US Dollar collapse in 2015? (2)

[pedrog]

There's one thing in common between all the 'prophets of the apocalypse', besides the stuff they're selling of course, it's the fact that they are always wrong.

[1714724101]

1714724101

[BobK71]

The bigger the bubble, the longer it takes to collapse.  China's paper currency lasted centuries before the Ming Dynasty gave up and went to physical silver.  Dutch Golden Age paper money and debt lasted for almost two centuries.  The pound dominated the world for about 100 years and was able to enjoy (with US help) a controlled descent from over $4 per pound sterling to $1.5 over a hundred years.  The dollar has had a hundred years of global hegemon status.

We know that there are far more dollars and Treasuries out there than the US economy can ever redeem with goods and services, at today's prices.  At the same time, we know the dollar has been and will be propped up by US financial, political and military maneuvers.

The very nature of this game is uncertainty.  Financial fragility is always advertised as "stable", until it isn't.  When confidence changes, things change very fast.  If anyone knew for sure which way things will go, that person could make a lot of money.

Even the final stage of a bubble this big could outlast a lifetime.  Or it could collapse tomorrow due to a seemingly small event.

[johnyj]

As long as people use USD to measure value, it won't collapse. And so far people have no better alternative. A standard unit of value must come from powerful authority, just like meter, second, kilogram or IP address

[Hazir]

The bigger the bubble, the longer it takes to collapse.  China's paper currency lasted centuries before the Ming Dynasty gave up and went to physical silver.  Dutch Golden Age paper money and debt lasted for almost two centuries.  The pound dominated the world for about 100 years and was able to enjoy (with US help) a controlled descent from over $4 per pound sterling to $1.5 over a hundred years.  The dollar has had a hundred years of global hegemon status.

We know that there are far more dollars and Treasuries out there than the US economy can ever redeem with goods and services, at today's prices.  At the same time, we know the dollar has been and will be propped up by US financial, political and military maneuvers.

The very nature of this game is uncertainty.  Financial fragility is always advertised as "stable", until it isn't.  When confidence changes, things change very fast.  If anyone knew for sure which way things will go, that person could make a lot of money.

Even the final stage of a bubble this big could outlast a lifetime.  Or it could collapse tomorrow due to a seemingly small event.

Great post. It is precisely like you said. Apart from bubble in our bitcoin world. We had our bubble in 2013 and it collapsed instantaneously. Of course there is no way I can compare currency of such magnitude as Dollar is to bitcoin which is experimental cryptocurrency in its infancy stage. I just think that dollar is strong and we won't see it collapsing in our lifetime, hopefully.

[BobK71]

As long as people use USD to measure value, it won't collapse. And so far people have no better alternative. A standard unit of value must come from powerful authority, just like meter, second, kilogram or IP address

Meter and second are neutral properties where the standard-maker has no way to abuse his power.  Money is also a standard, but the issuer has the power to abuse his position.

BTW, abuse of money is thousands of years old.  Even in the days of gold and silver, Kings and Caesars would coin metal and stamp it with an inflated value compared to the value of the underlying metal.  Sometimes this "seigniorage" was huge, depending on the current fiscal or political situation.

Historically, every human-imposed monetary standard has failed to maintain the purchasing power of the standard's unit of value.  The unique thing about bitcoin is that human creation of the money is limited by the system.

[Webnet]

I don't think us dollar will collapse anytime soon. in the next few years the us dollar might be the most valuable form of physical cash

[bitbunnny]

I don't think us dollar will collapse anytime soon. in the next few years the us dollar might be the most valuable form of physical cash

What about Euro? They allways compete

[ashour]

Late 2016 is when it will fall

before or after new elections

It probably depends on who will get elected and what they are going to do to prevent the crash.

[griffinriz]

USD is more powerful than previous year, i dont think dollar will collapse soon but in the other hand EURO is collapsing hard.

[BobK71]

My theory is that the US can't allow anyone to challenge the supremacy of the dollar, or the entire US imperial edifice will come tumbling down.  And the euro was one of the most serious recent challengers.

Since the weak point of the euro is public debt in the peripheral countries, that is where the US would have launched a campaign to break investor confidence.

The euro project always suffered from the naivete, that a fiat currency doesn't need to be protected by a strong and unified state using political and military means.  Economic merit is never enough -- that is the sad truth of the real world.  (It was really a French project, pulling in Germany using the euro as a condition for French support of German reunification.  Once the Germans were in, the process carried itself.)

But the process of monetary manipulation inherently means that "success" breeds weakness and decline, over the long term.  And this is far from just an economic issue.  The polity, the institutions, the people themselves of a monetary empire always suffer decline, due to the inner workings of perverse incentives and the "enjoyment" of "free" wealth and power.

The earlier confidence collapses in the empire's money, the better for the world, including people of the empire itself, over the long term.

[farting_shot]

I'd wager btc to collapse first, way before US $.

[johnyj]

As long as people use USD to measure value, it won't collapse. And so far people have no better alternative. A standard unit of value must come from powerful authority, just like meter, second, kilogram or IP address

Meter and second are neutral properties where the standard-maker has no way to abuse his power.  Money is also a standard, but the issuer has the power to abuse his position.

BTW, abuse of money is thousands of years old.  Even in the days of gold and silver, Kings and Caesars would coin metal and stamp it with an inflated value compared to the value of the underlying metal.  Sometimes this "seigniorage" was huge, depending on the current fiscal or political situation.

Historically, every human-imposed monetary standard has failed to maintain the purchasing power of the standard's unit of value.  The unique thing about bitcoin is that human creation of the money is limited by the system.

What you said is theoretically true, but only one in a million understand this, and these a few can not enlighten the rest of the people

It is millions of ignorant and short sighted average people grant fiat money today's religious status. Trying to change the religion of fiat money is almost impossible, at least for average household

It is possible that someone who command larger power than any single sovereign government (maybe global conglomerates) decided to abandon fiat money. But when you command that large amount of power, you would like to issue your own coins and make that a new religion(Amazon coin for example). Modern money creation is about power and politics, has nothing to do with economy

[Hazir]

USD is more powerful than previous year, i dont think dollar will collapse soon but in the other hand EURO is collapsing hard.

No, not really. Euro is quite stable on the contrary, there is not much of a value fluctuation from what I could see since a long time. It is just dolar which is extremely high in comparison to euro gives you that illusion that euro is weak and it is not true.

[BobK71]

What you said is theoretically true, but only one in a million understand this, and these a few can not enlighten the rest of the people

It is millions of ignorant and short sighted average people grant fiat money today's religious status. Trying to change the religion of fiat money is almost impossible, at least for average household

Well, when we reach this level of discussion, all we have are theories, and every theory looks just about right when the huge scope of your discussion contains this much complexity and uncertainty.  If I have to err, I'd like to err on the side of giving it a try.

Plus, I'm sure the Enlightenment was started by a small minority.  Based on my discussions with pretty "ordinary" people, the problems of paper money are more widely understood than I used to think.

The traditional exercise of power always sought stability.  The very nature of the current system is inherent instability, because of the incentives for the elites to issue more assets while there is any stability left.  This is not your millennia-old power structure where bowing your head to your elders sometimes actually makes sense.

More specifically, the grinding combination of democracy and obvious inequality and instability might just be the combination that will ultimately force people to look deeper into the system.

It is possible that someone who command larger power than any single sovereign government (maybe global conglomerates) decided to abandon fiat money. But when you command that large amount of power, you would like to issue your own coins and make that a new religion(Amazon coin for example). Modern money creation is about power and politics, has nothing to do with economy

I think the ultimate power will always be the sovereign.  It is the one with guns to enforce its will.  Two to three hundred years ago, sovereigns could argue that monetary manipulation was necessary to generate the war power needed to protect themselves against the aggression of other states, or to establish a profitable empire before others could.  The world is a different (and better) place now, and I hope it will be easier for people to see that the process is pure greed.

[GreenStox]

I'd wager btc to collapse first, way before US $.

That's not true, BTC has no reason to collapse, those who already hold it, will hold it. There is only 1 way a bitcoin can go and that is up, otherwise it will stay and hover around the current price of 200-300 € for now.

[Tlee88]

Maybe Obama will bring the $ down in 2016 , or he can be re elected and from 2016 and so on it can go down . His presidency time is almost done (5 years) .

PD: I think USA is an awesome country , good luck for americans for the best things in 2016 

[johnyj]

What you said is theoretically true, but only one in a million understand this, and these a few can not enlighten the rest of the people

It is millions of ignorant and short sighted average people grant fiat money today's religious status. Trying to change the religion of fiat money is almost impossible, at least for average household

Well, when we reach this level of discussion, all we have are theories, and every theory looks just about right when the huge scope of your discussion contains this much complexity and uncertainty.  If I have to err, I'd like to err on the side of giving it a try.

Plus, I'm sure the Enlightenment was started by a small minority.  Based on my discussions with pretty "ordinary" people, the problems of paper money are more widely understood than I used to think.

The traditional exercise of power always sought stability.  The very nature of the current system is inherent instability, because of the incentives for the elites to issue more assets while there is any stability left.  This is not your millennia-old power structure where bowing your head to your elders sometimes actually makes sense.

More specifically, the grinding combination of democracy and obvious inequality and instability might just be the combination that will ultimately force people to look deeper into the system.

Even they know, they don't have a better alternative right now. And if they have a better alternative, they don't even need to know the flaws of fiat money, they will just stop using it

[tobyjaguar]

a nice reset is in order soon, backstopped by the IMF, or a never ending U-shaped recover...

[Sithara007]

a nice reset is in order soon, backstopped by the IMF, or a never ending U-shaped recover...

Ya that's going to happen very soon. And not only for US, it is going to crash most of all the countries. Just cross your finger, don't want to witness another 2007.

[BobK71]

Even they know, they don't have a better alternative right now. And if they have a better alternative, they don't even need to know the flaws of fiat money, they will just stop using it

The nature of a leveraged system like a fiat currency is that the more stable it is, the more incentives there are among the elites to leverage it and thus destabilize it.  The thing can never be truly stable.  After a century of leverage, and especially after 2008, if average people just put a small portion of their savings into a non-leveraged asset like gold or bitcoin, the dollar based system would probably be in big trouble.  The reason the Fed still can't quite raise interest rates (though it would love to) is this fragility, that can't suffer any liquidation.

I understand that views tend to be inflated on both sides of the debate.  That's why it's probably best to keep bets on both sides.