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Your money is now worth nothing Options
LaserBillA
#41 Posted : Friday, June 05, 2009 4:03:27 AM
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The real problem is that most of the current talk involves moving around small green pieces of paper... On the whole it's not the green pieces of paper that are unhappy.

We need more "welth creation" from farming, mineing, manufacturing, and energy production.

John Edward Mercier
#42 Posted : Friday, June 05, 2009 9:14:49 AM
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Wealth creation is by labor. The labor theory of value is pretty much accepted doctrine  in all economic systems. The differences are the currency that represents it... whether its open-ended or specified standard.

Even socialism holds to the labor theory of value, just does not recognize the efficiency value of capital to the equation.

 

practicalman45
#43 Posted : Saturday, June 06, 2009 5:27:40 PM
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Hard times are upon us, there is no question about it.

I agree with JD about  "use cash for everything". Been doing that for several years now, myself.  I'd go further and say "Get completely out of debt, whatever it takes".  I finally did that, myself a few years back and it is the best thing I've ever done! All the people who are really sweating the depression we are experiencing are worried because they cannot service their debts. Get out of debt. I stopped using credit for business expenses, closed my accounts with all my suppliers (they still love seeing me come in and paying cash, maybe even more!). Stop using your credit cards. Stop using your banks except maybe as someplace to cash checks. Cash your checks. If you want to save? Buy precious metals, food, guns, ammuntion and other necessities such as medical and household items. I turn a lot of my money into inventory for my business: tools and metal for the welding shop. Grow some food. Work for yourself. Be self-reliant. Now is the time to have a garden.

Fiat currencies always fail. Ours are getting ready to do so pretty soon. Worldwide. First, we'll see hyperinflation. I'm seeing it already in prices for commodities and business needs. Gas is going back up to $5/gal this winter. Gold is going above $2000. Silver will probably do even better than gold. Bullets may be the best investment, considering the store shelves are bare of them wherever I look. Supply and demand will make that a good investment. Buy them mail order or online and wait for the backorders to process through.

The FED is not our servant. It is a group of private bankers who are raping us, economically. They have set themselves above our control or oversight. Why do you think the new president is surrounded by money men and bankers?? They put him there.

That needs to change.

Support  HR 1207.  The co-sponsors in congress are up to about 200 in numbers now. I support my congressmen who are co-sponsoring that bill.

 Google:   HR 1207 audit the Fed    Click the tab for "NEWS"

Pat Miketinac
#44 Posted : Sunday, June 07, 2009 2:01:26 AM
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Right on , Practicalman. See mises.org for yet another article from '95, "The Case Against the Fed".

I think that the amount of new stock being issued is a small fraction of the money being raised by the current flood of cheap credit by the Fed. This means that the total existing stock is limited and demand exceeds supply. Therefore, stocks in general are becoming overvalued.

By definition, "fiat" is a command, authorization, order, or decree, as in, "By government authority, I am commanding you to accept these little green pieces of paper in exchange for your labor." Our fiat currency is not convertable into coin or specie. A "promise" can be declined, as in, "I decline to loan you my money because your promise to pay it back is not good enough for me."

It would be great to get this country productive again, but it won't happen with the obscene growth of government with the two party system, which is effectively a single party supported by the Fed. Incentive is lost too. I retired 9 years early rather than see most of my labor lost to the myriad of taxes and regulations. The Mother Earth News philosophy of self sufficiency  will serve you well. I have been out of debt and mortgage free since 1980. I built my own earth shelter house that needs no heating or cooling.[See the Building forum.] I enjoy rebuilding engines and repairing anything, especially things with "no user serviceable parts inside." My big welder is a Hobart Cybertig. I run a 36 year old mower, a 51 year old tractor, and a 41 year old VW.

John Edward Mercier
#45 Posted : Sunday, June 07, 2009 2:50:04 PM
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Stocks of what?

Your a sovereign individual... so 'by authority of decree' is your promise to repay a debt. While if you offer significant collateral, which is hardly the case in modern times... the promise would be underwritten with commodity. Or are you not individually sovereign?

Actually the latest independent physical audit of the US Treasury determined there to be more than enough metal bullion reserves to cover every banknote printed under its authority by the Bureau of Engraving. And several times both the US Secretary of the Treasury and the Federal Reserve Chairperson have requested that Congress switch more of the physical currency to species. As species has a lower life cycle cost.

For the country to move back to productivity it would need to increase labor-hours, increase efficiency, or decrease consumption. The current cultural environment and demographics does not support any of the above.

Mises case against the FED does not equate with the fact that the Gold Standard and Full Reserve Banking, are not natural economic occurences and were the result of Alexander Hamilton centralized banking charter. Hamilton derived his thoughts from the Bank of England and the Currency Act of 1764. This being derived from the Bank of Amsterdam (a City-State centralized bank of renowned stability). The fact that the Currency Act of 1764 was the grounds for the American uprising did not disuade him and led to the formation of the two party system (originally Federalist and Democratic Republican). The Federalist party having support of the merchant class... while the DR party the support of agrarians. Agrarians were use to free barter without a formal third-leg standard of exchange. Simply supply/demand. But this free barter did not allow for easy creditation, nor taxation... and the Gold Standard unlike the earlier land-based Colonial Scrip tended to favor the merchant class over the agrarian.

To this day, the problem has only had minor 'tweaks'... many of those opposed by those that claim free market principle though support measures in opposition to the principle.

jd
#46 Posted : Sunday, June 07, 2009 5:48:40 PM
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JEM - once again I am impressed by your knowledge of the facts.  You seem to have an academics grasp of the system, knowing function, history and practice without a subjective analysis or bias attached.  In a way, I am respectful of that.  If only our news was reported so unbiasedly.  Having said that, this is a forum of opinion and viewpoint.  While you have been generous in your information, you have been less so when it comes to subjective opinion.  Why is that?  Anyone with the knowledge base that you have must have opinions...............No? 

For me, the Fed does all that you say it does but it is still a monster that was created by banks, for banks and there is nothing benign, benevolent or even moral in the equation.  These are businesses (the Fed is the offspring of the banking cartel) that have found a way to protect and profit themselves.  At least that is my reading of the history and their practices.  You seem to have 'bought the official line' from the govt. and the Fed that they are a good and useful function for the people.  Have you?

Finally, even if I have read you wrong (sorry about that, if so), I would very much like to hear of your 'personal views'.  Where do you think this is all going?  Are you buying land in Montana and stocking up on bullets?  Or hoarding gold and silver bullion?  Or, most surprisingly, are you still buying what Warren buys and looking to the stock market to keep you safe? 

 I guess what I am trying to say is this: you seem to be a 'steeped-in-the-system' guy.  We tend to be 'Chicken Littles' who subscribe loosely to conspiracy theories and advocate eschewing as much of the system as possible.  You would invest, we would divest.  Can you shed some light on your point of view?  Aside from likely working in an éstablishment' type place, what are your thoughts on the 'buy bullets' crowd?  And why?

Please accept that this is not a thinly veiled criticism.  It is merely an observation.  I'd like to know more (not more facts) about how your knowledge has translated into opinion.  How would you advise (not educate) your friends?  Thanks.

 

 

John Edward Mercier
#47 Posted : Monday, June 08, 2009 1:27:57 AM
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If you want safety... I-bonds. They were developed to remove the risk of currency inflation/deflation in the USD.

But I wouldn't invest any capital in those until I paid all debts and invested all I could in my homestead. It really makes more sense to ease your daily life rather than dream  of some future payout. But you have to make sure your investments in your homestead are sensible and not just flights of fancy.

 

Pat Miketinac
#48 Posted : Monday, June 08, 2009 5:10:57 AM
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There is no safe paper investment, long term, because of the Fed and government.

The words "fiat" and "promise" simply are not interchangeable.

Decreasing consumption will not help productivity. Consider the heavy consumption after WW2. Productivity was great because government spending dropped about 2/3 after the war. That is when The Great Depression really ended. The government can't spend us into prosperity as you will soon see. Minor tweaks? Trillions of dollars are minor? Fractional reserve banking is inherently fradulent. I plan to attend a Campaign for Liberty meeting next week to support HR1207 to force a true audit of the Fed. Did you know that there are now more voters registered Independent than Republican? Great trend.

jd
#49 Posted : Monday, June 08, 2009 5:36:00 PM
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I apologize!  I must have been out of line or, perhaps, my questions were answered in previous threads?  Maybe I was too 'personal'.....................whatever....................offense was not my intention.  But I wrote what I thought were reasonable questions and did not get even an acknowledgment, let alone an answer.  Is it my breath?

Well, maybe there was a hint..........you said,  "invest in your homestead...........".

Seriously: how is it possible to simply ignore a poster's sincere and honest participation?  Sheeesh!

John Edward Mercier
#50 Posted : Monday, June 08, 2009 9:09:56 PM
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I wasn't ignoring it.

Land  and commodity has value when it can be made productive. At the same time, I am heartenly aware of Executive Order 6102 along with the powers given Congress in the US Constitution.

I find it impossible for the average person to excise themselves much from the system...

Even at the high end its a matter of playing one system against another.

 

Pat...

Go for it. If you feel the results from a GAO audit will make you sleep better at night. They've done audits on the open book accounting of the Federal Reserve System and even publish them on line. It is after all required by federal law since 1978.

John Edward Mercier
#51 Posted : Tuesday, June 09, 2009 1:46:55 AM
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To answer JD...

The debate has always been a matter of government (central) control or private institutions... and a single non-inflationary standard or not.

Hamilton wished the US Treasury deposited in one bank, which the south hated because the bank was in the north. Jackson further hated the central bank because of its lobbying through economic power. Jackson solved the problem by the use of 'pet' banks that spread the US Treasury deposits to several banks in different States... which led to today's regional federal reserve banks. The idea being to decentralized the treasury deposits and limiting the strength of any one bank or regional influence. Obviously this became many times worse as the federal taxation becomes a larger share of the economy.

At the time Jackson rendered any further charter for a central bank moot, the US went to a free bank system. The problem of the free bank system was oddly a lack of centralization. Though the standard in the free bank system was not like Colonial Scrip, in that Article One Section Ten restricted State-incorporated banks to silver and gold coin (no federal standard existed as the Gold Standard was a requirement of their charter nor federal law at the time)... the lack of a single standard created havoc. The exchange ratio of gold ounces to silver ounces was set by each bank or State... and the level of reserve.

My opinion on this is simple... even though there is no hard ratio between gold and silver in our modern world, the increase disposal of market data has created a global market whereas two parties can make a fair exchange... even if this exchange is based on the third-party standard of USD or other currency measure.

Can we improve the system? I think whenever we're talking about a system that uses a third party standard, we suffer the fate of psychological manipulation. I can use this little box to review how much gold the US Treasury claims is in the Gold Reserve Depository at Fort Knox... but do I know its really there? Its been verified by independent audit, but could they have been paid off? Could they have been fooled, like the old trick of placing a $100 on top of a stack of $1s? Are all the gold bricks really gold? Or just the ones on the outside? Are they all the same weight and dimension?

First, we could drive ourselves insane on this. Second, even if we could verify the metal bullion reserve with the current US trade deficit (production - consumption), gold bullion would be flowing out of the US and into China, Canada, Saudi Arabia... and who knows where else... leaving the US broke and in debt. Not much of a change!

On a personal level, I'm much like everyone else... I get paid with a piece of paper that has a number and 'pay to the order of' with my name. Its signed by someone I have never met. I also pay taxes and bills with the same type of piece of paper to people I seldom know... and may have never met. 

Where do I think its going? I tend to fall on history. In 1971, the US only had 1/2 cent of gold for each dollar in circulation... meaning there was no way that everyone could trade their paper for gold even while the US was on the Gold Standard. J.P Morgan actually invented the predecessor to the Federal Reserve during the 1906 Panic because he knew the US did not have enough gold to cover all of is paper notes. But in 1971, after the US official declared it was leaving the Gold Standard... the US suffered stagflation. The global economy wasn't growing, the price of commodities shot up, people had to tighten down, and the back to the earth movement with MEN began. Its my opinion we are back to that cycle...

I'm not buying land in that I have some more productive capacity that I can squeeze from what I have, none of the abutting property is for sale, and property taxes in NH tend to skyrocket during downturns. I have metals... mostly because some weird OCD of collecting pennies. And the 'buy bullets' crowd is just looking at the supply/demand of that particular item... which is smart economics.

 

 

 

 

 

Pat Miketinac
#52 Posted : Tuesday, June 09, 2009 2:11:04 AM
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Sorry to hear about your garage, LaserBillA, I hope you will share what happened if you find out.

XYL says no more late typing, got to keep her happy!

The reason I don't believe in mainstream economists is because they are Keynesians like Paul Krugman. He actually said "large scale deficit spending by the government is needed to fight mass unemployment." If that were true, the massive deficit spending for the Iraq war would have kept employment up. Iraq will cost over $3trillion before it's over. Bills must eventually be paid, by guess who. Now the stupid bailouts and stimulus plans add more unsustainable, crushing debt. Excessive government and private spending with Fed supplied cheap credit [not real savings] caused the boom and inevitable bust, more of the same will not fix it. Unviable businesses must be allowed to fail because there is no way we can afford to keep them all going.

I believe Austrian school economists because they have logical thought, document what they say with historical examples and data and have been correct more often than any other school of thought that I have studied. You can review a 10 year archive of their articles on mises.org.

John Edward Mercier
#53 Posted : Wednesday, June 10, 2009 12:14:31 PM
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Not all mainstream economists are Keynesian...

Alan Greenspan was an objectivist very close to Ayn Rand... even suggesting that the US did very well during the period without a central bank and with the Gold Standard. Though historically this would be the period that the Gold Standard become active by decree of Congress (1900) and lasting to the time of the creation of the FRS (1913). And of course included the historically important 1906 Panic.

Milton Friedman was a Chicago School economist (monetarist), that believed the role of the FRS BOG/OMC could be best served by a non-emotional, politically-detached computer program. This of course would not be possible in 1913, and maybe even when he proposed it. But today in reality it is. 

 

jd
#54 Posted : Wednesday, June 10, 2009 5:47:48 PM
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Thank you JEM.  Appreciated.  OCD on metals, eh?  Interesting.  But more interesting is the endorsement for bullets.  I believe that bullets have a lot going for them but I confess to feeling a bit Heston-esque when I say that and it did not escape my notice that only Paratrooper came with me on that opinion at the time.  Still, odd and weird as it may sound, it has logic on it's side.  Of course, many useable hard goods would be 'logical' but not all of them are as transportable or able to be used for self defense.  So, bullets are best, I guess.  Who would have thunk that I would ever beat that drum?!

I also agree that we are entering a period of stagflation.  Such a circumstance seems inevitable.  Sadly, it is an economic condition that - I believe - feeds globalization.  Too long a reasoning to explain here but I think stagflation will allow China to develop, the US and the G's (8 and 20) to flatten and the world to economically homogenize.  That kind of nation eroding, together with climate change, will mean great disruption.


 

 

davisonh
#55 Posted : Thursday, June 11, 2009 2:35:24 AM
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Oh,don't take offense jd ,JEM does not mean to be crass,problem is when talking professionally about money,it does tend in general,to get more complex and to try to infer more charisma to the solution gets difficult because the final goal tends to get more and more cloudy.Final goal being to die with the most toys that dont cost you anything and fully clear of everything you owed and hoping that others owe you,and in the end that almost never happens though everyone thinks they should've deserved more than they got.And so thinks civilisations,political entities and such,thing is they don't die;they're ideals go on ad infinitum.

John Edward Mercier
#56 Posted : Thursday, June 11, 2009 4:46:23 PM
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LOL. I'm a minimalist, so its not really hard to die without debt... though I won't have many worldly goods either. This is why I refer to my penny obsession as OCD... it really doesn't make a lot of sense to me, at least in the quantity I've saved them. Its not numismatic in nature in that they have been circulated... and I never really look to see what the date or other defining features of each is.

In my personal life, I tend to focus expenditure of capital (stored labor) in further reduction of labor. I think the average person does this without really thinking much about it... making the investment that will provide them more comfort and save money, which is really just a measure of labor.

The bullet thing for me was less about defense and more about what Peter Lynch, the famous investment advisor for the Magellan Fund, used to say. Invest in what you know. So someone that uses a case of bullets per year, and sees the price increasing over time, could stock up at current prices and really make out whether they sell, trade, or use them. While someone investing in something that has no real utilization would have to sell or trade them to someone else that most likely wouldn't have any real utilization.

It like if we were all going on a survival training course and only had the option of packing ten pounds of supplies for two months in the wilderness. I would mostly focus on the tools necessary to help me meet my needs then some extra food to get me started. While the guy with ten pounds of gold, or even pennies for that matter, would be a hurting unit.

Pat Miketinac
#57 Posted : Saturday, June 13, 2009 2:24:14 AM
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Yes John, I should have mentioned the Chicago School economists, or just said "most", but since they also cause debased currencies, the end result is similar. Worldwide, I think the Chicago School guys are worse because they purposely cause the torture and killing of thousands to get what they want, well documented in Naomi Klein's book, "The Shock Doctrine". At least some of the Keynesians seem to think that they are doing the right thing, but I think they are wrong. If you have an economic philosophy that you think is better than the Austrian School's, I would like to know what it is and why.

The CampaignForLiberty.com meeting here was very uplifting. Over 200 Representatives have agreed to co-sponsor HR1207 to audit the Fed, over 100 in the past 4 weeks. The Fed has hired a former Enron lobbyist to fight it, that should tell you something. Ron Paul's next book, "End The Fed", is due out in September.

John Edward Mercier
#58 Posted : Saturday, June 13, 2009 5:25:46 AM
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Pat Miketinac
#59 Posted : Thursday, June 18, 2009 3:45:38 AM
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John, my computer is not showing your June 12 post for some reason.

Those of you who have mentioned bullets in this discussion may want to Google "Oath Keepers". This group is trying to get the military and law enforcement officers to uphold the Constitution if they are ordered to go against it. For example, if they are ordered to confiscate your guns and ammo, they will refuse because that would voilate the 2nd Amendment. This could be big as the economy worsens.

John Edward Mercier
#60 Posted : Thursday, June 18, 2009 2:37:40 PM
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Didn't post on the 12th.

The US violated the Constitution in 1794...

The bullet thing was about marginal utilization.

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