If the dollar gets cancelled and a new US currency arrives.

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noob_trad3r

Lets say the US declares chapter 11 just like GM. The old dollars get canceled out and a new currency gets issued.

What happens to house values, value of stocks etc.. Do peoples debts to banks get wiped out? or just repriced in new currency.
 
Actually it will be interesting. I remember when the netherlands went from guilders to the EURO and the exchange rate was something like 2.5 guilders to the euro. Many businesses didnt change prices, they just labeled everything from guilders to euro, so like a bottle of soda that cost 2.5 guilders, suddenly costs 2.5 euros. People that were trying to sell their houses for 250k guilders were now asking for 250k euros. People will probably try that here when we first take off on the new currency,especially if the exchange rate is something like 2 new dollars to 1 old dollar, or 9 new dollars to 1 old dollar (that way people instead of charging 9 new dollars for something that used to cost 1 dollar, they will just charge 10 new dollars and say they do it because its easier on the math to do 10 to 1)

People will find a way to charge people more when the currency first changes. They will then let the free market figure out how its going to react later on.
 
If there's a new currency -- the key question is, who gets their hands on it first??

The current system is broken because the people who first place their hands on the currency are the bankers, who produce nothing of value.

A new currency system would only work, IMHO, if the money was given first to engineers, and other actual producers (ie: miners, etc.), and then allowed to circulate into the economy.

Of course, there are many times throughout history where this has existed; its essentially a trait of commodity backed currencies. For instance, a currency on a gold standard, oil standard, or silver standard, naturally favours those who are able to produce gold/oil/silver. A currency based on nothing -- naturally favours those who produce nothing (ie: bankers).

Only way to 'fix' the system is to flush it/purge it of bankers. Hitler understood this, and was able to create a massively successful country on this basis.
 
Quote from noob_trad3r:

Lets say the US declares chapter 11 just like GM. The old dollars get canceled out and a new currency gets issued.

What happens to house values, value of stocks etc.. Do peoples debts to banks get wiped out? or just repriced in new currency.
More...

If they did that, WHY would anyone trust their new debt any more than the old debt? Consider that over 1/3 of the debt is owed to Social Security and Medicare funds.

The obvious answers are in the history books. Perhaps others are also possible.

1. You get merged into some other more "worthy" currency, if there is such a thing.

or

2. All paper currency becomes worthless again, and metals resume their place as worthy currencies.

or

3. You get a hyperinflationary collapse and both the currency you have and that you owe both become worthless over a period during which everyone starves. This ends with 1. or 2.

or

4. For 200 or 300 years your descendants slave to pay off the debt we leave them (I don't think this has ever happened before). Andrew Jackson did it in the early 1800's, but the amount of debt is so staggering by comparison this time, that even under the rosiest of scenarios, I think it would take at least 200 years this time.

5. North Korea just did what you suggested. They converted the first $300 of savings anyone had, and the rest was not convertible, but debts were. I can hear Obama now justifying why only $125,000 would be converted per person, or $250,000 per couple because that would be "fair".
 
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