The final collapse of the US dollar it is just around the corner

Quote from Cache Landing:

But you need to qualify who it is who cannot resist printing, and why is it in their benefit?
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ALL central banks of countries with FIAT currencies that are in depressions.

Because they think it will help their economy's recover, or at least help prevent things from getting worse.
 
Quote from thriftybob:

ALL central banks of countries with FIAT currencies that are in depressions.

Because they think it will help their economy's recover, or at least help prevent things from getting worse.
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All right, so IOW they aren't necessarily doing it for their own personal gain, but rather acting according to what they believe is in the best interest of their own region.

I should point out that statistically and historically, they are correct. IMO, the argument comes in how much control they actually have. I believe the law of diminishing returns has already taken us well past the point where small infusions of $ are going to have an effect. I also believe that they hold the same opinion.

When considering a fiat currency a person must consider the alternative. Most criticize a fiat currency as flawed. If I take that position then I must by default wish for the best alternative, which history shows is commodity money. Gold being the most widely known of such currencies. However, history also shows that there are huge flaws in a system which operates solely on commodity money. Inflation/deflation is then largely impacted by global opinion as to which commodity is most preferred, and supply of such a commodity. The accepted commodity must be fairly difficult to come by, and not subject to seasonal variation. So precious metals have historically best filled the spot. This leaves us vulnerable to wild fluctuations, and some would argue imposes a natural deflationary effect as the commodity becomes more scarce relative to the population and global production. You cannot simply create more of the commodity to satisfy a surge in productivity or population growth.

The natural effect of this is stifled growth, relative to what would otherwise be possible if this natural deflation didn't exist.

OTOH, the fiat currency eliminates these natural deflationary pressures. In this sense it has a huge advantage. The obvious problem with it is the ability to simply create more of it at will. 90% of the time this tool will be used to effectively smooth out what would otherwise be wild fluctuations, but 10% of the time such actions will throw us wildly in the opposite direction. In any case, I believe the ability to control the supply of currency to be a good thing overall. The problem for me isn't found in the ability to print money. It is found in the ability to loan out money that doesn't exist.

I have no problem with a bank loaning more than it has on reserve, but I believe that this ratio should be made known to the public in very plain terms that even most idiots can understand. At any given time when I visit my bank I want to see a sign that says,

"Total deposits = $#,### while total outstanding loans = $#,###. XYZ bank has currently loaned out 6.3 times the amount of money it has in reserve."

Then below that I want to see the following,

"National average reserve ratio is 4.5:1, thus our bank is at greater risk of bankruptcy than the national average, and carries a subsequent rating of C minus."

Laws should then require that no bank will be saved from bankruptcy via public bailout, and the public should be held responsible for deciding whether or not a specific bank carries the correct risk profile for their savings.
 
Sure, it might start out that way, but look what it has devolved into...

A BUNCH OF PONZI SCHEMES COVERING THE GLOBE

Printing money to buy government debt so the government can run in the red without needing to worry about it. I bet they think they can keep doing it FOREVER!

Look at the size of their future deficit estimates. And those have VERY OPTIMISTIC revenue estimates in them. They really do think they can keep printing and borrowing FOREVER!

Just like how we think we can import more than we export FOREVER.

Just like how we think we can consume more than we produce FOREVER.

I'll hold my GOLD, thank you very much. Nobody can PRINT more of it.
 
Quote from Cache Landing:

All right, so IOW they aren't necessarily doing it for their own personal gain, but rather acting according to what they believe is in the best interest of their own region.

I should point out that statistically and historically, they are correct. IMO, the argument comes in how much control they actually have. I believe the law of diminishing returns has already taken us well past the point where small infusions of $ are going to have an effect. I also believe that they hold the same opinion.

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very good post.
 
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March 16, 2011

SouthAmerica: Reply to Cache Landing

You said: “Yep, many of the participants on this board treat inflation like housewives treat spiders. "There's nothing good about it."

Nothing could be further from the truth. It is widely accepted that inflation would ideally match the combined growth rate of both the population and economic growth.”


*****


SouthAmerica: Please don't say that to a Brazilian, since we had real experience with inflation in Brazil for many years and we don't want to go back there, and there's an American that I am sure he would agree with me – his name is: Paul Volcker.

If inflation is good for the economy as you are claiming, then today the Brazilian GDP would be around US$ 50 trillion. And Zimbabwe would have one of the fastest growing economies in the world.

Inflation it is never good!!!!

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Quote from SouthAmerica:

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March 16, 2011

SouthAmerica: Reply to Cache Landing

You said: “Yep, many of the participants on this board treat inflation like housewives treat spiders. "There's nothing good about it."

Nothing could be further from the truth. It is widely accepted that inflation would ideally match the combined growth rate of both the population and economic growth.”


*****


SouthAmerica: Please don't say that to a Brazilian, since we had real experience with inflation in Brazil for many years and we don't want to go back there, and there's an American that I am sure he would agree with me – his name is: Paul Volcker.

If inflation is good for the economy as you are claiming, then today the Brazilian GDP would be around US$ 50 trillion. And Zimbabwe would have one of the fastest growing economies in the world.

Inflation it is never good!!!!

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Your argument is flawed on so many levels that it is hard to know where to start.

You are comparing ideal inflation of about 3-5% annual with 1,000%+ inflation in Brazil.

Rather than trying to spend valuable time explaining the difference to you, I'll let you put in the effort if you want. It should suffice to simply say that anyone who knows anything about history and economics would realize that deflation is much more dangerous than inflation. Nominal inflation in the US must equal about 3% just to prevent deflation.
 
I have said this before but here goes again.

These huge macroeconomic power shifts usually take a long long time to pan out (decades).

You have been saying for years now on this board that the dollar is 'just about to collapse' etc.

Give up the sensationalist posting and think about actual trades. If you were short the dollar the last few years you have not done very well.
 
Quote from BlackBison:

If you were short the dollar the last few years you have not done very well.
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Name me one currency the USD is up against year to year, 5 years and 10 years.
 
Well since he started talking about a dollar collapse in 2007 the dollar index is about flat.

I don't think these are very impressive returns over 3-4 years during a hugely volatile period when great fortunes have been made and lost..
 
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