[MERGED] Nothing to lose sleep over... just a few dollars, no biggie

[Dan47]

Originally Posted by dvarapala

As badly as governments want CBDCs in order to track every single transaction and control the public, there's no way in hell any of them will give up the ability to print money.

I don't think they'll have a choice, at least initially. I expect the gold backing to be temporary, much like Bretton Woods 1.

Also, I'm not sure they'll need the ability to create dollars or other currencies, when CBDC's are fully operational?

[dvarapala]

Originally Posted by Dan47

Also, I'm not sure they'll need the ability to create dollars or other currencies, when CBDC's are fully operational?

I'm not an economist, but this is how I understand it:

The way fiat money is created is by "loaning" it into existence at a central bank. The only reason the Fed can loan money that didn't exist yesterday is if there is no backing for that money. If each unit of currency is required to be backed by a unit of gold they can only loan out as much fiat currency as they have gold to cover it with.

I'm sure I'll be swiftly corrected if I'm wrong about any of this.

[Dan47]

Originally Posted by Dan47

Nope, China is way down the line.

I'm not even sure the earlier chart includes the Fed's balance sheet? They can create as many dollars as they want, to pay off foreign creditors, bail out the banking cartel, etc.

[Dan47]

Originally Posted by dvarapala

I'm not an economist, but this is how I understand it:

The way fiat money is created is by "loaning" it into existence at a central bank. The only reason the Fed can loan money that didn't exist yesterday is if there is no backing for that money. If each unit of currency is required to be backed by a unit of gold they can only loan out as much fiat currency as they have gold to cover it with.

I'm sure I'll be swiftly corrected if I'm wrong about any of this.

You're close.

The banking sector creates the majority of our currency by loaning it into existence. The Fed's role is to manage the banks and currency to produce "maximum employment and stable prices", allegedly. The Fed is "independent" of the political system, allegedly and is the only institution that can create the currency without a borrower.

The entire system is dependent on trust and brut force. Those forces are wanning rapidly, in the world and if history rhymes, we'll be back on a hard money standard, like gold, to restore trust... Until the population again forgets, the purpose of hard money.

[dvarapala]

Originally Posted by Dan47

The entire system is dependent on trust and brut force. Those forces are wanning rapidly, in the world and if history rhymes, we'll be back on a hard money standard, like gold, to restore trust...

Interesting article: https://theweek.com/articles/472873/...-gold-standard

What would happen if the U.S. went back to the gold standard?

The GOP promises to establish a "gold commission" to examine whether the dollar should be linked to gold — even though the idea has long been discredited.

Is it a good idea?

No. "Economics is often a contentious subject, but economists agree about the gold standard — it is a barbarous relic that belongs in the dustbin of history," says Matthew O'Brien at The Atlantic. "The problems with the gold standard are legion," says Ezra Klein at The Washington Post, "but the most obvious is that our currency fluctuates with the global price of gold as opposed to the needs of our economy." Think about it this way, says Noam Scheiber at The New Republic: "If there's suddenly too little gold — suppose something crazy happens, like South African miners go on strike — then there will be too few dollars relative to the amount of buying and selling going on in the economy." Then people start to hoard their dollars, spending slows, "and the economy collapses." The recent financial crisis shows the importance of giving the Fed flexibility to open the money spigots if necessary.

[Dan47]

Originally Posted by dvarapala

Interesting article: https://theweek.com/articles/472873/...-gold-standard

Yea, I wouldn’t give too much credit to “professional” economists. Most are bought and paid for to keep the status quo which just happens to benefit the status quo.

The “Industrial Revolution” happened under the classic gold standard.

Not sure if you’ve ever read “Economics in one Lesson”? Here’s a link to a free online version: https://fee.org/resources/economics-in-one-lesson/

It’s a great read, quick and will dispel a lot of economic nonsense, used to confuse the general public.

[Dan47]

“If there's suddenly too little gold — suppose something crazy happens, like South African miners go on strike — then there will be too few dollars relative to the amount of buying and selling going on in the economy." Then people start to hoard their dollars, spending slows, "and the economy collapses." The recent financial crisis shows the importance of giving the Fed flexibility to open the money spigots if necessary.”

Absolute nonsense. Fewer dollars would result in falling prices as dollars became scarce in relation to goods and services but people have to live, which means they will spend.

An excellent example is modern technology and the price deflation it has experienced over the years. I remember the first big screens costing tens of thousands of dollars and people bought them! And computers, pagers, phones, etc.

The entity that suffers under a gold standard, is the government and the oligarchy that controls it.

[Dan47]

Central Banks are buying the barbarous relic, hand over fist. But not Bitcoin?

I wonder if there’s a clue in there, somewhere?

[Onebadcad]

This will keep you awake at night:

https://www.pgpf.org/blog/2024/02/wh...0next%20decade.

The Congressional Budget Office (CBO) projects that interest payments will total $870 billion in fiscal year 2024 and rise rapidly throughout the next decade — climbing from $951 billion in 2025 to $1.6 trillion in 2034. In total, net interest payments will total $12.4 trillion over the next decade. Relative to the size of the economy, interest will rise from 3.2 percent of gross domestic product (GDP) in fiscal year 2025 to 3.9 percent in 2034. The previous high for interest relative to GDP in the post-World War II era was 3.2 percent in 1991 — that ratio would now be exceeded in 2025.

With interest rates remaining high, and MANY MORE social problems needed for the next wave of votes, ie ILLEGALS, the debt service will continue to increase.

There will be a day when we will not be able to pay our creditors,,, the rich will be blamed for not paying enough taxes, even though 50% will take MUCH MORE than they paid in their lifetime.

[Onebadcad]

2000 $5,674 Budget surplus
2001 $5,807 9/11 attacks; Economic Growth and Tax Relief Reconciliation Act
2002 $6,228 War on Terror
2003 $6,783 Jobs and Growth Tax Relief Reconciliation Act; second Iraq War
2004 $7,379 Second Iraq War
2005 $7,933 Bankruptcy Act; Hurricane Katrina
2006 $8,507 Bernanke chaired Fed
2007 $9,008 Banks crisis
2008 $10,025 Bank bailouts; quantitative easing (QE)
2009 $11,910 Bailout cost $250 billion; American Recovery and Reinvestment Act (ARRA) added $242 billion
2010 $13,562 ARRA added $400B; payroll tax holiday ended; Obama tax cuts; Affordable Care Act; Simpson-Bowles debt reduction plan
2011 $14,790 Debt crisis, recession, and tax cuts reduced revenue
2012 $16,066 Fiscal cliff
2013 $16,738 Sequester; government shutdown
2014 $17,824 QE ended; debt ceiling crisis
2015 $18,151 Oil prices fell
2016 $19,573 Brexit
2017 $20,245 Congress raised the debt ceiling
2018 $21,516 Trump tax cuts
2019 $22,719 Trade wars
2020 $26,945 COVID-19 and recession
2021 $28,428 COVID-19 and American Rescue Plan Act
2022 $30,928 Inflation Reduction Act
2023 $33,167
TODAY $34,491+