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Gino
15th December 2009, 06:39
Just picked this item up on maxkeiser.com.
http://www.zerohedge.com/article/shadowstats-john-williams-prepare-hyperinflationary-great-depression


. . . The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold. . .


A good read, in case you haven't seen it.

Hypothesising on a currency collapse, I suspect that if the US Dollar is on the verge of collapse, from a strategic point of view, the US can not afford to let the Chinese escape from their US dollar position before this collapse occurs. If they did they would be serving up the global empire to the Chinese on a plater. If a currency collapse is inevitable, the interests of the US will be in maximising their competitive position post-collapse. In which case they will need to accelerate their debasment efforts to cut-off a Chinese escape from their position in US treasuries.

In short, if a currency collapse is in the future, I wonder if the USA has a possible motive to make it happen sooner, rather than later.

valerb
15th December 2009, 07:13
Just picked this item up on maxkeiser.com.
http://www.zerohedge.com/article/shadowstats-john-williams-prepare-hyperinflationary-great-depression



A good read, in case you haven't seen it.

Hypothesising on a currency collapse, I suspect that if the US Dollar is on the verge of collapse, from a strategic point of view, the US can not afford to let the Chinese escape from their US dollar position before this collapse occurs. If they did they would be serving up the global empire to the Chinese on a plater. If a currency collapse is inevitable, the interests of the US will be in maximising their competitive position post-collapse. In which case they will need to accelerate their debasment efforts to cut-off a Chinese escape from their position in US treasuries.

In short, if a currency collapse is in the future, I wonder if the USA has a possible motive to make it happen sooner, rather than later.

What's to stop the US from freezing all federal notes and simply pegging the value of the dollar to some artificially low price? Like the dollar to be on par with the Yuan. Then unfreezing the federal notes. Of course the world would scream and holler, but what's good for the goose should be good for the gander. We allowed other nations to get away with that for decades, maybe it's our turn. It would be one way to debase the dollar in a hurry. I just want someone to let me know a couple days in advance, so I don't get screwed along with the rest of the world.

Gino
15th December 2009, 21:49
What's to stop the US from freezing all federal notes and simply pegging the value of the dollar to some artificially low price? Like the dollar to be on par with the Yuan. Then unfreezing the federal notes. Of course the world would scream and holler, but what's good for the goose should be good for the gander. We allowed other nations to get away with that for decades, maybe it's our turn. It would be one way to debase the dollar in a hurry. I just want someone to let me know a couple days in advance, so I don't get screwed along with the rest of the world.

I thought the Yaun was pegged to the dollar? A bit recursive to peg the USD to the Yaun, pegged to the USD, pegged to the Yuan . . . . but my point was that with a motive to preserve their relevence, power and strategic position in the world, might they not actively seek to drag their competitors for global power down with them. Like sacrificing a bishop to take a queen in chess, the initial loss may ultimately improve one's competitive position.

In which case, can they (the USA) afford to wait while China, India & Russia trade their US$ reserves for tangible assets?

Or is there no strategy and the US is just bumbling along blindly into this predicted hyperinflation/currency crisis?

hippiebrian
15th December 2009, 21:58
I thought the Yaun was pegged to the dollar? A bit recursive to peg the USD to the Yaun, pegged to the USD, pegged to the Yuan . . . . but my point was that with a motive to preserve their relevence, power and strategic position in the world, might they not actively seek to drag their competitors for global power down with them. Like sacrificing a bishop to take a queen in chess, the initial loss may ultimately improve one's competitive position.

In which case, can they (the USA) afford to wait while China, India & Russia trade their US$ reserves for tangible assets?

Or is there no strategy and the US is just bumbling along blindly into this predicted hyperinflation/currency crisis?

Seeing everyone is on a "flat money" system, if this theory holds that flat money is the cause of all these troubles, wouldn't hyperinflation happen globally?

Cup-of-Ruin
15th December 2009, 22:31
I thought the Yaun was pegged to the dollar? A bit recursive to peg the USD to the Yaun, pegged to the USD, pegged to the Yuan . . . . but my point was that with a motive to preserve their relevence, power and strategic position in the world, might they not actively seek to drag their competitors for global power down with them. Like sacrificing a bishop to take a queen in chess, the initial loss may ultimately improve one's competitive position.

In which case, can they (the USA) afford to wait while China, India & Russia trade their US$ reserves for tangible assets?

Or is there no strategy and the US is just bumbling along blindly into this predicted hyperinflation/currency crisis?


It is the strategy to devalue the U.S. Dollar. The Federal Reserve and it's operations are no longer secret, there's a growing awareness and knowledge, the gig is up. The Fed Note only serves it's function if it is private and secret, if its no longer private and secret then it wont work, it preys on ignorance and stupidity...It's like the Wizard of Oz, once you pull back the curtain and see the little frail old wizard pulling on the levers of money power and you realize, that it's not money but just an illusion, the effect is lost, the little frightened sheeple are no longer so frightened, the magic trick is no longer magic, and they start to make a noise and point and say 'look, its a fraud, get em', so as need be, change is in order, music has stopped, the dance is over.

valerb
16th December 2009, 02:51
It is the strategy to devalue the U.S. Dollar. The Federal Reserve and it's operations are no longer secret, there's a growing awareness and knowledge, the gig is up. The Fed Note only serves it's function if it is private and secret, if its no longer private and secret then it wont work, it preys on ignorance and stupidity...It's like the Wizard of Oz, once you pull back the curtain and see the little frail old wizard pulling on the levers of money power and you realize, that it's not money but just an illusion, the effect is lost, the little frightened sheeple are no longer so frightened, the magic trick is no longer magic, and they start to make a noise and point and say 'look, its a fraud, get em', so as need be, change is in order, music has stopped, the dance is over.

"The faster I run the further behind I get". That seems to be the success so far on hyper-inflating our way out of debt. The rest of the world doesn't seem to want to play ball. Has everyone forgotten all of the articles that were written about how the rest of the world no longer needs the US and we were doomed to collapse on our own. So along came our financial dooms day last year and instead of the rest of the world, just continuing on along without us. They didn't even feel a ripple effect from our problems, it was more like a global tsunami. Whoops, looks like a lot of people mis-calculated just how much they depend on the US, our currency and our importing business. Not to mention that we are not the only country with bankers screwing everyone. Is it really any wonder why the rest of the world doesn't seem willing to allow the dollar to drop any further. There must be a major fear factor around the globe, wondering just what would happen if the dollar really did collapse and would they collapse also.

Since all of the analyst were dead wrong about the US collapsing last year, why are they correct now? I sure as hell don't know where we are headed and I don't have any confidence in what the analyst believe either. The one thing I am sure of, things will either get better or worse, sooner or later!!!

ccjoe
16th December 2009, 03:14
"The faster I run the further behind I get". That seems to be the success so far on hyper-inflating our way out of debt. The rest of the world doesn't seem to want to play ball. Has everyone forgotten all of the articles that were written about how the rest of the world no longer needs the US and we were doomed to collapse on our own. So along came our financial dooms day last year and instead of the rest of the world, just continuing on along without us. They didn't even feel a ripple effect from our problems, it was more like a global tsunami. Whoops, looks like a lot of people mis-calculated just how much they depend on the US, our currency and our importing business. Not to mention that we are not the only country with bankers screwing everyone. Is it really any wonder why the rest of the world doesn't seem willing to allow the dollar to drop any further. There must be a major fear factor around the globe, wondering just what would happen if the dollar really did collapse and would they collapse also.

Since all of the analyst were dead wrong about the US collapsing last year, why are they correct now? I sure as hell don't know where we are headed and I don't have any confidence in what the analyst believe either. The one thing I am sure of, things will either get better or worse, sooner or later!!!

I agree with your last sentence Val:)

Az2Africa
16th December 2009, 08:37
I agree with your last sentence Val:)

I'm glad we cleared that up. I'll sleep better tonight.:D

DaleFromCalgary
16th December 2009, 10:28
"In which case they will need to accelerate their debasement efforts to cut-off a Chinese escape from their position in US treasuries."

The Chinese yuan is pegged to the dollar, so if the USA devalues the dollar, the yuan goes down by the same ratio. No win there.

Although the Chinese have immense US$ reserves, they can survive an all-out trade war because they have the factories and the USA doesn't. They can take the hit; they'll get their hair mussed but they'll be the last ones standing.

A dollar war between the USA and China would not occur in isolation. OPEC and other countries would definitely have something to say about it, and the U.S. Treasury can't fight an economic war on a dozen different fronts simultaneously.

Even just a minor skirmish would send the markets into hysteria, which is why now is the time to own physical oil and physical bullion.

Aggie
16th December 2009, 11:02
Although the Chinese have immense US$ reserves, they can survive an all-out trade war because they have the factories and the USA doesn't. They can take the hit; they'll get their hair mussed but they'll be the last ones standing.


Here's one perspective on that which takes a 180 degree opposite viewpoint.


ag


http://theautomaticearth.blogspot.com/2009/12/december-15-2009-why-china-wont-succeed.html

of one mine
16th December 2009, 11:13
THe news this morning included a snip from the future of lending at least for the inland empire of calif. THey stated that the local banks will ease lending by early 2012 so bussinesses can borrow boosting the local economy. One other point was that Obama had two faces one stating we must get tighter on lenders regulations the other saying we need to free up the credit. The credit cant flow unless the fed puts on the pressure like before. The fact that banks got greedy and careless was a precoursor to failure. That being said yeah we could see a small improvement before a big crash, but it would only build false hope in the future should history repeat itself-AGAIN
As far as hyperinflation goes yup that can happen also and would be very hard on those who dont diversify thier money into some form of worth(like pm's of course). "I remember the statement on a package of fireworks SAFE & SANE" YES IT IS BEST TO BE SAFE.

of one mine

UmassSteve
16th December 2009, 11:57
Here's one perspective on that which takes a 180 degree opposite viewpoint.


ag


http://theautomaticearth.blogspot.com/2009/12/december-15-2009-why-china-wont-succeed.html

I agree with a lot of what that article had to say, but it seems to be ignoring a lot of modern day developments. It makes it seem like 1.) The US always had such a huge purchasing power and 2.) That China has practically no domestic market. Both of which are false. China's domestic car market is on fire right now, and their domestic consumer base has been increasing freakishly fast over the past few years. It is possible that their consumer base might keep getting wealthier, slowly but surely, just like our consumer base did during the 20th century.

That said, I do agree that China has an outrageous number of obstacles to overcome in the near future if the country hopes to experience sustained growth like it has enjoyed up until now. Impending pollution bombs that'll tax their health care and social tranquility, accelerating loss of crop land across the country, water becoming increasingly scarce and toxic, air becoming increasingly toxic, a sh*t-storm of problems when their 1 child policy age group hits middle age and there are millions of elderly people that need to be cared for, an impending energy crisis that is only slightly less terrifying than our own, and more.

ccjoe
16th December 2009, 12:10
Here's one perspective on that which takes a 180 degree opposite viewpoint.


ag


http://theautomaticearth.blogspot.com/2009/12/december-15-2009-why-china-wont-succeed.html

Thanks Aggie:)
I guess we're all set then against the Chinese?:)
No matter what> He who has the silver and gold rules> bottom line.

valerb
16th December 2009, 19:55
"In which case they will need to accelerate their debasement efforts to cut-off a Chinese escape from their position in US treasuries."

The Chinese yuan is pegged to the dollar, so if the USA devalues the dollar, the yuan goes down by the same ratio. No win there.

Although the Chinese have immense US$ reserves, they can survive an all-out trade war because they have the factories and the USA doesn't. They can take the hit; they'll get their hair mussed but they'll be the last ones standing.

A dollar war between the USA and China would not occur in isolation. OPEC and other countries would definitely have something to say about it, and the U.S. Treasury can't fight an economic war on a dozen different fronts simultaneously.

Even just a minor skirmish would send the markets into hysteria, which is why now is the time to own physical oil and physical bullion.

Dale, that's the entire point of debasing your currency and yes it would set off a **** storm. Why else would you do that to yourself. You can't expect to cut your own throat and not bleed. Don't get me wrong, I'm not advocating we do such a thing, it's just the topic of the thread.

"To cut or not to cut, that is the question", sounds more the decision over a circumcision.

akak
16th December 2009, 20:19
Help me out here guys (and gals), as I must admit I still cannot understand the topic of the US dollar as world reserve currency. The whole situation, and all the chatter surrounding it, seem simply surreal and bizarre to me.

OK, we buy goods (well, a lot of them are "bads", but that's another subject) from China, and from the rest of the world, and "pay" them with pieces of paper, or the electronic bookkeeping equivalent. Those countries are now said to be richer, due to their vast and growing US dollar reserves. HOWEVER, it is also at the same time openly admitted that NONE of those countries could divest themselves of those same dollar reserves, to any significant extent, without crashing the dollar and collapsing the whole dollar reserve house-of-cards.

So I am always left wondering, of just what REAL value are all those supposed "reserves" sitting as dollars in all these foreign central banks, if they cannot USE or spend them to any great degree? And why are countries like China willing to send us real goods in exchange for what are essentially irredeemiable promises that the issuer openly admits cannot be honored? It all seems like a total farce to me: "Here, I am going to give you one trillion dollars, but DON'T YOU DARE EVER TRY TO SPEND THEM!" Is this all just some kind of joke? Am I missing something in this picture?

SeekrBrnEvryMin
16th December 2009, 20:40
"In which case they will need to accelerate their debasement efforts to cut-off a Chinese escape from their position in US treasuries."

The Chinese yuan is pegged to the dollar, so if the USA devalues the dollar, the yuan goes down by the same ratio. No win there.

Although the Chinese have immense US$ reserves, they can survive an all-out trade war because they have the factories and the USA doesn't. They can take the hit; they'll get their hair mussed but they'll be the last ones standing.

A dollar war between the USA and China would not occur in isolation. OPEC and other countries would definitely have something to say about it, and the U.S. Treasury can't fight an economic war on a dozen different fronts simultaneously.

Even just a minor skirmish would send the markets into hysteria, which is why now is the time to own physical oil and physical bullion.

I think it's precisely because international economies are so interconnected that you won't see hysteria. Watch Japan as she tries to emerge from a decade of devaluation, if you will, but even a Balkan powder-keg in this world of fiat economies isn't likely to blow the barn.

I doubt you'd see economic warfare without the preparation for conventional warfare itself.

Take the OPEC embargo of '73. Small potatoes causing a correction.

China cannot back the US into a corner, either by currencies, economics, or otherwise. Yet - but not for a long, long time.

At this point in time, all the world is merely quibbling, and the Western monoliths have Plan B to the Nth power.

I wish they'd get busy and gin up heavy industrial production while China, et al, hoard gold.

valerb
16th December 2009, 21:23
Help me out here guys (and gals), as I must admit I still cannot understand the topic of the US dollar as world reserve currency. The whole situation, and all the chatter surrounding it, seem simply surreal and bizarre to me.

OK, we buy goods (well, a lot of them are "bads", but that's another subject) from China, and from the rest of the world, and "pay" them with pieces of paper, or the electronic bookkeeping equivalent. Those countries are now said to be richer, due to their vast and growing US dollar reserves. HOWEVER, it is also at the same time openly admitted that NONE of those countries could divest themselves of those same dollar reserves, to any significant extent, without crashing the dollar and collapsing the whole dollar reserve house-of-cards.

So I am always left wondering, of just what REAL value are all those supposed "reserves" sitting as dollars in all these foreign central banks, if they cannot USE or spend them to any great degree? And why are countries like China willing to send us real goods in exchange for what are essentially irredeemiable promises that the issuer openly admits cannot be honored? It all seems like a total farce to me: "Here, I am going to give you one trillion dollars, but DON'T YOU DARE EVER TRY TO SPEND THEM!" Is this all just some kind of joke? Am I missing something in this picture?

Yes!!!!!!!!!

fansubs_ca
17th December 2009, 03:02
Seeing everyone is on a "flat money" system, if this theory holds that flat money is the cause of all these troubles, wouldn't hyperinflation happen globally?

Possibly, but even then it would not be very uniform as to when or how fast
in different places. Even with Fiat currency a country can freeze it's money
supply (at least in theory, real life disciplin is annother story) and if you are
the only one doing it, you might be the "last man standing". I really hope
_somebody_ _somewhere_ on the planet has the guts and judgement to
draw the line somewhere.

akak
17th December 2009, 15:58
Yes!!!!!!!!!

"Yes" it is a joke, or "Yes" I am missing something?

Or both?

Really, I would like to know! I have floated this question multiple times both here and elsewhere, and yet have never managed to receive an even halfway logical response. So I will ask it again:

WHY do foreign nations continue to take irredemiable promises to pay in dollars as payment for goods, and why do they continue to buy US dollar debt that all agree can NEVER be repayed?

akak
17th December 2009, 19:33
Can anyone answer my question?

valerb
17th December 2009, 20:17
"Yes" it is a joke, or "Yes" I am missing something?

Or both?

Really, I would like to know! I have floated this question multiple times both here and elsewhere, and yet have never managed to receive an even halfway logical response. So I will ask it again:

WHY do foreign nations continue to take irredemiable promises to pay in dollars as payment for goods, and why do they continue to buy US dollar debt that all agree can NEVER be repayed?

Think about what you just asked!!!

Obviously they "ALL" don't agree with your statement. Just because things appear that way, doesn't necessarily make it so. For instance, the derivatives market implodes. Who will be the winners and who will be the losers? Maybe the US will be in far worse shape than today and we will become that third world nation so many predict. Then again, what if the US is the big winner in that implosion and everyone one else bites the dust? So what happens if China should be on the losing end of a trillion Dollar loss to the US Banks. Should we just tell the banks to suck up and bite the bullet because we owe them so much and we depend on their buying more treasuries or do we tell the Chinese that we are confiscating all of their treasury notes to cover the losses at our US Banks that the Chinese government told their investors not to pay? I would vote for the second option myself. What are they going to do about it, stop shipping us tainted food and medicine, along with the dangerous toys our kids play with? Force us to become a self reliant a manufacturing giant once again. I really think we need to wait until all of these financial nightmares play out before we declare any country or currency "DEAD".

hippiebrian
17th December 2009, 20:22
Help me out here guys (and gals), as I must admit I still cannot understand the topic of the US dollar as world reserve currency. The whole situation, and all the chatter surrounding it, seem simply surreal and bizarre to me.

OK, we buy goods (well, a lot of them are "bads", but that's another subject) from China, and from the rest of the world, and "pay" them with pieces of paper, or the electronic bookkeeping equivalent. Those countries are now said to be richer, due to their vast and growing US dollar reserves. HOWEVER, it is also at the same time openly admitted that NONE of those countries could divest themselves of those same dollar reserves, to any significant extent, without crashing the dollar and collapsing the whole dollar reserve house-of-cards.

So I am always left wondering, of just what REAL value are all those supposed "reserves" sitting as dollars in all these foreign central banks, if they cannot USE or spend them to any great degree? And why are countries like China willing to send us real goods in exchange for what are essentially irredeemiable promises that the issuer openly admits cannot be honored? It all seems like a total farce to me: "Here, I am going to give you one trillion dollars, but DON'T YOU DARE EVER TRY TO SPEND THEM!" Is this all just some kind of joke? Am I missing something in this picture?

This may sound simplistic, and it may be, however I see it as basic monetary theory. In reality, whether a currency is backed by gold, silver, or just a promise, it is still worth only what we decide it is. We have decided what our treasuries are worth (which changes constantly) and China and the rest of the world have decided what they are worth to them. All we're doing, in reality, is tossing around numbers, numbers the international community has decided on. No one really has anything of value besides products or commodities, and a system of numbers has been agreed upon in order to keep these things moving and trading. You are right in a way, no one really has anything but a bunch of numbers.

DaleFromCalgary
18th December 2009, 11:16
"just what REAL value are all those supposed "reserves" sitting as dollars in all these foreign central banks, if they cannot USE or spend them to any great degree?"

For the time being, those reserves enable China et al to keep their citizens employed. The Politburo fears nothing as much as losing the mandate of heaven.

Although the Chinese can't dump all their US$ reserves at once, they are using them to slowly buy up commodities and manufacturers of value to them. (Example: they just bought the Hummer company, and you don't need an army lieutenant to tell you why.) They have to move slowly to avoid a mad rush to the door by other American creditors, but that is in their nature. Remember that the current Chinese near-monopoly in rare earths was part of a plan publicly announced by the premier more than a decade ago.