It is “they,” who are allowing the dollar to slide, right? It is “they” who do all things, it seems. “They” are this, and “they” are that. The “they,” who are responsible for the dollar’s slide is what we will consider here. Is “they” the government? Is “they” the Federal Reserve? I say it is neither. Remember Stott’s law, which states, “The more of anything there is, the less they will be worth.” This applies to rare stamps, or anything from pork chops to tomato plants. Well, let’s look at the dollar, and its slide. Interest rates are 1%, which is not exactly a desirable rate to attract savers, and Americans certainly are not saving. I can’t blame them, since the buck is going down about ten times faster than the interest they receive, after paying taxes on it. 1% is not an attractive rate to invest either, is it? Foreigners aren’t breaking down the doors to buy dollars, or invest in government paper. The 1% interest rate, does make mortgage rates lower, usually under 6%, and this makes for more and more mortgages, and more and more housing starts. The increased mortgages and housing starts are all done with funny money, so this increases the dollar supply greatly. A bubble, if you please.
The strong dollar vs. the weak dollar, really has nothing to do with “they,” but rather the market at work. Dollars, dollars everywhere, and more millions pouring out of DC every minute. Where are they going? They are going to Iraq, Afghanistan, Africa, Israel, Japan, China, India, to the army, navy, air force, pentagon, welfare, and handouts and subsidies of all sorts. Dollars to everyone. Billions here, and billions there, and after a while, there are so many everywhere, that they loose their value, which fulfills Stott’s law to the letter.
The IRS and other federal taxes, collect far less than the interest on the national debt. The debt is increasing by millions of dollars a day, because there is not enough money coming in to even pay the interest. It therefore compounds, as the debt goes higher and higher. When one can’t even pay the interest, most people would say that the entity is bankrupt. America has been bankrupt for years, but now it seems to this scribe, that we are in the final stages. When an individual or corporation goes bust, because of not being able to pay the interest, or service their debt, the end is final, with no ifs, ands, or buts. It is all over when an individual or corporation goes under. Finis. But not so, when the bankrupt entity can print its way out of debt, as does the United States and any other nation on earth that chooses to do so. Remember, all currencies are fiat in the world today, and none are backed by anything. The difference is that no other nation has to print nearly as much as do we. We have to print and print and print trillions of dollars to pay the interest, and all the other crap we think we have to buy and pay for, be it UN dues, or to help the blacks in Africa who have AIDS. There is no limit to the dollars that are being printed, and will continue to be printed.
While the dollar may be extremely weak, there is a chance that the entire world economy may crumble, because none of the currencies, which everyone deals in, have any real value. Sir Alan, on Jan 13th, in Berlin admitted as much, when he said, “ I can’t deny the possibility that the whole system might collapse ”
Actually the dollar or any currency, is like a share of stock, isn’t it? It is a “share” in the economy of a nation. If the currency were backed by gold or silver, it wouldn’t be a share of anything, but a representation of a physical wealth. But it isn’t that way. Currencies, are literal shares in a nation’s economy, and the currencies behave exactly like a share of stock in a corporation. In the stock market, when more sell than buy, the price goes down. Stocks always reflect the number of buyers, and the number of sellers. For every stock buy, there has to be a sell. When the sellers outnumber buyers, the price falls, till buyers are attracted, and the deal is closed. If there are huge numbers of sellers, and few buyers, we have a market crash. Dollars likewise.
It may be “they” who cause dollars to slide, but the “they,” aren’t what most people think. Most say that, “the fed is deliberately allowing the dollar to slide.” There isn’t much the fed can do about it, in my opinion. These dollars have proliferated so much, that they have simply lost not only value, but credibility. After all, the basis of a dollar’s “value,” is mere hype anyway. The dollar is the world’s “reserve currency,” it is said. You can take a few of them and get a cup of coffee at Starbucks, if you call that a “reserve” of some kind. (Coffee was a nickel when I was a kid.) Lack of credibility, is what makes people sell dollars. Lack of credibility, makes people sell stocks. The dollar may be a so-called “reserve” currency, but it is also a laughing stock. The Arabs are about to price their oil in gold backed dinars, if their press releases are to be believed, and Saddam had already priced his oil in euros when we did him in. I guess we showed him! The euro was 88 cents a few months ago, and now is about $1.25. So the euro has more credibility than the dollar, and rightfully so, because those who participate in the euro, have to meet certain standards as to their nation’s debts, reliability, and reputation. African dictatorships do not qualify to be euro nations. The euro, supposedly is backed 15% with gold, and whether this is true or not, it lends it credibility.
Enron, Global Crossing, and the like, went down the tubes because of shoddy books, fake figures, and such being exposed. Ahem! Doesn’t that sound like the bookkeeping in DC? Many times, stocks have gone from $100 to $2 because of exposure to the raw truths about the corporation. Many currencies have done the same, and always will, because they are mere fluff. “You can fool all of the people some of the time, and some of the people all of the time, but you can’t fool all of the people all of the time.” Americans have grown up with dollars, and like any habit, it is difficult to get rid of, regardless of the facts. Another neat saying is, “Don’t bother me with the facts; I’ve already made up my mind.” So it is with dollars, religions, places of residence, favorite brands of cars, foods, and restaurants. Habits are all consuming, regardless of the facts.
It so happens, that the dollar has lost a lot of its credibility, and “they” did it, but “they,” are the collective Presidency and Congress. Without the President urging ever more spending, sending troops overseas, and his unconstitutional “Executive Orders,” the dollar might have a chance. Without the Congress spending, spending, and spending yet more, the dollar might have some credibility. Like a family on a credit card binge, or an alcoholic tasting one drink, neither the Presidency nor the Congress will ever rein in spending. It’s not in their makeup. They haven’t a smidgen of what the real truth is about economics. Daily, in every state, state legislatures and governors beg for more federal handouts, and never even think that the more they get, the less the dollars will be worth. Beggars by the millions, and not a single one realizes the results of ever more and more dollars being run off the presses, or multitudinous checks being written.
The dollar’s falling, is simply caused by there being far more sellers than buyers, plus the incredible monsoons of them flooding the earth. “They” may be doing it, but “they” are the President, Congress, and the sellers and non-buyers of them. Who would want a worthless piece of paper with ink on it? Lots of people, or it would have gone the way of all flesh a long time ago. These are the “some of the people all of the time.” More and more are in the category of ’not being fooled forever.’ Things can happen really fast, you know. The buck could go on a toboggan slide quickly, or just drip away into worthlessness slowly. It will happen of course. I’m out of them myself. When I get any surplus dollars, I just buy more silver. The ratios have gone down 20 points in the last month, meaning silver has risen, in dollars, 20% faster than gold. It will continue. Both are fine, but for long term, if you have the room, silver will reward you greatly. Think about this also: The buck has slid 30%, and metals are priced in this “reserve currency” known as dollars. If the dollar had not slid, would metals have gone up, in dollars, 30% higher? I think it’s possible, but if you hold metals rather than paper dollars, you’re OK. Protect yourself.