rising dollar for 2007 [?]

[Tet]

Re: rising dollar for 2007 [?]

I'm aware of the existence of lots of counterfeiting and Lincoln's (in my opinion correct) opinions, but the counterfeiting you noted was after the war. Those Treasury notes were issued starting in late 1861 if memory serves.

I'm also aware of the BoE's ownership and influence over the first two central banks, but those were over 20 years earlier than the civil war. Do note that I'm not saying that the BoE didn't counterfeit, just that I question both the timing and quantities, and also and primarily the Treasury note issuance connections you seem to be making.

Counterfeiting occurs during the war, the Treasury Dept doesn't create the Secret Service until almost after the war and that's when it gets reported just how much counterfeit currency is in circulation.

Would you please address the 1971 dollar drop vis a vis the Treasury note issuance?

Oil goes up 400% during this time period, how possibly can the d0llar not drop in value?

[bart]

Re: rising dollar for 2007 [?]

I'm not necessarily saying one way or the other; my own indicators are conflicted. As noted elsewhere, it says interest rates appear to be too low for financial conditions, which implies inflation should be heading higher. The FDI itself, however, says we're already into at least a minor deflation. Funny, but it seems to echo the debate going on in the financial media, what with the Fed itself repeatedly insisting we are not out of the woods yet on inflation, while most of the rest of the market saying disinflation is in progress.

Conflicted on the short term describes me too - no positions right now since my certainty is too low for futures trading.

Mostly though, I'm just trying to butt in ... ;)

You go sparky... ;)

[bart]

Re: rising dollar for 2007 [?]

Counterfeiting occurs during the war, the Treasury Dept doesn't create the Secret Service until almost after the war and that's when it gets reported just how much counterfeit currency is in circulation.

Yes, but it still doesn't address your point about Treasury notes. The best data I have showed that the dollar lost value for the years after greenback/Treasury issuance. Although counterfeiting was undoubtedly an influence, I don't see it as primary... and it could and does happen today too, as witness North Korea and drug cartels, etc.

Oil goes up 400% during this time period, how possibly can the d0llar not drop in value?

The time period for that drop I quoted from 1.20 in 1971 to .90 in early 1973 was before oil started to rise.

[Tet]

Re: rising dollar for 2007 [?]

Yes, but it still doesn't address your point about Treasury notes. The best data I have showed that the dollar lost value for the years after greenback/Treasury issuance. Although counterfeiting was undoubtedly an influence, I don't see it as primary... and it could and does happen today too, as witness North Korea and drug cartels, etc.

I see counterfeiting as primary, we disagree.

The time period for that drop I quoted from 1.20 in 1971 to .90 in early 1973 was before oil started to rise.

Gold window closes 1971 war ends 1972 and oil does go up 32% ($3.60 to $4.75) in this time period, by 1974 it's up 160%, by 1976 it's up 260% and the Petrol D0llar is officially created. Oil is no longer sold by contract but only through London and Wall Street.

[bart]

Re: rising dollar for 2007 [?]

Gold window closes 1971 war ends 1972 and oil does go up 32% ($3.60 to $4.75) in this time period, by 1974 it's up 160%, by 1976 it's up 260% and the Petrol D0llar is officially created. Oil is no longer sold by contract but only through London and Wall Street.

WTIC was $3.56 in January 1971 and the next increase was to $4.31 in August 1973, then to about $10 in late 1973.

The $2 Treasury note is issued in 1971 and the dollar goes down from 1.20 to .90 before oil starts its move. Where's the connection between dollar value up and Treasury note issuance?

I sure wish I had a synthetic USDX value going back into the '60s to see the correlation you're implying there. Finster's FDI sure doesn't show it.


By the way, do you have a link to that Secret Service data on how big the counterfeiting was in the 1860s? I don't recall it was as big as you note.

[Tet]

Re: rising dollar for 2007 [?]

WTIC was $3.56 in January 1971 and the next increase was to $4.31 in August 1973, then to about $10 in late 1973.

The $2 Treasury note is issued in 1971 and the dollar goes down from 1.20 to .90 before oil starts its move. Where's the connection between dollar value up and Treasury note issuance?

I sure wish I had a synthetic USDX value going back into the '60s to see the correlation you're implying there. Finster's FDI sure doesn't show it.


By the way, do you have a link to that Secret Service data on how big the counterfeiting was in the 1860s? I don't recall it was as big as you note.

The treasury website I thought had info on counterfeiting before, I don't see it now. the mint's website had this

In 1861, the Federal Government was on the brink of bankruptcy as the Civil War raged well beyond the few weeks most Northern pundits thought it would take to suppress the rebellious South. To finance the Civil War, Congress authorized the United States Treasury to issue paper money for the first time in the form of non-interest bearing Treasury Notes called Demand Notes. In 1862, Demand Notes were replaced by United States Notes. Commonly called “Greenbacks,” they were last issued in 1971. The Secretary of the Treasury was empowered by Congress to have notes engraved and printed, which was done by private banknote companies. The design of U.S. currency incorporated a Treasury seal, the fine line engraving necessary for the difficult-to-counterfeit itaglio printing, intricate geometric lathe work patterns, and distinctive linen paper with embedded red and blue fibers. Despite these safeguards, the Department of the Treasury established the United States Secret Service in 1865 to control counterfeits, which at that time represented a third of all circulated currency. http://www.govmint.com/knowledgebase/cwbanknotes.aspx Mint says a third of all circulated currency was counterfeit. I have seen it quoted as a third to half of all currency. The mint shows the 1971 issue of treasury notes as well. Just found this from the Federal Reserve Kansas City. With so many new forms of currency in circulation, counterfeiting became a major problem. The U.S. Secret Service one of the nation's oldest federal investigative law enforcement agencies, was founded in 1865 as a branch of the U.S. Treasury Department. The agency's original mission was to investigate counterfeiting of U.S. currency. It was estimated that one-third to one-half of the currency in circulation at that time was counterfeit. http://www.kc.frb.org/pubaffrs/money...tm#TheCivilWar

Last edited by Tet; January 08, 2007, 03:02 PM.

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay

[metalman]

Re: rising dollar for 2007 [?]

yet another reason why anyone worrying about a deflationary bust out of this debt boom is barking up the wrong tree. the fed and treasury have 101 tricks to make sure there's plenty bonars in circulation. they just don't have as many of tricks to make sure there ain't too many.

[bart]

Re: rising dollar for 2007 [?]

The treasury website I thought had info on counterfeiting before, I don't see it now. the mint's website had this

http://www.govmint.com/knowledgebase/cwbanknotes.aspx
Mint says a third of all circulated currency was counterfeit. I have seen it quoted as a third to half of all currency. The mint shows the 1971 issue of treasury notes as well.


Just found this from the Federal Reserve Kansas City.

http://www.kc.frb.org/pubaffrs/money...tm#TheCivilWar

Thanks very much for the links and efforts.

Later today, I'm going to try and find and/or recall where my concept of counterfeiting was lower came from. I roughly recall it as 15-20% max from some research I did in the '70s.


(edit/add)

Bingo - I found where I got the basic idea of that 15-20%, and it was on the Treasury site:

During the Civil War, one-third to one-half of the currency in circulation was counterfeit. At that time, approximately 1,600 state banks designed and printed their own bills. Each bill carried a different design, making it difficult to detect counterfeit bills from the 7,000 varieties of real bills.

http://www.treasury.gov/usss/counterfeit.shtml

In other words, it wasn't just greenbacks being counterfeited and I assigned less than 50% of the counterfeiting to them.

[jk]

Re: rising dollar for 2007 [?]

re inflation- just to note that ecri's future inflation guage is showing some sustained movement to lower future inflation.

[Tet]

Re: rising dollar for 2007 [?]

Thanks very much for the links and efforts.

Later today, I'm going to try and find and/or recall where my concept of counterfeiting was lower came from. I roughly recall it as 15-20% max from some research I did in the '70s.


(edit/add)

Bingo - I found where I got the basic idea of that 15-20%, and it was on the Treasury site:

http://www.treasury.gov/usss/counterfeit.shtml

In other words, it wasn't just greenbacks being counterfeited and I assigned less than 50% of the counterfeiting to them.

Keep in mind the National Banking Act takes effect in 1863.
http://en.wikipedia.org/wiki/National_Banking_Act

A later act, passed on March 3, 1865, imposed a tax of 10% on the notes of State banks to take effect on July 1, 1866. The tax effectively forced all non-federal currency from circulation and increased the number of national banks to 1,644 by October, 1866.

Very interesting time period for the creation of the Federal Reserve.

[bart]

Re: rising dollar for 2007 [?]

Keep in mind the National Banking Act takes effect in 1863.
http://en.wikipedia.org/wiki/National_Banking_Act

Very interesting time period for the creation of the Federal Reserve.

True and point taken, but the national banks also had their currencies counterfeited too.


The whole US history with and without central banking has so many odd twists and turns, and the Civil War period was very key and likely the actual turning point towards the eventual establishment of the Fed.

[Tet]

Re: rising dollar for 2007 [?]

True and point taken, but the national banks also had their currencies counterfeited too.


The whole US history with and without central banking has so many odd twists and turns, and the Civil War period was very key and likely the actual turning point towards the eventual establishment of the Fed.

France takes over Mexico during this time period, Britain sends 10K troops to Canada, Russia parks several war ships in our harbors to prevent them from invading. Very interesting time period indeed and when it's all said and done the US has one currency. Looks like the Bank of England wins after all.