The United States. Default or Hyperinflation?

[Nikhil God]

Oil is still sold in dollars. Yuan (RMB) is not fully convertible. U.S. has the largest well managed and transparent capital market (global business doing their IPO is NYSE). All these are going to support the dollar, for the time being.

But on the long term no doubt Peter Schiff is right. The Value of dollar has to and will continue to decline.

Unless they undertake some reforms or make necessary changes. In light of this thread, the U.S. economy has held up quite well for the doom being predicted.

 

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[G-Man]

A Ponzi scheme can continue for an indefinite period of time as long as there’s a supply of fresh liquidity.

The side of me that’s a realist about human nature says inflation followed by default. That said, realists don’t build the future. People that do what realists say can’t be done build the future.

 

[Nikhil God]

A Ponzi scheme can continue for an indefinite period of time as long as there’s a supply of fresh liquidity.

The side of me that’s a realist about human nature says inflation followed by default. That said, realists don’t build the future. People that do what realists say can’t be done build the future.

True this. It's interesting how a lot of leading economists including Nobel prize winners like Amartya Sen are very idealists in their views. One would really expect them to be much more realistic about it.

 

[G-Man]

True this. It's interesting how a lot of leading economists including Nobel prize winners like Amartya Sen are very idealists in their views. One would really expect them to be much more realistic about it.

I only listen to economists that are tragic realists. If you’re going to be an optimist you better be a visionary or at least a creator.

 

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[Ocean Man]

where the Yuan becomes the official reserve currency

Why does this matter? (Serious question) as I would like to be educated. If the yuan becomes the official reserve currency, it’s not like the dollar is going to disappear? I’d still be able to walk into a bank and ask to trade one currency into USD and vice-versa.

 

[PizzaOnTheRoof]

I think people underestimate how long the US will last when the entire free world is depending on it.

 

[lowtek]

Why does this matter? (Serious question) as I would like to be educated. If the yuan becomes the official reserve currency, it’s not like the dollar is going to disappear? I’d still be able to walk into a bank and ask to trade one currency into USD and vice-versa.

I'm not an expert, but this is my understanding. Someone correct me if I'm wrong.

The demand for the USD stems directly from its status as the reserve currency. The fact that we have to continually borrow more money to pay off interest on the money we've already borrowed means we are already in a state of default.

Just like in consumer credit markets, defaulted debt is only worth pennies on the dollar. If USD loses its reserve status, anybody left holding USD will be sitting on toilet paper, or worse just some 1s and 0s in a database that can't be exchanged for anything else of real value.

 

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[Everyman]

I agree with people saying 'both' and a third option.

USD devalue to 4-40k per Au ounce and 30% of trade based on gold.

All countries are in debt that they cannot repay.

I don't think China will make the same mistake and replace USD with RMB as a reserve currency. They don't have the liquidity. The have seen what happened with the US (deindustrialisation, not to mention societal collapse but this probably is not that important at high level...).

A basket of gold backed currencies will restart it maybe?

Anyone remembers approx. 100 - 200 years ago. Same situation with the UK... And probably every other empire that built their power on producing goods and then went to live on credit (and then collapsed)...

The demand for the USD stems directly from its status as the reserve currency. The fact that we have to continually borrow more money to pay off interest on the money we've already borrowed means we are already in a state of default.

It actually stems from the Petrodollar system (recycling) i.e. oil producing countries being forced to sell oil for dollars. But with this link being broken now there is no demand for dollars and hence the 'strange' repo (75bn overnight) transactions...

Nobody admits it but this is the reason central banks have been buying gold (esp. Russia and China).

 

[Ocean Man]

@lowtek
Thank you for the explanations and what can be the effect of it.

 

[RazorCut]

Just like in consumer credit markets, defaulted debt is only worth pennies on the dollar. If USD loses its reserve status, anybody left holding USD will be sitting on toilet paper, or worse just some 1s and 0s in a database that can't be exchanged for anything else of real value.

Exactly. Whatever the trigger, when a currency devalues it creates panic which usually further deflates that currency as people try to offload it for something more stable (just like share prices fall when a company announces a profits warning).

@lowtek
Thank you for the explanations and what can be the effect of it.

The book The Death of Money is well worth reading if you want a greater insight. This part is insightful about the dollar crisis in the 70's:

"While the dollar panic reached a crescendo in the late 1970s, lost confidence was felt as early as​

August 1971, immediately after President Nixon’s abandonment of the gold-backed dollar. Author​

Janet Tavakoli describes what it was like to be an American abroad the day the dollar’s death throes​

became glaringly apparent:​

​

Suddenly Americans traveling abroad found that restaurants, hotels, and merchants did not want​

to take the floating rate risk of their dollars. On Ferragosto [mid-August holiday], banks in​

Rome were closed, and Americans caught short of cash were in a bind.​

The manager of the hotel asked departing guests: “Do you have gold? Because look what​

your American President has done.” He was serious about gold; he would accept it as​

payment. . . .​

​

I immediately asked to pre-pay my hotel bill in lire. . . . The manager clapped his hands in​

delight. He and the rest of the staff treated me as if I were royalty. I wasn’t like those other​

Americans with their stupid dollars. For the rest of my stay, no merchant or restaurant wanted​

my business until I demonstrated I could pay in lire."​

You can see a summary of the book on YouTube:

View: https://www.youtube.com/watch?v=gW1roHYvwuw

 

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[guy93777]

FYI - Read Atlas Shrugged if you haven't.

I haven't seen the movies (yet) but the book is written brilliantly.

Ayn Rand 's work is about the menace of the herd. this is the true meaning of her work


smart people deserve to live according to their potential.

Ayn Rand was an INTJ, and we INTJ HATE stupidity, and the stupid masses



so what's the point of this picture :





Karl Marx and Ayn Rand were INTJs whereas they say opposite things !


the point is that they both talk about 2 groups : the stupid masses and the masterminds



this is my point too :

the masterminds ( freemasons, geniuses, intitiates , smart people etc .) deserve the good life and have to manage the stupid mases



this is why society is managed by social engineering :

people are too stupid to honor the word " democracy "


explained here :













.

 

[Dan_Cardone]

Ayn Rand 's work is about the menace of the herd. this is the true meaning of her work


smart people deserve to live according to their potential.

Ayn Rand was an INTJ, and we INTJ HATE stupidity, and the stupid masses



so what's the point of this picture :

View attachment 28267



Karl Marx and Ayn Rand were INTJs whereas they say opposite things !


the point is that they both talk about 2 groups : the stupid masses and the masterminds



this is my point too :

the masterminds ( freemasons, geniuses, intitiates , smart people etc .) deserve the good life and have to manage the stupid mases



this is why society is managed by social engineering :

people are too stupid to honor the word " democracy "


explained here :

View attachment 28268



View attachment 28270 View attachment 28271







.

Careful trying to pigeonhole people into four letter personality types. Myer-briggs personality test/types aren't actually scientific.

Is Myers–Briggs scientific? • Skeptical Science

The Myers-Briggs personality test is very popular. What is the science behind this, is it actually credible or simply pseudoscientific?

www.skeptical-science.com

skepdic.com/forer.html

 

[G-Man]

Ayn Rand 's work is about the menace of the herd. this is the true meaning of her work


smart people deserve to live according to their potential.

Ayn Rand was an INTJ, and we INTJ HATE stupidity, and the stupid masses



so what's the point of this picture :

View attachment 28267



Karl Marx and Ayn Rand were INTJs whereas they say opposite things !


the point is that they both talk about 2 groups : the stupid masses and the masterminds



this is my point too :

the masterminds ( freemasons, geniuses, intitiates , smart people etc .) deserve the good life and have to manage the stupid mases



this is why society is managed by social engineering :

people are too stupid to honor the word " democracy "


explained here :

View attachment 28268



View attachment 28270 View attachment 28271







.

I'm gonna take a crack at it.

You're probably above average intelligence. You work at a normal job, and have to share the workplace with people you don't understand and resent because of their pre-occupation with celebrity gossip and that new car. To add insult to injury, you've probably had a few of these normies even out-achieve you. In work, with women, and in the rest of life.

Lacking real accomplishments to hinge your identity on, you're heavily invested in the designation you got from a Myers-Briggs test years ago.

That's it. That's the reason for your ennui. It's not the underachievement and involuntary celibacy, it's that you're so much smarter than everyone else that you're forced to deal with your inferiors all day every day.

You come home from a long day under the fluorescent lights and need a place to tell everyone how smart you are. To get the validation you don't get in the rest of life. But it doesn't come. Everyone just ignores your screeds, no matter how well formulated and insightful they are.

Just do something with your life and find some happiness instead of spewing condescending verbal vomit on everyone else.

We all ignore your BS, but then you post non-sense like this on intro posts from impressionable teenage kids that are looking fore direction in life. Just stop it.

 

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