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#2939251 - 09/11/12 08:34 AM Is the dollar destined to lose it's value...
FLTENNHUNTER1
16 Point


Registered: 11/21/07
Posts: 16574
Loc: Tampa FL

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...and purchasing power?


Is the dollar destined to lose its value and purchasing power?
*Texas Straight Talk, by Congressman Ron Paul, September 3, 2012:

'We frequently hear the financial press refer to the U.S. dollar as the 'world's reserve currency,' implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility! Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region. The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers. The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies. In 2009 Iran completely ceased any oil transactions in U.S. dollars. These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world's reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar's status in the Middle East, an even larger threat resides in the Far East. Our greatest benefactors for the last twenty years-- Asian central banks-- have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency.''
_________________________
"The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression."
--Thomas Jefferson
18 Trillion http://www.usdebtclock.org/

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#2939256 - 09/11/12 08:42 AM Re: Is the dollar destined to lose it's value... [Re: FLTENNHUNTER1]
Still-n-Quiet
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Registered: 07/18/06
Posts: 4888
Loc: San Antonio, TX

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It can do no other than drop in value. When the Fed prints money, the existing money is diluted.
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Searching for the elusive "Moderate" liberal and "Moderate" Muslim. Maybe they are hiding together...

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#2939297 - 09/11/12 09:14 AM Re: Is the dollar destined to lose it's value... [Re: Still-n-Quiet]
Rebel
TnDeer Old Timer
12 Point


Registered: 03/16/99
Posts: 5400
Loc: East Tennessee USA

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 Originally Posted By: Still-n-Quiet
It can do no other than drop in value. When the Fed prints money, the existing money is diluted.



Best short answer!
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Good night Chesty, wherever you are!

Tolerance is a virtue of those who believe in nothing.

Deo Vindice

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#2939303 - 09/11/12 09:22 AM Re: Is the dollar destined to lose it's value... [Re: Rebel]
Crappie Luck Moderator
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Registered: 01/29/03
Posts: 62020
Loc: Smith Co.

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There is nothing backing the paper they pass as currency in the first place.

No matter how much or how little there is. It's ink on "Paper" with no real redeemable value at all.

If it was still backed by precious metals, oil or some other historically sound commodity, there would not be an issue of printing more.

The fact that the feds can move a decimal point and declare "Look, we now have 10X the money and therefore we are 10X richer" only proves to the people that the money is a fraud.
_________________________
"To find out who your real rulers are, simply look to those whom you CANNOT criticize..."
--Voltaire

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#2939345 - 09/11/12 09:58 AM Re: Is the dollar destined to lose it's value... [Re: Crappie Luck]
LB FANATIC
6 Point


Registered: 03/25/10
Posts: 593
Loc: Middle TN

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It already has....
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The press is impotent when it abandons itself to falsehood ~Thomas Jefferson

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#2939361 - 09/11/12 10:16 AM Re: Is the dollar destined to lose it's value... [Re: Crappie Luck]
Wes Parrish
16 Point


Registered: 06/12/02
Posts: 19470
Loc: Knoxville-Dover-Union City, TN

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 Originally Posted By: Crappie Luck
If it was still backed by precious metals, oil or some other historically sound commodity, there would not be an issue of printing more.

Not disagreeing, but don't think it's (currently) as dire a situation as the fear-mongering suggests. That said, I do believe America will be in dire straits should we have 4 more years of Obama's reckless spending and mounting debt.

Let's say you're a poor West TN farmer, been financially struggling all your life. Along comes a Chevron Oil Exploration team, and they find a new oil reserve on your back 40 acres. It's worth a couple million dollars to you "Johnny on the spot".

Here's the question:

Did you have those "riches" all along, or just now acquire them?

America has a lot of oil wealth that's just sitting in the ground, as we're not taking advantage of it. It doesn't "back" our currency, and we're not "turning" it into a currently useable resource. But it's there, and we "could" conceivably back our paper money with known natural resources, which includes our having more oil than the Saudis. And big as this is, we have even a bigger resource in American ingenuity and ability, which is not being allowed to thrive as it should.

Our bigger problem is a Washington administration that is anti-oil, anti-coal, anti-business, anti-American. We CAN change that this November. If we don't, I fear our bigger problem (than what backs our currency) is national complacency, laziness, entitlement mentality, and most particularly a failure to learn from history. We cannot continue to reward failure and punish success (which seems to be the mantra of the Obama administration).

History will repeat, and it's up to us as to whether . . . . . .
United we stand, divided we fall.

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#2939370 - 09/11/12 10:24 AM Re: Is the dollar destined to lose it's value... [Re: Wes Parrish]
Wes Parrish
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Registered: 06/12/02
Posts: 19470
Loc: Knoxville-Dover-Union City, TN

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Even gold bullion (and currency backed by gold) becomes worthless when no one believes it's their responsibility to plant crops and grow food, and then there is none, everyone is starving. Can't eat gold. Can't drink oil. And we must turn this thing around where we once again have a lot more givers than takers, a lot more successes than failures, i.e. more people contributing to society than feeling entitled to only take from it.

Success is a good thing. It shouldn't be demonized by our failure-in-chief.

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#2939381 - 09/11/12 10:37 AM Re: Is the dollar destined to lose it's value... [Re: Wes Parrish]
Crappie Luck Moderator
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Registered: 01/29/03
Posts: 62020
Loc: Smith Co.

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All true but the only thing propping up our currency is our statues as the world's reserve currency and that is coming to an abrupt end.

As the world's reserve currency, all oil and many precious medals are traded in US dollars. This, in a sense, makes it backed by gold or oil.

When that is no longer the case, there is no benefit to trading in US dollars.

No, people cannot eat gold or oil. But that is true of every currency unless we're dealing in bananas. The point is not to consume the currency but to trade it for items of equal value that you CAN consume.

The problem is how much US dollars is equal to a bunch of bananas and WHY?
_________________________
"To find out who your real rulers are, simply look to those whom you CANNOT criticize..."
--Voltaire

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#2939392 - 09/11/12 10:42 AM Re: Is the dollar destined to lose it's value... [Re: Crappie Luck]
Wes Parrish
16 Point


Registered: 06/12/02
Posts: 19470
Loc: Knoxville-Dover-Union City, TN

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Like I said, I'm not disagreeing.
Just think we have ample opportunity to solve the problems, if we "will".
And, trying to point out we have vast resources that "could" be more utilized, if we "will" simply do so.

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#2939397 - 09/11/12 10:46 AM Re: Is the dollar destined to lose it's value... [Re: Wes Parrish]
Crappie Luck Moderator
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Registered: 01/29/03
Posts: 62020
Loc: Smith Co.

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Ah, I see. Yes, I agree 100%.

To solve a problem, we first must convince the sheep there is one.

Until the cable goes out, they'll keep thinking problems are things OTHER people have.
_________________________
"To find out who your real rulers are, simply look to those whom you CANNOT criticize..."
--Voltaire

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