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Fake money

May 14, 2013

One of this country’s Founding Fathers, Thomas Jefferson, said it best: “If we determine that the dollar shall be our unit, we must then say with precision what a dollar is....

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(46)

Tedeaux

May-14-13 5:46 AM

Sit back and SHUT UP Chris! We are all along for the ride now and there isn't much that anyone can do at this point to stop what is going on. Too bad that most of the worlds economy will be wiped out if what the US is doing with our monetary system fails. The only reason it hasn't failed aready is people still believe the dollar is worth something. When they quit believing, we are so screwed!

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CarlHiller

May-14-13 7:23 AM

"The only reason it hasn't failed aready is people still believe the dollar is worth something." Not entirely true, many nations are already pulling away fro the dollar, and Bitcoin is soaring. Over the past few years there have been a host of new international currency agreements encouraging the use of national currencies over the U.S. dollar. The following are just a few examples… China and Germany, China and Russia, China and Brazil, China and Australia, China and Japan, India and Japan, Iran and Russia, China and Chile, China and the United Arab Emirates, China, Brazil, Russia, India and South Africa.

The only reason the dollar is still afloat is due to the FED injecting some $85 billion dollars a month into the US and foreign banks.

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CMReeder

May-14-13 8:06 AM

LOL

Well Bobbie if you can't trust government and the central bank now what makes you think you can trust them on using the gold standard?

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nobud74

May-14-13 8:18 AM

Chuck, the establishment of a sound national currency is the job of the fed govt. Its not a matter of trust, it's a matter of responsibility. By the govt choosing to remove us from the gold and silver backing it has put our money in jeapordy and is ultimately irresponsible. I understand the reasoning but believe there is a need to readdress the problem before our currency ends up second rate and wreaks havoc on our economy. Perhaps a blend of precious metals and other backing rather than just a promise. There is a great short vid on this on Learn Liberty.

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CMReeder

May-14-13 8:38 AM

It's trust. Government has the responsibilty no matter which standard you use. Maybe they just want to take government out of it.

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spike2

May-14-13 9:42 AM

Peter Schiff school of thought?

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Josh84

May-14-13 9:45 AM

CMReeder May-14-13 8:38 AM****"Maybe they just want to take government out of it."

Considering they have caused the next bubble, due to the mishandling of the last couple of bubbles. The policies enacted were the easy way out and nobody wanted to take the appropriate actions. Plain and simple our current administration is encouraging the public to set themselves up for failure, by spending and borrowing, and not saving as they should.

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CMReeder

May-14-13 10:15 AM

The government did all of that. The markets and the financial markets had no hand in the bubbles or the easy borrowing or the low wages or the high price for goods and resources.

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JohnZook

May-14-13 10:19 AM

Great letter. But who cares? We've still got a number of jobs left, we've still got two years of unemployment compensation, we've got our Obama phones and Snap cards. Don't bother us with uncomfortable details and all that "tech" stuff. The government will take care of everything.

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philunderwood

May-14-13 10:32 AM

Great letter, but the only ones that can change the current system are the ones that derive their power from it and they aren’t about to give up that power.

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DavidBross

May-14-13 10:34 AM

The value of currency has been an issue throughout the history of the US. Even when currency was backed by gold and silver. There have been depressions, recessions etc. throughout our history. I believe that how a person viewed currency depended on whether one was a borrower or lender of currency. I also remember that the agriculturally based South was always at odds with the financial and industrial based North long before the Civil War. The isssue was the value of currency. It was one of the major reasons for the Civil War.

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Josh84

May-14-13 10:38 AM

Sorry Chuck, but the next collapse will be almost entirely the governments doing. Programs like, first time home buyer, cash for clunkers, the Fed pumping billions of dollars into the economy, holding back interest rates. They have a huge hand in this.

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Josh84

May-14-13 10:40 AM

In all fairness Chuck, this was an issue with the last admin. as well.

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philunderwood

May-14-13 10:47 AM

David, a truly free market will have ups and downs. The downs happen to correct excesses that develop during ups. Government’s attempt to “fix” this has only served to intensify the severity and length of the ups and downs.

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richardson

May-14-13 11:03 AM

The gold standard makes no sense. Basing the value of a dollar on a finite metal severely limits what that dollar can buy. Properly, the dollar represents what it can buy based on the abundance or scarcity of goods, or properly the GDP. Problems with this representation occur when the govt inflates the dollar's value by printing, or by discouraging investment through the FED with almost non-existant interest rates.

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enigma

May-14-13 11:22 AM

CarlHIller,"The only reason the dollar is still afloat is due to the FED injecting some $85 billion dollars a month into the US and foreign banks."

A perfect example of someone who doesn't understand the first thing about money supplies. You can't save the dollar by destroying it's value. The FED thinks it is creating wealth out of nothing. That cannot be done. The dollar will soon be inflated into worthlessness. This was tried in the Weimar Republic and is now being done in Zimbabwe. We are nearing the point of no return and that's not a good place to be. Hyperinflation only works out well for the government which is inflating the currency or in this case the FED. The people suffer. Savings are lost, investment is futile, it's a day to day existence. That's what your government and the FED are buying for you.

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CMReeder

May-14-13 12:13 PM

You have no proof that going back to the gold standard would have improved things or had avoided the recession at all.

The central bank would still have control of the gold standard. The gold standard would also give the government, the markets and the banks less flexibility in dealing with the recession. The gold standard has it's weaknesses.

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CarlHiller

May-14-13 12:20 PM

enigma - "A perfect example of someone who doesn't understand the first thing about money supplies." I am well aware of money supplies and the hazards of over-supply, under-supply and the danger in a money supply based on debt. The only way the FED has kept the U.S. economy afloat is by buying over 60% of the government debt issued by the Treasury Department. The U.S. government has become dependent on borrowing, creating a debt based money supply to finance itself. This is dangerous and unsustainable. It’s a Ponzi scheme that will eventually come crashing down. The U.S. cannot, no one can, continue to issue government debt and then print the money to pay for said debt.

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CMReeder

May-14-13 12:29 PM

From the Economist; "Hyperinflation is not an economic outcome. It isn't something that emerges, mechanically, from some macroeconomic process gone wrong. It is a symptom of total social and political collapse. And while it would be unwise to say that it could never happen in America, it is simply mistaken to say that it could happen because Congress was too foolish to balance its budget."

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Ritty77

May-14-13 1:20 PM

Great letter, Christopher, in both style and substance.

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Erdman

May-14-13 2:14 PM

I am not sure what folks mean when they say the government controls the gold standard. Unlike fiat currency, governments cannot simply print more gold out of a printing press, therefore artificially lowering its worth. Yes, precious metals will have peaks and valleys, but they will react accordingly in a market-based economy, where a free market decides what prices are. We live in a planned economy, where governments control everything from interest rates to the money supply. We no longer live in a free market based economy, that is an important fact to remember.

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eriklatranyi

May-14-13 4:06 PM

Mr. Reeder is correct that hyperinflation tends to take place in a total collapse situation.

However, printing money makes hyperinflation far easier.

Investing that printed money into the stock market, makes a collapse more plausible.

Now, add in a gov't that has wiretapped the media, launched IRS investigations into conservative and Jewish groups, abandoned a homosexual Ambassador to be savagely murdered in a nation where the President involved us without authority, and now, a reporter who dared ask President Obama about "lavish" vacations has been battling the IRS since that interview.

Now, you set the stage for a collapse.

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eriklatranyi

May-14-13 4:08 PM

ProPublica is a progressive group.

They just came out and admitted that the IRS gave them detailed information on Tea Party groups.

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philunderwood

May-14-13 4:16 PM

When more money is added to the economy it lessens its value. Tricks like government buying its own debt and other manipulations can only hold off the inevitable for a time. Sooner or later we’ll all pay the price, literally.

One thing that helps the dollar is the fact that the rest of the world is in worse shape and a collapse of the dollar would devastate the entire world economy.

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JerryfromRI

May-14-13 6:17 PM

"There was massive inflation... "

--

Are you sure about that? You might want to double check that one.

And for you Fed watchers out there, have you forgotten that for inflation to occur, too much money must chase too few goods?

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