The dollar is NOT going to collapse...YOU need to wake up

[Kevin7D]

and another

PM Putin suggests Russia, China ditch dollar in trade deals

http://en.rian.ru/russia/20081028/117991229.html

 

[Kevin7D]

Thanks

I tend to agree with you Kevin7D, people don't seem to understand the seriousness of the situation we are now in. Actually, I expect a serious event by July of 2009. We don't have that long to watch and wait as that time approaches. Time will tell. I just hope those who doubt will still get themselves prepared for the event even if it doesn't happen.

Oh and by the way.... welcome to the Ron Paul forums.

Thanks for the welcome. I do a lot of reading, but not a lot of posting. I figured it was time to join in the conversations.

Preparedness is definitely key. Even if it doesn't happen for another decade it's good to be aware and ready. The thing is, if these types of talks [removing the dollar from trade] aren't indicators of the "collapse" happening soon, then I don't know what is.

The way I understand it is we're been able to get away with lots of irresponsible decisions with our currency because of our reserve status. With out that, the house of cards comes down.

 

[Intuition]

Interesting blog post on www.nakedcapitalism.com entitled "CDS Pricing in Increasing Treasury Default Risk":

...the cost of insuring against a US government default has risen by 25 times in little over a year

Implications? Effects? The post discusses other evidence showing possible signs of distress in the T bond market, including erosion at recent auctions. I'm not sure what to make of this.

 

[Kevin7D]

Interesting blog post on www.nakedcapitalism.com entitled "CDS Pricing in Increasing Treasury Default Risk":



Implications? Effects? The post discusses other evidence showing possible signs of distress in the T bond market, including erosion at recent auctions. I'm not sure what to make of this.

I would think they are just basing the CDS spread on the US debt versus income. More indication that the dollar is becoming riskier.

The post also mentions:

"When measured as a percentage of GDP, the US national debt is expected to pass 70% next year, which, though much higher than recent years, is still short of the record 122% registered in 1946, at the end of the Second World War. Some observers point to this comparison as an argument for the sustainability of the current position."

The problem is how GDP is measured though. They're using GDP to measure economic strength and calling consumption wealth. But by now we all know that isn't an entirely accurate way to measure wealth. And what makes up a lot of today's GDP is our consumption, unlike in the 1940s when we were still very industrial. I don't see how there can be sustainability today. In the 40s we had production and manufacturing to fall back; we don't now.

The GDP is also adjusted to the phony CPI.

So I am curious as to what our true GDP is today assuming the lack of production, an enormous trade deficit, and the real rate of inflation. We're probably way worse off then we're led to believe.

From Wikipedia:

Simon Kuznets the inventor of the GDP, in his very first report to the US Congress in 1934 said[2]:

...the welfare of a nation [can] scarcely be inferred from a measure of national income...

 

[Anti Federalist]

Stagflation.

Study. Use the seventies as your starting point.
​

Give Oz a cigar for posting the word that, I suspect, most of the 20 something college students here haven't heard of and certainly haven't lived through.

"Stagflation", a condition, that by all rules of economics, cannot exist.

But it did.

Rising prices coupled with decreasing demand.

Look at the debt charts that have been posted. It's no accident that the rising national debt started to explode around 1980. Volcker and Reagan had no choice, to combat "stagflation" caused by the complete "uncoupling" of the dollar from gold under Nixon in 1971, but to tighten monetary supply and deficit spend.

The only reason that inflation hasn't been more pronounced at the consumer level is because of the borrowing and total de-industrialization to places like China.

But now, faced with an unprecedented meltdown, the Fed is at the point where it will have no choice but to lower interest rates to zero. At that point, there will be no incentive for foreign nations to buy up our debt.

At that point you will have stagflation that will make the period of stagflation in the late 1970s look like a walk in the park.

And that equals "game over".

Further, to put a timeframe on a currency collapse, when in a such an untenable situation as we are, is foolish. It can happen overnight. Just ask the Russians or Argentineans.

If I had told you in 1988 that by 1992 there would be no more USSR and Berlin Wall, you'd have thought me nuts as well.