View Full Version : Bye, Bye Old Dollar Standard
10-07-2005, 08:32 PM
Signals of the End of the Dollar Standard
October 5, 2005
Rob Lee is an economist who has been involved in investment markets for 30 years, the last few in nominal retirement.
I am an economist who worked for 25 years in large investment companies in South Africa. I “retired” to the UK a few years ago. For most of my career I lobbied for policies such as money supply targets and later inflation targets that were (implicitly) intended to substitute the role of gold as an independent anchor for the monetary system. I was never an advocate of any form of gold standard, unlike the current Fed Chairman, now ironically testing the fiat money system to destruction.
However, in recent years the scales have fallen from my eyes. As Voltaire said in 1729 “paper money eventually goes down to its intrinsic value – zero.” Every fiat paper currency before or since has confirmed to this prediction. A fiat paper currency that is also the global reserve currency becomes this problem writ large. A US Treasury official of old - Sam Cross - put it this way: “if you postulate a system that depends on one country always following the right policies, you will find that sooner or later no such country exists. The system is eventually going to break down”. In my view the Dollar Standard system is irretrievably breaking down, as signaled by four recent developments described below:
Taking a hard lesson from Germany, after the war, this is how it will go. Get your wheelbarrow ready, fill it with worthless paper money and transport it down to the grocery store to buy a loaf of bread.
Don't turn your back on it or someone will dump the worthless paper money and steal your wheelbarrow. :-?
10-07-2005, 08:38 PM
I expect mass rioting and total chaos ensuing cuz the grocery stores only have enough food stocked for 3 days. By then the sheeple will beg for martial law. Care to speculate when a good crash date is? :-P
10-07-2005, 08:45 PM
My guess would be sometime in the next 7-10 years. :-P
10-07-2005, 09:09 PM
ya know what's really fucked up, is that us common folk can't afford to actually buy gold cuz the shits valued at least 450-500 dollars an ounce. I hear that shit on the radio all the time saying," invest in gold, gold is the stuff that stands the test of time" and bullshit like that. Of course those fucking fuckers are talking about "gold stocks" which is the same as buying any other stock on fucking wall street. But as always, the sheeple don't know the difference and don't care so long as their portfolio is diversified and keeps them above breaking even. :-P
10-07-2005, 09:18 PM
"Close enough for government work," as the saying goes, NoHope. I don't think it is eminent (hey, what do I know, I changed my major from Economics to Accounting) but the Austrian Economists whom I look to for input on this, like the Honorable Ron Paul and the Mises Institute feel like we are in for an inflationary depression.
The price of things will keep escalating while the bankers draw the purse strings. Notable exception - the housing industry will go down like a rock.
With Keynesian Economics the rule of thumb is, when times are good, roll those printing presses, when times are bad, roll those printing presses.
It gives the impression of having great wealth and a bull market. People go crazy buying everything in sight 'cause "happy days are here again."
This has gone on for decades and the markets are screaming for an "adjustment." Dr. Paul said that the sooner it happened the softer the landing or, vice versa, the later it happened the harder the landing. That was at least 15-20 years ago or longer so I think we can forget the soft landing senario.
Just how painful it will ultimately be and how long it will last is anybody's guess. We are at the mercy (?) of the bankers, that's the way it works with a fiat paper currency. :-(
10-07-2005, 09:41 PM
Oh, hey, I would insist on buying the real thing and taking delivery of it forthwith IF I COULD AFFORD TO BUY GOLD, which I can't either, just as you said.
Face it, the bankers intend to end up with all the gold. Yes, they offer it for sale to the public and those who can afford it, buy it as a hedge against chaos.
Here's the kicker, what is to keep the "gubmint," which is totally controlled by those same bankers, (the borrower is subject to the lender) from declaring the ownership of gold illegal and having it all recalled? There's precedent on the books.
All purchases on the open market are recorded, much like registering your guns at point of purchase. Even if you don't have some goon in a black SWAT or Homeland Security uniform come and kick your door down, just try to use that gold.
I'll tell you what is an even better investment for the "little guy"; if you have a cellar buy regular canned goods, (not dried, what if they cut the water off or you have to move in a hurry where there's no water?) Buy spare parts for your car, things like belts that are apt to wear out or break, maybe even an extra set of tires. Wouldn't hurt to keep and extra 20 or so gallons of gas on hand - use it and replace it immediately so it doesn't separate on you.
I wasn't alive during the last depression but I heard many a conversation between my grandparents and my parents. They had food because they and later I lived on a farm but you can't imagine the social upheaval and civil disorder when the grocery store shelves are empty or, even worse, there's food and you have no money.
10-08-2005, 07:21 AM
I agree with what Barbara said, buy stuff you know you will need before you buy gold. The idea to get an extra set of tires is a good one too, back duing WWII you couldn't get tires since all rubber was needed for killing. If you needed new tires before the war started and put it off you were in a tough spot. Food, water filter, fuel, solar panel with batteries to charge, radios, LED flash lights, self defense stuff. It's easy to go overboard, just get things that can be used even if nothing happens so that it doesn't go wasted and don't buy so much stuff that people think you have lost your mind.
I'd suggest silver over gold if you wanted some kind of metal to use as a trade unit if the dollar became worthless. Silver spot is about $7.40 an Oz vs. $475 for gold. Buy some 1 oz silver rounds, they are big, heavy(1oz :lol: ), and have some flash. People like those and I feel they would be willing to take a coin or two for food or other things if times got real bad...if it never gets bad they make great gifts for kids and they can always be sold. Silver prices are fair...too much on the market to corner it. I buy mine on that famous online auction site...sometimes below the spot price.
I don't think FIAT money is the problem. There has to be some kind of publicly agreed upon value for a currency. There's other problems with fiat currency, not that it is a currency by government decree. I saw Bill Still's Money Masters video btw.
You can't eat gold, or silver.
Our money is temporary credit (world wide). The interest accruing to the private banks that lend out the loans comprising 97% of our money supply is permanent.
10-08-2005, 08:35 PM
diabolically brilliant is it not? A system designed to fail, yet they can determine when by how much they manipulate it.
10-09-2005, 03:59 AM
That's what's worried me about gold standard money since I was a teenager.
Who determines how many apples I can buy with an ounce of gold, versus a piece of paper with a picture of a ferret on it ?
10-09-2005, 08:45 PM
Shannow, with gold or gold backing for paper, the market determines what you will pay - supply and demand of/for products and services.
On a gold standard, the value of your money gently increases while prices stabilize or gently decrease.
And THIS, a fiat currency certainly IS the problem, especially combined with compound interest and 12:1 fractional reserve. :-?
10-09-2005, 08:54 PM
Barbara, I believe this and shannow are referring to the Bill Still plan for fiat currency from his Money Masters video, an excellent documentary.
Essentially, Still would eliminate the interst and fractional reserve banking, as well as the central bankers themselves. The power of coining money would revert to the Federal government, who would try to maintain a balance between supply and demand, only creating more money as the economy expands and requires it.
The Money Masters (http://www.themoneymasters.com/)
Of course, the flaw in his theory is that it still requires intelligent, uncorrupted men within the government to make the monetary decisions.
I'm not certain we could get back onto a gold or silver standard without an enormous currency devaluation.
10-09-2005, 09:29 PM
I agree that Bill Still's Money Masters is excellent.
As money is nothing more than a convienent medium of exchange it should simply match the size and vigour of the economy...we have data coming out of our ears so the bean counters can get an exact idea of whats going on.
I think the problem can only be solved with a profound change of heart in individual humans.
That profound change will not happen until massive suffering has ensued and people realise that knowing the ins and outs of your favourite sport team is in actuality, a quite useless endevour at the end of the day.
To carry on where TB left off... IF we are to continue with a modern society we can go essentially two ways moneywise:
Barter, which is looking better and better all the time, or some sort of public regulated and accountable money system.
Barbara, I'd love to argue about the Italian car manufacturer but I'd first want to know if you have any other disagreements with the two sentences I wrote on money in this thread & what I said about money on the Charlie Reese thread.
Thanks Freeman for expanding on the ideas of that video. Personally I think that video is best taken as excellent historical overview of banking and government corruption leading to war etc.
Quotations from the above linked Money Masters site:
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson
Issuing power? You mean they kind of like create it? So money does grow on trees!
History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison
Hey Madison, are you some kind of conspiracy theorist? Don't you know that the US State Dep't says that 'most' conspiracy theories aren't true?
If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations. -Andrew Jackson
Are you kidding me Mr. Jackson? Then why did 3 guys in 1913 sell the show away?
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
What dope are you smoking Lincoln? It's a dog eat dog world out there, and it should be - just ask Nomad.
10-10-2005, 12:56 AM
My point was that gold has no actual value, other than what we give it, so how does a "gold reserve" equate to real value ?
That being said, buying food by the calorific content, adjusted for minerals and vitamins...or clothes by the insulating value times the surface area, with adjustments for fashion/colour is impossible.
I don't see that gold is a replacement for the aforementioned piece of paper with a ferret printed on it.
What is the value of a T.V. ?
Nothing, or its weight in gold ?
10-10-2005, 07:59 AM
My point was that gold has no actual value, other than what we give it, so how does a "gold reserve" equate to real value ?
That is a good point, Shannow. Gold is simply another commodity itself, and all commodities are subject to fluctuations.
Obviously, if one major nation decided to revert to a gold standard, then what you describe is exactly the tack that the Rothschilds and others would take to undermine the process, probably one of the major reasons why the banksters hoard so much gold.
If all the world's economies tanked in a depression, and the money supply contracted greatly, there might be enough gold in the world to 'back' all the currencies. Chances are none of us would own even a sliver of gold in that scenario. There isn't enough gold in the world to reflect the value of our economies, probably why Nixon had to get the US off the standard - just a thought.
10-10-2005, 06:43 PM
There isn't enough gold in the world to reflect the value of our economies, probably why Nixon had to get the US off the standard - just a thought.
That's exactly what Nixon was told by his Rockerfellerian advisors. Toward the end of his first term, he started to question what Kissinger & Co. were spoonfeeding him...hence the need for Watergate.
I believe that Nixon's wage/price freeze was the act of rebellion that sealed his fate. Perceiving what the banksters were up to (runaway inflation and an overheated economy, leading to Carter's stagflation), the Dickster cleverly called a "timeout". The mainstream economic reaction was unbridled outrage; Nixon had temporarily derailed the Illuminati's sabotage of the American economy, and they were vocally unhappy.
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