Death of the Dollar, pt. 6589

[sdholloway56]

Fitch puts the US AAA rating on negative watch status.

Not on account of high issuance- the market is absorbing that easily, at ultra-low rates.

It is on account of political instability, in particular questions about the peaceful transition of power in the future.

Tends to happen to Banana Republics.

[erikjohnson61y]

Well, the dollar HAS lost 89% of it's purchasing power since 1933. Used to be worth 1/20th of an ounce of gold, now worth 1/1800th of an ounce.

Do you not realize that printing money only enriches the rich? Where do you think the money ($120billion per month) goes? It goes into the financial markets (stocks). Who owns the majority of stocks? Rich people.

Printing money is a stealth tax. It dilutes the value of the money people have in their pocket. Inflating the money supply above the rate of economic growth is regressive and immoral. This has been tried many times all the way back to Nero's Rome, and it ALWAYS fails. You cannot create value or wealth by printing money.

[sdholloway56]

Controlled inflation is near 100% the source of farm wealth, as it is for most Millionaire Next Door businesses.

The farming part is just keeping enough cash flow going to hang on while inflation lifts the debt away.

[sdholloway56]

If you’d like to go all Hard Money while the US is carrying $2M in debt, per capita, be my guest.

[bruce MN]

Probably need to hold a one shot asset auction first, before and in anticipation of the conversion. Some suggested that back in the Fall of 2008. Folks on both sides of the aisle.  I particularly remember it being proposed by Ag Forum Winger Icon and Hero Karl Denninger 

Then, as an old John Birch, Gold Bug, New Deal hating neighbor of mine used to say  back in the day, “they’d (whomever it was that he was sure that “they” was) need to give everybody 5 Bucks and start over.”

[nitefarm]

SO DOES CROOKED ELECTIONS 

[k-289]

MULTIPLE  BANKRUPTCIES  affects  the,   your ,   dollar  when  you  have  accounts  receivables  from  the  weasel  that  files  -  -  -

[erikjohnson61y]

I didn't say we could easily go back to hard money, but, as it has s0 many times, soft money corrupts because politicians cannot resist spending it. SD's argument about the farm being the asset is short sighted. When my folks got married in 1960, they bought a nice 3 bedroom 2 bath house on Highland Parkway in St. Paul (near the Snelling intersection) for $12,000. 

So yes, the land *appears* to have appreciated, but only part of it is due to productivity increases in ag. Most is fake, inflation-caused increase. Try telling a young farmer why it's so much better that land in south central South Dakota is  $5000/acre, to say nothing of what it is in an "I" state.

[sdholloway56]

Yes, in fact I wholeheartedly agree that asset inflation is not without a downside. 

As far as the farming thing (and as I said, most Millionaire Next Door fortunes), I'm not saying it is bad or good. I'm just saying how it worked out.

The one that will make you lay in bed at night wondering is the chart that shows the 39 year up cycle in rates ('43-'82) followed by the 39 yr down cycle ('82-'21) that drove the incredible asset inflation of the last 40 years.

Hard to figure whether to xxxx or go blind now.

BTW, that asset inflation has accompanied a trend where the increase in GDP from each dollar of aggregate debt has gone from like 5:1 to .50:1. 

That's some pretty harsh math there.

[bruce MN]

About once a year or so a convo comes up here that makes me think about this from back in the day

Not much has changed since the 1st time I read it, around 10 years ago:

https://www.macrobusiness.com.au/2011/05/overruled/