End the Fed!

[Teazer]

So in a nutshell you're defining "currency" to be "money" that has to some degree been devalued and is in circulation, whereas "money" would be some direct representation of a commodity. Is there any reason to say this definition is better than the ones out of the dictionary?

[Chris Fleming]

I can think of a reason: because that is what really has happened with currencies throughout history and is happening once again with the dollar.

[Teazer]

It doesn't really answer the definition question though. Any other reason come to mind?

What the dollar is indicating is that despite having a huge debt since Reagan, the US still borrows to pay its debts rather than just printing money. Hence the absence of the hyperinflation your pattern would predict. This is what we have come to expect from well run, relatively independent central banks with reasonably-aligned incentives around the world. As you say, there's enough history of the catastrophic effects of printing to finance government debt to make them very wary of doing so.

Now it could be said that a point will be reached when in general, the taste investors around the world have for US debt will be a lot less, at which point the Fed, Treasury and Congress will have much discussion to do. Will the Fed choose to monetize all the governments debt? Will Congress and the Treasury go ahead and take on more debt despite crushing rates of interest on following generations? Might voters or a President at some point put the brakes on wasteful government spending? Personally I'm hoping for the last one, but I'll leave that chore to those of you that can vote!

[Chris Fleming]

So you don't see a problem with the U.S. going more and more in debt to other countries in order to sustain the dollar? That doesn't do anything to the dollar in the mean time? If you want to quibble about what is money and what is currency according to a dictionary, that kinda misses the point and the distinction I'm making. Whether you like the definition or not, real is real, faked is fake. Look at history; every time governments try to cheat real money they lose in the end.

The pattern I posted is a cycle, and this is about cycles. Investment-wise, there are cycles when stocks out perform other things and when commodities outperform everything else. Nations also have an ebb and flow. The end of a cycle for a nation doesn't mean THE END of that nation (France, Germany are of course still here) but due to greed and debasement of currency, a nation can't remain as the super power it once was and can't keep creating money out of thin air forever. The U.S. is clearly on this course. I don't know about great depression this or hyperinflation that, but at the very least, people are losing their purchasing power and getting poorer, plus the middle class is being dissolved--due to the fraud of fractional reserve banking and other genius pyramid schemes also known as fiscal policy.

[Teazer]

BTW, it's now officially been a recession for the last year, subject to later revision of course!

<<The National Bureau of Economic Research confirms that the U.S. economy fell into a recession in December 2007. Many economists believe the current downturn will be the most severe since the recession of 1981-82.>>