"America and the Dollar will remain powerful BECAUSE of all of the debt we owe"
Had quite a long discussion last night with a guy who said this over and over. He knows the Fed is destroying the dollar, and he is happy about it.
Him: If the dollar is worth less because of the fed debasing it then great, it costs us nothing to print money and pay off our debts.
Me: Countries will eventually stop lending to use and the dollar will eventually crash and not be used as the worlds reserve currency.
Him: Other countries will never do that and let the dollar crash because of the huge debts we owe them, they couldnt afford to just lose all that loaned money.
Me: So by your position you are happy with being the superpower in the world only because countries are hoping to collect on our debt someday even tho itll be worth significantly less?
Him: Hell yea! Isnt that awesome that we just print more money and pay it off for way less?
Me: You think countries will continue to do this?
Him: Of course! Because we are the sole superpower.
He is not voting for Ron Paul because he wants to keep the existing power structure and financial setup that we discussed.
Then i asked him if he thought the Fed was a govt agency or a for-profit collection of banks. HA! He had no clue it was not a govt agency.
"Him: Other countries will
"Him: Other countries will never do that and let the dollar crash because of the huge debts we owe them, they couldnt afford to just lose all that loaned money."
What a huge error in logic. If the dollar plummets in value then they already essentially did lose all the money we owe them. We could attempt to pay them back in goods I suppose, but what would that be? Our country is close to bankruptcy, when someone goes bankrupt then the people they owe money to have to write it off as a loss.
I don't get why people can't just understand simple economic and accounting principles. Think about your own personal finances and then apply that to the government. Spending more than you earn and being in high debt and borrowing money to pay off debt makes no sense for an individual to do and it makes no sense for the country to do either.
I know it's more complex than that, but many basic fundamentals still hold true.
If the USA starts flinging
If the USA starts flinging nukes around, combined with the fact that PNAC's papers state we should do regime change in China using biological weapons and hem in Russia militarily then all bets are off.
Yes, the countries who have loaned the US huge amounts of money NORMALLY would try to preserve their investments. But not if we keep invading countries and threatening to fling nukes in their backyard like an insane brat out of control.
Just my opinion. =)
loans from china
I do belive thease loans are backed by securites such as our land natinoal parks and such. I think i have read this somewhere.
Sounds like your buddy is probably DEEP in debt himself
And therefore figures devaluation will help him pay all of that off.
What he is too ignorant to understand what happens in a hyper-inflationary environment.
He needs to realize that prices will go UP much, much quicker than his wages will. Wage increases always track SIGNIFICANTLY behind -- as much as two years behind, and take up to a decade or more to "catch-up".
In the end, HE (and virtually everyone else) will be MUCH poorer.
Move to Zimbabwe for a Few Weeks....
Let your friend know a few more details...
IF you think debasing currency is a fun project, I suggest you take a trip to places where they have done so, and an entire generation is *wiped out*.
Money = Trust.
When you 'muck' around with that, everything is lost. Of course, those who'll feel the pain are those who have worked hard and saved all their life.
Take this example: One of the greatest US exports is the Stock market. Let's say some Fund from China or India with billions invested in US Dollars in the market "pulls out" because they gained 10% in 2008, but lost 20% because the dollar tanked. When they pull out, you may be out of a job. Perhaps, that employer has no access to new capital.
Be *very* careful what you wish for, because if your friend gets what he's asking, a few generations will pay the price.
Rich Sage
http://www.richsage.com
Rich Sage
http://www.bestofronpaulvideo.com/
Insane
notions to fit an insane world. The market will eventually restore sanity. Watch out below.
Catherine Austin Fitts
was on Coast-to-Coast am last night and described inflatable Fed Res notes and inflation as a tapeworm economy. I wish Ron Paul would use more attention grabbing aggressive terminology like this. Describing the Federal Reserve as a tapeworm is as much analysis as an average person like myself needs.
Famous Quote from Justice William O. Douglas
"The Constitution is not neutral.
It was designed to take the government
off the backs of people."
Boycott Fox. Boycott PayPal. Boycott ChipIn.
Famous Quote from Justice William O. Douglas
"The Constitution is not neutral.
It was designed to take the government
off the backs of people."
The Fed Holds U.S. Treasury Bonds
The Fed's major assets are their holdings of US Treasury Bonds on which they earn interest. They will always act in their own self interests and try to protect the value of their assets. Despite the falling dollar, the world continues to have confidence in U.S. Treasury securities. The Federal Reserve will not hyperinflate the currency because that would panic the bond market and destroy the value of their own holdings. The dollar may actually begin to strengthen for a while despite future Fed interest rate cuts because increasing the supply of credit only inflates the money supply if there are willing lenders and borrowers. That is more of a psychological phenomena because people's appetites for risk change based on the degrees of optimism they have about the future. That is why the Fed is between a rock and a hard spot right now. Lower rates will not likely have much of an effect on the markets as long as people remain pessimistic and eschew risk. As people try to raise cash and get out of debt, the demand for dollars will likely increase for a while and the dollar may strengthen against other currencies until all the bad debt is eliminated from the system. Just an opinion.
The problem right now is
The problem right now is that the Fed IS between a rock and a hard place. Of course they don't want to create money/inflate/devalue, but they had no choice recently with that last .75 emergency rate cut to halt worldwide market selloff because of US economic fear. One thing depends on the other. Unfortunately, people (in my opinion) STILL will remain in stressful financial shape as we move forward and more jobs are lost, and more of this housing/credit crunch plays out. So you still have unwilling borrower/lender. The Fed will need to stimulate the threatened economic slowdown yet again with rate cuts. Now you can see the vicious cycle, and why we are likely in terrible times very soon.
By the way, the dollar WILL strengthen temporarily for the reasons you mention, and also because people will seek Treasury bonds as the markets look weak, but this is only a temporary upswing before a severe downturn in my opinion.
He won't mind $10/gal Milk and $4/loaf of bread
For God and Country!
For God and Country!
It's always better to be the banker
than the bankee.
Right now, the US is the bankee.
And China is the banker.
A few points ...
He has it half right, but is failing to understand what wiping out our debt means. It's true that we can simply print print print, to make the debt drop as the dollar value does. However, the problem is that the people of this country still use dollars to power the economy. This means that oil/gas prices skyrocket out of reach for most people, causing prices to skyrocket (hyperinflation), and the economy tanks - the dollar is worthless (along with the debt) and your friend is happy. Finally at some point in the extreme ensuing depression the Amero would probably be introduced and we go from there.
Point #2
Other countries do have a serious interest in keeping the dollar from crashing, and not just because of the debt they hold. The US economy also powers their economy in varying degrees. However, the yardstick is oil. It suits most countries to buy oil in dollars, as it's the most convenient currency to use being a 'safe haven' currency, but things change. A lot depends on the geopolitical scene, but the US can't afford to continue using force to tilt the landscape in our favor. It inevitably leads to world war. We are NOT the only world power. Russia, China, and India (increasingly) are also military and financial powerhouses to reckon with.
Point 3
The other countries holding our debt will use our dollars to come here and buy our real estate and other hard assets while people (even the ones we consider well off) are dealing with treading water in hyperinflation. I can think of no easier way to lose our country....
Very true! This is why the
Very true! This is why the dollar MUST not go below a certain value, or it will seriously crash as people frantically unload their dollars into other currencies.
Tell your freind to get real!!
1. Foreign Gov't will and are buying up our country out from under us. We will end working like share croppers for the Foreign Co's and Govt's
2. The devalued dollar hurt us. We will have less to spend and our savings is worth less as inflation takes over
3. Foreigners are using the dollar to give themselves capital. They are spending the money on infrastructure. Look a Dubai, China and India. They will not care that much when it crashes because they have already used it to make solid improvements to themselves.
4. Lots of other reasons that others may add
unreasonableman
he's right on the button
'They've already used it'. The new markets are china, India, etc. Look at where Nokia, blackberry, other telecoms, etc are moving into big time. That is where the new business is and growing because you've built them up with your dollars. When your tangibles are bought by foreign governments or even foreign private companies, that is time to worry. It's happened in UK with water, fuel and many telecoms. Then there is food production being bought years ahead in some cases. When you are told in your media that you have sold weapons abroad what you've probably done is exchanged weapons for debt interest payments? Obviously Dr. Paul is the expert and I'm learning more about these things everyday since I heard of Him. Hopefully we're spreading the detail better as we inform others. I showed 'Fiat Money' to our relatives this week and they were gobsmacked!
'I always thank of all you canvassors and precinct leaders and delegates who were at the front line and caucuses.
Good luck out there &Thank you. You're a gift.
Why are they doing this?
You might ask him, so WHY is china.. knowing our dollar is becoming worthless loaning all of this money. And can you be SURE the debts are all in dollars anyways, could some of the debt actually be in Yen??
He also suggested
That i buy a lot of gold and bet on the dollar getting stronger.
Told him i might be pretty drunk but even at this point i know that makes no damn sense.
LOL
LOL