Our USD system is just about to collapse.

[santafe2]

Re: Our USD system is just about to collapse.

Our USD system is just about to collapse.

JT, I'd like to bring this back down to a human level which I hope will make it more understandable to most contributors and readers. This is not a currency thing, it's a family thing. The US is the big brother and one or maybe more of the younger brothers would like to take him down for the way he's been treating the family. Too much disrespect and everyone is sure that's true. But as they approach, they know they have to show their respect as they ask for respect. This is what will happpen as the world begins to reign in our profligate ways. The US$ will not collapse, we've too much power and influence to collapse.

Going back to my analogy, my great fear is that the family is too weak to stand up to us, but I don't think that's true.

[tombat1913]

Re: Our USD system is just about to collapse.

The US$ will not collapse, we've too much power and influence to collapse.

Perhaps this is what will cause the collapse. Our ever expanding empire and all of the cost associated with the power and influence.

[*T*]

Re: Our USD system is just about to collapse.

The US is raising taxes like crazy. This is "positive" for the dollar, fwiw.

Tax receipts are collapsing.

[*T*]

Re: Our USD system is just about to collapse.

I just wouldn't go quite so far with my gold-buggery

Is there something you would like to share with us Ash?

I believe there are support groups for that kind of thing.
;)

[*T*]

Re: Our USD system is just about to collapse.

He DIDN'T SAY DOLLAR COLLAPSE AND NEITHER DID I. And that is a VERY important DISTINCTION.

SYSTEM SYSTEM SYSTEM. Not CURRENCY.

[LargoWinch]

Re: Our USD system is just about to collapse.

As austrian economics and Friedman has taught us, inflating the money supply too much causes inflation and inflation is not a good thing IMHO, but the real injustice is that a certain class of the population gets to use the new money first, bidding up everything before the prices rise whereas the common man gets the money later after the prices have already risen.
This is prima facie inequitable, but hey maybe if everybody got the same amount of new money as it was created it might work?

I doubt it vinoveri as the "new money" may be equal for all in nominal terms, the effects of the resulting inflation would be much greater and would affect market participants differently.

For example, if a saver has a large reserve of crispy US Bonars he may see a small nominal amount of money coming in, but the overall devaluation of all the "small nominal amounts" sent out would also decrease his overall purchasing power (his savings) and the net effect from his standpoint would be an overall decrease in purchasing power. The saver would remain a loser of the money printing.

[flintlock]

Re: Our USD system is just about to collapse.

Tax receipts are collapsing.

In my opinion, this will be devastating, will be worse than anticipated, and will have the most dramatic affect on the economy. It will also happen a lot quicker than many think. So much of our economy is buoyed by government spending at all levels. The Feds can just print money, the States and locals will have to go hat in hand to the Feds for bailouts. A move to an even stronger central government in inevitable because of this. So not only will we lose our wealth, we'll lose a lot of our freedom .

[LargoWinch]

Re: Our USD system is just about to collapse.

So not only will we lose our wealth, we'll lose a lot of our freedom .

Actually flintlock, I see this Keynesian craziness by world's governments more as an opportunity.

Imagine for a second if you could identify where the money will flow into in advance and then have the confidence to act on it due to solid research and data? You may in addition to protecting your familly's financial future and real wealth, accumulate some real wealth.

My bet is on iTulip and EJ to tell us where to look and even how one might play it...;). The best $200 return ever.

Now, imagine the same scenario but with leverage to boot (note: not a recommendation!).

[vinoveri]

Re: Our USD system is just about to collapse.

I doubt it vinoveri as the "new money" may be equal for all in nominal terms, the effects of the resulting inflation would be much greater and would affect market participants differently.

For example, if a saver has a large reserve of crispy US Bonars he may see a small nominal amount of money coming in, but the overall devaluation of all the "small nominal amounts" sent out would also decrease his overall purchasing power (his savings) and the net effect from his standpoint would be an overall decrease in purchasing power. The saver would remain a loser of the money printing.

yeah LW, I think you are right. Way to knock that straw man down.

[TRake]

Re: Our USD system is just about to collapse.

Now, imagine the same scenario but with leverage to boot (note: not a recommendation!).

Yeah, leverage is dangerous. I didn't find Itulip soon enough to change my view and I went to 0 in my "fun" account in 2008. I am rebuilding now and I am up 40% for 2009 so far. Timing the market is what I practice and I use options to make quick gains when I recognize momentum in a direction. Quick buys and quicker sells, but I did initiate a longer term position today. I chose DBC and I purchased Jan 2011 calls with a $40 strike. If the "sudden stop" happens and EJ is right on his timing being end of 2009 to early 2010, then this position could pay off nicely. I consider this an insurance position. The name of the game going forward will be meet or beat inflation.

[flintlock]

Re: Our USD system is just about to collapse.

Actually flintlock, I see this Keynesian craziness by world's governments more as an opportunity.

Imagine for a second if you could identify where the money will flow into in advance and then have the confidence to act on it due to solid research and data? You may in addition to protecting your familly's financial future and real wealth, accumulate some real wealth.

My bet is on iTulip and EJ to tell us where to look and even how one might play it...;). The best $200 return ever.

Now, imagine the same scenario but with leverage to boot (note: not a recommendation!).

While on a personal level, we may be able to profit off this crisis, in the long run I'd prefer living in a country where there is order and fiscal responsibility. The chaos I believe is going to follow is going to be ugly, and more money in my bank account won't make me feel better if thugs are breaking in my home and the tax man is parked outside my door every morning. Remember, its not what you make, its what you keep.

[rogermexico]

Re: Our USD system is just about to collapse.

No it isn't. Higher taxes will kill whatever is left of the economy which will wreck tax revenues.

If we apply that yardstick, Britain should be on its road to solvency with Darling's absurd tax increases. But even the hiking of the marginal tax rates to 50 percent only raises an additional £1 Billion (even by the Government's very optimistic estimates).

I believe current personal income tax receipts at the federal level are less than the current projected budget deficit of 1.8 trillion - tax revenue could double and we would still be adding to the debt burden. Of course, even if mathematically possible, the rates and enforcement would never get us there.

Income taxation cannot possibly be the solution.

Before they come upon the actual solution, which is mass bankruptcy, and reneging on govt. promises, they will try more outright wealth confiscation.

There will be annual wealth taxes of 1% or more on all your paper assets

They will do an Argentina and expropriate our individual retirement assets, giving us some sort of worthless government annuity instead.

[ASH]

Re: Our USD system is just about to collapse.

From Prudent Squirrel:

http://www.kitco.com/ind/Laird/may122009.html

"USD gradual fall or crash?
Our USD system is just about to collapse.

...

Most people cannot imagine a USD collapse, and even we who research about it find it impossible to predict the many consequences.

... If you have a single gold coin, you will likely buy a nice house with it, I am totally serious. I made a prediction about 2005 that if you have ten ounces of gold only, you will probably survive the period of transition from the USD (with careful planning).

...

Many of these people are hiding their heads in the sand, telling me they lost a lot of money and asking me what can they do, and then only having the stomach for a ten minute discussion before they wet their pants on what could happen if the USD fell– and cease discussing the situation.

He DIDN'T SAY DOLLAR COLLAPSE AND NEITHER DID I. And that is a VERY important DISTINCTION.

I read the quote you posted from Laird as talking more about currency than system. Judging strictly from the portion you quoted, I still think he's talking about a big change in currency value -- doesn't even mention the different categories of system to which you refer. I think your position is more nuanced, but you are reading greater sophistication into Laird's words than is actually there. Anyway, if Laird were really talking about a collapse of our market, government, economic, and real estate systems, that's hard to square with the idea that one could buy a very nice house for one gold coin. At the point where those systems undergo a collapse worthy of the name, I'm not sure one is "buying" anything.

[rjwjr]

Re: Our USD system is just about to collapse.

They will do an Argentina and expropriate our individual retirement assets, giving us some sort of worthless government annuity instead.

This is my biggest current fear. It may also likely be my pitchfork moment where I transition from a personally responsible productive adult to a gun-toting, government-hating animal. They better stick with a new 1% tax here and closing a loophole there, cause if they come for my life's savings in one fell swoop it ain't gonna be pretty.

[c1ue]

Re: Our USD system is just about to collapse.

While I have always been much more on the extreme 'Its all going to hell in a handbasket' crowd here, nonetheless I think a complete collapse of the dollar and or dollar based institutions is very unlikely.

And more importantly, if it does occur, holding gold isn't going to help much.

I'm researching now the societal impact of Spain's fall from world power from the 1600s on to see if there are any insights. It is an interesting example because Spain at its peak exhibited many of the characteristics of the US at its peak: wealthiest nation, top 5 in population, feared military, de facto reserve currency (as gold WAS money and Spain had all the gold).

Too early to draw conclusions, but the rise and fall of Spain: 100 years to the top, then 100 years to the bottom - wasn't that quick.