The Falling US Dollar

[billinchina]

The US Dollar has been falling in comparison with other currencies around the globe for quite a while now. Congratulations Canada, our dollars are the same now (actually yours are worth more than US dollars).

Things are starting to make sense. Rising stock market at record highs. Rising oil prices at record highs. Rising real estate at record highs (well, except for a recent dip). Dollar goes down, prices go up and records are set.

I see purchasing power being eroded as inflation skyrockets for certain items.

So, if things continue, be very excited about rising PPC and rising domain values. However, since dollars will probably be worth less, perhaps you will be no better off.

Just my observations...

 

[gou]

You probably know that when the government was on a gold backed money system years ago, they had to have gold in their reserves to fund whatever they were funding. Now they do not.

The government could still deficit spend under the gold standard...

 

[Krossat]

umm i think both of you are saying the same thing now, and Gou i think Goodkarmaco is looking for a solutions, you are providing the facts and the problem at hand.

I think the question is :
What can fix the problem of overspending by the government, so that the economy can stabalize?

 

[Pound]

All I know is that is an AMAZING time to be buying as Brit!

 

[goodkarmaco]

Piror to 1914 every dollar was backed by gold and inflation was practically nil. The same basket of goods cost almost the same for about 100 years 1815 to 1913. That is the number one reason for a gold backed currency.

If money was borrowed it had to have gold backing it. That is why the dollars that did come out had the saying on them "backed by gold".

Our money then was not borrowed like it is now, or in other words a debt. Our dollar at that time was wealth. All dollars today are debt. Say what you will it really comes down to this.. you can have the dollar today that is backed by nothing. The dollar that is responsible for the boom and bust cycles that we see. A big bubble and then the burst. The prosperity and the hardship.

Or we can have the gold backed dollar with a stable economy.

 

[gou]

Piror to 1914 every dollar was backed by gold and inflation was practically nil. The same basket of goods cost almost the same for about 100 years 1815 to 1913. That is the number one reason for a gold backed currency.

If money was borrowed it had to have gold backing it. That is why the dollars that did come out had the saying on them "backed by gold".

Our money then was not borrowed like it is now, or in other words a debt. Our dollar at that time was wealth. All dollars today are debt. Say what you will it really comes down to this.. you can have the dollar today that is backed by nothing. The dollar that is responsible for the boom and bust cycles that we see. A big bubble and then the burst. The prosperity and the hardship.

Or we can have the gold backed dollar with a stable economy.

The Great Depression happened under the gold standard. The Fed was afraid of issuing new money to stimulate the economy because the amount of money they could create was limited by the amount of gold it had. In other words, if they used up their gold, the US economy would've faced a dead end. What saved the US was Keynesian countercyclical fiscal policy which encouraged the government to deficit spend. Now you want to reverse the sysem where we are in a standby mode for another Great Depression.

 

[goodkarmaco]

The fed was not as concerned as you may think about the fact that if they issued money it would run out of gold.

When Roosevelt ordered Americans to surrender their gold in 1933 he was not saving the economy, he was destroying capitalism. Capitalism required a check and balance that only gold could provide. If the government did not have enough gold to pursue a project, then it would have to wait.

Today we lack a gold backing. Our money is based on some kind of faith. The result is a uncontrolled market.

Their actions from day one was to get all the gold from the public and replace it with something "they" could control. They did not like the fact that gold was a contract. The contract kept them in check from plundering wealth from us. It was our gold and it represented the energy of its citizens.

 

[pergamon]

You see, you can write as much as you want but when the facts proof you're right I love it. Gold up almost 100$/oz in a month.

Anyone who went for the above in early october like I said made a killing. Silver up 4% today alone.

Watch gold. If it breaks above 850$, the old time high, the sky is the limit. Currently at 820$ and if it breaks 850$ soon we will most likely see 1000$ this year.

I don't think it will break 850$ near term but when it does it should break it nicely and close above 850$ before it is a strong buy signal.

Dollar at record lows versus Euro. Think this will reverse now too in near term. A major short squeeze could be unfolding with retesting of 1.40 or even 1.35. Long term: bet against the dollar.

As predicted last week: major setback in gold, we didn't break the all time nominal high of 850$. Might see a major pullback now as low as 760$. THIS IS A TIME TO LOAD UP THE TRUCK! Don't get fooled.

As I also predicted the $$$ has gained quite bit in the past several days due to the unwinding of the yen carry trade.

Focus on the broader picture: gold at 2000$ within 5 years. Possibly 850$ this year if the FED cuts rates again, if not when Q4 of the big banks are released.

The Great Depression happened under the gold standard. The Fed was afraid of issuing new money to stimulate the economy because the amount of money they could create was limited by the amount of gold it had. In other words, if they used up their gold, the US economy would've faced a dead end. What saved the US was Keynesian countercyclical fiscal policy which encouraged the government to deficit spend. Now you want to reverse the sysem where we are in a standby mode for another Great Depression.

The Great Depression will be a birthday party compared to the real great depression that will be caused by exuberant monetary expansion.

It is true that the Gold Standard was partialy caused by the Gold Standard (although not everyone agrees on that point).
Every empire in history that inflated its currency has failed over time. The US military is IMHO the only thing that keeps the view of the US as most powerful nation up. Economicaly it is a disaster.

 

[goodkarmaco]

Yes,

I agree this may be the last time to get on board the train. It is a major buy time as the lemmings are listening to Berneke, and are lulled into thinking they can control the drop. The government knows what is happening, they are causing it. They want to fleece the economy again, so they make statements such as, we are providing liquity to help the homeowners.

Too late, besides throwing more money at the problem only delays the bust and actually makes it worse. Citibank just took a huge write down.

 

[onewordonly]

The US dollar seems to have risen quite a bit in the last week (at least compared to the aussie dollar), it is around 88c compared to about 94c a week ago. I hope it keeps going back up like this...

 

[goodkarmaco]

The news will shake up the population soon.

It will read, gas $5.50 a gallon, energy shortages, housing market continues to wreck havoc on the economy, retail sales plumment on news of shaken U.S. economy, massive layoffs, inflation roars its ugly head, and then these words... gold and silver SKYROCKET!