U.S. TO DEFAULT ON ITS DEBT – SUMMER 2009

[kewp]

I fully understand the concept. However this is where I disagree. Printing our way out of debt has consequences not only to us but to the world. The question is will the world take these printed dollars or will they just say screw it and get another reserve currency rendering the dollar worthless.

Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).

Something like 85% of our hard currency is in circulation overseas. Mostly in the form of $100 bills used for black/gray-market transactions. It’s critically important for these to remain strong in the global marketplace to prevent hyper-inflation from them all pouring back into our country.

The Fed isn’t printing money for the foreign banks (unless they specifically ask for it, which some of them are now.) The Fed is printing money to keep the banks from going out of business due to bad loans. This keeps the sum total of money supply relatively constant within our borders.

Both printing and defaulting is built into the system. The only adverse affects are if either one becomes too dominant an economic force.

[donaldduckmoore]

A “recent upward evolution of the US Dollar” is due to “investors and operators who are selling massive amounts of USD-denominated assets.”

It does not make sense to me.

[donaldduckmoore]

A “recent upward evolution of the US Dollar” is due to “investors and operators who are selling massive amounts of USD-denominated assets.”

It does not make sense to me.

[donaldduckmoore]

A “recent upward evolution of the US Dollar” is due to “investors and operators who are selling massive amounts of USD-denominated assets.”

It does not make sense to me.

[donaldduckmoore]

A “recent upward evolution of the US Dollar” is due to “investors and operators who are selling massive amounts of USD-denominated assets.”

It does not make sense to me.

[donaldduckmoore]

A “recent upward evolution of the US Dollar” is due to “investors and operators who are selling massive amounts of USD-denominated assets.”

It does not make sense to me.

[Arraya]

“Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).”

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt. From what I have read straight printing severely devalues in way that differs from debt created money and on a philosophical level it should. See Zimbabwe for and example. This is where I get lost in the abstract chicanery of our monetary system and have never been given any clarity on the specific difference of each form of monetary creation. Either way we are caught in a severe deflationary cycle of a system the is almost 100% dependent on growth and specifically growth of consumption to pay off the debts and not default. I’m quite sure there won’t be enough new debt issued to keep up with defaults so we will see affects of straight printing to attempt to keep it going.

And behind the scenes to make matters even more confusing is the much understudied interlinking between money and energy. There are a few ecological economists that are studying this. Being that energy or more specifically oil is real and fiat is not, I can only conclude that the peaking of world oil production will have a profound affect on the way we create and think of money. Oil has been pretty much free for most of the of industrial civilization just like our money. However, you can’t print oil which is the true underpinning of our currency. This current bumpy plateau of oil production is scheduled for terminal decline by 2010-2012. This illustrates another flaw in the system. Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects. We are ill prepared for starting the end of the oil age and the market is not coming to our rescue. Invisible hands and infinite growth on a finite sphere. Nonsense, it’s faith based economics and I’ve lost mine.

IMO, another fundamental flaw is that the whole thing is based on perpetual growth of money and population on a sphere with finite resources. In resource constrained world, this is where capitalism becomes cannibalistic and the web of multinational corporations and financial institutions morph into Global Corp as the mountain of debt comes crashing down. Just look at all the mergers and defaults.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

[Arraya]

“Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).”

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt. From what I have read straight printing severely devalues in way that differs from debt created money and on a philosophical level it should. See Zimbabwe for and example. This is where I get lost in the abstract chicanery of our monetary system and have never been given any clarity on the specific difference of each form of monetary creation. Either way we are caught in a severe deflationary cycle of a system the is almost 100% dependent on growth and specifically growth of consumption to pay off the debts and not default. I’m quite sure there won’t be enough new debt issued to keep up with defaults so we will see affects of straight printing to attempt to keep it going.

And behind the scenes to make matters even more confusing is the much understudied interlinking between money and energy. There are a few ecological economists that are studying this. Being that energy or more specifically oil is real and fiat is not, I can only conclude that the peaking of world oil production will have a profound affect on the way we create and think of money. Oil has been pretty much free for most of the of industrial civilization just like our money. However, you can’t print oil which is the true underpinning of our currency. This current bumpy plateau of oil production is scheduled for terminal decline by 2010-2012. This illustrates another flaw in the system. Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects. We are ill prepared for starting the end of the oil age and the market is not coming to our rescue. Invisible hands and infinite growth on a finite sphere. Nonsense, it’s faith based economics and I’ve lost mine.

IMO, another fundamental flaw is that the whole thing is based on perpetual growth of money and population on a sphere with finite resources. In resource constrained world, this is where capitalism becomes cannibalistic and the web of multinational corporations and financial institutions morph into Global Corp as the mountain of debt comes crashing down. Just look at all the mergers and defaults.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

[Arraya]

“Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).”

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt. From what I have read straight printing severely devalues in way that differs from debt created money and on a philosophical level it should. See Zimbabwe for and example. This is where I get lost in the abstract chicanery of our monetary system and have never been given any clarity on the specific difference of each form of monetary creation. Either way we are caught in a severe deflationary cycle of a system the is almost 100% dependent on growth and specifically growth of consumption to pay off the debts and not default. I’m quite sure there won’t be enough new debt issued to keep up with defaults so we will see affects of straight printing to attempt to keep it going.

And behind the scenes to make matters even more confusing is the much understudied interlinking between money and energy. There are a few ecological economists that are studying this. Being that energy or more specifically oil is real and fiat is not, I can only conclude that the peaking of world oil production will have a profound affect on the way we create and think of money. Oil has been pretty much free for most of the of industrial civilization just like our money. However, you can’t print oil which is the true underpinning of our currency. This current bumpy plateau of oil production is scheduled for terminal decline by 2010-2012. This illustrates another flaw in the system. Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects. We are ill prepared for starting the end of the oil age and the market is not coming to our rescue. Invisible hands and infinite growth on a finite sphere. Nonsense, it’s faith based economics and I’ve lost mine.

IMO, another fundamental flaw is that the whole thing is based on perpetual growth of money and population on a sphere with finite resources. In resource constrained world, this is where capitalism becomes cannibalistic and the web of multinational corporations and financial institutions morph into Global Corp as the mountain of debt comes crashing down. Just look at all the mergers and defaults.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

[Arraya]

“Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).”

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt. From what I have read straight printing severely devalues in way that differs from debt created money and on a philosophical level it should. See Zimbabwe for and example. This is where I get lost in the abstract chicanery of our monetary system and have never been given any clarity on the specific difference of each form of monetary creation. Either way we are caught in a severe deflationary cycle of a system the is almost 100% dependent on growth and specifically growth of consumption to pay off the debts and not default. I’m quite sure there won’t be enough new debt issued to keep up with defaults so we will see affects of straight printing to attempt to keep it going.

And behind the scenes to make matters even more confusing is the much understudied interlinking between money and energy. There are a few ecological economists that are studying this. Being that energy or more specifically oil is real and fiat is not, I can only conclude that the peaking of world oil production will have a profound affect on the way we create and think of money. Oil has been pretty much free for most of the of industrial civilization just like our money. However, you can’t print oil which is the true underpinning of our currency. This current bumpy plateau of oil production is scheduled for terminal decline by 2010-2012. This illustrates another flaw in the system. Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects. We are ill prepared for starting the end of the oil age and the market is not coming to our rescue. Invisible hands and infinite growth on a finite sphere. Nonsense, it’s faith based economics and I’ve lost mine.

IMO, another fundamental flaw is that the whole thing is based on perpetual growth of money and population on a sphere with finite resources. In resource constrained world, this is where capitalism becomes cannibalistic and the web of multinational corporations and financial institutions morph into Global Corp as the mountain of debt comes crashing down. Just look at all the mergers and defaults.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

[Arraya]

“Actually, the reverse is true. If the Fed doesn’t print money, then our economy collapses and renders our currency worthless (or close to it).”

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt. From what I have read straight printing severely devalues in way that differs from debt created money and on a philosophical level it should. See Zimbabwe for and example. This is where I get lost in the abstract chicanery of our monetary system and have never been given any clarity on the specific difference of each form of monetary creation. Either way we are caught in a severe deflationary cycle of a system the is almost 100% dependent on growth and specifically growth of consumption to pay off the debts and not default. I’m quite sure there won’t be enough new debt issued to keep up with defaults so we will see affects of straight printing to attempt to keep it going.

And behind the scenes to make matters even more confusing is the much understudied interlinking between money and energy. There are a few ecological economists that are studying this. Being that energy or more specifically oil is real and fiat is not, I can only conclude that the peaking of world oil production will have a profound affect on the way we create and think of money. Oil has been pretty much free for most of the of industrial civilization just like our money. However, you can’t print oil which is the true underpinning of our currency. This current bumpy plateau of oil production is scheduled for terminal decline by 2010-2012. This illustrates another flaw in the system. Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects. We are ill prepared for starting the end of the oil age and the market is not coming to our rescue. Invisible hands and infinite growth on a finite sphere. Nonsense, it’s faith based economics and I’ve lost mine.

IMO, another fundamental flaw is that the whole thing is based on perpetual growth of money and population on a sphere with finite resources. In resource constrained world, this is where capitalism becomes cannibalistic and the web of multinational corporations and financial institutions morph into Global Corp as the mountain of debt comes crashing down. Just look at all the mergers and defaults.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

[kewp]

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt.

Not really. Money is created via credit; debt is simply the other side of that equation.

In the modern age, there really isn’t much difference between cash, credit and debt. Its all just numbers in a computer. However, its much either to destroy debt than cash. Cash hardly ever gets destroyed; not too many people are burning dollars in their furnace (yet). In fact, cash is usually only destroyed when the bill get damaged enough that the banks send them to the treasury to be destroyed (and replaced with new currency).

What happened in Zimbabwe is runaway *physical* printing of their currency. *That* is inflationary. Imagine if the Fed started mailing everyone with a social security number a thousand dollars fresh from the printing press every month. We would see rampant price inflation of basic goods almost immediately and the dollar would decline on the global market.

I think its important to note that there is, however, a significant difference between credit and cash inflation.

You can see the difference being by looking at salaries vs. home and student loans. Things we borrow money to buy increase in price in a credit bubble, due to credit inflation. Housing, education and transportation are a good example. We are paid in cash, not credit and as such salaries have not kept up with the increased price of these goods and services.

This is big difference between now and the 70’s. The 70’s was a cash bubble where everything went up. This is/was a credit bubble.

Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects.

If we implemented European mileage standards we would end our dependence on foreign oil overnight.

Energy independence is the kind of thing you can’t wait for the free market to take care if you really want to be ahead of the curve. The market is myopic and will *gladly* kill a consumer today if it means turning a small profit now rather than a big one later. Look at the tobacco industry for an example of this.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

Indeed. Our financial system is simply not equipped to deal with the information age. It needs a massive, fundamental overhaul to keep from melting down again.

And I agree with you about over-consumption. As a conservationist it disgusts me. Americans are too fat and over-indulgent. A long recession could do us all some good.

In fact, it may even save our civilization.

[kewp]

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt.

Not really. Money is created via credit; debt is simply the other side of that equation.

In the modern age, there really isn’t much difference between cash, credit and debt. Its all just numbers in a computer. However, its much either to destroy debt than cash. Cash hardly ever gets destroyed; not too many people are burning dollars in their furnace (yet). In fact, cash is usually only destroyed when the bill get damaged enough that the banks send them to the treasury to be destroyed (and replaced with new currency).

What happened in Zimbabwe is runaway *physical* printing of their currency. *That* is inflationary. Imagine if the Fed started mailing everyone with a social security number a thousand dollars fresh from the printing press every month. We would see rampant price inflation of basic goods almost immediately and the dollar would decline on the global market.

I think its important to note that there is, however, a significant difference between credit and cash inflation.

You can see the difference being by looking at salaries vs. home and student loans. Things we borrow money to buy increase in price in a credit bubble, due to credit inflation. Housing, education and transportation are a good example. We are paid in cash, not credit and as such salaries have not kept up with the increased price of these goods and services.

This is big difference between now and the 70’s. The 70’s was a cash bubble where everything went up. This is/was a credit bubble.

Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects.

If we implemented European mileage standards we would end our dependence on foreign oil overnight.

Energy independence is the kind of thing you can’t wait for the free market to take care if you really want to be ahead of the curve. The market is myopic and will *gladly* kill a consumer today if it means turning a small profit now rather than a big one later. Look at the tobacco industry for an example of this.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

Indeed. Our financial system is simply not equipped to deal with the information age. It needs a massive, fundamental overhaul to keep from melting down again.

And I agree with you about over-consumption. As a conservationist it disgusts me. Americans are too fat and over-indulgent. A long recession could do us all some good.

In fact, it may even save our civilization.

[kewp]

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt.

Not really. Money is created via credit; debt is simply the other side of that equation.

In the modern age, there really isn’t much difference between cash, credit and debt. Its all just numbers in a computer. However, its much either to destroy debt than cash. Cash hardly ever gets destroyed; not too many people are burning dollars in their furnace (yet). In fact, cash is usually only destroyed when the bill get damaged enough that the banks send them to the treasury to be destroyed (and replaced with new currency).

What happened in Zimbabwe is runaway *physical* printing of their currency. *That* is inflationary. Imagine if the Fed started mailing everyone with a social security number a thousand dollars fresh from the printing press every month. We would see rampant price inflation of basic goods almost immediately and the dollar would decline on the global market.

I think its important to note that there is, however, a significant difference between credit and cash inflation.

You can see the difference being by looking at salaries vs. home and student loans. Things we borrow money to buy increase in price in a credit bubble, due to credit inflation. Housing, education and transportation are a good example. We are paid in cash, not credit and as such salaries have not kept up with the increased price of these goods and services.

This is big difference between now and the 70’s. The 70’s was a cash bubble where everything went up. This is/was a credit bubble.

Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects.

If we implemented European mileage standards we would end our dependence on foreign oil overnight.

Energy independence is the kind of thing you can’t wait for the free market to take care if you really want to be ahead of the curve. The market is myopic and will *gladly* kill a consumer today if it means turning a small profit now rather than a big one later. Look at the tobacco industry for an example of this.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

Indeed. Our financial system is simply not equipped to deal with the information age. It needs a massive, fundamental overhaul to keep from melting down again.

And I agree with you about over-consumption. As a conservationist it disgusts me. Americans are too fat and over-indulgent. A long recession could do us all some good.

In fact, it may even save our civilization.

[kewp]

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt.

Not really. Money is created via credit; debt is simply the other side of that equation.

In the modern age, there really isn’t much difference between cash, credit and debt. Its all just numbers in a computer. However, its much either to destroy debt than cash. Cash hardly ever gets destroyed; not too many people are burning dollars in their furnace (yet). In fact, cash is usually only destroyed when the bill get damaged enough that the banks send them to the treasury to be destroyed (and replaced with new currency).

What happened in Zimbabwe is runaway *physical* printing of their currency. *That* is inflationary. Imagine if the Fed started mailing everyone with a social security number a thousand dollars fresh from the printing press every month. We would see rampant price inflation of basic goods almost immediately and the dollar would decline on the global market.

I think its important to note that there is, however, a significant difference between credit and cash inflation.

You can see the difference being by looking at salaries vs. home and student loans. Things we borrow money to buy increase in price in a credit bubble, due to credit inflation. Housing, education and transportation are a good example. We are paid in cash, not credit and as such salaries have not kept up with the increased price of these goods and services.

This is big difference between now and the 70’s. The 70’s was a cash bubble where everything went up. This is/was a credit bubble.

Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects.

If we implemented European mileage standards we would end our dependence on foreign oil overnight.

Energy independence is the kind of thing you can’t wait for the free market to take care if you really want to be ahead of the curve. The market is myopic and will *gladly* kill a consumer today if it means turning a small profit now rather than a big one later. Look at the tobacco industry for an example of this.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

Indeed. Our financial system is simply not equipped to deal with the information age. It needs a massive, fundamental overhaul to keep from melting down again.

And I agree with you about over-consumption. As a conservationist it disgusts me. Americans are too fat and over-indulgent. A long recession could do us all some good.

In fact, it may even save our civilization.

[Author]

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