Posted by Bret4207 on February 27, 2014 at 16:03:50 from (64.19.90.196):
In Reply to: Bitcoin posted by Traditional Farmer on February 26, 2014 at 05:21:45:
While I think Rods summation of the way the Fed is working our fiat currency is basically accurate, you leave out a few things that cause people to become concerned. The Fed answers to no one except themselves. Although we let them dictate and control our currency to a very large extent, they don't answer to us or the President or Congress or the taxpayer. They don't even answer to Wall St. They answer to themselves and other international bankers who play the same game in other nations. Calls to audit the Fed have come and gone for some time now. We don't what they're doing, who they lend money to, what games they play with other people and what deals they've cut. It's nice to think they all know exactly what they're doing and have flawless character and foresight. But recent history makes any observant person doubt that possibility exists. What little we do know is that they've lent enormous sums to some very high risk nations. That money isn't "theirs" so to speak. In fact it's probably less "money" and more credit or digital loans of electronic credit of some form. Either way, it jeopardizes our currency and our credit as a nation. That bothers me- a lot.
Then we get into the idea that printing money without any solid asset behind it isn't just the way things are done, but that's it's somehow "good for the economy". My knowledge of economics is that of a layman that's read a lot of articles and a couple of books, so maybe I'm missing something basic, but I'll say it anyway. Yes, if we were just tied to gold we'd not have the currency in circulation we do now. The total of all the gold ever mined in the world is only valued at about $8.2 trillion US dollars and that was when it was at $1500.00 per Troy ounce. But we have almost twice that in debt. That bothers me. We owe more than all the gold reserves in the world combined! We can only do that through fiat currency, a currency which only has any value at all because "we agree" it has value. That bothers me too. What happens when "we" decide not to play the game any more? It's already starting to happen on the world markets where, IIRC, Chinese currency is starting to considered safer than US dollars. That spells HUGE trouble for us.
Then there's the debt I mentioned. Yeah, big deal, right? I believe it's impossible for most people to even begin to grasp what $17 trillion represents. When you toss out that the US has $122 Trillion in unfunded liabilities their eyes just glaze over. I'm not even going to touch that, lets just look at that debt it $17 trillion. We've all heard that "China owns most of our debt." Well, it's true they used to, but not anymore. These days the Fed owns most of our debt. You get that? We owe ourselves money, an awful, awful lot of it. Now if we were to apply that to real world situations, well, you can't because there IS no real world situation you can possibly think of that mimics this scheme. We borrowed money when the dollar was worth a dollar, then we flooded the market with dollars causing them to lose a lot of value. Then we took those same dollars that were worth maybe 60 or 65 cents compared to when they were borrowed and bought back the debt. On the face of it, that sounds like a real smart deal doesn't it? Stop and think about this- what did a gallon of gas cost 20 years ago? What did a weeks groceries cost then? Or a set of tires? Or a house? We all know the answer and most people will say, "We'll, yeah, but that's inflation. Prices always go up." That's partially true. Prices do tend to rise on average. But you have to stop and look at the bigger picture. What would we be paying for that gallon of gas if the dollar was still worth a dollar? Gas (oil) is bought on the world market. It doesn't really matter where the oil comes from, it's going to sell at on the world market. Same with a lot of other stuff. When the dollar was worth $1.00 (pick a time, it's all relative) you could buy a dollars worth of gas. But now we've put a zillion new "dollars" out there to "drive the economy" and (more importantly) to pay off that debt. (Actually, it's not to pay the debt off at all, it's to change the status of the debt, to change the owner- think "bundling" and the housing bubble!) So now your dollar only buys 60 or 70 cents (or maybe 10 or 15 cents depending on how far back you go) worth of gas above and beyond inflation. THAT is the problem with the Fed issuing a gazillion dollars in currency and THAT is the problem with devaluing our currency as they've done with QE1 and 2, etc. That's also the problem for anyone with run of the mill investments or a retirement package- unless you can beat both inflation AND devaluation you're going to lose every single time. Unless your land and home can beat both inflation and devaluation your "investment" in a house and land is a bum investment.
Someone was talking gold. Look at gold in relation to fiat currency and devaluation. Gold is still worth $20.00 an ounce in one respect. It's not that gold has risen in value at all, it's that our dollar is worth 12 or 1500 times LESS than it was when a $1.00 gold piece was still used as currency at it's face value. Or look at it this way- if the US didn't have a $17 trillion dollar national debt, if it didn't have $122 trillion in unfunded liabilities, if we weren't running deficits every single year...what do you think the dollar would be worth?
You can trust the Fed, you can stick your head in the sand or you can just let your eyes glaze over and think about football if you want, but it's all real and all very much beyond our control at this point. You'd better come to the realization that NO ONE has ANY PLAN to pay down our debt or control the Fed and that means all of us are on the hook and so are our kids and grandkids and great grandkids on down the line. We are Greece, we are the Wiemar Republic, we are repeating the same plays and it's eventually going to end the same way regardless of the Fed.
This post was edited by Bret4207 at 16:12:00 02/27/14.
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