Topic: [poll] - The U.S. Dollar Collapse Is Accelerating (Read 6301 times)

Though to be fair, you're not wrong, there's plenty of scare-mongering to go around. Things do seem to be accelerating though and unlike many things that appear to be getting crazy but are limited by negative feedback, there's ample evidence that those in control are actually in a positive feedback loop.

I guess that actually makes this somewhat fitting and appropriate:

Collapse relative to what?

To bitcoin? Obviously
To physical gold/ silver? Eventually, maybe 5-20 years from now
To other fiat currencies? Nope. It is a full on currency war right now with nations racing to the bottom (to avoid their debt responsibilities). So I don't think we will see any "collapse" of a single fiat currency relative to what our imaginations conjure when considering the word collapse.

Only if you pay your ISP in btc 

If the dollar collapses, will the internet stay on?

FUCK YEAH!

Because, unfortunately, TPTB (to use your acronym) can continue to keep this thing going for quite some time. I'm essentially arguing that the nasty stagflation situation can last for decades (largely because 100% QE eliminates a rational bond market, totally abusing interest rates, and therefore removing the mechanism that would force better behavior sooner). By contrast, the imminent hyper-inflation->collapse folks think we have 5-10yrs, max. I don't see how we get there in 5-10yrs with such a manipulated bond market. It'll ultimately be worse for humanity the longer this lasts, of course, but that's not the point.

I know your position is medium-term abrupt deflation. That could certainly be the case, but I still don't think it'll unseat the dollar in one dramatic moment. It'll be a slow, long-term process, involving decades of lost prosperity (and we may very well still prosper, just far less than could've been; a tragedy of waste, as it were).

Nobody can tell the investors to demand low rates or high rates. What they do, depends on the total situation as seen from the insvestors, including the words from the inflators.

Investors are you and me. Institutions are only collectives, ultimately controlled by you and me. If you and me don't save in a pension fund, it will have to disappear. If you and me regard company bonds as risky, their rate will go up.

There is nothing in the current global situation where we can draw upon experience from earlier times. We are in experimental territory. Mainstream economists say this, including the central bankers themselves. Experiment and forceful action.

According to the Austrians (yes, sue me), the manipulation of interest rate leads to malinvestments and reduced economic output. The longer it goes on, the worse.

Nobody knows when problems occur, or even what the bubbles are. But as soon as investors starts to distrust the bonds, the rates will go up. If people stops depositing in banks, there will be a sharp decrease in money supply, which will be met with more printing. When users of money starts to distrust the fiat, they will try to convert it to real goods as soon as possible, and price increases will start.

When it starts, there is nothing anybody can do.

then why did all these subprime lenders along with their debt get vaporized?  

http://online.wsj.com/public/resources/documents/info-subprimeloans0706-sort.html

along with Lehman, Merrill, Bear, Wachovia, Downey, IndyMac?

I agree, but I think it will take a long time for this to happen (possibly not within my lifetime), so I don't have a "sky is falling" attitude about it.


edit: To clarify, I dont think the dollar as a monetary unit will go anywhere, but I do believe it will fall out of favor as a reserve currency sometime in the future. 

No time is now! Fuck the high maintenance, always about to fall apart, fiat system. we have an alternative! its called BITCOIN,  know it, use it, love it!
 

Yes, clearly. My point is more that people are implicitly thinking that this is going to go the way of a typical debt/bond crises, but there's no mechanism for that in a modern fiat nation that's simply willing to print to buy it's own bonds. You don't get investors suddenly demanding higher rates (because guess who the "investor" is?), which is why the 3rd-world style sudden collapses happen.

Obviously even 0.00001% inflation could not go on forever. But <10% could go on for quite some time (yeah, I know I used 20% in my extreme thought experiment - sorry). Too many people look at the debt situation and predict collapse in the next couple years (or by 2020, or what have you). My point is that this is because they're failing to realize how insidious the dynamics of QE really are. Don't get me wrong - a major restructuring must happen - but it'll probably be another couple generations.

I didn't watch the whole video, but I've heard similar arguments before.

Here's what I don't understand (and I apologize if it's answered in the video): Why now?

We've have "unsound" money for decades.  Why now and not years ago?  Or, if the collapse is inevitable, why now and not later?  This can't be the first "stress test" our monetary system has had.

I hope the dollar collapses.  Then we can stop pricing goods and services in BTC/USD and instead just price in BTC.

You just defined exactly how an exponential process works.

>>> a = 1
>>> for i in range(1, 50):
...     print a
...     a = a * 1.2
...
1
1.2
1.44
1.728
2.0736
2.48832
2.985984
3.5831808
4.29981696
5.159780352
6.1917364224
7.43008370688
8.91610044826
10.6993205379
12.8391846455
15.4070215746
18.4884258895
22.1861110674
26.6233332809
31.9479999371
38.3375999245
46.0051199094
55.2061438912
66.2473726695
79.4968472034
95.3962166441
114.475459973
137.370551967
164.844662361
197.813594833
237.3763138
284.85157656
341.821891872
410.186270246
492.223524295
590.668229154
708.801874985
850.562249982
1020.67469998
1224.80963997
1469.77156797
1763.72588156
2116.47105788
2539.76526945
3047.71832334
3657.26198801
4388.71438561
5266.45726273
6319.74871528

Lol, wut? I may not know a lot about the world economy, but I do know the Earth does not have infinite resources. What makes you think that the US can keep even the stated 1.7% inflation rate going on forever? They can't keep inflating their dollars and expect the rest of the world to just take it laying down. Do you think China, Russia, and India will all just be like, okayface.jpg ?

No way in hell. The rest of the world is pissed that they are at a disadvantage and they all want to be in control of their own economies again.

Govs that issue debt in their own currencies (basically all modern economies) need to, over time, buy up most of their own bonds (with newly printed money) to drop rates on the debt to zero or nearly so, and then just print enough to cover ongoing fiscal deficits. So, yeah, fiat will continue to be devalued forever, but there's no inevitable exponential feedback loop (ie, an Argentina/Zimbabwe/Greece style bond crises) in there.

Think of it this way:
The US currently funds itself 2/3 through taxation, and 1/3 through debt issuance (which is mostly financed through QE; ie, direct bond buying). What would happen if the US just eliminated all taxation and funded itself ONLY through money printing? The money base would expand by about 20%/yr. Ok... 20% inflation forever. Again, no feedback loop mechanism. Just large, steady, inflation forever.

Edit: this collapses eventually as government slowly expands that 20% number, such that gov *becomes* the economy. But that's an entirely different issue than a debt/bond crises.

The question was not "will the dollar collapse NOW", but will it collapse at some point in the future. So it seams you don't disagree fully. The world is exremely pissed at the US scamming them (or at themselves having let it happen to them). They're looking at alternatives and developing them. It takes time, but the US Dollar is not here to stay.


According to shadowstats inflation (of price) is around 5.x% in the US currently. Official Gov't numbers are manipulated downwards.


Imo, one should keep some cash ready at all times in case of a drop in a desired asset. Storing wealth in USD (or other government-backed FIAT) is not a good idea. Monetary base inflation will lead to the value of the respective currency dropping, there is no question about this. And believe it or not, that's the intention of the people doing it (if you're receiving the fresh money first, the devaluing isn't much of a concern to you because price inflation will hit long after you've spent the money and turned them into some assets or other).

Currency wars, the race to the bottom.

I'm jealous.  I loved the brief time I spent northern BC a few summers back.

No the CAD is not doomed because Canada is a gold producer and mining for gold, silver etc., in Canada will boom. Here in Northern BC it is not uncommon for example for a contractor that used to service the lumber industry (US housing market) turn to service the mining industry instead.

Furthermore because of Canada's cold climate, I strongly suspect that Canada is also a net exporter of Bitcoins.

The problem is debt.  I think we can all agree on that.

Inflation: There is not exit this way.  Debt gets cheaper to maintain, saving is stupid, people continue to leverage up and buy real assets and stocks since they have negative incentive to save.

Deflation: There is a door here, but it won't be pretty.  We need to remove the bad actors by bankrupting them.  Lessons can be learned, and behaviour will improve.

But really neither direction will work so long as the government guarantees loans.  Banks will continue make bad loans because the government removes all the risk.  If you could borrow at 0.25% and lend at 4-6% with guaranteed repayment, how much money would you borrow and then lend?

Me.   I don't think the dollar is going anywhere, it's too tied into the global economy (too big to fail) so other countries have a vested interest in keeping it afloat. For now.

The inflation rate is at like 1.7% right now, so I'm not particularly concerned with "skyrocketing inflation leading to americas collapse" or whatever glen beck was on about when he was shilling for goldline.

It's also (IMO) the best store of wealth right now.  Precious metals are WAY overpriced right now (as is bitcoin) and I wouldn't be surprised to see all three crash relatively soon.

Then again, a vast majority of my money is in stocks right now (which is just as risky as the other ventures) so take my opinion for what it is.

What he means are the children that will either be politely working to make you neighborhood a nice place to live, or shoving a gun in your face.

Downward pressure for dollar:

Dollar bill printing. May be not very important, since dollar bills are a small part of the money supply.

FED balance decreasing. Equals money printing.

The US national debt. To some degree, the bonds are regarded as money by the public. Increases money supply.

Upward pressure for the dollar:

A possible decreasing trust in the bonds. Reduces the money supply.

A possible decreasing trust in the banks. Reduced deposits equals reduced money supply.

A possible increased demand for holding cash (dollar bills). Presses prices on goods downwards.

Other points:

If the prices start to decrease, this will be met with new price increasing actions from the Fed. A negative real interest rate may be seen.

Countries around the world seem to act more independently, everybody wants to lower the value their own currency. Everybody else responds in a downward spiral.

With interest rate unnaturally low, and subsidies to some industries like banking and housing, malinvestment occurs, destroying capital and reducing wealth.

Salary regulations, and special subsidies and regulations to fix whatever, reduces the dynamics of the markets.

Increase of government spending and subsidies increases GNP, but does not lead to real wealth. Fed action and national debt therefore has to increase even more.

Manipulation of markets paired with manipulation of public opinion on future wealth, future consumer prices, future interest rate and future job possibilities.

What happens first, price inflation or price deflation is uncertain and depend on politician action. In the end, price inflation and high interest rate is almost certain. When? Impossible to say.

Yeah, the best non-conspiracy guy I have found was this guy. He does an amazing job of explaining without saying, "The Illuminati are after us!" I will be showing this one to my family.

Another one woken up. Nice . Of course some of these nuts overdo it on the conspiracy theories (chemtrails anyone?). You took the red pill, now keep using your brain.

All govt-backed fiat currencies are on the same sinking ship. This is a currency war: the race to the bottom. It can't be stopped.

I started reading this thread mostly because of a comment on reddit which led me to a super long video about silver and the coming dollar collapse. I thought it was crazytalk because it seemed too easy to say, "We have too much debt."

I am now going to start stockpiling water and anything I can get my hands on.

This is the video which finally made me realize that people aren't joking or BS'ing:

http://www.reuters.com/video/2013/01/30/reuters-tv-how-the-fed-built-a-3-trillion-balance-s?videoId=240855423&videoChannel=117850

I have seen the debt clock, I have seen the articles about how china is buying assets, and I have no faith in our politicians ability to fix anything.

But it finally hit me like a ton of bricks. No one is listening to the writing on the wall or any voices of reason. It may not be today or tomorrow but this ride is is gonna stop.

...

Good news is we have bitcoins XD

When bitcoin saves the world from the conflict we will all have plenty of gold, silver, and weed .  And be allowed to have them .

I have plenty of weed, it is the others I need.

Weed has been under price for years now... fuck gold and silver buy weed and bitcoins.

I am no economist but... This is looking like it might be bad(Or good if you hold silver, gold, or bitcoins).

He's probably speaking as a US citizen and by "we" he means other citizens.

ARE WE MARRIED??

 

This is less of an issue than the fact that in the waste of that capital, it consumes goods services and labor.

For example, Instead of doing something that helps grow the economy, Billy Bob is standing around in the airport, frisking up innocent civilians. Jimmy Joe is managing Billy Bob and friends, Mary Sue is managing their payroll, Marky Mark is cleaning their crapper, Big Dave is building the office they all work in and *it's all for nothing*. Repeat this many, many times over. It's a tragedy of waste.

Yep... It's the bankers controlling the peanut butter prices, not the peanut farmers or the grocery store, who should be the two actors concerned with pricing.

talk to me about Libor.  it's only the most fundamental interest rate upon which all bonds are priced and thus every other risk asset.

Come now. It's totally possible to have a government that spends money without totally invalidating its nation's markets. If the US doesn't have a pricing mechanism, who's telling the grocery store how much to charge for my peanut butter?

The economic calculation problem is the wogly in command economies, not all government spending everywhere.

Yes, all government does is waste capital because it has no pricing mechanism to perform economic calculation like the market that arises from voluntary human action.

And it is the Austrian school which makes the assertion that you cannot guarantee things in economics because of human action which is inherently unpredictable. So, you misstated.

I know nothing about nothing but here it goes:


Kurgman's position isn't 'party hard on a credit card, let our kids pay for it'. It's a pragmatic observation that if you drastically slash spending in a sluggish economy to balance the budget, you'll inevitably tank the economy and thus also reduce tax income - leaving you with a deficit again plus a nasty recession. And a ginormous debt that we already have that our kids will inherit minus any means to ever pay it down.


Economy is not a zero sum game. Government doesn't (just) spend money on hookers and blow, it educates the next generations of our workforce, builds crucial infrastructure, funds early (commercially unviable) r&d that will power the economy that our kids will work in. That's not wasteful spending that our kids will have to pay for, it's a crucial investment in their future.


Now I believe that the economy is a ridiculously complex, recursive system that we just can't model. Both Keynesians and Austrians latched onto different bits that kind of make sense but neither can guarantee what's going to happen 10 years from now. Interestingly I think there's little disagreement about the effects of 'real' austerity - the death spiral of the current system. From what I can tell, that's kind of the goal of many austrolibertarians - they want to rebuild from there on their (somewhat idealistic) principles. Growing up on the wrong side of the iron curtain has left me deeply suspicious of idealists .


TLDR: we appear to be on course to economic Armageddon
Austrians: nuke it now and start over with gold!
Keynesians: poke it like we always did but harder! If that doesn't work, it'll nuke itself

I particularly like this quote from Krugman in the Rolling Stone article:


Lol wut? You mean, just let the kids in 10 years handle it!? Wtf is this? This is the opposition!?

From his opinion column in the NYT:


I was going to try and play devil's advocate in this thread, but I don't even understand what this man is saying anymore. I think I need to read some more about Keynesian economic theory before I can understand what is going on here...

Can anyone explain this to me?

until they lose control.

deflation is unacceptable!
governments will fight deflation with inflation, no matter what.

Here is a great article contrasting the two views.

i go over this alot in my newsletter.  it's called the deflationary theory.

Just go read something by Paul Krugman, the international man of idiocy.

I keep reading all this stuff about the dollar, and I feel like I should find some people saying some kind of opposition. Does anyone NOT think the dollar will collapse? Why? This all seems like a far off doomsday scenario even though I understand that this is happening now. Even though I understand, I can't believe it. Why aren't more people worried? I am prepping with what little I have... Not like hedging your bets ever hurt anyone.

When he showed the OBV for the dollar I about shit my pants. Dat volume.

http://youtu.be/US0c8POzIR4

is the CAD doomed aswell?  http://seekingalpha.com/article/1139891-can-the-canadian-dollar-collapse?source=google_news