Let's talk the U.S. dollar. Why no collapse?

[Dunedain]

For the last 5 years I've been listened to how the U.S. dollar is doomed. The U.S. dollar is going to collapse. It's history...it's over. There is nothing that can prevent the fall of this global currency. So far it has depreciated VERY SLIGHTLY compared to other currencies and commodities.

Because none of this doom and gloom has come true I need to ask the question:

What is going to replace the U.S. dollar? Not gold...there is no plan for that that I can tell. And gold is nowhere compared to it's highs in the 80s when large financial institutinos hoarded gold to drive up the price.

Other currencies are not going to compete with the U.S. dollar. Almost all countries have a central bank that uses a fractional reserve banking system. Canada is printing money like crazy. China, that wonderful country that is so economically stable is printing more money than Satan.

http://www.businessinsider.com/chin...ess-treats-this-as-a-glorious-success-2009-12

200 billion for the Chinese is trillions for us due to our superior productivity.

So let's get serious about the U.S. dollar. Why has it not collapsed? What is going to happen? Where is it going to go and why?

 

[TheConstitutionLives]

This topic probably goes here:

http://www.ronpaulforums.com/forumdisplay.php?f=204

 

[Pericles]

The value of the dollar to other currencies is relative. Other countries are screwed up worse than the USA is.

 

[low preference guy]

In the decades in the following graph the dollar lost about a third of its value compared to other currencies.

Since 1913, it has lost more than 90%.

You say "Not gold...there is no plan for that that I can tell." There is no need of a plan. All that matters is supply and demand. Demand is increasing, as more central banks are buying gold. Supply is not going to increase, because governments can't print gold. Gold is so scare that even if demand goes down it is going to keep some value.

Please take your attention to the fact the the current completely paper based dollar has been in place only since 1971. It doesn't even have 40 years. This period of a currency absolutely backed by nothing will be since as an aberration in history.

As far as when the dollar will collapse, it can only be estimated. After the recession of 2001, printing money bought us 7 years of prosperity before another crash. The bubbles after that however will be shorter, because the fundamentals have worsened. In the best case scenario of 7 years, the dollar will crash in 2015. If it takes half that time, 3 1/2 years, it will crash in 2012.

 

[Epic]

Cause we are on the other side of a credit buildup.

The effective money supply builds up during the boom because the fractional reserve system pyramids debt on top of debt, and then during the bust the multiplier works against you, rapidly decreasing the effective money supply, and making each dollar control a higher percentage of the effective money supply.

long term though, dollar and other fiat monies are screwed.

 

[Dunedain]

Since 1913, it has lost more than 90%.

Thank you. I was hoping someone would mention this so I could ask another question.

You need 2,000 Korean won to get on a bus in Seoul, Korea. They've devalued their current a lot more than ours. What's the big deal? U.S. wages have risen much more than 90% since 1913. So we're better off right?

 

[low preference guy]

You need 2,000 Korean won to get on a bus in Seoul, Korea. They've devalued their current a lot more than ours. What's the big deal? U.S. wages have risen much more than 90% since 1913. So we're better off right?

If affects us because if you keep your dollars and don't spend them, when you decide to buy them you buy a lot less. If you kept gold, your purchasing power would be maintained or increased.

If we are better off, we would have been even better if our money kept its power. Remember that the devaluation is a transfer of wealth from all of us to the politically well connected, i.e., we're being robbed.

Wages might have risen, but we are not enjoying the standard of living increase that all these technological advances should've brought to our lives. That is, again, because we have been robbed and our wealth have financed a military empire and a welfare state.

Just give it time. I'm sure when the next President swears in you won't be saying "we're better off".

 

[Dunedain]

long term though, dollar and other fiat monies are screwed.

4

ALL moneis are fiat. Every single one. Why is the dollar singled out? I'm not trying to be difficult, I'm just trying to understand why the U.S. dollar is screw singularly.

 

[Dunedain]

If affects us because if you keep your dollars and don't spend them, when you decide to buy them you buy a lot less. If you kept gold, your purchasing power would be maintained or increased.

If we are better off, we would have been even better if our money kept its power. Remember that the devaluation is a transfer of wealth from all of us to the politically well connected, i.e., we're being robbed.

Just give it time. I'm sure when the next President swears in you won't be saying "we're better off".

Same as the Korean won, right? Same as the Canadian dollar....same as EVERY other currency? The American dollar IS NOT unique.

 

[low preference guy]

Same as every paper currency. What we will witness is the end of paper currencies, which we have been having only since 1971.

 

[ctiger2]

Thank you. I was hoping someone would mention this so I could ask another question.

You need 2,000 Korean won to get on a bus in Seoul, Korea. They've devalued their current a lot more than ours. What's the big deal? U.S. wages have risen much more than 90% since 1913. So we're better off right?

I think you're confusing purchasing power with nominal rises in the USD.

 

[Dunedain]

Same as every paper currency. What we will witness is the end of paper currencies, which we have been having only since 1971.

The value of the entire world is measured in paper currency. What is going to replace it? gold is just another commodity measured in terms of paper currency. It isn't going to be a method of exchange. What is going to happen? We need to be able to put our brains together to figure this out. It could net us a lot of money! o.k. now you've made me reveal my real purpose for this thread...

 

[low preference guy]

4

ALL moneis are fiat. Every single one. Why is the dollar singled out? I'm not trying to be difficult, I'm just trying to understand why the U.S. dollar is screw singularly.

Because it's the reserve currency. The dollar has a greater potential of being devalued than any other currency. Half of the Canadian dollars are not owned by non-canadian citizens. More than half of all dollars, however, are owned by foreigners. Thus, if there is a run, the dollar has more potential for devaluation.

The reserve status allowed the dollar to enter in a bubble, so it will go down first. However, probably all other paper currencies will be also hit because they are backed by dollars, which will be wiped out.

 

[low preference guy]

The value of the entire world is measured in paper currency. What is going to replace it? gold is just another commodity measured in terms of paper currency. It isn't going to be a method of exchange. What is going to happen? We need to be able to put our brains together to figure this out. It could net us a lot of money! o.k. now you've made me reveal my real purpose for this thread...

It's gonna be gold. It is what keeps its value. Have you ever heard of hyperinflation on gold? It can be devalued but it can never be wiped out. Please read my first post on this thread.

Also, you said "gold is just another commodity measured in terms of paper currency".

You can measure something against anything you want. You can price dollars in terms of gold. The standard currency however is the most used currency, which has always been gold in the absent of paper currency.

 

[TCE]

4

ALL moneis are fiat. Every single one. Why is the dollar singled out? I'm not trying to be difficult, I'm just trying to understand why the U.S. dollar is screw singularly.

All fiat currencies around the world right now are in different stages. If you have a fiat currency, no debt, and don't print massive amounts of the paper, your currency will be somewhat stable for the time. However, there comes a point when someone does gain control of the printing presses or a government decides to abuse cheap credit, and that is when the currency is doomed to collapse. We already have the Fed printing billions and trillions of dollars in aid, over $12 trillion in debt with more on the way, and we are borrowing every dollar we can. The minute China stops devaluing its currency, the dollar is done. It is just that the USD is at the end phase of its existence, while many other countries are in better shape.

 

[Dunedain]

I think you're confusing purchasing power with nominal rises in the USD.

good point. So what if the cost of a movie ticket was 10 cents in 1950. People got paid 20 dollars per week back then.

 

[Che]

so the U.S. is unique in terms of declining purchasing power in respect to other countries?

Ultimately in long term, all fiat money is screwed, paper money eventually returns to its intrinsic value - zero.

 

[ctiger2]

4

ALL moneis are fiat. Every single one. Why is the dollar singled out? I'm not trying to be difficult, I'm just trying to understand why the U.S. dollar is screw singularly.

It's Fiat currencies that are NOT backed by real money like Gold/Silver or a commodity that are doomed. The reasoning behind this is that the value of the fiat money backed by nothing is based on faith alone. Once the faith is lost, the value goes away. That's why the dollar is doomed. Currency collapses happen extremely fast. The dollar could go along fine for several more years as long as the faith in it holds out. Once people start seeing rapidly rising prices and make the connection that it's actually the value of their fiat money that's decreasing they will panic and that's when the crisis occurs. Don't worry, you'll get to witness it firsthand.

IIRC Canada and Australia are both commodity backed currencies and they should fare well.

 

[Rancher]

When the paper dollar goes to zero, real money will be valuable.

 

[Dunedain]

IIRC Canada and Australia are both commodity backed currencies and they should fare well.

Wait a sec. Canada was off the gold standard before the U.S. . Canada has a central bank that prints money...They have a fractional reserve system. Where did you hear this? We don't want to get misled here.

How is the Bank of Canada backing it's money via gold? how is Canada different from us? I'm not looking for an argument, I just want to be clear about this. I'm not sure myself, but I believe Canada is in the same situation we are in...in terms of currency that is. Their currency is NOT back by commodities...please, correct me if I am wrong.