US Dollar Worth Nothing?

Call me extremist, call me out of touch, maybe you’re right.  Of course, I think you would be misguided, but you are welcome to your opinion.  Below is a great video from Glenn Beck explaining the latest Federal “Stimulus” money.  As I have been saying for some time, along with other “kooks” is that we don’t have this money – we’re printing it.  The presses are working overtime to put this money out into the system.

Eventually this reckless spending will catch up to the dollar, making it virtually worthless.  Remember, the US Dollar is backed by nothing other than the confidence in the US Dollar and our system of government.  If that goes away, inflation WILL spiral out of control and the economy WILL collapse.

Welcome to Monday morning.  Hope the rest of the week is great!

Of course, this is just my opinion.

Rob’s Rant

 

P.S. Welcome to Monday morning.  Hope the rest of the week is great!

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8 Responses

  1. Were you for the war in Iraq?

    Do you buy a car on credit?

    Have you bought a home with a loan?

    How are these different than the Stimulus?

  2. I should have posted that the GOLD currency standard is much worse a standard than the credit worthiness of the issuing country.

    Let’s say we have a country called R whose currency is backed in Gold, say at a rate of 1R = 1 ounce. If you were to hold $1T R’s you’d expect that the country has $1T ounces of gold (however many bars that is).

    There are four immediate problems:

    – they may not exchange the currency for gold. They may say, screw everyone. We can buy what we want, so too bad.

    – they may not have pure gold. It may be 10K instead of 24K. Too bad, you just lost most of the value of your holdings.

    – they may not have as much as they said. You will never recover any money because more powerful agents collected what they actually have.

    – the value of Gold itself may fluctuate, so you can buy at one value but have to sell at much lower.

    What everyone found out about 1860 was that everything is based on the confidence of the issuing country. The US is much more credit worthy than China, or France, or anything else.

    Glenn Beck makes the argument, unsubstantiated, that a deep depression is better than spending money. Let’s look at that:

    The 1930’s example of the Wiemar Republic excludes the heavy toll paid by Germany in war reparations. These had to be paid in Gold. Everyone wanted Gold, so gold prices went up further destabalizing the world economy. FDR took the US off of the Gold standard so that they could buy stuff in dollars, not gold.

    That was then. Today, the gold equivalent is US Treasury commitments to China and Europe. The US went officially bankrupt in the Regan Administration, when it borrowed 20x the US budget. Interestingly, today’s debt is only 3x the US budget.

    • A stimulus would be a great idea if it actually concerned itself with stimulating the economy long term. The bill as it has been written and passed gives gobs of money for thousands of projects, but they have nothing to do with stimulating the economy long term – it’s all about throwing money at the problem today hoping things will get better. If these things are needed, then put them in some other type of bill for road construction or whatever. It’s not even been 100 days and I’m almost out of hope.

      The fact that this bill was shoved through before anyone had a chance to actually read it should send up huge football field size red flags. Being the smart person that you are, I’m sure you’ve asked yourself, “Why did it need to be signed so quickly?” Doing things quickly did wonders for TARP. Would it kill these guys up on Capitol Hill to take at least a couple of days to see if this looks alright instead of a couple of hours?

      This ridiculous “Stimulus” started last year with the useless giveaway program by President Bush. A real way to “Stimulate” the economy is to lower taxes AND cut Government spending. President Bush did the first but did not tackle the out of control spending that has been getting worse and worse every year. I really wish I could ask my boss for an 8% raise each year without justifying results. That kind of thinking doesn’t generally fly in the real world without proving your worth.

      Regarding the Gold Standard, I’m not convinced that this is the best way to back a currency, but I have doubts on the current system. No, I don’t have any good ideas, but I’ve never been accused of being an economist. Those holding our notes, like China, really want us to succeed so they can actually get something out of their investment.

      The German war reparations example was a ridiculous item placed in that agreement. If I remember right, these kinds of policies really brought Hitler to power – in a round about way. Correct me if I’m wrong on that point.

      America can’t keep printing money and expect everything to “be alright”. There are plenty of examples throughout history of countries doing this exact same thing with dire results. The US is not too big to fail.

  3. Nobody read the bill…
    as written it gives gobs of money for thousands of jobs

    Its actually millions of jobs, 3 – 4 million. The result has been very effective at slowing the recession.

    The idea that no one read the bill is ridiculous. The bill was crafted and delivered basically on Jan 4 and it was read and debated extensively in the house. The senate debated it for about two weeks.

    The conference committee spent several days debating it. Once the final bill was set, a summary of the changes was sent to all members for a vote.

    It was never the case of a last hour change slipping in. Once in conference the rules are very strict.

    A stimulus would be a great idea if it actually concerned itself with stimulating the economy long term.

    There are plenty of long term incentives in the tax code already. There are huge incentives for innovation and for long term, capital gains.

    What was needed is to stabilize the markets and create healthy balance sheets for banks. Thus far in the first 100 days we’ve had two bills to do this.

    Regarding the Gold Standard,

    The point of the post is that no matter what system you put in place, it is always about the goodwill of the currency issuer. There is no other system, even if you traced in actual gold coins.

    Those holding our notes, like China, really want us to succeed so they can actually get something out of their investment.

    No they don’t. They will want concession after concession while they retain the power to manipulate the dollar. The Chinese did not just suddenly become powerful. They became powerful with Reagan spending 20x the budget.

    The only presidents to actually balance the budget are Bill Clinton and Dwight Eisenhower. Bill actually had a surplus.

    • The Porkulus bill may have been debated for a little while, the final bill was punched through as fast as possible. Are you telling me that if you were in Congress you would sign onto something over 1,000 pages without more than a couple of hours to really go through it? Did you ask why this had to be done so quickly? How about a little honest debate before spending nearly a trillion dollars? And since it was such a priority to get things moving and sign the bill, why did Obama wait until after his short little Valentine’s Day vacation to Chicago? I can tell you as an average citizen, this smells very bad. January 4 seems a little early also – wasn’t Bush still President? Just checking.

      This is a spending bill. It is not a stimulus. We can never spend ourselves out of a depression recession. Throwing money at problems and expanding the size of governement is socialism. We have been moving toward this for many years, slowly, but we are moving at breakneck speed toward the wall. Stablizing the banks now means government ownership. Stablizing the auto industry (off subject) now means governement ownership. What’s next? I’m starting to feel like I’m in Soviet Russa. I’m so looking forward to standing in the bread line!

      It is true that President Reagan spent and spent well. Actually, this is what sunk the Soviet Union, but I expect you to debate that point. The 20X figure seems a little vast. Clinton did very little to stem the tide of Terrorism. He was much more concerned with his legacy and less about our security. The cuts in the military were brutal in the 90’s and the problem was passed onto the next administration – George W. I have a lot to disagree with President Bush on, but character is not one of them. He did what he thought was right, forget the legacy. Time will only tell if he made right choices. Balancing a budget is fine, but what has been cut to balance that budget? How about some real cuts to useless social programs? How about the governement doing with less – not an 8% increase?

      President Obama and his cohorts in Congress are on a spending spree with more of our liberties being taken away each day. Call it jobs if you wish (3-4 million? Ok, Right). I really don’t care about who is in charge, if they are being wasteful, I’m irritated. If we collapse, the world collapses – including all those notes that foreign concerns hold.

  4. If we collapse, the world collapses – including all those notes that foreign concerns hold.

    Actually, no. They will ask us to pay for oil with Gold. How long will that last?

    How about a little honest debate before spending nearly a trillion dollars?

    I suggest that you bone up on Congress conference processes. Your questions only highlight the deep misunderstanding that conservative commentators have of the basics of government processes.

    Once the matter is referred to the conference committee no additional debate is allowed. The House and Senate have a specific amount of time to sign it, probably no more than 2 business days.

    Since no additional debate is permitted, the differences between the House and Senate bills are presented to all members. They only have to read a few pages.

    The conference process is outlined at the end of this post.

    The bill was crafted and delivered basically on Jan 4 and it was read and debated extensively in the house

    Congress convenes on Jan 4. By crafted and delivered I meant that it was delivered to Congress (I am sure you knew, or should have figured that out yourself).

    The President takes office Jan 20, so you know.

    Waiting until Valentine’s Day

    What nonsense! The bill took from Jan 4 to Feb 14 to work its way through debate: 6 weeks. Yet conservatives cry rushed! Once passed everyone pretty much knew what to expect. The signature on Monday is as good as a signature on a Saturday.

    But for some reason you your mind is all wrapped around these two days.

    This is a spending bill. It is not a stimulus. Call it jobs if you wish (3-4 million? Ok, Right).

    It’s 33% a tax reduction, which tells me you are either being dishonest or didn’t read it. The definition of stimulus is to increase, and in this case it is to increase jobs now, not a year or two or ten from now.

    That now demands jobs today. That’s how stimulus was constructed to work. You have a better plan, run for office.

    We can never spend ourselves out of a recession.

    On the contrary, every economist says you must, and every president (including Ronald Reagan) did that to move the country out of a recession.

    Job growth is projected to be 10M jobs in the next 8 years because of this bill.

    Throwing money at problems and expanding the size of government is socialism.

    Then you don’t know the definition of socialism.

    Socialism is a broad set of economic theories of social organization advocating public or state ownership of the means of production and distribution of goods, and a society characterized by equality for all individuals.

    President Obama has specifically acted to insure that the government DOES NOT take over operating banks, as that would be a move towards government ownership of a sector of society.

    Look at Venezuela as an example of socialism.

    Stablizing the banks now means government ownership. Stablizing the auto industry (off subject) now means governement ownership. What’s next? I’m starting to feel like I’m in Soviet Russa. I’m so looking forward to standing in the bread line!

    From time to time the US Govt has owned the mustang ranch, several dozen movie theaters, airplanes, all belonging at one time or another to private citizens. That is not social takeover. The government’s ownership is roughly equivalent to social security invested in the stock market.

    This is so far from Soviet Russia. Try living there for a few weeks back in the day. There is absolutely no comparison. To say so shows hysteria without any bounds of reality.

    Balancing a budget is fine, but what has been cut to balance that budget? How about some real cuts to useless social programs?

    How much would you guess the government would save if it every discretionary single social program were totally eliminated?

    The total budgets are:

    GWBush 2008 budget – $2.9T (but Iraq was not in the budget),

    GWBush 2009 budget – $3.1T (but Iraq was not in the budget),

    Obama 2010 budget – $3.6T (includes Iraq/Afgan war costs)

    (source: http://www.whitehouse.gov/omb/budget/fy2009/pdf/spec.pdf)

    Welfare programs can be defined a couple of ways, but we can start with Health & Human Services (HHS), $4.3B (2009 GWB budget), or 1.2% of the total budget !!

    Add all of Education, Agriculture, Commerce, Interior, Labor, Corps of Engineers, and EPA and the total in GWB budget comes to 1.7% of the total budget.

    The percentage of the budget for these programs are smaller in Obama’s budget.

    Defense is 21% of the budget, or $756B

    Interest on Ronald Reagan’s debt is $248B. Together these two items add up to $1T.

    Now you could have looked this up yourself, but it is just more convenient to blame social programs than to actually look at the numbers. Reality is such a harsh critic.

    President Obama and his cohorts in Congress are on a spending spree with more of our liberties being taken away each day.

    Huh? Which liberties do you lack today that you had on Jan 19th? Talking through your arse.

    Obama spent on Stimulus. He is buying real stuff: bridges, roads, building. His total expenditures are 20% of the Bush expenditures – and I do believe he inherited a crisis.

    Conference process

    — One of the two chambers introduces the bill, debates it and puts it up for a vote. Spending bills are always introduced in the House.

    — The Senate gets the bill and can make changes debate and amend it. It then passes its own version of the bill.

    — The matter is referred to the conference committee. It can only last just so long in conference before it is kicked out and the process starts anew. Once conference completes negotiations (it’s all based on adding and removing things that will cause it to pass or die), it is sent back to both chambers for a vote without debate.

    But you could have looked this up yourself.

  5. It’s 33% a tax reduction

    Just to clarify a line in my post above, 33% of the Stimulus bill is a tax reduction.

  6. I am so ashamed of the US govt. The tiny south east asian countries were able to weather the Asian crisis which was caused by excessive debt without resorting to printing money but we, with years of economic research behind us and reputable leaders with apparently “sound” economic experience are running the printing press 24 hours a day. I can’t believe our “leaders” are endorsing voodoo economics which will drive us further into hell. Honestly, to hell with Obama’s and Geithner’s quick fixes which carry long term suffering for us citizens.

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