Inflation

[Q9]

Quote:
That is what causes inflation. The government steals our savings by destroying the value of the currency. In Rome they debased the coinage. In Germany they printed money until it was worthless. In Zimbabwe they printed money until the politically elite owned everything.

In times of inflation, the debtor wins by borrowing good money and paying back in worthless money. People who work, save and invest lose. Speculators and insiders win.

Rufus

Also happened with the Continental dollar during the War for Independence, and happened to both United States and Confederate States currencies in the War for Southern Independence.

It's not uncommon. It's happened a lot, and it is 100% reasonable to assume that it'll probably happen again. Prepare for it.

Also, a thorough reading of the Constitution reveals that only GOLD and SILVER shall be legal tender in the United States. Not Federal Reserve Notes.

 

[chickened]

Probably why gold and other precious metals continue to rise in spite of the current economy. They are tangible

 

[rufus]

Quote:
Well, there doesn't seem to be a lot of attention paid to the Constitution lately.

Gold and silver are hard assets, but they can be taken away from you. Remember during the depression when the federal government forced everyone to turn in their gold for $20 and ounce? They effectively stole the savings of the nation.

Also, it is really hard to run with all of that weight. If you have to flee the country you just might have to bury your assets until there is a change in government. That may take a long time.

Can you imagine how much treasure is buried in what used to be the Soviet Union, Mexico, China, Viet Nam? Manila bay is probably full of silver coinage still.

Rufus

 

[Dunkopf]

You mean like become a fugitive? Or are you talking about when the wages get so low you'll want to go to Mexico and take a job from someone down there? Show me a country that has anything better than the US except their health care system. I'll put in for a transfer. At the moment I can't think of why anyone would flee the country though. In 30 or 40 years when they have closed down all the schools and taken us back to the stone ages it might be a good idea though. I'll be dirt by then.

 

[rufus]

You never know. El mundo da muchas vueltas. Our ancestors thought they were pretty well off in Russia and Germany. Then they had to flee. And then again they had to flee Mexico. When the Japanese invaded the Philippines, they lost everything.

You never know when a political system will turn against you. Be prepared.

Rufus

 

[Dunkopf]

It's turning against us right now. There's nowhere to flee to though. As for invasion. Not likely. Haven't heard any talk of dismantling our military by anyone. No, we are collapsing from within. The bottom up to be exact.

 

[rufus]

Yes, I do not foresee happy times for the next couple of generations. The last great depression lasted thirteen years and it took World War II to get us out of it.

The federal government owes so much debt there is no realistic way they could pay it off without running the printing presses. That means a terrible inflation. Worse, our nation's creditors are not going to be happy about their investments in US bonds shrinking down to worthlessness.

Expect those investors in China and the Middle East to be really upset. The day they decide not to go to those treasury auctions will be the day everything falls down real fast.

Making it worse, something like 48 per cent of the population pay no income tax. They say they pay taxes, but at the end of the year they file and get everything back. Some even get the earned income tax credit.

And, there are structural problems. We have such a large portion of our society dependent upon transfer payments. Welfare, food stamps, unemployment, WIC, Social Security, Medicare and Medicaid that the day these programs are not funded society will change in a very ugly way.

Taxing the wealthy used to be the remedy for everything. But that wealth was siphoned off to the Far East and the Middle East. Yes, there are still people living large, but mostly it is a house of cards. They carry a horrendous amount of personal debt.

No matter which political party controls the congress and the white house, we are in for some very tough times.

Rufus

 

[Dunkopf]

They're really the same party. I agree we have a lot of entitlement programs. Retirees need income though and some have never had a job that would have allowed them to create a retirement plan. A majority of people on welfare and food stamps actually need the help. There are a lot that are mothers and can't get a job that will pay for daycare and put food on the table. I refuse to believe that people willingly accept a very meager unemployment check when they can get a job. Obviously it happens for a while. There are many countries around the world that have much larger entitlement programs than we do and they are getting out of the recession. Germany for one is coming along quite well. England has cut their entitlements to the bone and they haven't shown any improvement yet.

When 2% of the population owns 60% of the countries wealth we have a problem. That 2% either needs to pay more tax or create some jobs. It's not the governments job to put people to work. During the Eisenhower administration taxes for the wealthy were at 93% of net profits which forced wealthy people to reinvest in their businesses which in turn created more jobs and wealth. These days they invest in Wall Street and only pay 15% on their earnings. Therein lies the real problem. I'm just curious what the upper 2% are going to do if the economy collapses. the only thing you create with trickle down economics is a bunch of peons.

 

[Wifezilla]

No matter which political party controls the congress and the white house, we are in for some very tough times.

Bingo!​

 

[rufus]

I see there is some concern that the Japanese may begin dumping some of our bonds. They need the capital to rebuild their nation. The end may be nearer than we think.

I wish we could think of a way out of this pickle, but all the choices are painful. Sometimes our ability to effect a change is very limited, in this case, it seems to be nil.

As to the issue of the wealthy reinvesting in our nation, well that just isn't going to happen. Primarily because those wealthy people now live in other countries. If they are going to invest, it would be in a country that has a lot less regulations and less taxes. Nobody in their right mind would start a capital intensive business in the US now. It is just too risky. They would be stuck paying for a lot of taxes to pay for social welfare programs and wars, both past and present.

The future does not look good.

Rufus