Monetary Inflation is the Problem
The financial press reported last week that the value of the U.S. dollar plummeted to a 14-year low against the British pound, and weakened against the Euro and Yen. Many financial analysts predict continued rough times for the dollar in 2007, given reduced expectations for economic growth at home and less enthusiasm among foreign central banks for holding U.S. debt.
This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply.
Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic-- which means the value of every existing dollar goes down.
Federal Reserve Chairman Ben Bernanke faces two basic ongoing choices: raise interest rates to prop up the dollar, but risk pushing the economy into a recession; or lower interest rates to stimulate the economy, but risk further declines in the dollar. This unfortunate dilemma is inherent with a fiat currency, however.
The bubble bursts quickly once the credit dries up and the bills cannot be paid.
December 07, 2006
A note from Congressman Ron Paul on the doomed Dollar
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I see the European Central bank raised rates a quarter point. That should force Ben's hand, but it probably won't, leaving the dollar less attractive (if that's possible) than it already is.
http://www.mehrnews .com/en/NewsDeta il.aspx?NewsID= 416994
Tehran: 19:01 , 2006/12/05
Iran replaces dollar with euro in most oil dealings
TEHRAN, Dec. 5 (MNA) — Iran has started replacing dollar with euro in majority of its crude oil exchanges in the last several months, an informed source with Iran’s Oil Ministry said here on Tuesday.
Oil Ministry has taken the policy to substitute dollar with euro, and begun to implement it for most of its oil dealings, the source who spoke on the condition of anonymity told the Mehr News Agency.
“This can maintain the real value of Iranian oil,” he added.
The majority of Iran crude’s customers are Asian and European states, the source noted.
Iran is the number two oil producing member of the Organization of the Petroleum Exporting Countries (OPEC). It also stands second behind Russia in terms of gas reserves in the world.
RAISE RATES BEN! RAISE RATES BEN! C'MON, you can do it son!
Bush might be the very worst president of all time. He had an incredible opportunity to be great: balance the budget BEFORE THE BOOMERS RETIRE with a republican congress like he said he would. It wouldn't have been that hard with artificially low interest rates and a 4.6% unemployment rate, but he spent money like a drunken sailor and took us to war to shore up the republican base with Jewish voters and to get revenge on the man who tried to kill his daddy.
I really hope Bush lives long enough to see how badly history treats him.
this post is about the dollar and the fed - keep it that way
Credit Bubble chasing real estate. It has always been connected and as time goes by, those connections will reveal themselves. One big delusion maintained by hubris and denial. There is a kernel of truth at the center - owning (not mortgaged) your own home is a great thing but it is like a piece of popcorn in the microwave oven - it gets puffy with a little heat applied.
Smug Bastard
Nice one, Keith. Somebody posts a hate comment, and when another poster refutes this, you delete the post, yet leave the hate comment standing.
And you have the nerve to claim you have more class than Greg Swann.
Your actions show what kind of a person you really are.
My post was about the Fed and the dollar. The reason the fed's in the place it is is because of unrestrained spending as well as this war - which is not only exaggerating the spending, but putting foreign central bankers in a mood to buy Euros and not dollars. And Bush, by spending this money so irresponsibly, is the one who has put the fed in this position.
Bernake, and Greenspan for that matter, is not the bad guy. Government spending is and George Bush is the government - and the war is a huge part of not only the spending (expansion of the money supply) but also a reason that the dollar is falling.
Re your second post, we are in full agreement. So why do you feel the need to drag Jews into the situation and imply the blame lies in their hands, as you did in your initial post?
Re your second post, we are in full agreement. So why do you feel the need to drag Jews into the situation and imply the blame lies in their hands, as you did in your initial post?
I'm just glad someone finally said it, and I am going to be keeping a very close eye on that Bernanke. I think he will hold steady, myself...because if he goes either way with those interest rates we are "doomed". I also know that if he drops rates, I'm throwing a bunch of money into gold, not housing.
Contrarians say the dollar will rise now that economist magazine has the dollar again on its cover -- a signal.
Well, the theory works until it does not.
Folks, the jews at the fed (yes, boys and girls, the fed really is owned by a handfull of international jew banking families) are pulling the plug on the dollar. They could prop it up with high rates, sending us into a recession but thats not in the cards this time, not with the jews stacking the deck that is. They have devalued the dollar 97% since taking con-trol of it. They now will start over with a new currency so they can continue swindling the general populace for the foreseable future.
Anonymous,
if you go to the AIPAC website, you'll see an article there that points out that Jewish Americans make up the swing votes in NY, CA, PA, FL, and NV, representing about 2%-4% of the population in each, but making up about 3%-6% of the votes in each state. And since 1952, the democrats have had roughly 80% of that vote in every presidential election. The republicans (carl Rove) see that vote as theirs to take, as the Jewish demographics are right up the republican ally. As a consequence, neither party can afford NOT TO COURT THEM AGGRESSIVELY. And poll after poll shows that the number one issue for Jewish American voters is the security of Israel. And, shockingly, Bush, with all his tough talk about the axis of evil and his Trillion Dollar war in Iraq, somehow managed to get 30% of the Jewish American vote in 2004 - the highest of any republican presidential candidate by a factor of about 50%.
The reason the dollar is falling off a cliff is irresponsible federal gov't spending, and a huge part of that right now is this war. And as far as I can tell, we're at war with Iraq for 3 reasons: 1) Bush wanted to kill the man who tried to kill his father 2) oil 3) to court the Jewish American vote for the republican party, which he's done extremely successfully.
What on earth is racist about pointing that out? Is it racist to say that both parties court the soccer moms, the cuban immigrants, or that both parties are screwing with our future by courting the fastest growing segment of the population, the mexican-american vote, with this rediculous border debate?
Do you really believe that the Jewish-American swing voters weren't on his mind when he made the decision to go to Iraq? Really? What is hateful about pointing that out?
Anonymous,
if you go to the AIPAC website, you'll see an article there that points out that Jewish Americans make up the swing votes in NY, CA, PA, FL, and NV, representing about 2%-4% of the population in each, but making up about 3%-6% of the votes in each state. And since 1952, the democrats have had roughly 80% of that vote in every presidential election. The republicans (carl Rove) see that vote as theirs to take, as the Jewish demographics are right up the republican ally. As a consequence, neither party can afford NOT TO COURT THEM AGGRESSIVELY. And poll after poll shows that the number one issue for Jewish American voters is the security of Israel. And, shockingly, Bush, with all his tough talk about the axis of evil and his Trillion Dollar war in Iraq, somehow managed to get 30% of the Jewish American vote in 2004 - the highest of any republican presidential candidate by a factor of about 50%.
The reason the dollar is falling off a cliff is irresponsible federal gov't spending, and a huge part of that right now is this war. And as far as I can tell, we're at war with Iraq for 3 reasons: 1) Bush wanted to kill the man who tried to kill his father 2) oil 3) to court the Jewish American vote for the republican party, which he's done extremely successfully.
What on earth is racist about pointing that out? Is it racist to say that both parties court the soccer moms, the cuban immigrants, or that both parties are screwing with our future by courting the fastest growing segment of the population, the mexican-american vote, with this rediculous border debate?
Do you really believe that the Jewish-American swing voters weren't on his mind when he made the decision to go to Iraq? Really? What is hateful about pointing that out?
One reason we have such runaway fiat US$ inflation is b/c of the extreme concentration of wealth and income in the US. the top 1% receive about 20% of all US income and have ~40% of all financial wealth. The top 10% receive 40-45% of income and hold 85% of all financial wealth. The top 20% (2M households and ~55-60M people) receive 60% of income and have 93% of the wealth. That leaves 40% of US income and 7% of US wealth for the bottom 80% of households.
When wealth and income is so concentrated to the top 1-10%, and further to the top 10-20% of this group, i.e., the top 1-2%, the bottom 90-98% of households become disproportionately dependent upon the whims of the 1-10 out of 100 households who have all the wealth. The bottom 90% work to work, that is, work to subsist so that they can subsist to work as tax, debt, and wage slaves.
The top 1-2% of US households have reached a point at which they don't even need the US economy, or any economy, to retain their wealth and status. And the tax code and rentier-financier-based economy continues to reward the top 1-10% without them even making the effort to accumulate more.
When an ultra-wealthy person buys a Aspen or Telluride ski chalet for $2M, assuming he doesn't hire a large staff to maintain the place, the expenditures does little to trickle down to the rest of the economy. The lender who initiated the mortgage gets a large fee, and the interest on such a huge note is hardly chump change, but the overall multiplier and velocity effect is minimal. The same applies for yachts, Mediterranean villas, and costly collectables, such as artwork, vintage cars, etc.
Thus, we have rampant fiat-money inflation b/c the bottom 80-90% of US households have no capital wealth to deploy, and they must rely on their meager wages/salaries after tax to subsist so they can continue to function as slaves. The wealthy concede the need for fiat-money inflation to prevent a debt-deflationary implosion and people rioting and calling for eating the rich, which is also why the wealthy are rigging the game so that all the wealth goes to them. They see the future and fear it, thus they want to be holding all of the chips when the system implodes so that they can call the shots in determining what is valuable and what is worthless. A billion dollars is no longer "enough"; they will eventually desire trillionaire and multi-trillionaire status.
But don't think gold will save you. If gold were to skyrocket in value to $1000, $2000, or $5000, the gov't has the right (and has done it before) to confiscate your holdings, revalue gold to some arbitrary level, and create a new currency that is worthless before it's printed (or a digital currency based on electrons and book entries).
Ms. "Jewinski" is probably right about a new currency coming along. The US has had a change in currency regime every 32-36 yrs. since the founding of the republic (and fledgling successor empire to the British Empire). We are due a new currency regime, which probably had/has its impetus or antecedent in the creation of the Euro, which itself is a move by the Anglo-American and European power elite to create a Pan-Atlantic federation between the Americas, UK, and EU+ under a since currency, trade/customs union, military, and regulatory and taxing authority.
The new currency regime might take the form of a petro-currency based on a basket of currencies with all fiat currencies converging toward par with one another but all of them (and the merged currency) falling in value in the long term against commodities. One can clearly observe this dynamic having occurred in trade-weighted US$ terms since the Euro was introduced in terms of gold, oil, and other basic materials prices.
The move by some countries to shift currency reserves to the Euro is merely a balancing act with the overall trade-weigthed effect being largely neutral.
That was a funny post Professor. US with a non dollar dollar. How whould that work? If you have 100K in bank would they exchange it with another currency?
Anon, the change would occur over time. The US$ you have today might look the same or be digital, but its purchasing power would be based on the value of other currencies within a trade-weighted context, which in turn would be determined by the relative value of the other currencies against which the US$ was valued and the value of oil (or a basket of commodities).
It is already this way today, but most people don't perceive their George Washington Fed Reserve note in this manner. I today can hold deposits in AUS$, CDN$, SWF$, GBP$ in CDs or other instruments and be paid in interest in foreign currency terms via a respective institution to which I can convert to US$ to buy my frijoles y arroz.
The difference in the future will be the relative value of foreign currencies in a respective basket versus oil or a basket of commodities. IOW, as the value of oil transitions from primarily in terms of the US$ to other currencies, the long-term trend will be for all currencies to trend toward parity but lower in terms of "things". In this context, the apocalyptic scenario for the US$ is misguided; rather, it is the value of commodities versus ALL currencies that one should concentrate on and reorder one's assets to adapt to for the long run.
Iran better be careful, Sadaam had called for Iraq to accept on Euro's instead of dollars for his countries oil and we all see how that ended.
Now where did that damm "M3" go to......???
Invest your dollars: Buy Ammo!
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