Forbes: Don’t Get Caught Holding Dollars When The U.S. Default Arrives

Forbes of course has this dead wrong. Everyone should hold on to their dollars and should be accumulating more of them if possible. I think what they meant to say was that the federal reserve notes and bank accounts with federal reserve member banks (BofA, CHASE, Wells Fargo, etc.) that only allow withdrawal in federal reserve notes are going to further decline in value due to the fact that more of these federal reserve liabilities are being created every day to finance the massive deficit spending in Washington D.C. by the legislators. While federal reserve notes and bank accounts are denominated in dollars they are not worth their face value. Dollars of course are silver coins. See seventh amendment to the constitution, and Thomas Jefferson 1784 Notes on Coinage and the establishment of a money unit "A dollar is a known coin...If we determine that a dollar shall be our unit we must say with precision what a dollar is".

We've built a society on such absurdity. Just as money exists as a claim on a borrower's economic output, government sustains itself by claiming more of the future economic output of the people it supposedly represents."

http://www.huffingtonpost.com/robin-koerner/sell-illusion-pu...

The scare about a technical default reminds me of the Y2K fiasco.

Will share!

It's Federal Reserve Notes you don't want to be caught with.

frn's to begin with LOL

as a child, but he came to a completely different conclusion than you, unfortunately. He is now passed on, but till he died, he was trusting of the govt. and he was for all of the socialist plans, and thought that socialism was wonderful. Fortunately, for me, his son, my husband didn't inherit his viewpoint, and is a Ron Paul supporter.

The nation's money supply is bank debt. Under this system, in order to increase the supply of money new loans must be made to some individual, business, or government. This makes the debts OF the banks go up by the increase in the money supply, and also makes the debts TO banks of either individuals, businesses or government go up in an equal amount. Since the federal government is the most hungry debtor and stands first in line to borrow (as long as they increase the debt ceiling) it will just become more indebted, and the current scam will be perpetuated for just a little longer.

When individuals, businesses and government pay back debts held by the banks or interest thereon, the money supply decreases with "out of thin air" money going back to the netherworld from which it originally arose.

And then there is the velocity of money. If people and businesses sit on what money they have the overall supply could go up, but prices could go down from lack of spending, even if the government increases spending.

It is a complex system (fraud).

We know that a huge number of banks in the US are insolvent, i.e., they have more debts than the value of their assets. They have glossed over this by valuing their assets at fantasy numbers with the complicity of their accountants. What happens if people start to fear that their bank will fail and they won't get bailed out by the FDIC which is also insolvent, and backed by an insolvent government. Most people are under the delusion that Federal Reserve Notes are money, not realizing that they are just un-payable debts of the Federal Reserve Bank. It is conceivable that people would want to hold these in preference to a checking account or savings account and would run the banks. This would wipe out the ability of banks to make new loans because it would deplete the reserves against which they make new loans, so a deflationary collapse is just as likely as an inflationary blow off. It is also possible that if prices start to pick up, people will take money out of the banks because they won't want to hold large checking or savings account balances, which would have the effect of making money supply expansion much more difficult for the banks.

Additionally, formal default by the federal government could cause the money supply to be wiped out because it could take out the banks and eliminate the checking and saving account component of the money supply.

For an inflationary blow off to be highly likely, the federal government would need to change the way money comes into existence. They would need to start printing their own paper bills and spend them into existence. Unlike the current loaning of money into existence, there would be no associated debts taken on by individuals, businesses and government so the deflationary drag from the requirement of debt repayment would no longer exist on the new money.

So what will play out. Will your checking accounts and savings accounts become worthless because your bank fails and the FDIC cannot step in? Will Federal Reserve Notes have any value if they become the only remaining component of the money supply? Will a banking collapse damage the economy to such a degree that the economy grinds to a screeching halt, resulting in social chaos? Will the federal government try to issue its own greenbacks and will a Wiemar Republic hyperinflation result? Will the federal government even survive?

I don't think you can really know, but the longer the resolution of the debt crisis is pushed into the future the bigger it becomes and the more destructive will be the collapse.

We don't have reliable money. We have been swindled by those occupying the seats of power colluding with the banks to impose upon us an unconstitutional, unstable, unsustainable, predatory monetary system for the benefit of the banks to the detriment of the general public.

Do not automatically assume that the money supply will become worthless from hyperinflation because it could just as easily become worthless from banking system collapse.

Man. The comments show that even educated people are not getting this..odd.