The only outcome

[Randall Flagg]

Along with many others today, I am of the mind that a currency collapse is on the way very soon, here is a write up i did a couple of months ago.

Alot of people ask me, do you really believe the dollar will collapse and civil unrest will run rampant? The answer of course is ABSOLUTELY the dollar will collapse!! This is the only outcome possible anymore, and here is a couple of reasons why....

1. In our economic system, money IS debt. Meaning the only way you can pay off your debt is if someone else takes on debt.

2. Fiat currency's have always collapsed, due to greed of the politician's and the printing press(or devaluing of the currency)

3. Our debt is so large the only way we could begin to try and pay it is if we inflate it away.


4. But the biggest reason is because there is not enough money in existence, be it paper FRN's or gold. The interest never gets printed, just the principal.


With our national debt at 12 trillion and our yearly deficit to gdp at about 10% which is historically low, your thinking wtf right?

You would be wrong, total debt is anywhere between 50-70 trillion dollars.

US debt clock has it at 54 trillion right now, but i have heard estimates of up to 70 trillion, but we don't have hard figures on this as the fed does not allow outside audits of it's books.

http://www.usdebtclock.org/


Now when the boomers start to retire, how do you think we are going to pay for that? Social security is already running in the red.

http://www.pbs.org/nbr/site/onair/transcripts/social_security_100217/
GERSH: That's the
Heritage Foundation's David John. The administration's latest figures show
Social Security will pay out $34 billion more this year than it takes in from
tax revenues. John says that cash deficit is a warning Social Security is not
sustainable.

JOHN: This is just saying flatly, look, this is real. It's
happening. It's happening now.
​

The fed is buying up most of debt and worse yet, hiding it in the balance sheets as household buying.

Now get this, household bought 15 billion worth of us debt in 2008, but in 2009 household bought 700+ billion worth of debt.

Who believes this crap?

We must admit that we were surprised to discover that "Households" had bought so
many Treasuries in 2009.

They bought 35 times more government debt than
they did in 2008. Given the financial condition of the average household in
2009, this makes little sense to us.

With unemployment and foreclosures
skyrocketing, who could afford to increase treasury investments to such a large
degree?

For our more discerning readers, this enormous "Household"
investment was made outside of Money Market Funds, Mutual Funds, ETF's, Life Insurance
Companies, Pension and Retirement funds and Closed-EndFunds, which are all
separate reporting categories.

This leaves a very important question-
who makes up this Household Sector? Amazingly, we discovered that the Household
Sector is actually just a catch-all category.

It represents the buyers
left over who can't be slotted into the other group headings. Formost categories of
financial assets and liabilities, the values for the Household Sector are
calculated as residuals. That is, amounts held or owed by the other sectors are
subtracted from known totals, and the remainders are assumed to be the amounts
held or owed by the Household Sector.

To quote directly from the Flow of
Funds Guide, "For example, the amounts of Treasury securities held by all other
sectors, obtained from asset data reported by the companies or institutions
themselves, are subtracted from total Treasury securities outstanding, obtained
from the Monthly Treasury Statement of Receipts and Outlays of the United States
Government and the balance is assigned to the household sector." (Emphasis ours)

So to answer the question - who is the Household Sector? They are a
PHANTOM. They don't exist. They merely serve to balance the ledger in the
Federal Reserve's
Flow of Funds report.


http://www.docudharma.com/diary/18162/imploding-households-rescue-treasury-debt
​

Listen right now folks, you need to do everything you can now to get out of the dollar. Trade them for long term storable food, seeds,weapons,ammo,generators,water filters,etc.


Do not wait, China is not only buying less debt, but is selling some of the stuff it already holds.

China sold $34bn (£21.5bn) worth of US government bonds in December, raising
fears that ­Beijing is using its financial ­muscle to signal that it has
lost confidence in American economic policy.

http://www.guardian.co.uk/business/2010/feb/17/china-sells-us-treasury-bonds​

Get out of the dollar now, while you can. If you have alot of money to protect and your already set up with everything you need for your family to survive for 6 months to a year at least, then i would suggest gold and silver coins.

Please do not wait till this happens and it will be to late for you and your family. This is going to happen, if you believe it or not does not matter. So prepare and survive, or dont and more then likely die.

But remember if you have failed to prepare, do not look to people that have prepared and expect them to take care of you, only hard times lead down that path friends.

If i'm wrong, you get to laugh at me. If your wrong, your dead.

You see with your own eyes what i'm saying is true, override the sheep switch put into your brain by the msm and the government propaganda.

Be ready brothers and sisters, the time is not far out.

Any comments or insults are always welcome

 

[Fletch]

The Free Market: Dinars or Dollar?

 

[Fletch]

Zimbabwe's history under Mugabe might be instructive in this, but it's difficult to separate the damage done by his hyper-inflation of the currency from the damage done by the destruction of property rights. Africa in general has a very poor cultural understanding of private property, and it's been suggested that the widespread poverty in Africa primarily arises from this problem. So on the one hand, one might compare poverty in the rest of Africa to the poverty in Zimbabwe after Mugabe destroyed the smallest vestiges of property rights, and attempt to tease out some sense of the scale by which hyper-inflation has impoverished the people there.

In America, we maintain a fairly strong notion of property rights, and our inflation is nowhere near Zimbabwean levels (yet). The damage we see from inflation is bad enough, but it also has an ameliorative effect on public unrest. The reason for this is that inflation tends to harm savers and creditors, but tends to benefit debtors. With a nation full of debt-laden consumers, inflation has a tendency to "take the edge off" -- it prevents people from seeing the damage done to their prosperity by ever-increasing levels of personal debt, and probably prevents a fair amount of teeth-gnashing among the rabble.

The worst position to be in, if and when the Federal Reserve ratchets up inflation, is to have a ton of dollar-denominated assets. Real wealth would be handy, as would non-dollar assets, but saving in terms of a currency that is in a massive inflationary period is not something to be recommended.

 

[Randall Flagg]

When the currency collapses, and with nothing to pay people with, things get bad in days (katrina anyone? day 4 had rape and murder in the papers)

When Trucks Stop, America Stops​

A Timeline Showing the Deterioration of Major Industries Following a Truck Stoppage​

The first 24 hours ​

• Delivery of medical supplies to the affected area will cease.​

•​

Hospitals will run out of basic supplies such as syringes and catheters
within hours. Radiopharmaceuticals will deteriorate and become
unusable.​

•​

Service stations will begin to run out of fuel.​

•​

Manufacturers using just-in-time manufacturing will develop component
shortages.​

•​

U.S. mail and other package delivery will cease.
​

Within one day
​

• Food shortages will begin to develop.​

•​

Automobile fuel availability and delivery will dwindle, leading to skyrocketing
prices and long lines at the gas pumps.​

•​

Without manufacturing components and trucks for product delivery,
assembly lines will shut down, putting thousands out of work.
​

Within two to
three days​

•​

Food shortages will escalate, especially in the face of hoarding and
consumer panic.​

•​

Supplies of essentials—such as bottled water, powdered milk, and
canned meat—at major retailers will disappear.​

•​

ATMs will run out of cash and banks will be unable to process
transactions.​

•​

Service stations will completely run out of fuel for autos and trucks.​

•​

Garbage will start piling up in urban and suburban areas.​

•​

Container ships will sit idle in ports and rail transport will be disrupted,
eventually coming to a standstill.
​

Within a week
​

• Automobile travel will cease due to the lack of fuel. Without autos and
busses, many people will not be able to get to work, shop for groceries,
or access medical care.
​

•​

Hospitals will begin to exhaust oxygen supplies
.​

Within two weeks ​

• The nation’s clean water supply will begin to run dry.
​

Within four weeks ​

• The nation will exhaust its clean water supply and water will be safe for
drinking only after boiling. As a result gastrointestinal illnesses will
increase, further taxing an already weakened health care system.

This timeline presents only the primary effects of a freeze on truck travel. Secondary effects must be
considered as well, such as inability to maintain telecommunications service, reduced law enforcement,​

increased crime, increased illness and injury, higher death rates, and likely, civil unrest.

http://www.truckline.com/Newsroom/Trucks%20Are/When%20Trucks%20Stop%20America%20Stops.pdf

 

[Eddie]

Hyperinflation in my opinion is one of the more likely SHTF scenarios to occur during my lifetime. It has the potential to be one of those "not with a bang but a wimper" disasters that starts slowly and then builds to the point that the unprepared do not realize until it is too late just how bad their situation is.

I picture scenes like in the days of the Weimar Republic only with people pushing around wheelbarrows full of useless dollars instead of rentenmarks. Life savings and retirement plans will be rendered valueless. People will work all week for an hourly rate of pay that can't keep up with the rising cost of food. When payday comes their week's paycheck won't buy a loaf of bread.

It is very possible and it doesnt' take a natural disaster or foreign invasion to make it happen. All it takes is greed and elected officials turning a blind eye to the lessons they should have learned in basic economics.

 

[Kirk Freeman]

 

[Eddie]

I think if I recall correctly that at its worst the exchange rate of marks to dollars was something like 4 trillion marks to 1 U.S. dollar.

 

[hornadylnl]

Question here.

I understand how inflation helps those who are debt. IE you borrow $1000 today. That $1000 will buy you 1000 bottles of soda. If inflation comes, you still only owe that $1000. But as inflation gets worse, the buying power of that $1000 becomes less. Let's assume that inflation becomes so bad that the $1000 will only buy 100 bottles of soda. You're still only repaying the $1000 you borrowed.

The op seems to think the government is in bed with the banks. How does inflation benefit the banks?

 

[Randall Flagg]

The op seems to think the government is in bed with the banks.

So the fact that for many years there has been musical chairs at Goldman,fed reserve and treasury, but yet you imagine they are separate?

 

[Randall Flagg]

Hyperinflation in my opinion is one of the more likely SHTF scenarios to occur during my lifetime. It has the potential to be one of those "not with a bang but a wimper" disasters that starts slowly and then builds to the point that the unprepared do not realize until it is too late just how bad their situation is.

I picture scenes like in the days of the Weimar Republic only with people pushing around wheelbarrows full of useless dollars instead of rentenmarks. Life savings and retirement plans will be rendered valueless. People will work all week for an hourly rate of pay that can't keep up with the rising cost of food. When payday comes their week's paycheck won't buy a loaf of bread.

It is very possible and it doesnt' take a natural disaster or foreign invasion to make it happen. All it takes is greed and elected officials turning a blind eye to the lessons they should have learned in basic economics.

We are now going through a huge period of deflation as measured by the aggregate money supply. Most periods of hyperinflation followed periods of deflation(i.e. germany,etc).

http://www.cnbc.com/id/37750600

Deflation—Not Inflation—May Be Bigger Threat to Economy


Economists and policymakers generally don't take the D-word lightly, but when enough economic indicators show falling prices, it's time to ask if deflation, not inflation, is the more immediate threat to the US economy.

By one measure or another, reports on producer prices, consumer prices and import-export prices in the past week all showed declines—meaning falling prices—and they're hardly the first negative readings this year.

"There's clearly deflationary pressure," says Dean Baker, co-director of the Center for Economic and Policy Research, who worris that the "economy is just drifting along."

"We haven't seen an economy like this in 70 years," adds David Resler, chief economist for Nomura Securities.

 

[hornadylnl]

So the fact that for many years there has been musical chairs at Goldman,fed reserve and treasury, but yet you imagine they are separate?

I have no doubt that the banks are in bed with the government. The government is causing the things that are leading us to inflation. But what I'm trying to figure out is how inflation benefits banks. That's a serious question here.

 

[CarmelHP]

I have no doubt that the banks are in bed with the government. The government is causing the things that are leading us to inflation. But what I'm trying to figure out is how inflation benefits banks. That's a serious question here.

Banks are huge debtors now. Remember the reasons for the bailouts. A hyperinflation makes all those nasty toxic assets disappear. At least those not already purchased by the hyper-gullible taxpayers.

 

[Fletch]

We are now going through a huge period of deflation as measured by the aggregate money supply.

The Austrians disagree. Their first objection is the fraudulent reporting by the Fed about the actual state of the money supply (7/1/2009):

How Much Money Inflation? - Howard S. Katz - Mises Daily

The Federal Reserve is lying about the nation's money supply (M1). The current figure for money supply is being given as $1.6 trillion. The actual number is $2.34 trillion. The reported number is equivalent to an increase of 16% over the past year. The actual number is equivalent to an increase of 70% over the past year. This compares with the nation's high money-supply increase of 16.9% in 1986.

Frank Shostak recently weighed in (6/10/2010) on deflation:

Is Deflation in the United States Possible? - Frank Shostak - Mises Daily

Conclusion

A sharp fall in commodity prices has raised the specter of deflation in the United States. We suggest that what matters for deflation is the state of the money supply. As long as the money- supply rate of growth remains a positive figure, there can be no deflation.

Despite a decline in commercial banks' inflationary credit, the offsetting monetary pumping by the Fed has kept the money-supply rate of growth in positive territory. There is, however, always the possibility that the Fed could tighten its stance in response to a strengthening in the growth momentum of the CPI. This, coupled with a fall in inflationary credit, could result in a fall in money supply and thus the emergence of deflation.

However, we are of the view that, on account of the fall in the growth momentum of money supply between November 2008 and November 2009, US economic activity could come under pressure in a few months time. As a result, the Fed may embark on strong monetary pumping. We suggest this could lead to severe stagflation.

So according to Shostak, eflation is possible, but not currently present.

There has also been some disagreement about what to expect in the future, as Robert P. Murphy describes here:

y reason for expecting large-scale price inflation is fairly straightforward: I see no coherent strategy for Bernanke to remove the excess reserves from the banking system. A plan to sell off the assets on the Fed's balance sheet (and thereby drain some of the reserves out of the system) doesn't reassure me because (a) I don't think Bernanke would have the guts to do it and thereby crash the housing market; and (b) the Fed would have to sell its newly acquired assets at a loss from what it paid for them, meaning there would still be excess reserves it couldn't sop up.

...

I was recently on a conference call with a group of asset managers, most of whom were in the deflationist camp. When I made these points, they said that the total CPI has risen, yes, but that it was driven by rising commodity prices. If we focus on the "core" CPI (which excludes food and energy), then the CPI hasn't risen nearly as much in 2009, showing just how weak consumer spending has been.

Fair enough, but by the same token the so-called core CPI never fell substantially, either. The reason people thought we were in a deflationary trap last year was that oil and other commodities fell quite sharply. As the chart below shows, if you just looked at core CPI, you wouldn't realize there was an enormous collapse in late 2008.

So it's true that focusing on core CPI can take away some of the problem for the deflationist by reducing 2009's price hikes, but then it also wipes away much of the collapse in prices at the end of 2008. Thus the deflationist must still explain: if the credit crunch has been in strong force for a full year — and this is what will drive a Japanese-style deflation — why haven't we seen it kick in yet?

Shostak and Murphy both agree that there was a very brief period of deflation that lasted a couple of months, but they also agree that it is over and we are back to "business as usual"-style inflation for the moment.

 

[NordicHeathenVinlander]

Dollar is predicted to fall. It's substance, I believe have dropped to no where near it's value 15 years ago.

This is the trend.


If you watch European countries, like Greece, we're following in they're steps, it appears.
The EU is desperately attempting to keep Greece from dragging down other Nations and it doesnt look like it will work.


Just like Obama's "big fix" bailouts.

 

[patton487]

This is a VERY important subject. Hyperinflation and the collapse of the dollar are much more likely than a nuclear attack.

Unfortunately America will go down silently with a whimper rather than in a blaze of glory. Our spineless politicians have sold us and our children down the river. They are selling our land and our natural resources out from under us.

We, as a country, will be forced to submit and take our place in the NWO. But as a third world country with a wrecked economy, begging for help from the Chinese and the IMF. Timetable?? Two years on the pessimistic side, maybe ten on the optimistic.

Get your food and preps now, while your dollars still buy something....

[ame=http://www.youtube.com/watch?v=xgrOZbOWjUU]YouTube - Why No Hyperinflation....Yet? - Banks are holding onto the excess Dollars - Glenn Beck explains[/ame]

 

[Randall Flagg]

The Austrians disagree. Their first objection is the fraudulent reporting by the Fed about the actual state of the money supply (7/1/2009):

How Much Money Inflation? - Howard S. Katz - Mises Daily



Frank Shostak recently weighed in (6/10/2010) on deflation:

Is Deflation in the United States Possible? - Frank Shostak - Mises Daily



So according to Shostak, eflation is possible, but not currently present.

There has also been some disagreement about what to expect in the future, as Robert P. Murphy describes here:



Shostak and Murphy both agree that there was a very brief period of deflation that lasted a couple of months, but they also agree that it is over and we are back to "business as usual"-style inflation for the moment.

The Austrians disagree. Their first objection is the fraudulent reporting by the Fed about the actual state of the money supply (7/1/2009):

1. good for them
2. they base this off a memo from the st. louis fed(see below quote)
3. john williams of shadow stats has been following the stats for years, his charts tell a different story.

But, according to the memo, this reported figure is only half of the real deposits.

They also try to say the base is higher then the supply, which it is, but thats nothing new.

The monetary base is called high-powered because an increase in the monetary base (M0) is allowed to be multiply magnified in terms of the supply of bank money, an effect often referred to as the money multiplier. As an example, an increase of 1 billion currency units in the monetary base will allow (and often be correlated to) an increase of many more billions in the "bank money" supply. This is often discussed in conjunction with fractional-reserve banking banking systems.

The reason the base is higher then the supply is because banks are not loaning out money right now.

FRB: H.3 Historical Table 2 Aggregate Reserves of Depository Institutions and the Monetary Base June 17, 2010

US money supply plunges at 1930s pace as Obama eyes fresh stimulus - Telegraph

The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.


The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

 

[Fletch]

They also try to say the base is higher then the supply, which it is, but thats nothing new.

The reason the base is higher then the supply is because banks are not loaning out money right now.

All of which are accounted for by Shostak, and he still maintains that we are in an inflationary period because the Fed is pumping money into the system at a rate faster than the banks are shrinking their inflationary lending:

Now a fall in inflationary credit, if not offset by the Fed's pumping, results in a decline of the money stock and hence in deflation. As we have seen so far, the money stock is still rising, which we suggest means that for the time being the Fed's monetary pumping via buying of assets is offsetting the decline in inflationary credit. Observe that currently the Fed is pumping at the yearly rate of 14% against the pace of contraction in inflationary credit of around 6%. Remember that whenever the Fed buys assets from nonbanks it boosts the demand deposits of the sellers of assets to the central bank. An increase in demand deposits implies an increase in money supply.

So it seems that irrespective of the decline in inflationary credit the Fed can always offset this fall through monetary pumping. (Again, the Fed could offset this fall by an aggressive buying of assets from nonbanks.) So in this sense one could argue that, given the Fed's readiness to pump money on a massive scale, the likelihood of deflation is not very high.

 

[Fletch]

All of which are accounted for by Shostak, and he still maintains that we are in an inflationary period because the Fed is pumping money into the system at a rate faster than the banks are shrinking their inflationary lending:

It's also interesting to see that John Williams pretty much agreed with Shostak line for line back in 2008:

No Deflation. The U.S. has not seen annual CPI deflation since several periods of minimally lower prices in the late-1940s through the mid-1950s (the latter being outside of a recession). Of the nine official recessions since 1950, none of them were deflationary. The last significant deflation seen in the U.S. was during the Great Depression, thanks to a sharp contraction in the money supply, which, in turn, was due to a large number of bank failures and lost deposits.

...

The Fed has the will, the perceived mandate and the ability to create as much new money as is needed to prevent a deflation in the prices of goods and services, as measured by the CPI.

And 6 months ago he hadn't really changed his mind:

A Great Collapse. The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold.

I don't have a subscription (and I'm not about to get one), so I can't read his more recent thoughts, but his sidebar states that he's still measuring inflation, not deflation:

May Annual Consumer Inflation: 2.0% (CPI-U), 9.2% (SGS)