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Dennis G
09-06-2010, 12:20 PM
Is deliberately inflated?

Say you wake up one Sunday morning and the bid news is that the USA has devalued the USD by fifty percent.

Besides gold essentially doubling in USD price, what happens to exports, imports, the price of oil (probably doubles)...etc.

Would that be good for the USA in the long term?

Would love to explore some possibilities.

Dennis G

goldenthusiast
09-06-2010, 12:30 PM
China will be left holding the bag. Retirees will be toast, but they are the fools who allowed the country to be flushed by foreign lobby anyway.

TedNugget
09-06-2010, 12:36 PM
China can adjust her currency too.

Think of this as Economic MAD.

China could go for the gold and seek to become the equal of the US economically.

AND Yes, that means militarily also.

==========

Anyone here notice the quote from the Joint Chief?
#1 threat to US stature is _____________________

savagegoose
09-06-2010, 12:43 PM
amrerica becomes a place for manufacture again, no more foreign cars, and maybe electronbics become expensive.

Westerner
09-06-2010, 12:49 PM
People would wished they cashed out of their 401ks, etc... and took the tax hit to buy real goods before the devalue. :eek:

MT Freeman
09-06-2010, 12:57 PM
Never happen. Everyone holding a mortgage in USD would now have half the value. Talk about a rush to the doors. Any action China would make would want to keep USD higher (at the current level) because we're all in this together.

goldenthusiast
09-06-2010, 01:05 PM
Never happen. Everyone holding a mortgage in USD would now have half the value. Talk about a rush to the doors. Any action China would make would want to keep USD higher (at the current level) because we're all in this together.

I have a mortgage. I am not sure what you mean.

opiumbox2000
09-06-2010, 01:20 PM
I think he meant the note holder (The Creditor) would be hurt

The debtor would be ecstatic

Until the home-owner realizes that the global economy would probably go into free-fall after such a dramatic devaluation. Jobs will be scarce and any money you made would probably be better spent on necessties like food, electricity and heat - not continuing mortgage payments on an over-inflated asset in which supply of housing will outstrip demand for housing for at least the next 15-20 years

Irrespective of said currency devaluation

Dennis G
09-06-2010, 01:33 PM
I am thinking that oil would immediately double in price (in FRN) so domestic natural gas would be a good thing, and those things that can run on or be powered by NG.

If the price of gas goes to 6 or more dollars per gallon, I would imagine electric cars would be more popular.

I agree that manufacturing here in the USA would increase.

Maybe things would get better.

Dennis G

youngman
09-06-2010, 04:24 PM
Many countries and companys would quit doing business with us...or at least in US Dollars....anything imported would double if not more as some would no longer be available..your local grovery store will be smaller with less options..liquor store too....no more travel to far away places ..to expensive..we would be a country that watches the world around us...not the leader that we once was...people will try to inflate their good to make back the money they lost in the deflation....hyperinflation will start...there will be shortages of many things...and everyone will be angleing for the higher price...and the government regulations will be worse and no one will open a factory here....except the goverment run ones....and they donīt produce....and our deficits will still go up and up and up....

jeffersonian
09-07-2010, 08:50 AM
Is deliberately inflated?

Say you wake up one Sunday morning and the bid news is that the USA has devalued the USD by fifty percent.

Besides gold essentially doubling in USD price, what happens to exports, imports, the price of oil (probably doubles)...etc.

Would that be good for the USA in the long term?

Would love to explore some possibilities.

Dennis G

Everything would cost more overnight. We make little here anymore, so buying basics would cost double. We are not prepared to start producing here again yet. I think people will make due without stuff, bills will probably go unpaid because unable to afford, driving to work may get to expensive. Will probably see a rise in fresh produce stands, backyard gardens, and making items oneself or bartering for something to avoid the lose of dollars you have been subjected too.

See, it's hard to say exactly what will happen cause they want one world currency, and depending of if they get that or not, it's hard to say what will happen here. One thing is for sure, any way you slice it we are in for a bumpy ride ahead.

jeffersonian
09-07-2010, 08:51 AM
People would wished they cashed out of their 401ks, etc... and took the tax hit to buy real goods before the devalue. :eek:

Amen. This will probably be the reality of it.

Dennis G
09-07-2010, 09:28 AM
See, it's hard to say exactly what will happen cause they want one world currency, and depending of if they get that or not, it's hard to say what will happen here. One thing is for sure, any way you slice it we are in for a bumpy ride ahead.

I am in agreement that we are in for a bumpy ride! BIG TIME!

So for me and my family, we have water, food, power, guns and ammo, a small garden, traps and nets and a small library of survival and do it yourself books - as well as some extended family and friends and neighbors all trying to be prepared for the worst scenarios.

I have net worth in PMs, Cash, rental real estate...

Dumped my equities, shorted the market a little with a small portion of the net worth.

I tell my friends and distant family members who think I am nuts...

DO NOT CONFUSE PREPARATION WITH PARANOIA. While I hope the worst does not happen, I and my loved ones WILL be prepared for it the best I know how.

I hope our "bumpy ride" ends with perhaps a smaller but stronger USA.


Dennis G

Carpenter
09-07-2010, 09:40 AM
Everything would still be a mess, what could it change?

All currencies, by virtue of US treasuries held, would devalue proportionately.

80% of US $'s are held overseas.
Hell, we'd suffer less than those holding the bulk of the currency.

Unless the dollars come home.:eek:

jeffersonian
09-07-2010, 09:52 AM
I am in agreement that we are in for a bumpy ride! BIG TIME!

So for me and my family, we have water, food, power, guns and ammo, a small garden, traps and nets and a small library of survival and do it yourself books - as well as some extended family and friends and neighbors all trying to be prepared for the worst scenarios.

I have net worth in PMs, Cash, rental real estate...

Dumped my equities, shorted the market a little with a small portion of the net worth.

I tell my friends and distant family members who think I am nuts...

DO NOT CONFUSE PREPARATION WITH PARANOIA. While I hope the worst does not happen, I and my loved ones WILL be prepared for it the best I know how.

I hope our "bumpy ride" ends with perhaps a smaller but stronger USA.


Dennis G

Your very smart. Wish I had more assets to prepare, but have to get by with what I have. Problem is, once word gets around you are prepared, don't expect a friendly welcome from some people. It's sad, I too have hard time convincing family members and friends of what's happening, and taking some precausions. Unfortunately if you wish to help them, you either have to pick up the slack from what they refuse to see or do anything about, or let them fend from themselves.

I see some tough personal decisions ahead for many of us.

Silken
09-07-2010, 10:10 AM
Chaos, confusion, disorder, not to change the thread but I have done my part to warn friends and family.,. some think iam crazy and others know but fail to prepare., and yet ask me whats the "word".... its gotten to them looking for me for direction.....

"were coming to your house!"
"where we going to meet?"
" we need to have a plan!"


All I know is they have to bring SOMETHING to the table..

and its getting exhausting...its like a slow motion car wreck at break neck speed.:(

Jonathon Ross
09-07-2010, 12:54 PM
It's an interesting exercise but I don't see how it could happen. If the dollar were devalued 50%, would I have to double up on my mortgage? What if I rent...would the landlord require me to send double the amount? What would be the value of let's say a half a million dollar house? Would it now take a million to buy it? More importantly to government, what about that $15,000 property tax bill...will they accept my 50% devalued dollars or want me to send them $30,000?

This has been speculated for years but I just don't see it happening. They will definitely devalue our dollar but only because they will be printing many more of them causing high inflation or possibly hyperinflation.

Dennis G
09-07-2010, 01:12 PM
[QUOTE=Jonathon Ross;1068963]It's an interesting exercise but I don't see how it could happen. If the dollar were devalued 50%, would I have to double up on my mortgage? What if I rent...would the landlord require me to send double the amount? What would be the value of let's say a half a million dollar house? Would it now take a million to buy it? More importantly to government, what about that $15,000 property tax bill...will they accept my 50% devalued dollars or want me to send them $30,000?

I think that your mortgage would not change...it was a contract in dollars, the dollars did not change...

Oil is imported (or at least a good portion of it) so the price of oil in dollars would double...that would impact the price of gas at the pump.

The $15,000 property tax bill is still that, but imagine that the assessor would be changing it in the coming years...

If you rent, the landlord would accelerate his original plans to increase your rent, roughly in accordance with how your salaries go up because of the costs of imported goods.

I believe that the USA would of necessity return to making stuff, instead of shuffling paper....

Dennis G

Ag gnostic
09-07-2010, 02:23 PM
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axRgXYrMdWoA

See what happened in Venezuela when they did it last January.
(I actually never looked into what happened).

Here's something:

http://www.latinamericamonitor.com/file/91019/macroeconomic-forecast-venezuela.html

goldensilver
09-07-2010, 05:58 PM
didnt they do this once already?

oh yes back during the smaller depression this one is bigger.

but things did get better right?

but im hard pressed to believe they could devalue the dollar anymore seems like its lost 93% of worth since 1916 the fed has done such a great job of robbing ppl.

SUMOSABE
09-07-2010, 06:04 PM
didnt they do this once already?

oh yes back during the smaller depression this one is bigger.

but things did get better right?

but im hard pressed to believe they could devalue the dollar anymore seems like its lost 93% of worth since 1916 the fed has done such a great job of robbing ppl.

That's correct - and have you paid your.....lately?

Sales Tax
Hotel Tax
School Tax
Liquor Tax
Luxury Tax
Excise Taxes
Property Tax
Cigarette Tax
Medicare Tax
Inventory Tax
Car Rental Tax
Real Estate Tax
Well Permit Tax
Fuel Permit Tax
Inheritance Tax
Road Usage Tax
CDL license Tax
Dog License Tax
State Income Tax
Food License Tax
Vehicle Sales Tax
Gross Receipts Tax
Social Security Tax
Service Charge Tax
Fishing License Tax
Federal Income Tax
Building Permit Tax
IRS Interest Charges
Hunting License Tax
Marriage License Tax
Corporate Income Tax
Personal Property Tax
Accounts Receivable Tax
Recreational Vehicle Tax
Workers Compensation Tax
Watercraft Registration Tax
Telephone Usage Charge Tax
Telephone Federal Excise Tax
Telephone State and Local Tax
IRS Penalties (tax on top of tax)
State Unemployment Tax (SUTA)
Federal Unemployment Tax (FUTA)
Telephone Minimum Usage Surcharge Tax
Telephone Federal Universal Service FeeTax
Gasoline Tax (currently 44.75 cents per gallon)
Utility Taxes Vehicle License Registration Tax
Telephone Recurring and Nonrecurring Charges Tax

JSutter
09-07-2010, 06:57 PM
The price of everything would double overnight, except labor. It would take a while for people to negotiate raises so people would be paying double or more for everything on their current income. It would be difficult for anyone working paycheck to paycheck or who had little to no savings. People would starve and not be able to buy gas or heat or cool their homes.

mysticsalem
09-08-2010, 08:09 PM
The money supply represents the whole of deposits in financial institutions, or the money outstanding and not accounted for by any other measure. This money is often very fluid, flowing in and out of the system, and is a key measure of economic health. If the money supply is too much, inflation could result. If it is too little, economic growth (http://www.wisegeek.com/what-is-economic-growth.htm) may not occur.
Given the dangers of inflation or no growth, the U.S. Federal Reserve (http://www.wisegeek.com/what-is-the-federal-reserve.htm), and the central bank (http://www.wisegeek.com/what-is-a-central-bank.htm) of any other country under a monetary policy (http://www.wisegeek.com/what-is-monetary-policy.htm), will try to control the money supply by a number of different methods. In the end, the overall goal is to provide a balance that will generate sustained growth, but not so much growth as to cause inflation. Both extremes must be guarded against, and economies can change very drastically, making this a very difficult balance to accomplish.
Interest rates (http://www.wisegeek.com/what-is-an-interest-rate.htm) are one way of controlling the money supply. The Federal Reserve, or national bank (http://www.wisegeek.com/what-is-a-national-bank.htm), can arbitrarily change the rate of interest on money it lends to banks. If a high interest rate (http://www.wisegeek.com/what-is-a-good-interest-rate-on-a-credit-card.htm) is charged, banks make fewer loans. This leads to a restriction in the inflation rate (http://www.wisegeek.com/what-is-an-inflation-rate.htm), because there is less money to go around so it becomes more valuable. If interest rates are lowered, more commerce (http://www.wisegeek.com/what-is-commerce.htm) is likely to happen. Interest rates often get a lot of media attention because it has such a direct effect on the lives of many people, especially when it comes to long-term loans such as mortgages. The Federal Reserve Board usually meets once a quarter to consider this.
Another method the Federal Reserve has for controlling the supply of money is by buying bonds. The money from these bonds is then put into the system in order for it to be used by banks. These banks will take charge, and attempt to lend the money out in order to realize a profit. This provides an engine for economic growth.
If the Federal Reserve wants to restrict the money supply, it can also sell bonds. This reduces the money for borrowing because the money that would normally be used for such purposes is used to buy the bonds the Federal Reserve is selling. Thus, the supply of money is tightened, which should control inflation but could also choke the economy, if done to too high a degree.
The final way the Federal Reserve can control the supply of money is through the requirements for reserves. Each bank, credit union (http://www.wisegeek.com/what-is-a-credit-union.htm) or other depository institution is required to keep a certain amount of its money in reserves, defined as a certain percentage. The Federal Reserve can change the amount required for reserves, thus freeing up money or further restricting its use, depending on what the economic situation may call for.

JustaNumber
09-09-2010, 12:23 AM
Is deliberately inflated?

Say you wake up one Sunday morning and the bid news is that the USA has devalued the USD by fifty percent.

Besides gold essentially doubling in USD price, what happens to exports, imports, the price of oil (probably doubles)...etc.

Would that be good for the USA in the long term?

Would love to explore some possibilities.

Dennis G

Can you (or anyone else) explain exactly how this would occur? Presumably you imply that someone in the government or Fed would take some specific action to "devalue" the dollar. What would this action be?

I guess I'm confused because the dollar is not currently officially valued against ANYTHING, so how could someone make it officially worth a smaller fraction of nothing? When we talk about the dollar being devalued in the past (by FDR for example), that was when the dollar was officially valued against gold. Specifically 20 dollars was worth 1 ounce of gold, by definition or decree. So FDR was able to decree that effective immediately 35 dollars was suddenly now equivalent to an ounce of gold.

This can't happen today because the price of the dollar is not fixed to gold; gold is traded in the "free" market, and its dollar price cannot be officially set. Now what the Fed CAN do is vastly increase the currency supply, which has the effect of devaluing the dollar against everything, but this is a process that takes time to gradually work through the system, and manifests itself as the inflation of the price of everything, or put another way, since there would be more dollars chasing the same number of goods and services, it would require a greater number of dollars to purchase the same goods and services. But it doesn't happen overnight, such that there is a news story that the dollar was just officially devalued.

Perhaps you mean that the government could officially change the international exchange rates for foreign currencies? I'm not sure if that's possible, much the same as any attempt to fix any prices always resuts in failure.

Perhaps I don't understand what you mean. Please elaborate, thanks!

Stormdancer
09-09-2010, 12:26 AM
I'm curious too....excellent question! How would they manage it?

MoMoney
09-09-2010, 12:56 AM
The money supply represents the whole of deposits in financial institutions, or the money outstanding and not accounted for by any other measure. This money is often very fluid, flowing in and out of the system, and is a key measure of economic health. If the money supply is too much, inflation could result. If it is too little, economic growth (http://www.wisegeek.com/what-is-economic-growth.htm) may not occur.
Given the dangers of inflation or no growth, the U.S. Federal Reserve (http://www.wisegeek.com/what-is-the-federal-reserve.htm), and the central bank (http://www.wisegeek.com/what-is-a-central-bank.htm) of any other country under a monetary policy (http://www.wisegeek.com/what-is-monetary-policy.htm), will try to control the money supply by a number of different methods. In the end, the overall goal is to provide a balance that will generate sustained growth, but not so much growth as to cause inflation. Both extremes must be guarded against, and economies can change very drastically, making this a very difficult balance to accomplish.
Interest rates (http://www.wisegeek.com/what-is-an-interest-rate.htm) are one way of controlling the money supply. The Federal Reserve, or national bank (http://www.wisegeek.com/what-is-a-national-bank.htm), can arbitrarily change the rate of interest on money it lends to banks. If a high interest rate (http://www.wisegeek.com/what-is-a-good-interest-rate-on-a-credit-card.htm) is charged, banks make fewer loans. This leads to a restriction in the inflation rate (http://www.wisegeek.com/what-is-an-inflation-rate.htm), because there is less money to go around so it becomes more valuable. If interest rates are lowered, more commerce (http://www.wisegeek.com/what-is-commerce.htm) is likely to happen. Interest rates often get a lot of media attention because it has such a direct effect on the lives of many people, especially when it comes to long-term loans such as mortgages. The Federal Reserve Board usually meets once a quarter to consider this.
Another method the Federal Reserve has for controlling the supply of money is by buying bonds. The money from these bonds is then put into the system in order for it to be used by banks. These banks will take charge, and attempt to lend the money out in order to realize a profit. This provides an engine for economic growth.
If the Federal Reserve wants to restrict the money supply, it can also sell bonds. This reduces the money for borrowing because the money that would normally be used for such purposes is used to buy the bonds the Federal Reserve is selling. Thus, the supply of money is tightened, which should control inflation but could also choke the economy, if done to too high a degree.
The final way the Federal Reserve can control the supply of money is through the requirements for reserves. Each bank, credit union (http://www.wisegeek.com/what-is-a-credit-union.htm) or other depository institution is required to keep a certain amount of its money in reserves, defined as a certain percentage. The Federal Reserve can change the amount required for reserves, thus freeing up money or further restricting its use, depending on what the economic situation may call for.

I believe the Fed changed the "reserve" % down to 0 within the last two years which I feel is very scary...yet rarely talked about! :eek:

Stormdancer
09-09-2010, 01:02 AM
I believe the Fed changed the "reserve" % down to 0 within the last two years which I feel is very scary...yet rarely talked about! :eek:

last time I checked it was .89 %....less than one percent. If banks could find anyone to borrow it into existence their ability to create money out of thin air is virtually unlimited. Of course they can always loan it to each other....

ARCHANGEL
09-10-2010, 12:54 AM
Maybe all the government has to do is recall all existing currency and replace
with a new dollar. Give us two for one back. All 401`s, any electronic cash value automatically reflects the devaluation. Debt amounts may be left unchanged .

ARCHANGEL
09-10-2010, 12:58 AM
That is give the government 2 dollars for 1 new dollar back .

Carpenter
09-10-2010, 04:13 AM
Can you (or anyone else) explain exactly how this would occur? Presumably you imply that someone in the government or Fed would take some specific action to "devalue" the dollar. What would this action be?


Perhaps you mean that the government could officially change the international exchange rates for foreign currencies? I'm not sure if that's possible, much the same as any attempt to fix any prices always resuts in failure.

Perhaps I don't understand what you mean. Please elaborate, thanks!

Inform the world you intend to double the M3, and forex traders would do it for you.

Dennis G
09-10-2010, 07:03 AM
Inform the world you intend to double the M3, and forex traders would do it for you.

yeah, that might do it

A good question though, how do you devalue when the dollar is not pegged to anything. Perhaps establish that all them 30 year bonds out there will be called in for 50 cents on the dollar? Or paid off at only 50 cents on the dollar?

Not sure how they would devalue - in Argentina they just announced a new exchange rate against the USD.

Dennis G

Stormdancer
09-10-2010, 07:16 AM
Inform the world you intend to double the M3, and forex traders would do it for you.

That's the only way I can see that is both feasible and somewhat controllable.

The problem with that choice is that China, Japan, OPEC and Russia would probably ally just long enough to kick our butts up around our shoulder blades and even Europe might get in on the game. We'd probably find ourselves virtually locked out of global markets over night....if they didn't all just start dumping treasuries and wipe the dollar off the face of the earth altogether. Sooner or later war would almost certainly be the result.

We'd probably struggle to find enough money just to fly our soldiers back home from all the places they are now. Forget the equipment...abandoned in place.