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The Evolution of the U.S. Dollar
Armstrong Economics ^ | January 17, 2012 | Martin Armstrong

Posted on 01/19/2012 12:35:42 AM PST by Razzz42

...Therefore, this whole idea that we can live the high-life, be whatever we dream and never have to pay the consequences is simply dead wrong. The confusion that the Gold Standard advocates have created is this misconception that we print money and that is “fiat” that results in inflation. This is a far too simplistic view of finance. It presumes “printing” of actual dollars without restraint. Simply put, HAD WE PRINTED dollars instead of BORROWING DOLLARS, the national debt would be about 40% of its current size. Printing is MUCH LESS inflationary than borrowing. The reason, borrowing necessitates the creation of MORE money to pay the interest whereas printing does not.

If you simply add the accumulative interest each year, you will find that this is driving the debt higher and thus not even any motion to compel a BALANCED BUDGET will have any effect whatsoever on the stopping the crisis we now face – the extinction of Western Civilization percolating with nuclear weapons. The United States poses the exact threat that USSR did upon collapse – rouge nuks in the wake of political disintegration!

The debt is on automatic pilot. It will grow at the expense of EVERYTHING ELSE until it defaults. The consequence of all of this debt creates a serious problem. Not even a BALANCED BUDGET is a solution because the interest on existing debt will continue to rise as a percent of total. This means that ALL other spending social and military will be crowded out by the obligation to service the debt by paying interest of which 40% is exported.

The accumulative interest expenditures will simply rise to the point they bring down the entire system. For you cannot cut the interest expenditures without defaulting on the debt. Austerity is not the answer...

(Excerpt) Read more at fullfaithandcredit.com ...


TOPICS: Business/Economy; Government
KEYWORDS: banking; currency; dollar; finance
A detailed summary report? More history, more parallels, same conclusions.
1 posted on 01/19/2012 12:35:45 AM PST by Razzz42
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Things made by humans eventually die just as humans eventually die. Fiat’s glory days are well behind it. Let the fiat zombie created by humans die.


2 posted on 01/19/2012 12:41:38 AM PST by Milhous
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To: Razzz42

Printing money to resolve your debt works about as well as writing bad checks. Anyone knows not to take checks from someone who writes bad ones. Anyone in the current situation knows not to hold dollar denominated cash. Contracts are being written with gold clauses, to prevent federal theft of assets kept in dollar denominated cash.

What interests me is the price of silver. It seems sadly out of kilter with the price of gold. I can’t tell if that is because of speculation in gold, or because of accumulations of copper production that produces gold as a byproduct, perhaps both.


3 posted on 01/19/2012 12:42:38 AM PST by donmeaker (e is trancendental)
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To: Milhous

I saw a Fiat at work today. what an ugly car.


4 posted on 01/19/2012 12:43:44 AM PST by donmeaker (e is trancendental)
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To: Razzz42

The missing portion of the premise is that when one borrows there is the expectation that one will pay it back. We do that by borrowing more and then printing money to stay afloat. We’ve run out of options. Stop digging the hole deeper.


5 posted on 01/19/2012 3:35:48 AM PST by muir_redwoods (No wonder this administration favors abortion; everything they have done is an abortion)
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To: Razzz42
the exact threat that USSR did upon collapse – rouge nuks

"Rouge nuks?" Sounds hugh and series.

It's pretty hard to take this guy seriously.

HAD WE PRINTED dollars instead of BORROWING DOLLARS, the national debt would be about 40% of its current size.

Not sure what he means there. The Fed prints the dollars and buys Treasury Bonds with them. In other words, the government borrows the newly-printed dollars.

I'm as disgusted by and fearful of the debt as anyone, but I don't know that I'd rely too much on Mr. Armstrong.

6 posted on 01/19/2012 4:30:47 AM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: donmeaker

Watching this movie will explain the roll that silver has played in our economy of real money throughout the decades and why the banksters must convince people that it is not money...

Silver is the plentiful, sound, real money that is necessary for the economy!!!

The secret of OZ:
http://www.youtube.com/watch?v=swkq2E8mswI

Here is a couple more good sites for people...

http://www.losthorizons.com/Cracking_the_Code.htm

.

http://losthorizons.com/CtCforFree.pdf


7 posted on 01/19/2012 6:12:21 AM PST by phockthis (http://www.supremelaw.org/fedzone11/index.htm ...)
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To: Razzz42
HAD WE PRINTED dollars instead of BORROWING DOLLARS

There is no distinguishable difference between borrowing and printing. Money is created out of debt regardless of whether the paper is printed as currency or printed as bonds and sold as a currency exchange.

Only about 3% of the money actually exists in the form of printed-paper. The remainder exist as digitally created money that only exist as computer files.

The mechanics of borrowing money begins with printing bonds and selling them to an entity that will receive interest twice a year and the return of the principal after thirty years by printing more paper that is backed by more paper.

8 posted on 01/19/2012 9:12:06 AM PST by MosesKnows (Love many, Trust few, and always paddle your own canoe)
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To: MosesKnows; BfloGuy

For the most part, bonds are being printed not money. Money is printed to pay the interest on the bonds, that is a faction of what the bonds are worth (esp. @ current % rates) until they come due or cashed in.

Armstrong is making the point that most of the interest paid on US bonds ends up overseas going to the overseas bond holders (ex. China, Euroland, etc.) which keeps the money flow out of the US economy.

It would be better to print money to inject into the US economy and not sell bonds overseas to save on paying interest, which lately is 40% of US debt and that 40% paid out doesn’t enter the US economy.

So the difference between printing and borrowing (selling bonds), is interest payments. Simplistic but that is basically it while not considering low interest rates, rollovers, SWAPs, prime rate, interest charged to consumers, being the reserve currency, inflation, etc.

‘Rogue’ refers to a breakdown where once a country loses control of its finances then it turns into a free-for-all as it has to sell off anything of value to satisfy its debts even on the black-markets.


9 posted on 01/19/2012 11:39:25 AM PST by Razzz42
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To: Razzz42
For the most part, bonds are being printed not money.

I will take another closer look at the article. I skimmed it and could not see his point. The Fed is printing billions to purchase Treasuries and that money is certainly entering the domestic economy in the form of the government's spending.

And I don't know that increasing the domestic flow of counterfeit money would be such a good thing anyway. It would only add to the inflationary pressure here. But when we're discussing the horrible situation we're in, I suspect we're only trying to rearrange the deck chairs on the Costa Concordia as it were.

‘Rogue’ refers to a breakdown

I really do understand that. He spelled it r-o-u-g-e like the makeup and followed it up with n-u-k-s (rhymes with yucks.) It's unfair of me, perhaps, but I tend to immediately discount articles with terrible spelling -- it matters.

That said, I'm sure he had a point, but I'm too thickheaded tonight to see it. I do thank you, though, for your patient response.

10 posted on 01/19/2012 3:51:32 PM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: BfloGuy

Armstrong can’t spell check worth a crap but that is just him.

If you are a first and last paragraph reader then you will miss the foundation Armstrong builds during this writing. He is always writing a lot about history and begins repeating himself in his writings but this is what it takes to get the masses deprogrammed.

If you read this writing once through thoroughly, even if you don’t agree with his conclusions, you will understand this/his way of thinking because his views are not unique but based on past history as human nature cycles from rich to poor back to rich on a regular basis.


11 posted on 01/19/2012 4:55:47 PM PST by Razzz42
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To: Razzz42
until they come due or cashed in.

The bonds will mature or "come due" but a bondholder cannot cash in the bonds before the maturity date.

However, they are traded in the financial markets ever day.

12 posted on 01/19/2012 5:01:52 PM PST by MosesKnows (Love many, Trust few, and always paddle your own canoe)
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To: MosesKnows

Thanks for that, I thought if you paid a huge penalty you could cash them in, maybe not. There are so many ways to go with bonds, hold, swap, trade, etc.

With these low interest rates, only a rise with inflation will case a panic in bond prices.


13 posted on 01/19/2012 5:24:51 PM PST by Razzz42
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