Dollar Hegemony, Dying Fiat Currencies, Debt Problem... Economist-The Phoenix, 2018

The cover of the Economist magazine from September of 1988 shows a mythical bird, the Phoenix, stepping on a burning pile of currencies, currencies from all over the world. It reads, Get Ready for a World Currency. The phoenix is wearing a golden necklace with a large coin on the front that says "10 Phoenix" and the year 2018 inscribed on it.


Source: Economist; 01/9/88, Vol. 306, pp 9-10

Article

Interesting prediction - this was published almost 30 years ago.

Let's zoom out and take a look at the US Dollar. It's been steadily declining in value pretty much since March/April of last year, going from something like $101.74 down to just $90.47 today. That's not all that alarming in itself. However we should also take notice of the flattening yield curve - the gap between 10-year and 30-year US Treasury yields seems to be lessening. History has shown us that a flat or inverted yield curve spells danger.

The Federal Reserve Note is an IOU, and inflation is likely much higher than what is "officially" reported. I highly recommend Shadowstats as a research tool if you'd like to do some experiments with prices yourself: inflation calculator vis ShadowStats. What we have with our dollar is a fiat money. What does history tell us about fiat currencies?

The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value.

link

Also, we have heard rumblings about countries moving away from the petrodollar, or from US bond buying programs (like the recent rumor involving China: article

Sure, the US Treasury could use the Exchange Stabilization Fund to buy back their own treasuries (something many suspect they have been doing already), or try to use other accounting tricks and off-the-book accounts to try to stay propped up, but how long can that last?

The costs of sustaining the US's new 'Empire' will become apparent to its public only when these costs directly accrue to them. This will happen, as this article suggests, only when (i) other nations stop subsidizing the US's imperial adventures by colluding in them, and (ii) the dollar loses its role as the world's reserve currency.

US Dollar Hegemony: The Soft Underbelly of Empire

We are at roughly $20.614 Trillion for the National Debt, which works out to around $170,000 per tax payer.

US Debt Clock

My question to you is this: if it is still around in a few decades, will the US Dollar be worth much of anything? Will we see something new emerge before then? I look forward to the conversation ATSers.

a reply to: FamCore

Good thread, agree wholeheartedly. There is only 3 possible outcomes

1) the debt tower collapses and the fed does nothing so we have another extensive depression like the 30s
2) the debt tower collapses and the fed monetizes debt so we get hyperinflation
3) the government begins printing greenbacks, non-interest bearing currency for operations and eliminates taxes while liquidating the national debt over say 20 years and nationalizing the commercial banks.

a reply to: SkeptiSchism

Or a war.

Get out of paper and buy gold, silver, and crypto.

a reply to: seasonal

Will a war prevent the 3 scenarios I outlined? I think it may be able to postpone it, since governments can increase the debt capacity during war but wars don't last forever and then the problems remain.

a reply to: SkeptiSchism

No matter what happens we will rinse and repeat. It's what we do.

originally posted by: FamCore
Let's zoom out and take a look at the US Dollar. It's been steadily declining in value pretty much since March/April of last year, going from something like $101.74 down to just $90.47 today. That's not all that alarming in itself. However we should also take notice of the flattening yield curve - the gap between 10-year and 30-year US Treasury yields seems to be lessening. History has shown us that a flat or inverted yield curve spells danger.

The US Dollar is $90.47 cents of what? Is that against the Euro, Yen or something else?

a reply to: seasonal

Yah the 3 scenarios outline the possible ways of liquidating the debt. The debt continues to grow faster than productive output and productivity is the only thing that can service debt.

So a war won't fix the problem, a war just diverts attention away from the root causes then it it's a big enough war the war itself can blamed as the cause instead of banks counterfeiting our national productivity with the complicity of legislators and regulators.

originally posted by: LogicalGraphitti

originally posted by: FamCore
Let's zoom out and take a look at the US Dollar. It's been steadily declining in value pretty much since March/April of last year, going from something like $101.74 down to just $90.47 today. That's not all that alarming in itself. However we should also take notice of the flattening yield curve - the gap between 10-year and 30-year US Treasury yields seems to be lessening. History has shown us that a flat or inverted yield curve spells danger.

The US Dollar is $90.47 cents of what? Is that against the Euro, Yen or something else?

What is the 'U.S. Dollar Index - USDX'

The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.
BREAKING DOWN 'U.S. Dollar Index - USDX'

Currently, this index is calculated by factoring in the exchange rates of six major world currencies the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. The euro holds the most weight versus the dollar in the index, constituting about 58% of the weighting followed by the yen with about 14%. The index started in 1973 with a base of 100, and values since then are relative to this base.

www.investopedia.com...

a reply to: LogicalGraphitti

That's the US dollar index (ticker DXY), which looks at the dollar relative to a basket of U.S. trade partners' currencies

originally posted by: projectvxn
Get out of paper and buy gold, silver, and crypto.

Long term sure, in the meantime buy land, learn to grow food and keep some livestock, food and water will be worth more than gold or any other non edible currency.

a reply to: SkeptiSchism
Thanks Skepti - I always learn from ATS!

originally posted by: FamCore
My question to you is this: if it is still around in a few decades, will the US Dollar be worth much of anything? Will we see something new emerge before then? I look forward to the conversation ATSers.

I did a bit of reading on USDX and without spending too much time, I ended up getting a lot from this chart:


Source

It hit a low if $86 in 2011 and has come up as high as $103 in January 2017. It's hard to say what it will be in a few years but I don't see anything that would alter the up and down trend. There are so many things that go into exchange rates which I think are manipulated anyway. China purposely undervalues it's currency to make exports attractive. I have a feeling the US does the same thing.

As for cryptocurrency, it's got a long way to go before it becomes mainstream. There are a lot of issues to get over before we can really take it seriously.

originally posted by: hopenotfeariswhatweneed

originally posted by: projectvxn
Get out of paper and buy gold, silver, and crypto.

Long term sure, in the meantime buy land, learn to grow food and keep some livestock, food and water will be worth more than gold or any other non edible currency.

Cryto is a red herring for the fools of the future.

I would take your advice over anyone's here on ATS. A starving man with silver, gold, and a computer saying he has 10 million dollars in cryto, would trade it all for a meal, with no market to spend it at, or a total collapse.

Self reliance is really the only way if things get bad.

The human ego is a funny thing.

a reply to: seasonal

I'm thinking a war,plus new currency,I kind of thought it would collapse this year,the sub government wants a socialist America

a reply to: Oldtimer2

I hope you and I are wrong. But the debt is out of hand, and sooner or later the bubble is going to pop.

originally posted by: hopenotfeariswhatweneed

originally posted by: projectvxn
Get out of paper and buy gold, silver, and crypto.

Long term sure, in the meantime buy land, learn to grow food and keep some livestock, food and water will be worth more than gold or any other non edible currency.

So one for capital to do the other.

No reason you can't do both. But if you don't have a lot of money, investing for mid-long term (1-5 years) taking regular profits and saving will probably get you where you need to be with careful planning.

To really understand the value of the dollar, one must live in a "3rd world country". The dollar is heaven to them and even to me, although Japan is not considered a 3rd would country unless you are one of thousands living on the streets of Osaka , well, anyway, the dollar is the most wanted currency worldwide. And that is a fact.

a reply to: musicismagic

For now, dollar is the most wanted currency. However, when the global economy finally collapse, the dollar will become worthless.

Our current economy is not sustainable in the long run.

originally posted by: LogicalGraphitti
a reply to: SkeptiSchism
Thanks Skepti - I always learn from ATS!

originally posted by: FamCore
My question to you is this: if it is still around in a few decades, will the US Dollar be worth much of anything? Will we see something new emerge before then? I look forward to the conversation ATSers.

I did a bit of reading on USDX and without spending too much time, I ended up getting a lot from this chart:

Source

It hit a low if $86 in 2011 and has come up as high as $103 in January 2017. It's hard to say what it will be in a few years but I don't see anything that would alter the up and down trend. There are so many things that go into exchange rates which I think are manipulated anyway. China purposely undervalues it's currency to make exports attractive. I have a feeling the US does the same thing.

As for cryptocurrency, it's got a long way to go before it becomes mainstream. There are a lot of issues to get over before we can really take it seriously.

Here is a better chart it explains practically everything



That is the federal reserve's effective or prime lending rate, the rate of interest they charge member banks for loans. That spike around 1980 was the result of the Nixon shock when Nixon defaulted on our international debt obligations in gold. It basically meant that the dollar became a purely fiat currency, with no tangible backing.

Once he did that interest rates in the general economy starting rising, and the fed funds rates followed course. Gold also started spiking in price.



Volker ended the rise in interest rates by forcing the prime rate down, it peaked around 16% I think on US 10 year treasury bonds which is pretty much the bedrock for our financial system. Ever since the fed has continued to push interest rates down over time. This allows corporations and our government the ability to continually 'roll' our debt, borrowing cheaper in the future to pay off old debt. If we had to actually pay for our debt with productivity the economy would fall into a depression.

But they kept the prime rate around zero for over 8 years while Obama was president, and all the cheap credit has blown this recent monster bubble in stocks, bonds and real estate.

So, essentially they want to try and raise rates up around 4% so they can drop them again and try to 'stimulate' the economy 1 more time before they have to enter negative rates. But to get negative rates they have to ban cash since people would just pull their money out of the banks instead of paying to keep their money on deposit.

I can tell you, you don't want a forced/conscripted electronic currency system because they will track all your transactions and charge you 6-8% on every single transaction. That is a black hole because where do they go from there? Deeper interest rates? It's such a fraud people need to wake up.

originally posted by: SkeptiSchism

originally posted by: LogicalGraphitti
a reply to: SkeptiSchism
Thanks Skepti - I always learn from ATS!

originally posted by: FamCore
My question to you is this: if it is still around in a few decades, will the US Dollar be worth much of anything? Will we see something new emerge before then? I look forward to the conversation ATSers.

I did a bit of reading on USDX and without spending too much time, I ended up getting a lot from this chart:

Source

It hit a low if $86 in 2011 and has come up as high as $103 in January 2017. It's hard to say what it will be in a few years but I don't see anything that would alter the up and down trend. There are so many things that go into exchange rates which I think are manipulated anyway. China purposely undervalues it's currency to make exports attractive. I have a feeling the US does the same thing.

As for cryptocurrency, it's got a long way to go before it becomes mainstream. There are a lot of issues to get over before we can really take it seriously.

Here is a better chart it explains practically everything

That is the federal reserve's effective or prime lending rate, the rate of interest they charge member banks for loans. That spike around 1980 was the result of the Nixon shock when Nixon defaulted on our international debt obligations in gold. It basically meant that the dollar became a purely fiat currency, with no tangible backing.

Once he did that interest rates in the general economy starting rising, and the fed funds rates followed course. Gold also started spiking in price.

Volker ended the rise in interest rates by forcing the prime rate down, it peaked around 16% I think on US 10 year treasury bonds which is pretty much the bedrock for our financial system. Ever since the fed has continued to push interest rates down over time. This allows corporations and our government the ability to continually 'roll' our debt, borrowing cheaper in the future to pay off old debt. If we had to actually pay for our debt with productivity the economy would fall into a depression.

But they kept the prime rate around zero for over 8 years while Obama was president, and all the cheap credit has blown this recent monster bubble in stocks, bonds and real estate.

So, essentially they want to try and raise rates up around 4% so they can drop them again and try to 'stimulate' the economy 1 more time before they have to enter negative rates. But to get negative rates they have to ban cash since people would just pull their money out of the banks instead of paying to keep their money on deposit.

I can tell you, you don't want a forced/conscripted electronic currency system because they will track all your transactions and charge you 6-8% on every single transaction. That is a black hole because where do they go from there? Deeper interest rates? It's such a fraud people need to wake up.

You put it quite nicely. We are running out of time with this current system and 99.9% of the population is oblivious