Four reasons why the government is destroying the dollar

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investorzzo's picture
investorzzo
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Four reasons why the government is destroying the dollar

Overview

The United States government has four interrelated motivations for destroying the value of the dollar:

1. Creating money out of thin air on a massive basis is all that stands between the current state of hidden depression, and overt depression with unemployment levels in excess of those seen in the US Great Depression of the 1930s.

2. It is the weapon of choice being used to wage currency war and reboot US economic growth.

3. It is the most effective way to meet not just current crushing debt levels, but to deal with the rapidly approaching massive generational crisis of paying for Boomer retirement promises.

4. Political survival and enhanced power for incumbent politicians.

In this article we will take a holistic approach to how individual short term, medium and long term pressures all come together to leave the government with effectively no choice but to create a high rate of inflation. If you have savings, if you rely on a pension, if you are a retiree or Boomer with retirement accounts - any one of these four fundamental motivations is individually a grave peril to your future standard of living. However, it is only when we put all four together and see how the motivations reinforce each other, that we can understand what the government has been and will be doing, and then begin the search for personal solutions.

http://www.financialsense.com/contributors/daniel-amerman/four-reasons-w...

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Re: Four reasons why the government is destroying the ...

That's depressing.

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Re: Four reasons why the government is destroying the ...

Well yeah. No cost of living increase for Social Security, because "there is no inflation" according to the CPI = problem fixed.  Blame the greedy farmers and grocers for raising our food prices.  The game is on.Frown

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Re: Four reasons why the government is destroying the ...

There are often questions here on whether to buy a home now, or what to invest in now (besides PM, and preps).  Mr. Ameran lays out a convincing, IMO, outline on how to "Reverse the Inflation Tax", and why to borrow now with low interest rates, and then make non dollar investments (property, e.g.).   

Here's another link to the article above, directly from Ameran's website.  He offers a DVD course for sale, however, I think his initial free set of articles is enlightening on its' own.

http://danielamerman.com/articles/Four.htm

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Re: Four reasons why the government is destroying the ...

Low fixed interest home loan now is probably the best deal you are ever going to get even if real estate prices slide some more. imho

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Re: Four reasons why the government is destroying the ...

It seems to me that the government will still have to pay full value for its Medicare commitments, irrespective of how much the currency is devalued, since providers are to be expected to maintain their real level of income. So I guess an attack on Medicare is to be expected.

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Re: Four reasons why the government is destroying the ...
SteveW wrote:

It seems to me that the government will still have to pay full value for its Medicare commitments, irrespective of how much the currency is devalued, since providers are to be expected to maintain their real level of income. So I guess an attack on Medicare is to be expected.

On the contrary, the government will gradually reduce its reimbursements to providers and gradually raise the bureaucratic bar that they have to jump over to receive payment.  They're playing a game of downward hopskotch alongside the private insurers, each one pointing to the other as they each nickel and dime the providers and saying, if the other guy is doing it, we can do it too.  It's been happening for a while will continue to do so, most likely in an increasingly accelerated fashion.  It's the reason why many medical providers are no longer recommending that their children get into the field.

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Re: Four reasons why the government is destroying the ...

It is very upsetting to be at retirement and know that it won't work well very long.  He makes perfect sense.  This way obligations to the elderly are met and there is a future for our young people too.   

I was going to be Ameran's little pig that paid off debts and  hunkered down to weather the storm.

According to Ameran, the little pig that borrows money now to buy an asset that will not lose value is the one who wins.

My experience reminds me that Ameran is right if there is hyperinflation.  I was young and in debt during the Mexican crisis.  I had a job and I wasn't hurt too badly.  The old man we owed money to could barely pay the gas to pick up the devalued money we owed him.  He had been so wealthy, but he was losing money everywhere.  The debtors were the winners.

I really hate debt.  We won just by dumb luck on that one.

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Re: Four reasons why the government is destroying the ...
ao wrote:
SteveW wrote:

It seems to me that the government will still have to pay full value for its Medicare commitments, irrespective of how much the currency is devalued, since providers are to be expected to maintain their real level of income. So I guess an attack on Medicare is to be expected.

On the contrary, the government will gradually reduce its reimbursements to providers and gradually raise the bureaucratic bar that they have to jump over to receive payment.  They're playing a game of downward hopskotch alongside the private insurers, each one pointing to the other as they each nickel and dime the providers and saying, if the other guy is doing it, we can do it too.  It's been happening for a while will continue to do so, most likely in an increasingly accelerated fashion.  It's the reason why many medical providers are no longer recommending that their children get into the field.

So you agree that an attack on Medicare is not only expected but ongoing?

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Re: Four reasons why the government is destroying the ...

Investorzzo

Interesting post but why are you blaming the government for the problems with money when the governement creates no money at all and has nothing to do with the creation of money?

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Mexican Crisis
maceves wrote:

I was young and in debt during the Mexican crisis.  I had a job and I wasn't hurt too badly.  The old man we owed money to could barely pay the gas to pick up the devalued money we owed him.  He had been so wealthy, but he was losing money everywhere.  The debtors were the winners.

Would you tell us more about your experiences during that time? What kind of jobs did people hold? Did wages rise with inflation? The man you owed money to - what kind of assets did he have? Or was he only a money-lender? Any lessons you feel that you learned from that time?

Thank you.

Poet

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Re: Four reasons why the government is destroying the ...

Poet--

I remember times being hard for us, but they were hard for everybody.  People tried to be frugal, and by custom the family takes care of their own,  There was no welfare or entitlements anyway, just family.

I was a teacher in a private school, so I was paid better than most.  For a few years, the tuition went up every year and then our salary went up too.  It didn't go up as fast as prices, so we were always behind.

My ex was an architect who got a back injury and coudn't work right in the middle of the construction of a house.  The client required him to pay his losses, a large part of the cost of that house.  It had something to do with the way the contract was written.  He had social security to pay for his medicine, but in Mexico that was it.  So, at the beginning, everything we could make was put into that debt.  After a few years, the debt was minimal even though it was the same amount of money---the money was just not worth as much.

I remember having to take a calcuator to the grocery store.  The prices had so many numbers.  I finally learned to just round things off.

A lot of people were used to hard times and took it in stride.  Some people who were industrious found ways to make it work for them--jacking up thier prices with the inflation.   Young couples buying houses got a bargain.  My in-laws had a fixed mortage of 100 pesos a month--now that was almost a joke.  They were very happy to pay that one off. 

One very strange thing I remember is extremely high interest rates on savings accounts. I've never seen anything like that since then,

I left Mexico and didn't go back for years.  Among other things, they created a new currency and got rid of all those zeros.

You hear a lot about crime in Mexico nowadays.  You would think that at that time crime would have been bad, but it wasn't.  There was not a big crime wave and there was not much theft.  This new wave of crime is about the drug cartels, not  about the economy.

Anyway, reading Ameran brought all of that back. 

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Re: Four reasons why the government is destroying the ...
maceves wrote:

You hear a lot about crime in Mexico nowadays.  You would think that at that time crime would have been bad, but it wasn't.  There was not a big crime wave and there was not much theft.  This new wave of crime is about the drug cartels, not  about the economy.

Mary

Thank you so much for sharing your thoughts! You have a wealth of life experience and I hope you continue to share that with us.

Question: Did you notice if home prices went down in Mexico during that time, to coincide with the rise in interest rates? Or go up because people realized houses were still valuable compared to the devaluing currency? What time frame was this? I assume it was the 1980s to 1993 when the nuevo peso came out?

Since apparently some 40% of Mexico's federal budget is from taxes on PEMEX, and the oil fields are in decline even as Mexico's domestic use increases... I wonder what will happen when as described under the Export Land Model (and outlined in the Crash Course), within about 5 years, Mexico may start becoming a net importer of oil. (Egypt crossed that mark sometime last year or will cross it sometime this year., and its government had recently threatened to reduce fuel and food subsidies.) I suspect there will be more after-effects spilling over into the United States.

Poet

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Re: Four reasons why the government is destroying the ...

Interesting post but why are you blaming the government for the problems with money when the governement creates no money at all and has nothing to do with the creation of money?

It does enforce legal tender laws which forces the "free" citizens to use a certain currency that they otherwise might reject.

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maceves
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Re: Four reasons why the government is destroying the ...

Poet--

What I remember about house prices, being married to an architect, was that homes had to be built very fast.  The budget for a house could only be guaranteed for a short period because the price of everything, all the materials, was constantly going up.  That was why the client had the architect sign a contract guaranteeing the price and why he was in so much trouble when he was bed ridden and got behind.  The only way to make money was to keep money in production just long enough to get a product on the market.  The prices of all homes were going up very fast.

I do not remember a culture of credit there like we have here.  Credit cards were not used much and from what I remember, people saved and bought homes cash unless they qualified for a government built home.  Those homes, by the way, were government subsidies for employees of businesses who had a long history with the company and were a benefit for the loyalty of the employee, not homes for the unemployed or unemployable.  The concrete construction lent itsself to building as much of a house as you could afford and adding to it when you could later on.

At least at that time, the value of goods was not quite the same as it was in the U.S.  I was making $300 a month as a teacher for a job that at that time would have possibly paid just under two thousand a month before taxes in the U.S.  Food was a lot less, housing somewhat less,  homes were not heated or air-conditioned in most places, propane gas was purchased regularly and the hot water heater was only used when it was needed. The price of any technology not made in Mexico cost a lot more and had import taxes.  I don't remember gasoline being especially high.

One thing I do not remember is anyone on a fixed income.  Everyone I knew was out doing something in the economy or depended on someone who did. 

 

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Re: Four reasons why the government is destroying the ...

 

Thomas Hedin wrote:

Interesting post but why are you blaming the government for the problems with money when the governement creates no money at all and has nothing to do with the creation of money?

Because the government should be doing this. As you obviously know, money is created by a private corporation, the Federal Reserve. But blaming a private banking corporation for the raping and pillaging of our country is like blaming my neighbor's dog for knocking over my trash cans: that's what dogs do, it's in their nature.

But, just like it's my neighbor's responsibility to keep his dog under control, it's the government's responsibility to serve the people, a responsibility which they have abandoned.

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