Peter Schiff: Run on the Dollar

Off Topic Politics & World Issues
21

[quote]jawara wrote:
Regular Gonzalez wrote:
jawara wrote:
What really scares me is if we end being like the Weimar Republic.

The governor of the Reserve bank of Zimbabwe has actually publicly congratulated the US for following its lead in regards to monetary policy.

You know what really pisses me off about that? For some reason we (Americans) seem to think that if we get approval from some other country its the greatest thing in the world. Who gives a damn about what Zimbabwe thinks of us? They suck!!!

You need like 400K of their dollars to buy a can of Coke, and some dumbass is like "Hey, Wow, Zimbabwe think we have great economic policy. Anyway, I got some some money in the bank, I’m gonna buy as much silver as I can with it tomorrow.[/quote]

Lol, you completely misinterpreted my point.

Being endorsed by Dr Gongo is certainly not a good thing.

22

Why doesnt America just print its own debt free currency and do away with centralized banking?

23

[quote]Psicks wrote:
Why doesnt America just print its own debt free currency and do away with centralized banking?[/quote]

Because, odd as it may sound, debt = money. We’d be back to the argument against gold, that you can’t pyramid.

When a bank borrows from the Federal Reserve system, the bank is allowed to make loans up to about 10 times the amount borrowed. The Fed uses the debt incurred by the bank to expand the money supply in this way. Those new loans then form the basis for yet even more loans.

The trouble today is that this loan process is frozen. Everyone is afraid of the weakest link in the chain crashing this pyramid. The government has to become the lender of last resort.

But now the Feds are trapped. They have made loans in the trillions. They offer loans at zero percent, yet fear still overrides the system. You can’t force people to borrow money. Also, as my chart above shows, we are so saturated in debt that we CAN’T borrow anymore. We thus will get a deflationary collapse and the worst depression in American history. It may take 20 years to even begin to recover. By then, we’ll have our version of National Socialism.

24

[quote]skaz05 wrote:
dhickey wrote:
Wreckless wrote:
Quite right. And can you please explain to me how they did that?

Are you one of these tough guys who don’t need the goverment? You don’t need roads, schools, firestations, cops?

Noooh, government is BAAAAD ! ! !

If you are really interested in learning why start with one of the following:

Free to Choose - Milton Friedman
Economics 101 - Henry Haslett
The Politically Incorrect Guide to Capitalism

After one or more of these, you’ll be ready for the Austrians or Rothbard.

Add Basic Economics by Thomas Sowell to that list too.[/quote]

That was going to be my suggestion as well. Reading it should be a graduation requirement at public highschools.

25

Headhunter, thats kinda my point the American government should just print it own currency again just like Lincoln did and not have a privately owned & operated bank like the Fed print your money.

If the government can print a note worth a dollar why not just print the dollar?

26

[quote]Psicks wrote:
Headhunter, thats kinda my point the American government should just print it own currency again just like Lincoln did and not have a privately owned & operated bank like the Fed print your money.

If the government can print a note worth a dollar why not just print the dollar?[/quote]

Normally, this would be the time when my face would meet my sweaty, calloused palm.

But today, today folks, something incredible has happened. My forehead has officially met my desk.

What an eventful afternoon.

27

[quote]Beowolf wrote:
Psicks wrote:
Headhunter, thats kinda my point the American government should just print it own currency again just like Lincoln did and not have a privately owned & operated bank like the Fed print your money.

If the government can print a note worth a dollar why not just print the dollar?

Normally, this would be the time when my face would meet my sweaty, calloused palm.

But today, today folks, something incredible has happened. My forehead has officially met my desk.

What an eventful afternoon.[/quote]

I’m a bit bored right now, so I’ll help you out with this one. Take is easy on that forehead.

the dollar is a comodity like any other and also adheres to the laws of supply and demand. You print more, all of it is worth less per unit, and all goods and serives are worth more comparitively.

It’s actually not a bad idea (as far as keynesian ideas go) on paper if one owes trillions of dollars and contracts for that dept don’t have inflation clauses.

Problem is it completely fucks the market. Speculators of every kind (read consumers, producers, investors)must be able to predict demand and prices for the economy to function. Inflation, or deflation for that matter, that cannot be accurately predicted, cloud market signals and give us huge booms with corrisponding busts.

Probably most harmful effect is the undermining of interest rates. Agressive inflation combined with interest rates approaching zero means the borrower makes money and lender loses money just by lending. Artificially cheap and easy money encourage investments that would ohterwise not be prudent. When there is a flood of money (debt) looking for investment, the cost of that investment is bid up. Referense any bubble in history. Housing, telecom, etc.

So unless the benefit of reducing real dept outways collassal market colapses, probably not a good idea. Reduction of real long term debt is the only benefit of inflation. Any other claimed benefits fall victim to exchange rates and relative value.

All of this is incredibly simple yet habitually ignored.

28

[quote]dhickey wrote:
Beowolf wrote:
Psicks wrote:
Headhunter, thats kinda my point the American government should just print it own currency again just like Lincoln did and not have a privately owned & operated bank like the Fed print your money.

If the government can print a note worth a dollar why not just print the dollar?

Normally, this would be the time when my face would meet my sweaty, calloused palm.

But today, today folks, something incredible has happened. My forehead has officially met my desk.

What an eventful afternoon.

I’m a bit bored right now, so I’ll help you out with this one. Take is easy on that forehead.

the dollar is a comodity like any other and also adheres to the laws of supply and demand. You print more, all of it is worth less per unit, and all goods and serives are worth more comparitively.

It’s actually not a bad idea (as far as keynesian ideas go) on paper if one owes trillions of dollars and contracts for that dept don’t have inflation clauses.

Problem is it completely fucks the market. Speculators of every kind (read consumers, producers, investors)must be able to predict demand and prices for the economy to function. Inflation, or deflation for that matter, that cannot be accurately predicted, cloud market signals and give us huge booms with corrisponding busts.

Probably most harmful effect is the undermining of interest rates. Agressive inflation combined with interest rates approaching zero means the borrower makes money and lender loses money just by lending. Artificially cheap and easy money encourage investments that would ohterwise not be prudent. When there is a flood of money (debt) looking for investment, the cost of that investment is bid up. Referense any bubble in history. Housing, telecom, etc.

So unless the benefit of reducing real dept outways collassal market colapses, probably not a good idea. Reduction of real long term debt is the only benefit of inflation. Any other claimed benefits fall victim to exchange rates and relative value.

All of this is incredibly simple yet habitually ignored.[/quote]

It also destroys social capital that capitalism has created because suddenly to work hard and safe makes you a sucker that is fleeced by the system.

29

Inflation = the Government sells bonds to the bank, those bonds are then purchased with currency that the bank creates from… nothing.

Those bonds are sold because the Government wants to spend money that it does not want to raise taxes to get, so instead of paying this debt as a tax they spread it out across everyone through inflation.

Whats the best way to stop inflation? Issue money that is not based purely on Government debt, like I said if the Government can issue a bond worth a dollar why not just print the dollar?

30

Currency should be issued in the best interest of the people by the people just like the founders of the country intended instead of being issued by private for profit corporations at interest.

31

[quote]Psicks wrote:
Inflation = the Government sells bonds to the bank, those bonds are then purchased with currency that the bank creates from… nothing.

Those bonds are sold because the Government wants to spend money that it does not want to raise taxes to get, so instead of paying this debt as a tax they spread it out across everyone through inflation.

Whats the best way to stop inflation? Issue money that is not based purely on Government debt, like I said if the Government can issue a bond worth a dollar why not just print the dollar?[/quote]

gotcha, just printing the dollars .vs debt to create dollars. Right?

I doubt our creditors would like that. I am sure they would prefer to loan us more money or purchase more bonds to finance the creation of money, rather than have their current debt devalued with no additional investment to average out loss due to inflation.

I guess I am not too familiar with the details of our debt arrangements. Just creating money would certainly screw current bond holders and would not allow for cost avering, at least until inflation provided some addition investment capital. This may take awhile to trickle down.

32

[quote]Psicks wrote:
Currency should be issued in the best interest of the people by the people just like the founders of the country intended instead of being issued by private for profit corporations at interest.[/quote]

The best interest of the public would not to create it all or at least adhere to some sort of guidlines that would allow for accurate forecasting of the value. In this respect, just printing the money with full disclosure would probably be better than back door inflation. Still not better than no inflation.

33

No, when you abandon the old currency you simply buy it up over time with the new currency you just have to do it at a rate that does not devalue your new currency.

America has printed its own currency without a central bank at least twice before, but the damn banks just keep coming back…

I guess if I had a business that allowed me to print someone elses money and then charge them interest to get it I wouldnt really want to give that up either lol

Just think how much less you would need to pay in taxes and interest once your currency does not require direct taxation of the people to function… you could even make a huge profit off of taxing other peoples goods though tariffs and have a country that generates for its people a profit.

34

[quote]Psicks wrote:
No, when you abandon the old currency you simply buy it up over time with the new currency you just have to do it at a rate that does not devalue your new currency.

America has printed its own currency without a central bank at least twice before, but the damn banks just keep coming back…

I guess if I had a business that allowed me to print someone elses money and then charge them interest to get it I wouldnt really want to give that up either lol

Just think how much less you would need to pay in taxes and interest once your currency does not require direct taxation of the people to function… you could even make a huge profit off of taxing other peoples goods though tariffs and have a country that generates for its people a profit. [/quote]

I am not following this at all. I think you are being sarcastic but not sure.

35

[quote]Psicks wrote:
Headhunter, thats kinda my point the American government should just print it own currency again just like Lincoln did and not have a privately owned & operated bank like the Fed print your money.

If the government can print a note worth a dollar why not just print the dollar?[/quote]

Look at the Fed chart again, which I posted. That debt either needs to go away (repudiation and hence deflation) or be paid off in hyperinflated currency. In either case, we get a depression. You should seriously hope for a deflationary collapse; hyperinflation is much worse. Look at the outright destitution in Zimbabwe.

Deflation would mean that SOME means of trade exists. Hyperinflation means no one will trust the paper money at all — would you trade food for a currency that loses value by the hour? No.

36

[quote]dhickey wrote:
Psicks wrote:
Currency should be issued in the best interest of the people by the people just like the founders of the country intended instead of being issued by private for profit corporations at interest.

The best interest of the public would not to create it all or at least adhere to some sort of guidlines that would allow for accurate forecasting of the value. In this respect, just printing the money with full disclosure would probably be better than back door inflation. Still not better than no inflation.[/quote]

The Fed was created because our government is forbidden to issue paper currency (I think. Is it the 4th amendment? I’ll look it up.). Only gold and silver may circulate as lawful money. So our leaders outsourced the job by creating the Fed, with big Wall Street banks.

This gave a lot of power to banks and political scientists. It also allows one to create a virtual empire: most voters would not pay ruinous taxes to become the world’s policeman.

Most Americans were/are suspicious of all government, as they should be.

37

The Federal reserve act is what gives the Fed the right to print paper currency, Congress posses the sole right to decide who will print and issue currency. There have been previous banks before the fed that congress has given the right to print money to.

I still think there is alot to be gained from abandoing fractional reserve banking and printing debt free currency.

Mabey its just me but I really dont like banks making profit by charging people interest on money that the bank is only allowed to print through direct empowermnet from the people (congress)… in fact they can loan out 10x as much as they actully have…

We let them charge us interest when they loan us our money… and they dont even have the money we are borrowing… no wonder the system is falling apart.

The 4th ammendment is what protects you from unreasonable search and seizure which has nothing to do with this.

38

[quote]Headhunter wrote:
dhickey wrote:
Psicks wrote:
Currency should be issued in the best interest of the people by the people just like the founders of the country intended instead of being issued by private for profit corporations at interest.

The best interest of the public would not to create it all or at least adhere to some sort of guidlines that would allow for accurate forecasting of the value. In this respect, just printing the money with full disclosure would probably be better than back door inflation. Still not better than no inflation.

The Fed was created because our government is forbidden to issue paper currency (I think. Is it the 4th amendment? I’ll look it up.). Only gold and silver may circulate as lawful money. So our leaders outsourced the job by creating the Fed, with big Wall Street banks.

This gave a lot of power to banks and political scientists. It also allows one to create a virtual empire: most voters would not pay ruinous taxes to become the world’s policeman.

Most Americans were/are suspicious of all government, as they should be.
[/quote]

My bad. The issue is unclear. Instead of getting rid of fiat money once and for all, they didn’t ban the practice it seems. I guess every politician can’t resist screwing the public.

39

Its a whacked out world.

The S&P is expected to earn $42 this year. At 920 (about where it is now), that’s a PE of roughly 22. This number is what we look for in boom times. During bad recessions (1982, 1974, 1942, 1931), the PE is closer to 10!!

That means a market of 420, not 920.

If that happens, and the dollar is in freefall, the best thing to hold might be a lot of food and a couple of shotguns!!

40


Just because I thought it funny, and this thread is the closest thing on page 1 of this forum to the topic of the cartoon…