dollar devaluation doom

8/8/2019 Dollar Devaluation Doom

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Dollar Devaluation Doom

Recently we have been finding that bees are dying, the US is fighting an illegal war in Iraq

(and spending trillions in the process), illegal immigrants are taking jobs (because

businesses don't have to pay a living wage to these workers), and the US governmentwants to devalue the Dollar (continuously). All the while we the people are spending

more for products that in 1913 would be much less. How much? Well imagine, you go to a

store in 1913, and spend $5.00 for a suit. That same suit would be over $200.00 today.

The American Dollar has been devalued so much that $1.00 is actually only worth $0.04 .

How does this affect me? As the scenario above shows, you are paying more today than

what you paid, or rather what you would have paid earlier in the last century. Our

current devaluation (about 50%) of the Dollar is in accordance with our conflicts (whether

real or imagined) abroad. Take China for example, the US government continues to ask

for a floated currency, just like ours. China will not bit on this proposal, because they

know that if they did such a thing, their currency would be too inflated (just like ours).

Our borrowing is outrageous, we borrow over $85 million from our sons, daughters, and

grandchildren. This kind of borrowing, whether you are a democrat or a republican, is

going to damage their futures for many years after they are born. The current generation

is feeling the pinch, and even though they don't recognize it now, ten years down the

road when they want to go to college, they won't be able. They will have to borrow

against theirgrandchildren, and the cycle will continue.

A floated currency means that the proposed currency is 'floated' against the stock

exchange (Dow Jones Industrial Average, NYSE, et cetera). When the commodities go up

we devalue the Dollar, or "adjust" by raising interest rates, which effects everything from

bread to gas (petrol for my UK readers). This fluctuation can work both ways, where

commodities can go up as the Dollar is devalued. A Dollar's devaluation can have effects

on our natural resources, by raising the price of drills, rigs, and mining equipment. When

this price goes up, then so too does the price of such materials. China doesn't want to

'float' their currency for several obvious reasons, and because they are a nation that has a

continuously effective industrialization. When the US gives reasons for a floating currency

to the Chinese, it is a worthless explanation at best. They want the Chinese to do this

because it creates a trade gap and covers their butts when it comes time to pay their

trade debts.


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Some articles like the New York Times article about the devaluation of the Dollar, says

that people are too anxious and need to calm down. Well NYT writers, do you want to

make less? Do you want to have your pensions? Do you want to have outrageous heath

costs? Then keep writing the same filth that you continuously write. Just like "global

warming" (myth), and everything else, they don't ask questions, do research, or interview

people (besides government subsidised scientists). The US News and World Report wrote

an article about this topic and stated that this policy of adjustment will backfire and

cause even more economic hardships in the years to come. Hardships will come in the

form of, more manufacturing jobs being shipped overseas, crop shortages due to farmers

losing their land and in the end everyone will be paying $8.00 a gallon for gas (petrol).

Housing prices will inevitably go up as well, this is due to greed however. Back in the

1940's and 50's a family paid roughly $5,000 to $10,000 for a good house, in 2006, you

would be lucky to get a house under $140,000. This is because as we adjust for inflation

(devalue the dollar/ raise interest rates) we are causing the "cost of living" to rise as well.

Then the property taxes rise, then the cost of commodities rise and this becomes a

viscous circle that will continue as long as we have the Central Bank, I mean, the

"Federal" Reserve in power.

If the Chinese stopped buying our Dollars, and yes they do buy our Dollars, and start

selling them back, our economy would collapse. The Chinese are the only thing keeping

the US from becoming a second world country. That is why the only thing that will help

the US has a President like Dr. Ron Paul (Rep. TX). He will bring back a stable form of

economy and we will again become the richest country in the world. He will slowly begin

to incorporate gold as a currency backer and this will stabilize the economy. Anyone who

is interested in learning about economics and how this works click here.

Yes I understand that many of you think that the Dollar is still backed by gold,

unfortunately that too is incorrect. The Federal Reserve has complete control of all gold

reserves in the US and can not be audited, therefore the people no longer own the gold

and the Dollaris

a fiat currency. The same goes for the Canadian, Australian and the

Euro. Any one whom doesn't believe this look it up on Google. Laws may say one thing but

the economy and the World Bank says another. Ask yourself, why or how can these people

manufacture money out of thin air, any time they want? How can they adjust interest

rates when they do not correspond to the rates of gold that is on the market? When I say

the 'Dollar', for clarification, this is talking about the US Dollar, and since the Dollar is

controlled by the Fed. and the Fed. is controlled by the global elite, then you'll see that


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devaluation of the Dollar is a good thing. In other words if the Dollar becomes so devalued

then they can buy up the US lock, stock and barrel. That is a bad thing for the people of

the US and their sovereignty.

Richard Nixon eliminated the gold standard.

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As many of my "loyal readers" may or may not know I posted this article on the seventh of

May, last year (2007). However I am choosing to augment this post with the addition of an

article that was sent via Mises.org. The post reads:

"Economic Outlook 2008: Darkening Clouds"

By Dominick Armentano

Posted on 1/2/2008

Presidential election years usually are not recessionary but next year will be an

exception. Several economic factors are colliding in an almost perfect storm to markedly

slow the general economy and the stock market.

The most important signal flashing recession is, of course, the subprime mortgage fiasco.

After years of monetary inflation on the part of the Federal Reserve, individuals and

families with poor credit were suckered into low-down-payment/low-interest adjustable

mortgages that simply cannot be maintained or repaid under current conditions. Their

incentive is to sell the property quickly before their equity evaporates or the financial

institution repossesses it. Yet the massive oversupply of homes and condos for sale has

pushed prices down at a record clip and made additional foreclosures even more likely.

Next year, unfortunately, will be the Year of the Auction.

The financial institutions have also been punished well sort of. Various institutions

including hedge funds that hold these poorly performing debt obligations have been

forced (by accounting rules) to "write down" the value of these assets, take huge paper

losses in the bargain, and pull in their financial horns. Thus, any near-term recovery in

housing must now fight a record supply availability, falling prices, higher insurance costs

and restricted credit a near-term impossibility in my view.

Moreover, the slowdown in residential and commercial construction will send secondary


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ripple effects throughout the economy. Laid-off construction workers don't spend money.

Construction and home furnishing suppliers sell less output and make fewer investments.

Even local governments will be pinched by declining property-tax assessments and fewer

developer fees. Things are likely to get worse before they get any better.

The second major factor indicating a near-term recession is the sky-high price of crude oil

and refined product. Pushed upward by world-wide speculative Middle East war fears and

increases in demand (especially from China), increasing energy prices act as an

inflationary "tax" on domestic production and consumption throughout the market

economy. Higher costs of production will lower profits; higher prices will reduce some

consumption. The only good news here is that any substantial economic slowdown in 2008

will eventually moderate the price of oil and other commodity prices as well.

The third factor in the current recession scenario and the real wild card is the

continuing decline in the value of the dollar in international money markets caused by our

Iraq blunder and the Federal Reservegenerated oversupply of dollars. Some economists

would argue that a devalued dollar is good for US exports, and thus positive for the

economy as a whole. I disagree for three reasons.

First, the bulk of crude oil purchases takes place in dollars; a falling dollar translates into

still higher crude oil prices. Second, the US dollar is the major reserve currency of the

international monetary system and dollar-paying investments (such as US Treasury bills

and bonds) are held in massive amounts by foreign banks and governments. Dollar

devaluation makes these investments less attractive and any disinvestment in these areas

would sharply drive bond prices down and increase interest rates.

The third reason why dollar devaluation makes recession more likely is that it effectively

prevents the Federal Reserve from pushing US interest rates much lower. Any additional

Fed easing (inflation) would be seen as a signal of even further future dollar devaluation

and even higher dollar prices for oil. Unfortunately, we will not be able to "inflate" our

way out of this recession this time. We will simply have to take our lumps and let market

forces liquidate the bulk of the malinvestments caused by the unprecedented Greenspan

money bubble. This liquidation process will not be pretty but it is necessary to restore a

sustainable economic recovery in the years ahead.

A note on Dr. Dominick T. Armentano:


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is professor emeritus in economics at the University of Hartford (Connecticut). He is the

author of numerous reviews, articles and op-eds on regulatory policy, some of which have

appeared in "National Review", the "Cato Journal", "The Antitrust Bulletin", "The New York

Times", the "London Financial Times" and "The Wall Street Journal". He has presented

talks to academic and business audiences in the United States and abroad. Between 1978

and 1985 he was a regular commentator on BYLINE, a nationally syndicated public affairs

radio program. His books include The MythsofAntitrust: Economic Theory and Legal

Cases (Arlington House, 1972),Antitrust & Monopoly: Anatomyofa Policy Failure (John

Wiley, 1982 and Independent Institute, 1990) andAntitrust: The Case for Repeal (Mises

Institute, 1999). Send him mail.

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