[poll] - The U.S. Dollar Collapse Is Accelerating

[notme]

I am no economist but... This is looking like it might be bad(Or good if you hold silver, gold, or bitcoins).

Weed has been under price for years now... fuck gold and silver buy weed and bitcoins.

When bitcoin saves the world from the conflict we will all have plenty of gold, silver, and weed .  And be allowed to have them .

[XxionxX]

I started reading this thread mostly because of a comment on reddit which led me to a super long video about silver and the coming dollar collapse. I thought it was crazytalk because it seemed too easy to say, "We have too much debt."

I am now going to start stockpiling water and anything I can get my hands on.

This is the video which finally made me realize that people aren't joking or BS'ing:

http://www.reuters.com/video/2013/01/30/reuters-tv-how-the-fed-built-a-3-trillion-balance-s?videoId=240855423&videoChannel=117850

I have seen the debt clock, I have seen the articles about how china is buying assets, and I have no faith in our politicians ability to fix anything.

But it finally hit me like a ton of bricks. No one is listening to the writing on the wall or any voices of reason. It may not be today or tomorrow but this ride is is gonna stop.

...

Good news is we have bitcoins XD

[molecular]

http://youtu.be/US0c8POzIR4

is the CAD doomed aswell?  http://seekingalpha.com/article/1139891-can-the-canadian-dollar-collapse?source=google_news

All govt-backed fiat currencies are on the same sinking ship. This is a currency war: the race to the bottom. It can't be stopped.

[molecular]

I started reading this thread mostly because of a comment on reddit which led me to a super long video about silver and the coming dollar collapse. I thought it was crazytalk because it seemed too easy to say, "We have too much debt."

I am now going to start stockpiling water and anything I can get my hands on.

This is the video which finally made me realize that people aren't joking or BS'ing:

http://www.reuters.com/video/2013/01/30/reuters-tv-how-the-fed-built-a-3-trillion-balance-s?videoId=240855423&videoChannel=117850

I have seen the debt clock, I have seen the articles about how china is buying assets, and I have no faith in our politicians ability to fix anything.

But it finally hit me like a ton of bricks. No one is listening to the writing on the wall or any voices of reason. It may not be today or tomorrow but this ride is is gonna stop.

...

Good news is we have bitcoins XD

Another one woken up. Nice . Of course some of these nuts overdo it on the conspiracy theories (chemtrails anyone?). You took the red pill, now keep using your brain.

[XxionxX]

Another one woken up. Nice . Of course some of these nuts overdo it on the conspiracy theories (chemtrails anyone?). You took the red pill, now keep using your brain.

Yeah, the best non-conspiracy guy I have found was this guy. He does an amazing job of explaining without saying, "The Illuminati are after us!" I will be showing this one to my family.

[xxjs]

Downward pressure for dollar:

Dollar bill printing. May be not very important, since dollar bills are a small part of the money supply.

FED balance decreasing. Equals money printing.

The US national debt. To some degree, the bonds are regarded as money by the public. Increases money supply.

Upward pressure for the dollar:

A possible decreasing trust in the bonds. Reduces the money supply.

A possible decreasing trust in the banks. Reduced deposits equals reduced money supply.

A possible increased demand for holding cash (dollar bills). Presses prices on goods downwards.

Other points:

If the prices start to decrease, this will be met with new price increasing actions from the Fed. A negative real interest rate may be seen.

Countries around the world seem to act more independently, everybody wants to lower the value their own currency. Everybody else responds in a downward spiral.

With interest rate unnaturally low, and subsidies to some industries like banking and housing, malinvestment occurs, destroying capital and reducing wealth.

Salary regulations, and special subsidies and regulations to fix whatever, reduces the dynamics of the markets.

Increase of government spending and subsidies increases GNP, but does not lead to real wealth. Fed action and national debt therefore has to increase even more.

Manipulation of markets paired with manipulation of public opinion on future wealth, future consumer prices, future interest rate and future job possibilities.

What happens first, price inflation or price deflation is uncertain and depend on politician action. In the end, price inflation and high interest rate is almost certain. When? Impossible to say.

[cbeast]

And a ginormous debt that we already have that our kids will inherit

ARE WE MARRIED??

 

He's probably speaking as a US citizen and by "we" he means other citizens.

What he means are the children that will either be politely working to make you neighborhood a nice place to live, or shoving a gun in your face.

[evolve]

Does anyone NOT think the dollar will collapse? Why?

Me.   I don't think the dollar is going anywhere, it's too tied into the global economy (too big to fail) so other countries have a vested interest in keeping it afloat. For now.

The inflation rate is at like 1.7% right now, so I'm not particularly concerned with "skyrocketing inflation leading to americas collapse" or whatever glen beck was on about when he was shilling for goldline.

It's also (IMO) the best store of wealth right now.  Precious metals are WAY overpriced right now (as is bitcoin) and I wouldn't be surprised to see all three crash relatively soon.

Then again, a vast majority of my money is in stocks right now (which is just as risky as the other ventures) so take my opinion for what it is.

[notme]

The problem is debt.  I think we can all agree on that.

Inflation: There is not exit this way.  Debt gets cheaper to maintain, saving is stupid, people continue to leverage up and buy real assets and stocks since they have negative incentive to save.

Deflation: There is a door here, but it won't be pretty.  We need to remove the bad actors by bankrupting them.  Lessons can be learned, and behaviour will improve.

But really neither direction will work so long as the government guarantees loans.  Banks will continue make bad loans because the government removes all the risk.  If you could borrow at 0.25% and lend at 4-6% with guaranteed repayment, how much money would you borrow and then lend?

[ArticMine]

...

is the CAD doomed aswell?  http://seekingalpha.com/article/1139891-can-the-canadian-dollar-collapse?source=google_news

No the CAD is not doomed because Canada is a gold producer and mining for gold, silver etc., in Canada will boom. Here in Northern BC it is not uncommon for example for a contractor that used to service the lumber industry (US housing market) turn to service the mining industry instead.

Furthermore because of Canada's cold climate, I strongly suspect that Canada is also a net exporter of Bitcoins.

[notme]

...

is the CAD doomed aswell?  http://seekingalpha.com/article/1139891-can-the-canadian-dollar-collapse?source=google_news

No the CAD is not doomed because Canada is a gold producer and mining for gold, silver etc., in Canada will boom. Here in Northern BC it is not uncommon for example for a contractor that used to service the lumber industry (US housing market) turn to service the mining industry instead.

Furthermore because of Canada's cold climate, I strongly suspect that Canada is also a net exporter of Bitcoins.

I'm jealous.  I loved the brief time I spent northern BC a few summers back.

[molecular]

Does anyone NOT think the dollar will collapse? Why?

Me.   I don't think the dollar is going anywhere, it's too tied into the global economy (too big to fail) so other countries have a vested interest in keeping it afloat. For now.

The question was not "will the dollar collapse NOW", but will it collapse at some point in the future. So it seams you don't disagree fully. The world is exremely pissed at the US scamming them (or at themselves having let it happen to them). They're looking at alternatives and developing them. It takes time, but the US Dollar is not here to stay.

The inflation rate is at like 1.7% right now, so I'm not particularly concerned with "skyrocketing inflation leading to americas collapse" or whatever glen beck was on about when he was shilling for goldline.

According to shadowstats inflation (of price) is around 5.x% in the US currently. Official Gov't numbers are manipulated downwards.

It's also (IMO) the best store of wealth right now.  Precious metals are WAY overpriced right now (as is bitcoin) and I wouldn't be surprised to see all three crash relatively soon.

Then again, a vast majority of my money is in stocks right now (which is just as risky as the other ventures) so take my opinion for what it is.

Imo, one should keep some cash ready at all times in case of a drop in a desired asset. Storing wealth in USD (or other government-backed FIAT) is not a good idea. Monetary base inflation will lead to the value of the respective currency dropping, there is no question about this. And believe it or not, that's the intention of the people doing it (if you're receiving the fresh money first, the devaluing isn't much of a concern to you because price inflation will hit long after you've spent the money and turned them into some assets or other).

Currency wars, the race to the bottom.

[Melbustus]

Govs that issue debt in their own currencies (basically all modern economies) need to, over time, buy up most of their own bonds (with newly printed money) to drop rates on the debt to zero or nearly so, and then just print enough to cover ongoing fiscal deficits. So, yeah, fiat will continue to be devalued forever, but there's no inevitable exponential feedback loop (ie, an Argentina/Zimbabwe/Greece style bond crises) in there.

Think of it this way:
The US currently funds itself 2/3 through taxation, and 1/3 through debt issuance (which is mostly financed through QE; ie, direct bond buying). What would happen if the US just eliminated all taxation and funded itself ONLY through money printing? The money base would expand by about 20%/yr. Ok... 20% inflation forever. Again, no feedback loop mechanism. Just large, steady, inflation forever.

Edit: this collapses eventually as government slowly expands that 20% number, such that gov *becomes* the economy. But that's an entirely different issue than a debt/bond crises.

[XxionxX]

Just large, steady, inflation forever.

Lol, wut? I may not know a lot about the world economy, but I do know the Earth does not have infinite resources. What makes you think that the US can keep even the stated 1.7% inflation rate going on forever? They can't keep inflating their dollars and expect the rest of the world to just take it laying down. Do you think China, Russia, and India will all just be like, okayface.jpg ?

No way in hell. The rest of the world is pissed that they are at a disadvantage and they all want to be in control of their own economies again.

[notme]

Govs that issue debt in their own currencies (basically all modern economies) need to, over time, buy up most of their own bonds (with newly printed money) to drop rates on the debt to zero or nearly so, and then just print enough to cover ongoing fiscal deficits. So, yeah, fiat will continue to be devalued forever, but there's no inevitable exponential feedback loop (ie, an Argentina/Zimbabwe/Greece style bond crises) in there.

Think of it this way:
The US currently funds itself 2/3 through taxation, and 1/3 through debt issuance (which is mostly financed through QE; ie, direct bond buying). What would happen if the US just eliminated all taxation and funded itself ONLY through money printing? The money base would expand by about 20%/yr. Ok... 20% inflation forever. Again, no feedback loop mechanism. Just large, steady, inflation forever.

Edit: this collapses eventually as government slowly expands that 20% number, such that gov *becomes* the economy. But that's an entirely different issue than a debt/bond crises.

You just defined exactly how an exponential process works.

>>> a = 1
>>> for i in range(1, 50):
...     print a
...     a = a * 1.2
...
1
1.2
1.44
1.728
2.0736
2.48832
2.985984
3.5831808
4.29981696
5.159780352
6.1917364224
7.43008370688
8.91610044826
10.6993205379
12.8391846455
15.4070215746
18.4884258895
22.1861110674
26.6233332809
31.9479999371
38.3375999245
46.0051199094
55.2061438912
66.2473726695
79.4968472034
95.3962166441
114.475459973
137.370551967
164.844662361
197.813594833
237.3763138
284.85157656
341.821891872
410.186270246
492.223524295
590.668229154
708.801874985
850.562249982
1020.67469998
1224.80963997
1469.77156797
1763.72588156
2116.47105788
2539.76526945
3047.71832334
3657.26198801
4388.71438561
5266.45726273
6319.74871528

[stochastic]

I hope the dollar collapses.  Then we can stop pricing goods and services in BTC/USD and instead just price in BTC.

[Topazan]

I didn't watch the whole video, but I've heard similar arguments before.

Here's what I don't understand (and I apologize if it's answered in the video): Why now?

We've have "unsound" money for decades.  Why now and not years ago?  Or, if the collapse is inevitable, why now and not later?  This can't be the first "stress test" our monetary system has had.

[Melbustus]

You just defined exactly how an exponential process works.

>>> a = 1
>>> for i in range(1, 50):
...     print a
...     a = a * 1.2

Yes, clearly. My point is more that people are implicitly thinking that this is going to go the way of a typical debt/bond crises, but there's no mechanism for that in a modern fiat nation that's simply willing to print to buy it's own bonds. You don't get investors suddenly demanding higher rates (because guess who the "investor" is?), which is why the 3rd-world style sudden collapses happen.

Obviously even 0.00001% inflation could not go on forever. But <10% could go on for quite some time (yeah, I know I used 20% in my extreme thought experiment - sorry). Too many people look at the debt situation and predict collapse in the next couple years (or by 2020, or what have you). My point is that this is because they're failing to realize how insidious the dynamics of QE really are. Don't get me wrong - a major restructuring must happen - but it'll probably be another couple generations.

[adamstgBit]

You just defined exactly how an exponential process works.

>>> a = 1
>>> for i in range(1, 50):
...     print a
...     a = a * 1.2

Yes, clearly. My point is more that people are implicitly thinking that this is going to go the way of a typical debt/bond crises, but there's no mechanism for that in a modern fiat nation that's simply willing to print to buy it's own bonds. You don't get investors suddenly demanding higher rates (because guess who the "investor" is?), which is why the 3rd-world style sudden collapses happen.

Obviously even 0.00001% inflation could not go on forever. But <10% could go on for quite some time (yeah, I know I used 20% in my extreme thought experiment - sorry). Too many people look at the debt situation and predict collapse in the next couple years (or by 2020, or what have you). My point is that this is because they're failing to realize how insidious the dynamics of QE really are. Don't get me wrong - a major restructuring must happen - but it'll probably be another couple generations.

No time is now! Fuck the high maintenance, always about to fall apart, fiat system. we have an alternative! its called BITCOIN,  know it, use it, love it!
 

[evolve]

Does anyone NOT think the dollar will collapse? Why?

Me.   I don't think the dollar is going anywhere, it's too tied into the global economy (too big to fail) so other countries have a vested interest in keeping it afloat. For now.

The question was not "will the dollar collapse NOW", but will it collapse at some point in the future. So it seams you don't disagree fully. The world is exremely pissed at the US scamming them (or at themselves having let it happen to them). They're looking at alternatives and developing them. It takes time, but the US Dollar is not here to stay.

I agree, but I think it will take a long time for this to happen (possibly not within my lifetime), so I don't have a "sky is falling" attitude about it.


edit: To clarify, I dont think the dollar as a monetary unit will go anywhere, but I do believe it will fall out of favor as a reserve currency sometime in the future.