Death Valley Snowballs and Fiat Currencies

Keep it simple!

 

  • Snowballs have a short life expectancy in Death Valley.
  • Fiat currencies, backed by credit and debt, survive longer than snowballs in Death Valley, but history shows all fiat currencies are inflated into worthlessness and eventually die.
  • U.S. dollars have value only to the extent that they are strictly limited in supply.” Ben Bernanke on November 21, 2002. But we know the supply of dollars has grown rapidly since 1971, and especially after the 2008 crisis while Bernanke was Chairman of the Fed.
  • The U.S. government is officially $20 trillion in debt. Unfunded liabilities are far larger.
  • Official national debt has doubled every eight to nine years for decades. Debt in 2017 is $20 trillion and accelerating higher, and in 24 – 27 years it could be eight times higher – at $160 trillion. Can this fiat currency Ponzi scheme survive that long?
  • If the Fed “prints” another $140 trillion, will that destroy the purchasing power of the dollar?
  • Note to congress: “If you don’t raise the debt limit you will collapse the fiat currency bubble. But if you raise the limit and continue with ever-increasing debt you only delay a larger collapse.”
  • If something can’t continue, it will stop. What specifically might stop? Economic insanity, exponentially increasing debt creation, Federal Reserve credibility, the dollar as the Reserve Currency, purchasing power of the fiat dollar, euro, pound, yen …and others come to mind.
  • Federal Reserve Notes are debts of the central bank and have value because they are strictly limited in supply. But the supply of dollars is huge and rising rapidly. That begs the question, “What will preserve the value of the dollar?
  • Gold has been valuable money for thousands of years. Which will retain their value longer?

Gold coins,

or

Fiat dollars created in ever-increasing quantity?

Snowballs in Death Valley tell us most of what we need to know about debt based fiat currencies – and their chances for survival.

Gary Christenson

The Deviant Investor

 

10 thoughts on “Death Valley Snowballs and Fiat Currencies

  1. PS:
    http://neweconomicperspectives.org/modern-monetary-theory-primer.html

    also:
    https://mythfighter.com/
    Monetary Sovereignty – Mitchell
    For those who enjoy fiction: Why you have too much money — and the government has too little.
    Friday, Mar 31 2017
    snip
    “It would be amusing to hear someone explain the mathematics of how a 60% cut in federal spending or a doubling of taxes, would boost GDP growth. Historically, every U.S. depression has been introduced with just such fiscal nonsense:
    1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
    1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
    1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
    1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
    1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
    1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
    1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.”


  2. Yes we all need to know that debt keeps INCREASING! Why? The governments DON’T want to fix it! The solution is PAIN!

    What happens to set off a run on the USD? I am 81 years old, I don’t see it happening on my watch? Therefore I don’t care! Have told my children it’s coming, they don’t care as well, as the rest of the world population also doesn’t care. As Scarlet said, ” I’ll WORRY ABOUT IT TOMORROW, I CAN’T WORRY ABOUT IT NOW!” Amen!


  3. A B C : But that will never happen in the real world.
    As long as the Banks and Fed keep printing, it will never collapse.
    Spending: Deficit must and will go on:
    Eliminate debt: How? Kill the goose that laid the egg.
    Correct on gold in the world: but who has it ? We don’t .
    The 100 year gold bit means nothing to me and many-many others, It’s not 1917 when the $ was a $, No one can look to the Gold standard, it failed.
    Think about it . Who would run it . care for it. Some corrupt Gove. again.
    I am betting on more debt and more corruption, the corruption of banks and the fed will be around for a long -long time.
    My Dad is 109 , this is what he says: To kill corruption , you must cut off it’s head . Not talk about it::
    silvercup


    • Agreed, it’s a human problem, everyone talks about monetary theory, while corruption and greed have always ruined the efficacy of any system far sooner than the weakness in the system itself.


  4. Yes, the supply of USD has certainly increased a lot since 1971, which might be expected for a reserve currency. Demand also has a say in the value of the dollar. The petrodollar and other similar systems make sure there is a ready-made demand for USD. Monetary inflation is not necessarily a bad thing. Even if the US government issued its own debt-free currency there would still be a need to create it out of thin air. The problems lie with the fact we must pay interest on the created money and a significant portion of the newly created money seems to flow into the hands of the extremely wealthy as opposed to the public. Even fiat money might survive if we didn’t have to pay interest on it to a private bank.


  5. Gary: There’s over 300 million in this country, a small percent own gold. Where is the money going to come from. It takes money to purchase gold.
    If gold goes to 10 grand or like most experts are saying ,maybe even 25 grand.
    How can a price be put on something that doesn’t exist ? [ dollars- money ]
    and the most important thing. Inflation. What? inflation will be arrested , Now at 1200 gold.
    The FED raised interest: It won’t stay there very long. Did you read the key word: PROBABLY others state : could-may, all guess-work, [ opinion ]

    If gold cant get to the 1900 level with what inflation we have: How will it get to 10-25 grand. Gary: KILL inflation and no one will need GOLD.
    silvercup::


    • And to kill inflation we must:

      a) Kill deficit spending.
      b) Eliminate the national debt
      c) Balance the budget, reduce spending, and gore many sacred cows

      Otherwise, commercial banking and the Fed will increase the supply of currency and that is where the currency will come from…

      There is more gold in the world than at anytime in history. Also far more fiat currency than at any time in history. Either the gold price will increase, or the fiat currency scheme will implode. Based on 100 years of history, bet on more fiat currency, more debt, and higher gold prices.
      The Deviant Investor


      • “a) Kill deficit spending.
        b) Eliminate the national debt
        c) Balance the budget”

        Austerity like this risks disaster:
        http://www.truth-out.org/news/item/29268-economist-mark-blyth-continued-austerity-will-be-catastrophic-for-greece-and-europe

        Or even worse:
        http://blogs.wsj.com/eurocrisis/2012/06/19/nowotny-links-austerity-with-rise-of-nazism/

        Gary, please look into Modern Monetary Theory. Start here:
        http://moslereconomics.com/2011/08/04/mmt-history-and-overview/
        http://bilbo.economicoutlook.net/blog/
        http://neweconomicperspectives.org/mmt-scholarship

        … and/or go to youtube and search:
        – modern monetary theory
        – randall wray
        – warren mosler
        – bill mitchell [must add “monetary” to search because bill mitchell is too common a name]

        Also check out Ellen Brown (youtube and general web search), Web of Debt, public banking.


        • What I got out of this:

          Given that government spending and debt are completely crazy and out of control, austerity will cause hardship, recession, and depression.

          Fine, but so will unrestrained debt growth. We must continue the insanity because facing the consequences of insanity is unpleasant is not a good argument.

          MMT: Given excess debt, fiat currencies, crazy economics, ever-increasing debt, deficits, and spending … MMT is another idea. But how about fixing the problems? Make the currency honest – back it with something tangible, stop deficit spending, balance the budget etc. Yes, the reaction will be ugly, but so are the consequences of continuing the currency insanity. Again, continue the insanity because stopping it would be unpleasant is not an argument for continuing the insanity. Of course vested interests will make certain we extend and pretend until we can’t …

          The Deviant Investor


          • Gary: “government spending and debt are completely crazy and out of control”

            Why are you convinced of this?

            I know, I know. I used to be convinced of it, too. But then I started questioning things that I thought I knew. Now I am unsure. Still studying and thinking.

            Gary: “austerity will cause hardship, recession, and depression. Fine, but so will unrestrained debt growth”

            Perhaps “unrestrained” debt growth will cause problems, but who is advocating that? NOTHING can be completely unrestrained, including debt and currency issuance, and the MMT guys would not disagree. How do we define “restraint” and “unrestrained”? Why do we consider current debt to be “unrestrained”? How will we know when restraint has been restored?

            Why will debt growth *per se* cause hardship? That is, if that is what you are saying.

            Further: doesn’t the potential harmfulness of debt have something to do with what the money is spent on? i.e. if you borrow money and spend it on cocaine and hookers, that will produce a different outcome than borrowing money and investing it in a growing business. Right?

            I sometimes grow impatient, now, with the ranting against “debt” not otherwise specified. We have to know WHAT the debt was incurred FOR, not just that it exists! If I incur a debt to pay for a surgery without which I would die, then that is a wise move — all the ranting against “deficit spending” be damned. What the money is spent on COUNTS.

            On the other hand, as the statistics I posted make quite clear, whenever debt is reduced drastically the result appears to be depression. This could perhaps be decried as “crazy and unrestrained pay-down of debt” — a bad thing, if you consider depression to be a bad thing, as I do, and if there is in fact a causal link. IS there a causal link? Great question! Let us sincerely seek the answer.

            Further: there is disagreement within the MMT community regarding debt. The issuance of more money does not have to involve taking on debt. See Ellen Brown’s (and others’) writings). This is a vibrant, diverse, intelligent community, and there is lots to learn. Again, I’m still reading and thinking — and questioning my old dogmas. Fun!

            As for spending: SOME spending is excessive; e.g. military-industrial-security spending. Most of that is a total waste — just like spending money on cocaine and hookers. Other spending is different.

            What I question is whether further spending *per se* is “crazy and out of control”. I’m no longer convinced that it is, but I am open to good arguments that prove me wrong.

            Please go to the links I provided. They are highly provocative. READ, and question the things that you think you know. Maybe you will emerge from that process still believing the same things. And maybe you won’t. Studying MMT is a real intellectual JOURNEY for someone who believes as you do (which is the same as I used to). Don’t delay. Embark on the journey.


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