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What's with the US dollar?!

  • #41
  • Apr 2, 2011 12:42pm Apr 2, 2011 12:42pm
Quoting Mautje
I'm actually really curious how the world would be if we would let go of ALL the money and currencies and ONLY trade in commodities. Unable to "print more".. there just IS a certain amount of gold/silver/diamonds/oil etc. in the world and that's it.

What would our world look like if we just ONLY traded these? Buy a new car? pay with diamonds.. buy a piece of steak? pay with silver etc.

Just let go of all the BS that comes along with all the abilities that currencies come with.

Anyone have a view on this? I'm not an expert (yet!? lol) but I'm...
Well the beauty of the fractional reserve system is that if you deposit say 1 million dollars in a bank, the bank only has to keep the reserve requirement of that. Lets say the requirement is (by law) 10%

That means that 100,000 needs to be physically kept by the bank and the other 900,000 they can loan out to other people... And of course earn interest on that loan and in effect "create" money as people say... this is where the conspiracy theorists rest their case that the fractional reserve system is evil... But where does that 900,000 go?

Lets say the entire amount goes to an entrepreneur who is starting up a new business then where does he deposit that 900K when he receives it? Into a bank! So again the bank receives the 900K and they only have to keep 90,000 (10%) of it and the rest they can loan out... The process starts all over...

So... lets go back to the first loan of 900,000 to the entrepreneur... What does he do with this money? Firstly he is hopefully credit worthy so that initial capital will be put back through the system.. secondarily his entrepreneurial efforts will hopefully create jobs (employment) which in turn mean that the employees can afford food (which supports the local super markets) who in turn can pay their workers who can afford to by food etc etc... Education, etc etc you can see how it goes on and on through the chain benefiting many people, so the economy as a whole will hopefully get BACK more than the 900,000 that was initially "created"

So going back to your question... How will this be done if the supply of gold or silver is FIXED? it can't... Money was initially created when the banks were on the Gold system meaning that the notes (money) were simply "rights" to a part of the banks gold to whatever the value of the note promised them...

I would imagine that by having a fixed gold or silver supply as money would create the biggest gap between rich and poor ever. In fact this would be like the ancient days where a privileged few own the "wealth" and everyone else slave for them///

Not that much has changed these days lol but things would be more pronounced I would imagine... When a monetary supply is fixed then that's it! It filters up the pyramid until the rich have it all and enslave the rest of the nation


Anyone else have any thoughts on this?

EDIT: I've seen Zeitgeist and all the rest and although they make a case it is very one sided (extreme) Banks play a very important role in our free economies... I don't believe they're as evil as everyone makes them out to be
Time hides Nothing
  • #42
  • Apr 2, 2011 12:44pm Apr 2, 2011 12:44pm
First I agree that the world monetary system is broke and desperately needs fixing but second there were also boom/bust cycles long before the Fed came into being.
  • #43
  • Apr 2, 2011 12:47pm Apr 2, 2011 12:47pm
Quoting SunTrader
First I agree that the world monetary system is broke and desperately needs fixing but second there were also boom/bust cycles long before the Fed came into being.
True, but you also had currency debasement underlying those cycles, which is pretty much equivalent to printing money. You also had mania's like the south sea bubble or tulip mania, those end badly as well.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #44
  • Apr 2, 2011 12:53pm Apr 2, 2011 12:53pm
Quoting SunTrader
First I agree that the world monetary system is broke and desperately needs fixing but second there were also boom/bust cycles long before the Fed came into being.
Agreed, but the causes followed the same formula, the debasement of the money (boom), flippant misallocation of capital, reigning in of the debasement (bust), or the complete collapse of the financial system as in the recent Weimar Republic collapse. If it happened in the last 100 years it's recent to my purposes
  • #45
  • Edited 1:23pm Apr 2, 2011 1:00pm | Edited 1:23pm
Quoting CindyXXXX
Well the beauty of the fractional reserve system is that if you deposit say 1 million dollars in a bank, the bank only has to keep the reserve requirement of that. Lets say the requirement is (by law) 10%
But they don't even do that In the case above they are lending a large amount of someone elses money, which is fine IF they agree to their money being lent and they get a commensurate percentage.

They use the 1million on deposit to lend 9MILLION. Here they are lending money and making interest on money that does not in effect exist.
This is why Satan spawn like Bernanke will actually state with a straight face that "there is not enough inflation".

It's not capitalism anymore, there are no massive bailouts in Capitalism. It's welfare for the rich and privileged ripped out of the backs of the yet to be born, otherwise known as text book Fascism.

If any of this seems off topic is totally not, the title of this thread is "what's with the US dollar".
  • #46
  • Apr 2, 2011 1:01pm Apr 2, 2011 1:01pm
An older post about the crash 1920-21 that you never heard about. No government intervention and the economy recovered in 18 months. Says a lot of trying to centrally manage an economy.

.
http://www.forexfactory.com/showpost...5&postcount=54
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #47
  • Apr 2, 2011 1:28pm Apr 2, 2011 1:28pm
Quoting SerpentDove

They use the 1million on deposit to lend 9MILLION. .
Are you sure that's correct... I don't think so man... An INITIAL reserve limit is a % of the initial deposit

on re deposits and re lending the total amount lent will blow out to more than the initial deposit but fact is total lending can never exceed total deposits as the reserve requirement is a % of deposits
Time hides Nothing
  • #48
  • Apr 2, 2011 1:30pm Apr 2, 2011 1:30pm
Quoting SerpentDove
In the case above they are lending a large amount of someone elses money, which is fine IF they agree to their money being lent and they get a commensurate percentage.

They use the 1million on deposit to lend 9MILLION. Here they are lending money and making interest on money that does not in effect exist.
This is why Satan spawn like Bernanke will actually state with a straight face that "there is not enough inflation".

It's not capitalism anymore, there are no massive bailouts in Capitalism. It's welfare for the rich and privileged...
I didn't want my edited previous post to be lost in connection to the one above.
  • #49
  • Edited 1:47pm Apr 2, 2011 1:34pm | Edited 1:47pm
Quoting SerpentDove
I didn't want my edited previous post to be lost in connection to the one above.
No worries I deleted it - Anyway man without this thing you wouldn't even have the opportunity to trade and certainly not at leverage... Be grateful!

Inflation BTW isn't always such a bad thing.. A certain amount is needed sometimes, if prices didn't inflate then foreign countries could seize domestic supplies at cheap prices and suck value from an economy...

I gotta go now man but was nice chatting with you will check in tomorrow
Time hides Nothing
  • #50
  • Apr 2, 2011 2:06pm Apr 2, 2011 2:06pm
Quoting CindyXXXX
Are you sure that's correct... I don't think so man... An INITIAL reserve limit is a % of the initial deposit

on re deposits and re lending the total amount lent will blow out to more than the initial deposit but fact is total lending can never exceed total deposits as the reserve requirement is a % of deposits
Yes and no, as usual the the truth lies somewhere in the middle

An explanation of how it works from the New York Regional Reserve Bank of the US Federal Reserve system. Scroll down to the "Reserve Requirements and Money Creation" section. Here is what it says: "Reserve requirements affect the potential of the banking system to create transaction deposits. If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000)

So when the Fed prints a 1 million it's actually 10 in the end.... Now how big where those bailouts? OMG
Let's not forget the Fed wants it back, with interest, the American taxpayer is Washington's surety.
  • #51
  • Apr 2, 2011 2:26pm Apr 2, 2011 2:26pm
Quoting SerpentDove
The Fed created the bubble in EVERYTHING in the first place. Boom bust cycles are absolutely NOT normal, they are created by the abuse of free floating currencies. What was the inflation deflation cycle like in the USA before 1913, answer...... infla...what? defla...who?
Are you really suggesting that booms and busts never happened in the US before 1913?

Seriously. Read some history.

And don't forget, the FED controls the monetary base, they can only "encourage" inflation, in order for active inflation to occur, private banks must multiply the base through investments (including loans) voluntarily.
  • #52
  • Apr 2, 2011 2:30pm Apr 2, 2011 2:30pm
Quoting Mautje
I'm actually really curious how the world would be if we would let go of ALL the money and currencies and ONLY trade in commodities. Unable to "print more".. there just IS a certain amount of gold/silver/diamonds/oil etc. in the world and that's it.

What would our world look like if we just ONLY traded these? Buy a new car? pay with diamonds.. buy a piece of steak? pay with silver etc.

Just let go of all the BS that comes along with all the abilities that currencies come with.

Anyone have a view on this? I'm not an expert (yet!? lol)...
I can guarantee you there wouldn't be enough "money" to sustain our current global population growth rate (not sayin that's a bad thing).
  • #53
  • Apr 2, 2011 3:09pm Apr 2, 2011 3:09pm
The Greenback is coming back to life, it's not going anywhere. Now for the gold crash.
  • #54
  • Apr 2, 2011 3:23pm Apr 2, 2011 3:23pm
Quoting Scotty B
The Greenback is coming back to life, it's not going anywhere. Now for the gold crash.
That's based on what?
  • #55
  • Apr 2, 2011 3:29pm Apr 2, 2011 3:29pm
Quoting Low
Are you really suggesting that booms and busts never happened in the US before 1913?

Seriously. Read some history.

And don't forget, the FED controls the monetary base, they can only "encourage" inflation, in order for active inflation to occur, private banks must multiply the base through investments (including loans) voluntarily.
Addressed the booms bust thingy in previous post earlier in the thread...of course they happened, but the circumstances where always the same, they were preceded by a debasement of the money at the time. If you knew me you would seriously have a chuckle about telling me to read some history. It's just that the scale of it this time is unprecedented in history.

Now why would all subsequent banks who make money on interest made by making loans and investments possibly multiply that base to the fullest extent that they can get away with as there is now a precedent in place that they cannot lose as long as the Fed is pulling the strings?

Scotty, if Gold crashed (retraced) to $1000 per ounce...... and then rallied another $1500..... it would not be pretty. Being someone who enjoys finding products on supermarket shelves when i go shopping.. I hope it crashes like crazy, I hope the inflation can be contained, I hope I have no idea what I'm talking about.
  • #56
  • Apr 2, 2011 3:31pm Apr 2, 2011 3:31pm
Quoting CindyXXXX
Well the beauty of the fractional reserve system is that if you deposit say 1 million dollars in a bank, the bank only has to keep the reserve requirement of that. Lets say the requirement is (by law) 10%

That means that 100,000 needs to be physically kept by the bank and the other 900,000 they can loan out to other people... And of course earn interest on that loan and in effect "create" money as people say... this is where the conspiracy theorists rest their case that the fractional reserve system is evil... But where does that 900,000 go?

Lets...
Well yeah good for the entrepreneur and the bank,

So there was no money or real asset in the first place right? Its just a number being created and passed around and being bubbled "beautifully" (if even they lend it like 10 times extracting 10% each time it gets upto 5 mio).

Now lets say that after some years company your entrepreneur opened goes broke and the bubble will burst, The bank made interest, company made profits enough. That bank and company were TBTF so they had to be bailed out but who's gonna pay for that? Well there was no hard asset to start with cause the cycle started with number in a bank but every cycle has an end at the end that number has to be realized.

Its you that will pay the eventual price through Inflation, Taxes, Unemployment, Foreclosures and Depression to name a few. Yep u bailed out AIG.

So you started from a tent and now you are back in the tent (not littrely but i mean standard of life) and all that you earned in the middle is in the air. But the worst part is u dont know how it up in the air right out of your checking account.

You cant close your eye's here. Many families that were living a decent life style some years ago are now go broke almost every month. Its what happening in around me not that something i read on internets.

So where is this money is going? Who is the Apex predator? It's supposed to be a ZERO sum game right so If every one seems to be loosing than who is winning?
.
  • #57
  • Apr 2, 2011 3:39pm Apr 2, 2011 3:39pm
Quoting SerpentDove
"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -- Thomas Jefferson...
Sorry, but this is not an authentic Jefferson quote. The closest actual quote is, "... banking establishments are more dangerous than standing armies...." which was from a letter written by Jefferson in 1816. The part about inflation and deflation is a red flag, since those terms were not in use during Jefferson's lifetime.

http://www.monticello.org/site/jeffe...anks-quotation

This is the danger of cut-and-paste quoting. Jefferson is the leader in internet misquotes, followed closely by Abraham Lincoln, who once said, "Beware of relying on quotes you find on the internet, for they may not be authentic."

I haven't checked the authenticity of your other quotes.
  • #58
  • Apr 2, 2011 3:41pm Apr 2, 2011 3:41pm
Quoting Scotty B
The Greenback is coming back to life, it's not going anywhere. Now for the gold crash.
easy with that. (just jk)

Firstly, don't know what are the reasons for such a statement but I'm definitely a contrarian here.

I'm expecting a much higher price on gold in the long term ,1500 and beyond till 2000 will not be a surprise

Gold crash NO - correction yes. Nothing goes straight up or straight down so there is nothing unusual about corrections, there are allways corections.

I have no idea when or what will cause the corrections. If you go back to any bull commodities market you'll see there's about a 40% range between the top and the bottom. They always have and they always will.

Previous bull markets in commodities have lasted 15 or 20 years. This one is going to last at least that long if not longer. And unfortunately, the supply side of gold it seems to be getting worse not better.

The same is true for silver and in the medium term will outperform the gold by far.

anyone can print this message, but only time will judge and prove otherwise

all the best!
  • #59
  • Apr 2, 2011 3:50pm Apr 2, 2011 3:50pm
Quoting nasir.khan
........ It's supposed to be a ZERO sum game right so If every one seems to be loosing than who is winning?
Trading and especially futures is said to be a zero sum game. But not in all trades. Both sides can win depending on time horizon on each trade and whether or not it is hedged with some other trading instrument.

The history of human endeavor economically is of growth so it is not purely zero sum you win, I lose or vice versa.
  • #60
  • Apr 2, 2011 3:57pm Apr 2, 2011 3:57pm
Quoting nasir.khan
Who is the Apex predator?
The shareholders of the Federal Reserve Bank is my guess.
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