off our mortgage last year.

and we bought our car with cash.

borrowing isn't something we like to do.

[Leopolds Ghost]

102. What about the religious prohibition on Usury? A prohibition Nixon removed from US law

Traditionally, societies saw usury for what it is -- a nonviolent mechanism for maintaining the revenues needed to support the non-producer class, who in turn supported the artisan class.

[Sapere aude]

78. I am paying off my credit cards and tearing them up. I don't give a shit about my credit score.

I don't ever plan on borrowing again. Screw sending my paycheck to everyone else and leaving none for myself. I plan to lower my spending to a sustainable level and stay there. Of course I am over 60 yrs old and have a younger wife who will still work when I retire so this works for me. It doesn't work for everyone.

[Lucky Luciano]

81. Your credit score doesn't really matter

if you own a house and a car. being over 60, I presume that is the case. It is just that the people here who are feeling so exalted and principled for not succumbing to getting a credit card might regret it later on. Nobody cares or feels proud of them for being so "principled" because things are not exactly as they think they should be. Like the guy above who thinks it is horrendous that people should have to borrow for housing. Maybe housing would be a great deal cheaper if population did not continue to explode as it does, but that is another topic.

[Rex]

97. Wow, are you so wrong!

Principled? That is a hoot. It is BECAUSE of my unprincipled behavior towards free money* that keeps me from getting a credit card. :rofl:












*Not free per se. See the ultra-fine print.

[Lucky Luciano]

100. Wasn't really referring to you. There are certain conveniences

with the card...like being able to go to an ATM in some foreign country, buying airplane tickets online, or books from AMZN or something. Little things like that. Just pay it off at the end of the month. I don't get what is so complicated about that. Of course, this has already been discussed ad nauseum already here.

[Rex]

104. True

and will be discussed long after the next new scam is discovered.

[MadHound]

93. You don't need a piece of plastic to establish a good credit rating

I've never had a card in my life, and my credit rating is excellent, up in the high 700 range. I've done this through paying my bills on time, and having four loans in my life time, one unsecured $1000 loan twenty eight years ago, a business loan twenty five years ago, and two mortages.

You don't need a credit card for a damn thing, including getting a good credit rating. Cut the damn things up and your life will be much better.

[IntravenousDemilo]

13. I finally found someone other than myself who refuses ever to get a credit card.

And do you know what's one of the reasons I've not acquired one in my almost 48 years on this earth? Because everyone tells me I have to have one, and I refuse to be dictated to by capitalists.

And another reason? Because back in the day, what CC companies now charge in interest would have been considered usury, and those responsible would be thrown in jail.

And another? Because one is treated as a second-class consumer if one doesn't have a card, which only serves to get my Irish up. Who... the fuck... are these... people... anyway?

And yet another? Because in order to get one, you have to answer a lot of prying questions that are really none of their business.

[Lucky Luciano]

26. To some extent you do have to submit to

the society we live in. For example, my mother is extremely left wing - as far to the left as the more radical members here. She did not invest wisely or care about the concept of investing while she was a teacher in a public school in NYC. The end result is that she has a lot less inretirement than she would have had otherwise. Now she has her mutual funds and what not, but it could have been better if she was not trying to buck the system.

I am nowhere near as far to the left as she. I believe in the right to become rich if you want it. I also believe the US is in dire peril because of the republicans...which is why I am here.

[Jcrowley]

56. Count me in there

Never had a credit card, never will. Don't have a checking account either.

Interesting thing happened on my way to buy a car. I went to the Honda dealer to buy the cheapest new Civic they had with no additions and when it came time to get the financing the guy is taking down my info as he's plugging it into the computer. As he's asking these questions and getting answers that are off the menu he's looking at me as if he's encountered a space alien.

He basically says that I'm not in the system and they can't give me a loan. I show him that I have half of the price of the car in cash, he ogles the money, and if he won't sell me the car I'll go down the road to the next dealer and they will. He went to talk to the manager came back and they agreed to finance the remainder. I paid the three year loan off in one year.

Swindlers sucking our blood through their usurious swindles they call "interest" should be locked up.

[Lucky Luciano]

63. ...and when you go buy a house are

you going to bring a 50% down payment with a suitcase full of $100 bills?

The whole CC thing is not a big deal if you have just a little bit of self control. Though, the Debit card thing does lessen the need for credit cards substantially.

I don't know what the big deal is with the interest thing either. Just buy what you can afford and pay it off at the end of the month - no interest. Simple really!

[Jcrowley]

65. Don't need it

Don't use it don't want it. Doin' fine without it. It's a predatory scam.

Any culture that forces people into debt for esssentials, housing e.g., is a culture steeped in vulgarity and servility.

I know a trap when I see it.

Not into buyin' anything. Have to for the essentials of course but mostly into livin' and not buyin'.

The American Dream is a fraud if you bought into it you've been sold a plastic nightmare.

Plastic culture
Plastic card
Plastic soul
Plastic yard

[we can do it]

72. You Forgot Plastic House

:D

[Lucky Luciano]

75. wow...you're angry

Pretty much anywhere you will have to go into debt to buy a home - unless you move to a third world country and stake out a claim to some far off rural spot in the jungle...or just get a cheap house in said third world country - you could probably get a $100K nice house in Thailand.

I rarely buy anything material, but I do buy airplane tickets and books online all the time - traveling qualifies as livin' in my eyes. I also like the card to consolidate all my monthly expenses into one payment. As it is, Manhattan requires frequent trips to the ATM to take out the maximum allowed. One day at work costs me $30 between taxi, breakfast, lunch, and snacks. Meeting friends after work? It adds up.

That said, I definitely favor the debit card over the CC except for online purchases...I am very uncomfortable with a debit card over the internet since debit cards can be more troublesome if someone steals your info.

I have a feeling though that if I ever meet the right woman, I would probably leave the city, move to a rural area, and have a simple life in the mountains or something.

[Jcrowley]

86. As Thomas Aquinas said

"Anger is a virtue" and if your not outraged by banks ripping everyone off you're not paying attention. So I try to minimize the amount of blood they suck from my veins just as I try to minimize my consumption so that the next generation will have some air and water to breathe.

One of the biggest problems with "lifestylism" is how utterly devoid from reality it has become. For example I'm going to guess you are concerned about global warming and yet it sounds as if you fly frequently and consider that "living." Well you are aware that jet travel is one of THE most egregious contributors to global greenhous gasses? How do you align that with a concern for global warming assuming you have that concern?

[Lucky Luciano]

92. I'm not really outraged at the banks charging those

rates on their cards. Everything about using those cards is a choice. You do not need to use them, but as I have already outlined, they are good to have.

I am concerned about global warming, but less than most. I am a bit more fatalistic about the whole thing. Perhaps we have done our damage and it is time for the earth to give some payback. George Carlin has a great bit about self-righteous environmentalists that I agree with in the satirical manner in which he presents it.

http://www.chaparyan.com/2005/04/george-carlins-planet-is-fine.php

To be clear though, I do always recycle and try to do my part, but I refuse to be as extreme about it as you appear to be. I feel you miss out by restricting yourself so thoroughly and completely, but that is your choice and I do not judge you. I like to travel the world. I like to visit my friends in L.A. where I went to grad school. I like to check out Costa Rica...or run down to South America...and see the world first hand. I guess you need to find a commune to live on which is all well and good, but you will not be able to experience the world that way. To be honest, it sounds like you lock yourself in your room.

What do you consider living? I might be interested in adding something to my repertoire. I usually like outdoor activities and I see you like rock climbing. The gunks by Lake Minnewaska are nearby in New Paltz - I think that is the most beautiful palce in New York State actually.

edited to comment about the "satirical manner in which presents it"

[Jcrowley]

94. By your standards

It would probably seem like being locked in a room. I rarely drive. I walk and bicycle almost exclusively.

The parameters of what we consider "extreme", as relates to ecology, are so completely skewed so as to render any analysis of this area of discussion completely skewed. There is nothing so extreme as the current levels of energy consumption of the average American.

The sort of fatalism you describe condemns the next generation to pick up our trash.

You seem to think it your right to travel so freely no matter the consequences. You are not alone in that. In conjunction with that level of consumption comes the myth of "personal choice" which is one of the most widespread and false assumptions going in the days of selfish individualism. It's as if we live in a vaccuum and what we do does not effect others. Most people don't have choices, at least any meaningful choices, and that is connected directly to the fact that the choices they might have had have been limited or eliminated as the overprivileged people are taking their resources and opportunities. Again it comes back to grotesque energy consumption and all that that entails.

The average American uses 25% of the world's energy with only 4% of the population. That's not okay. No matter how you need to rationalize it that represents colossal theft from other people's lands and is the primary source of the wars we see all around us. How can one be against the Iraq War e.g. and still participate knowingly and fully in the system that brings the war about? There's a tremendous disconnect there.

The least we can do is make sacrifices and try to minimize our damage. That's not asking too much.

American's are terribly spoiled.

[Jcrowley]

95. What do you consider living?

Is a very good question. And whose back is that "living" built on?

``With high energy consumption goes a high standard of living. Thus the enormous fossil fuel energy which we in this country control feeds machines which make each of us master of an army of mechanical slaves. Man's muscle power is rated at 35 watts continuously,'' little more than you are working, but you have got to sleep, ``or one-twentieth horsepower. Machines therefore furnish every American industrial worker with energy equivalent to that of 244 men, while at least 2,000 men push his automobile along the road, and his family is supplied with 33 faithful household helpers. Each locomotive engineer controls energy equivalent to that of 100,000 men; each jet pilot of 700,000 men. Truly, the humblest American enjoys the services of more slaves than were once owned by the richest nobles, and lives better than most ancient kings. In retrospect, and despite wars, revolutions, and disasters, the hundred years just gone by may well seem like a Golden Age.''

from Hyman Rickover in 1957.

[Lucky Luciano]

99. You still have not told me what "living" is!

I am curious how it is that you find happiness. I am guessing that you are either extremely happy (10% probability) or terribly unhappy (90%), but nowhere inbetween.

I think you might be very happy because of some enlightenment that I am not aware of...which is why I want to know what you consider living...simple things actually work for me as well.

I think you are most likely very unhappy because it will be difficult for you to find common ground with people in your community. This leads to loneliness which is the cause of most unhappiness. That is why I think a commune style of living would work well for you if you are not already there. You would be with a whole bunch of other people that share your values and there would never be loneliness. Additionally, you don't need credit and you are totally self-sufficient and not gorging on energy the way the rest of the U.S. does.

That said,

I knew I should have looked for the Carlin bits on Youtube...they are there. I think Carlin is the absolute shit!

http://www.youtube.com/watch?v=no40BlyA3YQ Part I 10 min
http://www.youtube.com/watch?v=HpIQG3g03hw Part II 5 min

[Jcrowley]

101. Happiness?

I see that as nothing worthy of great attentions and a rather facile need that is really predominantly an objective and impossible desire of America, though it is not exclusive to Americans it resides here as some penultimate goal as in no other place.

In fact the pursuit of happiness rings rather tinny to my ears and as one embarks upon this pursuit it results in never ending desires which in turn leads to a manic cycle of ups and downs that is part of the character of our culture. It leads to many addictions and in fact to much "unhappiness." We see the evidence all around us.

What other culture has such high rates of depression, suicide, obesity etc?

Your speculations on my condition are just that and they are quite inaccurate. As we live near enough you are welcome to come visit anytime and see for yourself first hand.

I would say judging someone on the basis of a few internet exchanges is pretty ridiculous wouldn't you agree?

I do not need credit. This is true. I am not self-suffcient, we all are attached to this slave economy to varying degrees. I am not gorging on energy the way the rest of the US does. That is true. What the rest of the US does is grotesque. It kills people.

You are completely accurate in the assumption that I find little common ground, in fact none, with what passes for American culture, but fortunately I am able to find many other "internal exiles" (LOL) here in the 4th Reich and we commiserate, commune and I assure you have more romps than the strivers and achievers.

In agreement on Carlin. One of the premier social critics of our time who I assure you is not "happy" per se and has lots of anger but is at the same time hilarious and fun-loving.

By the way spring is great here and hands will be needed in the garden. Good local greens and local ale.

Live simply so that others may live. There's alot in that little saying.

More to the point none of this is about you, me or the individual it has more to do with our collective obligations to the future as well as our shared responsibilities in the present.

[IntravenousDemilo]

66. Well, I do have a debit card.

I got it when I opened my chequing account. It can be used for purchases in Canada, or in US bank machines, but not at US shops, because there's no MasterCard or Visa symbol on it.

As to interest, I don't think CC (or any other) companies should be allowed to charge any more than one per cent above the going prime rate.

Come to think of it, we used to have windfall-profit laws as well, up here anyway. Ah, for the good old days!

[nadinbrzezinski]

68. My dad gave us a car

he has never bought anthing on credit (and they don't live here)... when all was said and done we saved about 5K, and yes HE PAID cash... though he does have a checking account.

The faces at the dealership were... ahem astounding... but that car is fully paid for

(honda civic hybrid, and we love it!)

[barb162]

61. They're not "evil". Spending like there's no tomorrow on cards

and getting in debt you can't easily pay off is stupid. I heard someone on TV say today she had 60,000 in credit card debt. Now that could have been medical bills but she sort of indicated she was buying lots of clothes. I have had credit cards for years and pay them off every month in full so they can't nab me on interest charges.

[Art_from_Ark]

62. That's all fine and good, but

Sometimes a credit card can come in VERY handy, like if you're stranded somewhere and don't have much cash.

Or if you want to rent a car.

Or if you pay in full each month, and the credit card company gives cash or useful points back.

[we can do it]

73. A Lady Was On the News This Morning, Saying What Immense Amount of Debt

she had starting with student loans, she said, "I knew I had some debt but I just kept charging and getting loans and I never realized it could be so much..." What a freaking idiot...don't keep track of what you spending for YEARS - then cry about...give me a freaking break - so its imbeciles like that who are partly to blame with the problem as well as the predatory lenders.

[trekbiker]

76. huh?? what is "real money"???? I love credit cards. Credit is the way

our modern world works. If people cant manage it then they have only themselves to blame. We're all "adults" arent we? I pay for virtually everything with a mastercard, food, gas, bills, material purchases... everything. I've never paid one dime of credit card interest in my life. The convenience, the 20 day float... I love it. AND, my mastercard pays me cash back on purchases, $300 a year. I remember back when I had to pay them just for the convenience of a card, something like $50 a year. Now, the card is free and they pay me $300 a year to use it. Incredible. As far as credit ratings and building a good credit history, that takes care of itself if you're are semi-responsible. And there is a big advantage to having good credit, lower interest rates, lower payments. Credit matters

[Karenina]

2. And what happens when the ARMs get tweaked?

:popcorn:

[Greyhound]

4. So after the 50% devaluation the dollar will be worth $.02 whereas

it is now worth $.04. As many pointed out in the 80's, all that raygun and the politiwhores did was to defer and capitalize the inevitable correction that we were nearly through. Of course it will be much worse now than it would have been then, and I'm certain that we can count on our fearless leaders to delay it further and make it that much worse when it can no longer be delayed.

OTOH, there is always the possibility that we will experience some huge disaster (something like NOLA X 100, or a nuclear exchange) that will make the whole thing irrelevant.

:kick: & R

[cspanlovr]

6. They're probably hoping for a disaster so they won't be blamed.

[Greyhound]

9. I'm just cynical enough to believe it. n/t

[John Q. Citizen]

8. This is what happened in the late 70's early 80's with inflation. Inflation was used

to pay off the debt from WWII.

Good post.

[sandnsea]

23. No, Vietnam

Kennedy lowered the tax rates because the WWII debt had been paid, is what I was taught. The 70's was Vietnam and various social programs. Or possibly just what happens as a result of Republican economies, I'm not sure.

[roamer65]

24. I saw a chart once...

and just about every war we've been in has significantly eroded the value of the dollar. WW2 the erosion was not as bad, primarily due to FDR's very stringent price control mechanisms. War profiteers were pursued with vigor as well in WW2. The two wars that did the most damage to the dollar were WW1 and Vietnam, when there were no controls.

[Odin2005]

37. My understanding us that LBJ tried to have both guns and butter.

The result was inflation and us being forced to go off the gold standard. So, in a way, the hyperinflation of the 70's was a result of the Vietnam War.

[roamer65]

41. ...correct and Nixon allowed it continue...

...and escalated the war. Nixon's abandoning gold-dollar convertibility was the final nail in the coffin. That was a dark day in 1971.

[John Q. Citizen]

47. Buy War Bonds! They were coming due, (40 year) and were paid in

deflated dollars is how I understand it.

[sandnsea]

53. That would be 1980's

They were ten year bonds, so they started maturing in the 50's. They earned interest for 40 years. I don't see how the 70's, specifically, could have anything to do with the war bonds or the war debt.

http://www.savingsbonds.gov/news/pressroom/pressroom_com1mud.htm

We were doing pretty good on the national debt by 1960 too, at least compared to now.

http://www.die.net/musings/national_debt/

[Warpy]

10. The dollar has already been devalued nearly 40%

but Joe Sixpack never realized it because China has tied the yuan to the dollar: when the buck rises, so does the yuan, when the buck falls, so does the yuan. They do this to keep their labor looking a lot cheaper than ours so that stupid, greedy and short sighted CEOs will continue to move whole industries over there while they leave US workers and US factories abandoned.

Until and unless China sees a threat to its own currency from the drop in the dollar, we're stuck. When they see the threat and allow the yuan to float, we're stuck with severe inflation and nothing to trade in return for goods and services from elsewhere, and little to supply the domestic market.

Our situation is far graver than they know.

[Esra Star]

11. The reason Saddam is dead is because he was serious

about stopping Iraq's support for the US dollar.
I still think the Euro will continue to make inroads over time.

[redqueen]

12. This kind of thing gives me nightmares.

Makes me want to leave ASAP.

[originalpckelly]

17. I don't know if everyone gets this, but devaluing the dollars means...

you devalue debt. If the dollar loses 50% of its value, then the debt does as well. Even though the debt may have the same amount of dollars, the dollars with be worth less. So actually, if the dollar decreases in value that's a good thing for those with lots of debt.

[htuttle]

20. Sure it's a good thing -- Unless you have to...um...eat

What is going to surprise Americans the most about dollar devaluation is discovering how little is actually made or grown here in the US nowadays.

[originalpckelly]

36. Huh? We feed ourselves....

and in fact we have enough food to send around the world as exports. China is a prime receiver of our food exports.

[roamer65]

39. Yup, a food surplus due to petrochemical-based fertilizers, herbicides and pesticides.

I grew up on a farm and saw all the petrochemical-based junk that it takes to grow crops. If oil and natural gas were to disappear, our agricultural abundance would vanish overnight. Add in the fact that most current cropseeds are genetically tuned to these petrochemical mixes. :yoiks:

[lectrobyte]

58. That may have been true 20 years ago, but I thought in dollar terms, the

amount of food imported to the U.S. surpassed the amount exported in 2005. Another one of those little things that no one is making a big deal out of. Lots of produce from Mexico, beef and seafood from South America, etc.

[roamer65]

22. I get it and use it to my favor.

For instance, I have taken CC loans at 1.9%. Then I pay it back in devalued dollars, as the inflation is destroying the original worth of the loan at 1.9%.

[Double T]

18. The grand plan for the wipe-out of the middle class continues..........

as the US dollar declines toward becoming and then being 'worth-less' with each passing day. dollar stores and wal-mart supercenters continue to be constructed at a record pace as they function to not only provide lower cost goods, BUT also serve to lower the standards of the products purchased by the masses that can no longer afford anything else. The american worker and the middle class have been sold-out by their government and the wall street 'traitors' that suck the very existence out of every corporation by closing American plants and moving operations overseas. Ever increasing trade deficits and national debt are NOT sustainable for much longer; much like global warming, the payback for our evil deeds is going to be a REAL SERIOUS BITCH!!!

[KansDem]

27. I've often wondered if we now have the "perception of prosperity" in this country

Or should I say the "illusion?"

dollar stores and wal-mart supercenters continue to be constructed at a record pace as they function to not only provide lower cost goods, BUT also serve to lower the standards of the products purchased by the masses that can no longer afford anything else.

We don't have the prosperity my parents enjoyed following WWII, so let's provide cheaper and cheaper goods that make it seem we are prosperous. As wages fall and health care costs creep up, among other considerations, we achieve the "illusion of prosperity" by buying such goods that ape what our parents bought. The quality is crap but if our living rooms and garages look like our parents' living rooms and garages, we don't mind...

[roamer65]

30. A country of two dollar millionaires.

It's pretty much all on paper.

[originalpckelly]

38. Actually, bankers lose big time in all of this, so do investors...

because they have a set amount of money which must grow in order to keep or increase its value.

Bankers usually own debt, as do credit card companies, inflation hurts them.

On the other hand it also hurts people saving for retirement, because the money saved away loses its value.

That's unless they speculate on the value of the dollar, in that case their money would eventually increase in value as the dollar returns to its normal value.

[Jim Warren]

77. Yes

and the main operating principle of the Greenspan years at the Fed was to protect that debt from inflation.

[Double T]

96. Harsh reality check...........

the US dollar will NEVER EVER return to its 'normal value'; the political and corporate greed-mongers have seen to that!!

[NotGivingUp]

71. you're right. most things you buy today are crap. you'll be having to buy it again very shorty.

[we can do it]

74. Exactly, My Brother Just Had A Crappy Plastic House Built In 1998, He Has Already

had to replace his washer, dishwasher, microwave and I don't know what else. All were new when he bought the house. I bought a 75 year old brick house the year before, brought my old appliances with me, they are all still working, except for the 20 some year old dishwasher that was here when I moved in - it was still working great but this year it started leaking so I had to replace it.

[JNelson6563]

21. Good article, great chart!

Scary facts. We're doomed.

This would've been great in the Stock Market thread in the LBN forum. Thanks for posting.

:toast:

Julie

[redacted]

25. Thanks again Jcrowley; I almost posted this article on Tuesday

but ran out of time on the first day back at work from a 3 day weekend.

Also, their latest podcast posted on the FinancialSense home page is really interesting. It's about 3 hours but easy to skip around the topics. They talk about:

--the current (manipulated) oil price situation,

--the arctic cold blast as due to volcanoes exploding in Russia,

--why the Fed absolutely must cut interest rates at their next OMC meeting, and

--the key indicators to watch that will warn of an impending recession (especially the rate of change of aggregate credit in the economy).

All this with no commercials. Some topics are controversial, and you might not agree with all their conclusions, but it's well worth the time to listen. I think that we DUers might be wise to periodically monitor what these folks are saying.

[Odin2005]

44. Exploding volcanoes in Russia?

:wtf:

[redacted]

52. Exactly! WTF-That's what I thought before I heard the explanation.

Here's the podcast; select "3rd Hour with Jim & John"
http://www.netcastdaily.com/fsnewshour.htm

Transcript is here:
http://www.financialsense.com/fsn/BP/2007/0113.html

Relevant segment:

Other Voices: Evelyn Garriss, Browning Newsletter

<snip>

We have something else going on besides just the El Niño. And it's something that I warned my clients about in my last newsletter. Right around Christmas, we had two volcanoes go off. They were moderate size volcanoes in Russia. And why do I even care? I mean they didn't hurt anybody. But they put debris 6 miles high. Now, that's not high enough to put into orbit, but it is high enough to put a lot of dust in the air. And the dust does two things: one is it blocks incoming sunlight, and the second is it absorbs water. So you had this cold wet air mask. And because it was only a six-mile high eruption, it wasn't high enough to affect the climate for years, but it was enough to affect climate for a short period of time.

And this happened right around Christmas and I warned my clients in the first two weeks of January: sometime during that time, what goes up, must come down. And you could expect that that cold air mass would be hitting North America, entering into the US and then it would be affecting US weather. And we've seen that cold air now come into the center of the United States. And lucky California, it's being pushed your way and they’re talking now about freezing temperature and some of the citrus growth over the next three nights. And then that cold air is going to be eventually swept East. It's very, very likely that once that air mass from the volcano is swept out to see then you'll start to feel a return to normal El Niño conditions for another few weeks. But that’s sometime here, and if we hadn't had this volcano explosion I would have said very late January to early February you could expect that cold weather will start to return and we can start having a very cold end to this winter. So just when everybody has decided that global warming has hit and that it's always going to be warm, we're going to see some cold weather return back to the east. <38:18>

[Jcrowley]

57. Have you seen

an article titled "What's The Fed Up To With The Money Supply?" that was circulating about a year ago or so? Hey when the Fed says it is no longer going to disclose M-3 at the same time there is a shift in personnel one has to raise an eyebrow.

You can google the title and you'll find some interesting stuff that speaks volumes as to how we are being sold down the river.

:hi:

[Warren DeMontague]

28. .

.



.




.



.

[Jeffersons Ghost]

29. K&R and it will be blamed on those "Democrats in charge" when things colapse.

[we can do it]

31. Ok - So If This Happens. What Would A Person With No Debt and Some Savings Want To Invest In?

Help!

[roamer65]

32. Gold, silver and certified & graded rare coins.

This should be part of your investment portfolio EVEN if you have debt. The best way to buy silver is pre-1964 US silver coins and 1965-1969 40% silver Kennedy half dollars. They have silver content, plus the face value to fall back on in case silver crashes. For instance, one 40% silver Kennedy half will always be worth 50 cents (its face value). If you choose to invest in rare coins, do your homework first, so you don't get taken.

[we can do it]

33. Wow - Would That Include Precious Metal Mutal Funds?

So real estate at below appraisals would not be a good idea?

[roamer65]

34. On precious metal mutual funds...

Here's the question you have to ask yourself. If the dollar hyperinflates and society begins to break down, will I be able to access the fund? Probably not. If I store the metals and/or coins in safety deposit boxes, will I be able to access them in rough times? Probably not. Safety deposit boxes are also much more susceptible to government confiscation. It does not hurt to have a stash, physically available, just in case. If you're just looking to try to preserve wealth in dollar terms, the precious metal funds may be ok. Maybe a mix of a fund and physical metal, eh? Another reason I advocate pre-1964 silver coins versus silver bullion is that the silver coins can be insured, whereas bullion often cannot.

On real estate, I don't know. Not a real estate specialist. I would see one before I, personally, would do it.

[we can do it]

42. Thanks, That Makes Sense. The Greedy Bastards Totally Piss Me Off

We have been trying to responsibly not incur debt, we've paid our modest house off and have been saving in 401K's and IRA's...so now we could watch it all go down the shitter because the greedy bastards (and stupid people who keep piling on debt for mcmansions, supersuvs and all the other consumer bullshit are going to stick us with their debt???) Fuck them all....sorry for the rant.

Ok - I will check into metals and possibly real estate, my thinking on real estate (without incurring debt) is it has to be worth more than money if the dollar drops. I realize we will need to keep some liquid funds. God this just makes my head spin....

[roamer65]

45. A good mix of all is the best I've been told.

You've done really great to get the house paid off. That's what a lot of financial advisors advocate, so if only one spouse was left for some reason, they wouldn't hafta worry about mortgage payments. Research is good and watch the markets and where the money flows. I've tended to agree with many that the "anti-dollar" is gold. That's where a good chunk of the money really flows when the dollar gets shaky.

[we can do it]

46. By Real Estate I Mean, Somewhere I Could Live with A Couple of Acres To Grow Some of My Own Food

We have a friend who would like to rent our current home - and possibly buy it later on. I am totally into organic gardening, and I think we could save a bit and be healthier by growing a good portion of our veggies and fruit.

[roamer65]

48. Good move on growing your own food.

My family raised our own beef on our farm for many years. There was a very distinct difference in quality and taste. We fed real grains and not all the fancy, high powered feed additives.

[we can do it]

49. We Used To Keep A Couple of Cows for Beef At My Grandma's When I Was A Kid

We also had a garden, yum.... We grew beans, potatoes, tomatoes, strawberries, raspberries, peppers, onions and I can't remember what else...we did some canning and freezing. I always thought our home grown stuff tasted best. I can't believe all the mystery ingredients in "food" today, no wonder cancer is so prevalent...

[MilesColtrane]

85. I looked into putting some money into a precious metals/mining fund...

...just the other day.

To my dismay, the Vanguard fund closed to new investors last February. (1 yr. rt. 34.3%, 5 yr. rt. 34.72%, 10 yr. rt. 13.92%)

I guess a lot of people are feeling nervous.

[originalpckelly]

40. A foreign currency like the Euro...

if the dollar loses its value, and you had your money in Euros, the absolute value of your money would stay the same, or eventually increase in value as the value of dollars comes back up.

So you invest in Euros during the fall of the dollar, then when the value of the dollar seems like it is bottoming and it starts to return to its old value, you convert your money back into dollars. As the value of the dollars rise, so to does your money.

This is called currency speculation, it is a risky investment, but it is possible to make billions on it, just ask George Soros who made a ton of money this way.

[we can do it]

43. Another Good Idea...Risky, Yes, But So Is Having Your Savings Disappear

[wiggs]

51. How about an index fund for international stocks?

Wouldn't this not devalue with the dollar, since we are talking about the value of foreign companies that are not based on the dollar?

[we can do it]

59. That Also Sounds Reasonable....

anybody else have a comment on this?

:)

[wiggs]

64. I was looking into it, now I'm hesitating because international stocks

are way, WAY up over the last couple of years.

[redacted]

54. .....

[rman]

67. k&r

[GreenZoneLT]

69. The end is near, blah, blah, blah

Yeah, the markets totally don't take the risk of monetary devaluation because of excessive debt into account. :eyes:

Sounds like gold-bug nonsense.

[LeftCoast]

70. What's his PhD in?

I can't find anything on him except that his company sells investments. These two things, plus the rather doom and gloom forecast make me more than a little suspicious about this fellow.

:shrug:

[tjwash]

82. NO NO!! He's right! That's why everyone must sell everything that they own...

...buy gold silver and platinum with it, with his investment companies help of course (it's a small commision...promise), and then hole up in a log cabin in Montana with a shitload of guns and kill your own food. :eyes:

The end is coming!!!1!!11 I'm SERIES!!1!!!!111ONE!!

[ProfessorGAC]

84. More Than A Little Suspicious?

Just more than a little. The fact that his conclusions have ZERO basis in macroeconomic theory makes me a LOT of suspicious. Sounds like a guy who's trying to scare up the drones to invest in currency so his speculator clients can make a killing.

The Professor

[generaldemocrat]

79. Man you have no idea. I just spent the last two years abroad......

One British Pound equals $2. One Euro equals $1.30. Our dollar is officially worth toilet paper.

[tjwash]

83. The Brit pound has always kicked the Dollars ass, even in...

...the economic "good times" in our country. The Euro opened at 1.12 the day that it became a currency and went up steadily afterward. However, remember one thing though, if Germany ever pulled out of the EU the Euro would fall faster than the Peso did in the late eighties.

Toilet paper? That's why half the worlds currencies are pegged to the U.S. Dollar because it is worth toilet paper? Come on...

[ProfessorGAC]

80. Sophomoric Nonsense

While i do not disagree in principle that we have an unsustainable situation fueled by debt, the apocolyptic economic vision he portrays is utter nonsense.

It's not supportable by any monetary theory or macroeconomic models, and i've seen hundreds. (I've built more than a dozen myself.) And, it lacks the fundamental realization that the asset to debt ratio of this country is only about 40% of the threshhold that has actually been employed by debt-blighted countries in the past. The total capitalization of the United States is over $28 trillion dollars (Statistical Abstract of the United States, 2005 Edition). Our capital to debt ratio is greater than 2. When it gets to 0.8, i'll start worrying.
The Professor

[NewJeffCT]

88. Thanks for being the voice of reason on economic issues

As always.

I think I read somewhere within the past year or two that despite the massive increase in debt under Bush, our Debt-to-GDP ratio is still better than most of the other so-called 1st world nations, including Japan (who is at a ratio of 1.5 to 1, while we are 'only' at 0.65), Germany, France, Italy and others.

Our overall number is the highest because our economy is the biggest overall.

[pitohui]

89. thanks professor

i'm glad to hear a voice of reason, my gut reaction to the piece was what crap! and i'm glad to hear that instinct may be congruent w. reality in this case

in my humble experience on this earth most of these "last train out" guys have been wingnuts (pretty often mormon wingnuts) pushing investment scams

[BluePatriot]

87. yes...Yes!!! Thank you!

I have so long looked for a discussion or viewpoint where some economist brings up the fact that all the spending figures are based on credit card debt. Thank you for sharing this with us.

[Jcrowley]

90. The role of the petro-dollar to underpin American economic hegemony

The answer is the unique role of the petro-dollar to underpin American economic hegemony.

How does it work? So long as almost 70% of world trade is done in dollars, the dollar is the currency which central banks accumulate as reserves. But central banks, whether China or Japan or Brazil or Russia, do not simply stack dollars in their vaults. Currencies have one advantage over gold. A central bank can use it to buy the state bonds of the issuer, the United States. Most countries around the world are forced to control trade deficits or face currency collapse. Not the United States. This is because of the dollar reserve currency role. And the underpinning of the reserve role is the petrodollar. Every nation needs to get dollars to import oil, some more than others. This means their trade targets dollar countries, above all the U.S.

Because oil is an essential commodity for every nation, the petrodollar system, which exists to the present, demands the buildup of huge trade surpluses in order to accumulate dollar surpluses. This is the case for every country but one -- the United States which controls the dollar and prints it at will or fiat. Because today the majority of all international trade is done in dollars, countries must go abroad to get the means of payment they cannot themselves issue. The entire global trade structure today works around this dynamic, from Russia to China, from Brazil to South Korea and Japan. Everyone aims to maximize dollar surpluses from their export trade.

To keep this process going, the United States has agreed to be 'importer of last resort' because its entire monetary hegemony depends on this dollar recycling.

The central banks of Japan, China, South Korea, Russia and the rest all buy U.S. Treasury securities with their dollars. That in turn allows the United States to have a stable dollar, far lower interest rates, and run a $ 500 billion annual balance of payments deficit with the rest of the world. The Federal Reserve controls the dollar printing presses, and the world needs its dollars. It is as simple as that.

http://fergusonreport.myonlinepublication.com/article.asp?pop_id=161&article_id=69

[Esra Star]

103. and that's why Saddam is dead. n/t

[louis c]

105. If this is accurate, you're better off borrowing than saving

When a dollar is worth 50 cents, you're better off owing and paying with a cheaper dollar than having the money in the bank worth half as much