The Dollar Is In Danger of Collapse
60The Humble Greenback
Treasury Bond Auctions
A funny thing happened at a recent auction for five year Treasury bonds. It seems that nobody wanted to buy them. Given the amount of craziness that our government has been engaged in over the last almost year, it's not surprising that people are hesitant to take on more Treasury debt.
It's interesting that bonds were originally sold by the government finance World War I. After the war, seen that they had a good thing going, they continued to sell bonds in order to fund public works projects and, finding that budget slur pluses were not enough to completely unlimited toward debt, bonds were used to refinance the war debt over longer and longer periods of time. One of the things that quickly happened was that secondary markets sprung up that traded bonds in such a way that somebody could buy a Treasury bond and sell it for more than they bought it for. a consequence of the secondary market offering such attractive interest rates was that there soon became more buyers for Treasury debt then there was get to sell.
Since the government was obviously not selling the debt for what the market would bear, the Treasury Department began auctioning Treasury bonds which were then issued on a pro-rata system. So if you wanted by treasury debt, you would place a bid along with a certain number of bonds that you wanted to buy. If you are the highest bidder Treasury would fill your order, so to speak, then the next highest bidder would have their order filled, and so on, until there was no more debt sell. One of the things this day, was give an investor pretty good idea of how much confidence there was in the policies of the federal government. If, for example, people were buying up debt, you can be pretty sure that investors felt as if the current standing of the United States government was reasonable. The system is pretty much worked for the last 70 years, or so.
A Fly in the Ointment
But now, things have changed. One of the ways the government has been able to finance its operations running deficits that has, is through the sale of these Treasury Bonds. Foreigners were willing to finance its operations, because the United States was seen as a much more safe haven for parking your wealth than many other places in the world. Also interest rates were attractive, which made people even more willing to buy up debt debt. But, much like a binge drinker, the availability of so much credit has unforeseen consequences.
If one looks at the panic of 1819, or the stock market crash of 1929, a single thread is common to both events. That is to say, too much credit. We have a situation with too much credit, people seem to lose their perspective. After all, you're using other people's money, and other people's money never seems as real as using your own money. Some mistakes are made, signals get scrambled, after too many of these comes the inevitable crash. We, of course, saw this towards the end of last year.
Danger Will Robinson
In previous panics, we didn't have a massive welfare state support, so there was no reason to continue allowing easy credit or expanding the deficit. In addition, there was no central bank, so you really couldn't create money out of thin air, like the Fed does today. But now we have this massive welfare program, that our politicians are getting set to expand even further. We can't even pay for what we have, and they want to add more to it. That could very easily be used as the definition of insanity.
The only other option, is to continue to create running out of thin air, but without foreigners buying a part debt, we are going to see price inflation. The deficits are getting so high, that we might even see hyperinflation. Which is why a belief that the days of the dollar are pretty much numbered. As soon as foreigners stop buying our debt en mass, we're going to see prices go through the roof. If you think things are bad now, wait till that happens.
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Fiat money only has purchasing power as long as people believe it does. Once they lose that faith, usually because the printing presses have been running overtime, people dump the fiat money and buy anything else with it. For a modern example, look at Zimbabwe. They've gone so far as to stop using their own currency and now use dollars. For historical examples, Germany in the 1920's, the Confederate Dollar, French Assignats, and of course the Continental. Fiat money, sooner or later, loses all of it's value. The temptation to reap short term rewards is too much for the people running th system to resist. That's why hard currency is the only way to have a stable economy in the long run.
There are 110 Central Banks in the World... all perpetuating a self imploding "Debt Model" based on what is essentially electronic currency whose value is determined on perception.
The Debt Load Nationally is about $13 Trillion, Consumer Debt $26 Trillion = $39 Trillion. Estimated worth of all America's assets both private and public = $54 Trillion.
I'm still waiting to see the "plan" by anyone of how to repay the existing outstanding debt... not to mention the continued borrowing.
What people in the United States don't know is that Governments are borrowing from Governments. The State of California for example is borrowig heavily from the Federal Government... billions! How will they repay the Federal Government... the very Government who in turn is determining how much Financial Aid they will give back to California.
There is an old episode of "Married with Children" where Peg Bundy starts selling cosmetics for a commission. She starts telling Al she is making all kinds of money. And she is... except she is making her commissions from purchases she is making herself.
People do not understand the Money Supply, they have no idea what the Federal Reserve is or what it does, they don't understand how Fractional Reserve Banking creates money out of nothing at two levels... first at the Federal Reserve level where money is printed, then each and every time a loan is made.
Ignorance is not going to solve the problem. We are in serious serious trouble. Hard Assets... property, homes, equipment are not going away. The problem is going to be protecting them from the masses when no one has a job and has to find a way to put a roof over their head and eat.
This is not a doomsday scenario... this is an eventual reality. Those who live in small rural communities where people can bad together to protect a common principal and beliefs will fare the best. Those in concrete cities incapable of working land and protecting the land are in big big trouble.
BBGBS's. BringBackGreenbacks.
We must use a fiat currency that is based on NOTHING but its designation as legal tender. Money is not a commodity; it is an act of law, not of nature and has no intrinsic value. Money is NOT wealth. Resources, and that includes human resources, are wealth and all resources belong to all the people.
All lobbying and all corporate influence must be completely eliminated. All corporations must exist only as nonprofit entities whose function must be proven beneficial to all. Said existence must be allowed only by limited government charter and only for a predetermined time. If, after the stipulated period, a corporation cannot produce indisputable, factual data showing that its operation is contributing to the general welfare, its charter must not be renewed.
The u.s. must withdraw from the international monetary fund, the world bank, and the bank of international settlements until such time as these entities become publicly held rather than private, for-profit, operations. They may continue to exist, not for profit, but in the interest of international commerce in a purely administrative capacity.
Without these fundamental changes to the way in which we perceive money and its purpose, the population of Earth will inexorably continue its transformation into a bilateral caste system of masters and servants.
There will be no improvement but rather a steady decline in the quality of life as long as "profit" remains the motive for everything. Mammon has become the god of choice in amerika and the kapitalist jihad is spreading the worship of money and power around the world.
The founders of america, some presidents and other politicians have warned of the coming of this day.
“The end of democracy and defeat of the American Revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations.
The Bank of the United States is one of the most deadly hostilities existing against the principles and form of our Constitution. The system of banking is a blot left in all our Constitutions, which if not covered will end in their destruction. I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity is but swindling futurity. “
Thomas Jefferson
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
Abraham Lincoln
"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."
The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in 1933
Um NFTE, we have a fiat currency right now. It's called the greenback. Secondly, I take issue with your consideration of "all the people" having all the wealth vested in them. Communism did that and look where it got them. Wealth and property belong to individuals, not some ill-defined group like "the people". If you strip people of their property and the ability to accumulate it, you've only enslaved a people, not set them free.
It amazes me that you quote people like Jefferson and McFadden, without a real understanding of what they were arguing for and against. Personally I think Andrew Jackson would have been a better source for quotations against the Bank of the United States. If you don't believe the Fed is a public institution, I'd suggest you consider the following article: http://mises.org/daily/4171
The gist of the article is simply this. While private banks do own stock in the Fed, so to speak, control of the Fed is vested in the Board of Governors of the Federal Reserve. Ownership does not necessarily mean control. That's where the "banks control the Fed" thesis falls apart. The Fed itself says this on it's own website:
"The holding of this stock, however, does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations. It is merely a legal obligation of Federal Reserve membership, and the stock may not be sold or pledged as collateral for loans. Member banks receive a 6 percent dividend annually on their stock. (p. 12)"
http://www.federalreserve.gov/pf/pdf/pf_complete.p
In retrospect, it would seem McFadden had no real idea of what he was talking about. I'd stick with guys like Jefferson and Jackson.
Your second point about making all corporations and businesses not for profit is equally misguided and irrational. A sound economy is built on savings and investment. Without profit to pay dividends to investors, why should people invest their hard earned money in companies, which allow then allow those companies to expand their products or services. That creates jobs and new customers all the while driving prices down and making it easier for people to live the good life. What exactly is wrong with that?
Interesting user name; defense tech.
I'm not interested in debating with you. My comment was more in response to MikeNV than to your "hub".
Your position is clear and, in my opinion, so delusional as to be almost religious in its zeal. You have chosen Mammon as your god. At least you believe the choice was yours. Believe whatever you like.
I've simply offered what I know. What you do with it is of no concern to me.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” —Henry Ford
"The study of money, above all other fields in economics, is one in which complexity is used to disguise the truth or to evade truth, not to reveal it." —John Kenneth Galbraith
The currency presently in use is the federal reserve note. No other type of bank note is currently being produced. No U.S. dollar notes have been produced since january of 1971.
The government borrows money from the privately owned federal reserve, a central bank just like the old bank of england, which must be repaid with interest.
Let's say the government needs a billion dollars. The treasury is authorized to print $1 billion in U.S. bonds, IOUs, which go to the bankers. The fed pays the treasury around $1,000 per billion to print the federal reserve notes, which the government uses. The interest that is charged on these notes becomes the burden of the american people and no notes are ever printed for the purpose of paying the interest.
Since the federal reserve act was passed in 1913, the government had become indebted to the bankers for at least $5 trillion. Payments on the interest alone, which will never come to an end, were costing the american people around $400 billion a year. With what's been happening lately, $5 trillion is small change. I doubt that anyone even knows with any accuracy what the actual debt is now.
Incidentally, the billion in bonds that the bankers got from the government lets them create another $15 billion to lend out at interest. That means, with the original billion, they can have $16 billion loaned out, earning them interest and their only cost was the $1,000 for printing $1 billion in federal reserve notes.
This is usury of the highest magnitude, plain and simple.
“If all the bank loans were paid up, no one would have a bank deposit, and there would not be a dollar of currency or coin in circulation. This is a staggering thought. We are completely dependent on the commercial banks for our money. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp upon the picture, the tragic absurdity of our hopeless position is almost incredible - but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and the defects remedied very soon.”
- Robert H. Hemphill, Federal Reserve Bank of Atlanta
"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations."
- Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982
Farewell america. Your day is done.
Leretseh 2 years ago
ledefensetech, I'm curious, do you have any idea what makes fiat money valuable? If so, please explain. You'll need more than a layman's knowledge of finance to answer this one. You seem to have it, so give it a try.