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jrsiajdranch
Veteran Advisor

Re: You guys who want to learn more about our fiat dollar............

JIm another thing besides our world view is prolly our age. I think in terms of 30 years out. What will you be doing in 30 years?  Don't take offense just understand that our position in life will impact our view.

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lln50nwin
Frequent Contributor

Re: You guys who want to learn more about our fiat dollar............

It truly was a diaribe and people have and should disagree with what you have said.

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Palouser
Senior Advisor

Your view makes invalid assumptions

There is nothing magical about any hard currency standard. Bretton Woods was implemented on a 'fiat value' for gold - $35. Hoarding and speculation was basically curbed by making it illegal to own gold. There was nothing special about this arrangement other than it was an agreement among nations to coordinate their monetary behavior to create a unified system that would encourage trade and predictability on a global basis. Nothing more, nothing less. Which is exactly what is being done today.

 

There were plenty of panics and economic upheaval while we were on the gold standard - which is why the Great Recession was compared to the recession of 1951, not the Great Deppression until the magnitude of the fraud was revealed. The Bush administration may have been in charge - but they apparently reacted appropriately because we were on the brink of the abyss. Inaction, based on ignorance or fear might have percipitated the worst economic disaster since 1929, and wars and famine might have been the result - because we were in lock-up mode.

 

The article you presented shows many biases and is strictly an opinion piece, and not one that pretends to be objective, and attributing current run ups in commodities to monetary policy and discounting the role of supply and demand in current markets is too far off base to be taken seriously.

 

Beyond all that, the Wall Street fiasco could have taken place regardless of what the monetary regime was, because the banks created their own money machines based of fraudulent and purposeful unethical tactics. Just exactly why the dockets aren't full of criminal charges for hundreds, if not thousands, of people is a real concern.

 



 

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teaspoon73
Senior Contributor

Re: Your view makes invalid assumptions

     The biggest question  with the Fed reserve buying treasuries from the Fed gov., to keep our interest rates low, under the name of QE-2, is there going to be a QE-3? QE- 2 runs out in March. With our friends in Washington in the cutting mode it will be interesting to see if they are ready to step up to the plate and stop wall streets slow morphine drip and not have a QE-3.  Ever see a heroin addict go cold turkey? Not pretty.

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Palouser
Senior Advisor

Re: Your view makes invalid assumptions

Using that same analogy I think one can compare the credit paralysis from the Wall St fiasco to going cold turkey. The DT's can kill the patient. Treatment in a hospital usually requires a regimen of drugs to ease the withdrawal and make it over the rough spots, even though they too may be habit forming. But, a schedule of reduced dependence - in time- can bring the patient back to health and allow him to make the necessary choices in rebuilding their life.

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GoredHusker
Senior Contributor

Re: You guys who want to learn more about our fiat dollar............

Don't let all the naysayers get you down JR. as the dollar trumps everything.  Here's a little history to show the relevance of the value of the U.S. dollar in terms of marketing.  On October 1, 1980; the U.S. had carryover stocks of corn around 1.6 billion bushels while the price was roughly $3.90 a bushel.  On October 1, 1984; the U.S. had carryover stocks of corn around 722 million bushels while the price was roughly $2.65 a bushel.  On October 1, 1985; the U.S. had carryover stocks of corn around 677 million bushels while the price was roughly $2.20 a bushel.  In five years, the carryout stocks had shrunk nearly 60% while.  Even though we only had roughly 40% of the supply of five years earlier, the price shrank roughly 45%.  Why?  The U.S. dollar bottomed in 1980.  By 1985, the U.S. dollar rallied just over 50% from its lows in 1980. 

 

Normally in times of World chaos much like we're witnessing in the Middle East, people flock to safe havens.  In the past, it was always the U.S. dollar.  This time around has been much different.  They're flocking to currencies, but they're flocking to the Japanese yen, Swiss franc, and the euro.  The euro is suprising considering all the unrest they've had in the past year or so.  It all but appears that people are betting on Europe's austerity measures, and they're betting against the U.S. quantitative easing policies.  What's really interesting about our quantitative easing policy is the fact that while the Fed is implementing Q2 and soon to be Q3 that states are actually implementing austerity because they don't have the means to print away their budget shortfalls. 

 

How does this all affect marketing?  If the powers that be decide to really get the deficit under control, this will provide a driving force for the U.S. dollar propelling it higher.  Once this occurs, it will have a negative affect on commodities.  From 1983 to 1984, we lost roughly 15% on corn price.  From 1984 to 1985, we lost roughly 10% on corn price.  From 85' to 86', we lost just over 10%.  We basically just stair stepped our way down.  By the time we hit 1987, we had dropped from a peak of roughly $3.90 to a bottom of roughly $1.40 a bushel.  There's been a lot of economists predicting $200+ oil prices.  If we implement Q3 and Q4, it's almost a certainty. 

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dapper7
Senior Contributor

Re: You guys who want to learn more about our fiat dollar............

thanks jr

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