Posted on 02/20/2023 1:02:01 PM PST by elpadre
The U.S. dollar enjoys the world reserve currency status due to numerous factors. Legal and investor security, an open and transparent market, as well as independent institutions with checks and balances that limit political power and strengthen the country’s currency in relative terms. No, a country does not have a world reserve currency due to military power. No one accepted the kopek when the Soviet Union ruled half the world. For a fiat currency to be a world reserve it needs to be widely accepted as unit of measure, method of payment and reserve of value.
The problem is that all the above may be under threat.
Increasing pressure from politicians is threatening the reserve of value status of fiat currencies, and the political threat is not only against monetary authorities, but aimed at all institutions that provide independent checks and balances that limit political imposition.
When politicians talk about the “social use” of money, what they are basically saying you will suffer higher inflation for longer. It means using the currency to disguise massive fiscal imbalances under the illusion that citizens will always have to use the local currency. It makes no sense. A fiat currency, like any other good or service, is subject to supply and demand. Excessive supply is damaging its purchasing power the same way that excessive supply lowers the price of a good, but weakening demand added to rising supply leads to the collapse of the currency.
The moment that politicians stop defending the reserve of value status of their currency they are destroying the country they promise to defend.
(Excerpt) Read more at dlacalle.com ...
For some reason printing money like the Weimar Republic to deal with ballooning national debt causes international bankers to doubt the strength of the economy backing the currency in question. Gee, I wonder why.
a good explanation for an economic layman to understand how our Washington spendthrifts with they overactive printing presses will soon have drastic results.
How to slow them down??? That is the question!!
When your money can be used for toilet paper, it’s already too late.....................
Good blog article explaining some aspects of the basics.
With our spending (what he addresses), the war in Ukraine and BRICS nations wanting to dump the dollar, this administrations spat with Saudi Arabia... lots of bad forces converging. You have various currents, but they are all heading in the same general direction.
We might be at the beginning of what is the end of the dollars rule:
PRC: https://foreignpolicy.com/2022/09/21/china-yuan-us-dollar-sco-currency/
When we print money and inflate our way out of debt, what we are also doing is screwing every nation which is holding on to US dollars.
Here’s another way to look at this. Inflation is too much money chasing to few goods (i.e. empty shelves/shortages and high prices). But it is actually caused by government over spending and it is usually known and intentional (not an accidental act).
It’s a way of breaking promises made without using a microphone and telling folks you’re going to break them. All the folks on Social Security, Federal retirements, military retirements, VA checks, cashing in on their bonds, they are getting what they were promised at face value, but it’s in end effect 20% less than what they were promised actually, just in the last 2 years.
It’s a way the government can slip out from its obligations without coming forward and saying “Screw you we’re cutting your retirement, not giving you your bonds worth...”
Today, politicians lie cheat and steal in ways that allow the people to be unaware of what is actually going on. They are creative in how to both break promises made, but also how to ever raise the tax burden without folks ever realizing what is going on. No one wants a tax increase and any politician coming out and saying “I want to raise the income tax” will be highly unpopular. Yet with things like a CO2 tax built in everyone is paying a tax on everything essentially, but folks don’t even realize that. This is de facto a massive tax increase and also creating inflationary pressures, but people do not realize this: https://www.foxbusiness.com/politics/epa-quietly-pushes-expensive-carbon-tax
Inflation is theft by a government. It’s a way of breaking a promise in obligations made in the past which appear burdensome today. Even if you get a 6, 7 or 8% raise, truth is the net inflation was nearly double of what was officially claimed (more lies) and all those owed by uncle Sam are now getting it in the rear.
What you’re seeing right now is a government cheating and lying, intentionally.
Very scummy.
deliberately killing America
Obama effectively killed that in this country.
When he forced bond holders and preferred stock holders in US Automakers to take a haircut in the bankruptcy restructuring.
Why would anyone ever consider investing in preferred stocks in a weak company again?
Shared risk is what stock markets are all about.
Extra risk is what preferred stocks are supposed to be about. I buy stocks when the risk are high with the expectation that I get paid before the common stock owner.
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