Is the dollar going to become worthless?

This stuff is more than a little unnerving. Gold over 1000 an ounce, silver up high, oil outrageous. Everyone's savings getting eroded away. $1.60 to the Euro. What the hell is going on? What if the dollar becomes worthless? Are we headed for another great depression? This shit is getting serious. Over 3.20 a gallon for gas now and it costs a fucking fortune to fill the tank now just to get back and forth to work. Confidence in everything is going down. Sometimes I think America is just a house of cards.

We're hitting a rough spot, nothing more.


It takes a little more than a housing bubble and some inflation to destroy the worlds largest economy.

http://news.bbc.co.uk/1/hi/business/7296678.stm

Errr... second largest economy.

The EuroZone officially surpassed us on Thursday or Friday when the value of the dollar dropped below a certain amount.

This is what I am talking about

Like all big economies. I think the weak spot of the US economy is its lack of sustainability. You guys simply have more of a knack for buying completely useless stuff on credit than anybody else - it's American nature to be optimistic and thus you're more open to risk. Now, sometimes that pays off, but then, soaring private and public debt will be your undoing.

Europeans might seem more conservative when it comes to private spending, which some Americans interpret as being poorer. It's not, we just save up more and don't borrow left and right without good reason. In the public sector, sure, our social costs are a lot higher and the countries are deep in the red too. But then, social expenses come back into the economy to a very large percentage (at least until globalization really struck). America puts more money where it doesn't return - your bloated military and its zany adventures are prime examples.

In the long run, all western economies are going down because it's inevitable. In the worst case, there will be another cleansing war, which might not be the best idea given the nuclear stockpiles. But western economies ARE a house of cards. Don't let the Dow tell you otherwise as these numbers don't have much connection to reality any more.

My personal prediction? This isn't it. From this, the economy will come out stronger and soar for a few years. BUT one trend will continue: while profits reach new record levels, the common people will have less and less money. This has been measurable since the mid 90s and will definitely continue as profits go into the investor's pockets and losses are socialized by laying off more and more workers.

Will the next crises break the current system's back? The one after the next? Could very well be. I don't know. But I think I see very rough times ahead. Here's hoping they are beyond my lifetime, but somehow I doubt it.

For the first time, Canadians are rejecting our dollar, which seem to have turned into Deutsch Marks. That never stopped the Bundesrepublik from booming.

Every time I would talk about the danger of fiat money, the deliberate debasing of our currency by the Fed and the subsequent erosion of wealth in this country, Gul would always come in and try to slap me down with his 'superior' understanding of economics, sure that everything was right as rain and the fiscal insanity could go on forever.

It can't.

The crooks in DC and the Fed have pulled their last trick out of the bag to try and maintain the suicidal 'business as usual' financial practices in this country. The general population, as always, is its own worst enemy, but in this case they've been enabled by unethical financial 'experts' who know better. Case in point: the subprime lending crisis.

The time to pay the piper is arriving on our doorstep, and while I don't think it will be the catostrophic 'end of the country' at this time, it will be looked back upon a century or two down the road as one of the cusp points where the Great Experiment turned into a big bowl full of fail and began to unravel.

Honestly, my advice to my countrymen is that if you've got some extra cash lying around, spend some on things you might think you are going to need in the next couple of years. I'm talking about things like clothes, shoes, maybe a new jacket, or get that maintenance done on your house or car that you've been putting off. I'm becoming more and more convinced that money sitting in the bank is going to net you very little down the road, if it's in U.S. currency.

I've been laughed at for saying it before, but I'll say it again anyway: If you can afford it, buy gold. Even better, buy silver. While the price of gold has doubled (roughly) over the past five or six years, silver has tripled. The reason is that silver has many industrial applications, giving it added value as a commodity. It's also no shock that the price of oil has remained very steady against gold and silver.

I'm sitting on top of a couple of huge IRA's, and my biggest worry now is that in ten years they won't be worth the paper the statements are printed on. We're already turning into Mexico as far as tourism goes: the rest of the world is flocking here because the deals are so good.

What's the rise in the price when compared with the Euro or the Pound Sterling?

http://www.monex.com/monex/controller?pageid=prices

Heckuva job, Bushie!

If you are referring to oil, the price varies proportionately to the value of the dollar versus the euro or pound sterling, because the world's oil exchanges deal in dollars.

So if oil is $100 per barrel and the pound is worth $2, then oil is 50 pounds per barrel. If the dollar drops against the pound, then your pound buys more oil from a dollar-based oil exchange. However, when the rise in oil price (in dollars) exceeds the rate at which other currencies are gaining on the dollar, then the price of oil goes up for everyone, everywhere. Don't know if I articulated that very well, but you should get the idea.

No, my point is why should I invest in gold if the price is only being inflated by a weak dollar?

Besides, I can't buy shit with gold. Maybe you've got a smelting and mint complex in your back yard, but I'd sooner invest in a stronger currency.

Because as the dollar continues to fall in value, your gold does not. One is a fiat promissory note, the other is a commodity. I bought my last big metals purchases when gold was roughly $500 an ounce and silver was 5.50 an ounce. Today gold is $1000 an ounce and silver is $20 an ounce. Was it a good investement or not? If I had held onto that $9000 from 5 years ago, how much could I buy with it today? And how much can I buy with it today if I take those metals and convert them back to cash?

I can't spend it at the store. But I can sell it back to the place I bought it (Certified Mint in Phoenix, AZ) at today's spot price if I choose, and then go to the store.

Buying precious metals is like having a piggy bank where the contents don't lose their value (read purchasing power) due to inflation or currency debasement.

That's my point though, how much did your actual purchasing power grow? Say you held onto that $9K, what can you buy now that you weren't able then? What was the real growth of the investment?

Exactly. With the gold and silver, when you convert it back to currency, the purchasing power of the original investment is preserved at worst, and improved at best. That's the whole point.

I edited and clarified, sorry for the confusion.

You can invest that 9k in stocks, too. You might do better than gold, or worse, depending on the economy. But in the long term, gold has always been a winning investment, because we have a fiat currency backed by nothing and burdened by national debt. Even if your stocks are giving you good returns, the dollars in which they pay out are being continuously debased. That's the part where you have to pay attention to the spot price of metals, the value of the currency you are trading in, and the markets. Balance all three and put your money where it'll do you the most good.

Over the past 5 years, my percentage return on metals has far exceeded my IRA's and mutual funds. And thanks to the Fed, I expect this trend to accelerate.

You're not answering my question...

Yeah, saw that. But in real terms, inflation isn't so much a rise in prices as it is a drop in the value of your currency. Inflation doesn't make a gallon of milk intrinsically worth more than it was yesterday, but your ability to pay for it has been diminished because of currency manipulation. This isn't the same thing as changes in supply and demand, which will cause price increases even with a rock steady medium of exchange. (Like gold)

How can you tell the difference, you might ask? Supply and demand will cause the prices of specific commodities to change. Inflation drives up the price of everything, regardless of supply and demand.

Okay, what exactly is your question?

No.

Why should I invest in gold and silver over the Euro or Pound Sterling? Don't say anything about the merits of hard or fiat currencies.

Don't ask a question and then tell me how I can or can't answer it.

I'm not saying you should necessarily invest in metals over foreign currencies, but foreign currencies are subject to the same manipulations and debasements that the dollar is subject to, theoretically. IMO Your best bet in investing in a foreign currency is the euro, because that is the one good thing to come out of the EU: a stable, genuinely international currency not tied to the rise and fall of one specific nation. As far as FIAT money goes, it's the best deal going in the world today. And yes, I understand that ALL government produced money is fiat, but in this case, fiat ALSO means 'not backed by a commodity with intrinsic value'.

The next argument that inevitably arises is whether or not gold and silver have intrinsic value. (The old 'gold standard' argument) Maybe not if you're a buddhist. But in the history of mankind, those two substance more than any other have meant wealth and purchasing power. So I guess my argument is that if you are a human being living on planet earth, gold and silver have intrinsic value as a medium of exchange, and always have. Money made out of paper will only ever be guaranteed to be as valuable as the paper it's printed on.

I can do anything I want. If you don't like how the question is presented, then don't answer.

Well....the recession, or heading towards it is inevitable.

Or was inevitable. Such is the way of a free market economy.

I don't see how you can blame that solely on Bush.

MUST...ignore the trolls.

I don't blame it solely on Bush, but I do think he shares the blame. A POTUS sets the tone and direction for the country for his term. I predicted in 2000 over at TBBS that if Bush was elected, the price of gas would double. He's an oil man, too pro business, and too anti environment. It was the talk of alternative fuels and power that ended the embargo of the early 1970's. Scared the A-Rabs into thinking they were about to be put out of business.

Had the alternative fuels talk of that time been met with a national initiative on the scale of the Apollo program, we'd now be able to give them a big, ol' California Howdy.

Unfortunately, Reagan, Bush1, and Bush2 ended any hope for that. Clinton really didn't follow through, either.

You know there was a lot of money put into getting shale oil in the 70s and then early 80s but it finally died out when the price of gas dropped again. Grand Junction CO was a booming little town and then just died when the shale project out there stopped. All the houses were for sale and you could get a nice one for cheap.

The dollar is losing value and the property prices are going down. I look for people outside the US to buy up stuff as well.