The Fall of the US Dollar - Is a return to a gold standard inevitable?

[KDave]

Good presentation this one, well worth a watch;

 

[EdNug]

IMO, and as much as I hate to say it, a completely debased internationally recognized crypto currency has more chance of replacing the US dollar when the time comes. I hope I'm wrong!

[sixgun]

i would say Kinesis -  blockchain  title of ownership over gold and silver, usable as a 21st century currency is one of the entities which will replace worthless fiat paper.

[HawkHybrid]

what happened in zimbabwe after the currency collapse?

temporarily they used assets(eg gold) to barter. what are

they using now? I think non asset currency will be replaced

by other forms of non asset currency.

 

HH

[EdNug]

9 minutes ago, HawkHybrid said:

what happened in zimbabwe after the currency collapse?

what are they using now?

I was in Zim a few years ago, in the run-up to Mugabe's last winning election, they were using South African Rand and US dollars primarily. Not long after I left the govt ditched the dollar and switched to Chinese Yuan. I'm guessing that most ordinary Zimbabweans just carried on with Rand and US$ but Bitcoin got popular, and then its price exploded so more than a few previously impoverished Zimbabweans suddenly found themselves relatively rich via crypto.

[sixgun]

11 minutes ago, HawkHybrid said:

what happened in zimbabwe after the currency collapse?

temporarily they used assets(eg gold) to barter. what are

they using now? I think non asset currency will be replaced

by other forms of non asset currency.

 

HH

The issue is the Zimbabwe dollar can fall out of bed and nothing will happen outside Zimbabwe. When the USD collapses the whole house comes down with it. Every fiat currencies has collapsed but the consequences were always limited, but finance has become globalised and highly leveraged so when the world reserve currency blows up, the shock wave blows up the world. This is why notable nations are de-dollarising and very quickly. Russia has sold all its US bonds. China is reducing US bonds. Russia is reducing its dollar holding. i see the Shanghai oil contracts are making significant traction. i heard that Saudi signed up to sell oil in yuan back in November, this is not out in the open yet but when it gets picked up expect fireworks. Russia will be selling oil for local currencies. There are moves all over the place to move out of the USD and significant nations are loading up on gold. Swapping out USD for gold.

No there will not be a switch to another fiat currency. This little experiment with fiat is like smoking crack, the rush was great but now we are coming down more crack is not the solution. The disciple of gold is the antidote.

[Pete]

I watched the video and as I have no background in either finance or economics I was left without any conclusion other than we are all getting screwed so hold on to your metals.

I also suggest you don't watch the presentation after a heavy meal as this person; 2nd from the back on the left  -

[HawkHybrid]

22 minutes ago, sixgun said:

No there will not be a switch to another fiat currency.

 

what does history tell us to be most likely?

if the dollar collapsed all trade between nations can

continue using their respective currencies. eg china

can trade with the uk using the pound and yuan.

there's likely to be a period of uncertainty.

is zimbabwe not using the dollar now after a period

of uncertainty, until the next crisis hits?

those cans can be kicked down the road for a lot

longer than people think possible.

 

HH

[sixgun]

When the USD collapses all the fiat currencies will go down. They are all going to hell in a handcart since the USD came off the gold standard. They are linked together, it is a house of cards. There will be massive inflation as they collapse. Savings will be lost faster than you can count.

The USD is in the last 2 cents of the purchasing power of the first 1914 Federal Reserve notes. Sterling is in a worse position than the USD. i remember slang for the half crown was half a dollar - this was when £1 got you $4 USD.

In 1914 the gold sovereign disappeared from circulation, the sovereign is worth £237 gold spot price. £1 fiat is worth 1/237th of its 1914 value. That is 0.42% of the 1914 value. They are all in a similar mess but Sterling is one of the worst cases. i remember i got over 1.50€ to the pound.

This May Kinesis will be launched - a practical workable gold/silver currency. There are other gold backed digital currencies emerging. Several countries are clearly gearing up for some sort of gold backed currency. There is little point in piling up thousands of tonnes of gold unless this is the objective. New national currencies will appear as well as private digital currencies - these will be gold/silver/asset backed. Gold stabilises a currency, it preserves purchasing power - this is what is on the label.

If i am trading with you would i prefer to take a stable gold backed currency or some paper which is circling the drain? This has happened before. Nations had to settle debts in gold. An example the US sucked all the gold out of the Empire in WWII to pay for war supplies and food. The US demanded gold sovereigns not £5 notes.

[HawkHybrid]

24 minutes ago, sixgun said:

This May Kinesis will be launched - a practical workable gold/silver currency

 

you are being blinded by this, almost every post you make

have a sentence claiming kinesis is a miracle fix. it is not.

 

think about it. if I trade with china and I can't make trades in

dollars then I will use yuan. the world will not explode if the

dollar collapses. countries will find a way to trade using

non asset currency, because the power of those in control of

those countries depend on it.

 

history shows it will be another non asset currency. I'm basing

my argument on history and you're basing your arguments on

something that doesn't even exist yet, if ever.

I see plenty of people trading using the pound despite it

losing 98%+ of it's value. even with its problems the pound is

still more traded than any other solutions put forward so far.

 

what's likely to happen is that people will try to continue with

their lives as best as they can. the dollar causing all other

currencies to collapse is a myth.

will china willingly not accept payment in it's currency the

yuan?

payment will be made in whatever form that is accepted.

most forms currently accepted will continue to be accepted.

 

zimbabwe does not accept payment in kinesis, why would

anybody else?

 

HH

 

[sixgun]

All the paper currencies are going down together, unless they are backed. How are you going to get hold of these Yuan when your Sterling is worthless?

History does not show collasped fiat currencies are replaced by other unbacked currency - please provide me with your examples. We have only had worldwide fiat since 1971 when Nixon took the dollar of the gold standard.

Kinesis has not launched so no-one is accepting it. Kinesis will be redeemable for the gold/silver it is title over, it will be convertible in your Kinesis account or at the point of sale on your debit card. Come the need for yuan it would be convertible to yuan. You will be able to hold your value in gold/silver as Kinesis. Kinesis is not the (only) panacea - i say there are other gold backed currencies emerging and certain nations are stacking gold which can only be to back their currencies at a future date. The UK has been selling off gold so your Sterling will be backed by Jack Sh1t.

You are a member of the silver forum - i am sure you have gold and silver and not just for the pretty coin designs.

[EdNug]

I don't understand how a USD collapse will cause all other currencies to collapse - i figured that most other currencies would go down first as their central banks devalue in an effort to maintain their exports, as has been happening since QE started. If the USD tanks then the global export trade will take a massive hit, and that will screw over all the major economies as well as most smaller ones. Also, Russia and China are reducing their percentage of USD foreign reserves as fast as possible to minimise exposure to this risk, but the USD still comprises the vast majority of most countries foreign currency reserves primarily due to its use in the oil trade. A dollar collapse will wipe out the value of these reserves, which will likely hit the OPEC states hardest of all. Said collapse will not just wreak havoc in currency markets but smash the broader global economy to smithereens. Who will China find to replace the US in terms of an export market if/when the US undergoes hyper inflation?  What happens to interest rates when this happens? Answers on a postcard...

 

[sovereignsteve]

2 hours ago, sixgun said:

This is why notable nations are de-dollarising and very quickly. Russia has sold all its US bonds. China is reducing US bonds

So with the Fed issuing increasingly record numbers of Dollar paper, who the hell is buying it? It used to be China.

16 minutes ago, sixgun said:

How are you going to get hold of these Yuan when your Sterling is worthless?

but according to you, the Yuan will be equally worthless.

In theory, all worthless fiat will be convertable but no one will be able to afford to buy gold. What's to stop the world all inter-trading using equally worthless fiat?

[sixgun]

4 minutes ago, EdNug said:

I don't understand how a USD collapse will cause all other currencies to collapse.

OK so the USD goes down. Let's imagine by some miracle no other currency was touched.

US bonds become worthless. The $trillions of US Federal and state debt denominated in USD are defaulted on. The quadrillions of derivatives in USD are smoke. The USD in other nations' foreign reserves would be smoke. Every major Western bank would collapse.

You may remember the commotion when Greece was looking like it would default. You may be aware of the talk about one Italian bank collapsing and the chain reaction this would cause. The French banks have lent to Italian and German have lent to French. It is a house of cards. If one big player goes down it all comes down. If the USD goes down it is curtains for the fiat system. All the stock and bond markets would just shut. The banks would shut. Credit would freeze. People would starve. To imagine another piece of worthless paper with a different picture on it would be the remedy is just a nonstarter.

[KDave]

"What is interesting, is that the general price level in terms of gold, is still back where it was. In other words the change in the price of gold, is equal to the price of commodities, or the general price level. Which tells you, that there is something about gold... I have thought about this for a number of years, and I reached a blank. Its almost as though, technically speaking, the ability of having a stable price, has great value". 

Gold is still acting as money, Greenspan noticed but he couldn't understand why after years of thinking about it, perhaps we will never figure out the reason behind it, something humanity just does for the past few thousand years is use gold as money. Greshams law is part of it, but why do we chose gold and not something else, that is the question, it could just as well be crypto-currency or a hybrid tomorrow. For now it is gold that maintains its value as if it was money against the cost of living (stuff) over long periods of time.

Currencies will come and go, I would be more inclined to think as HH does that another form of fiat will replace the USD when the time comes, perhaps we will still call it the USD but debt will be restructured perhaps 100 old dollars will be 1 new dollar. It doesn't matter really what form it takes, the result will be lenders lose, and holders of the old currency will lose. I think we actually still have a form of human gold standard, governments use gold, people use gold, everyone can access gold as savings if they want to spend their currency on it, or they can lend their currency to the bank like the old days and expect to lose everything when the economy takes a turn, just as saver who lent his gold to the bank lost everything back in the day following a run on an over-leveraged bank. 

[HawkHybrid]

10 minutes ago, sixgun said:

History does not show collasped fiat currencies are replaced by other unbacked currency - please provide me with your examples.

 

zimbabwe dollar -> us dollar

 

HH

[sixgun]

6 minutes ago, sovereignsteve said:

So with the Fed issuing increasingly record numbers of Dollar paper, who the hell is buying it? It used to be China.

but according to you, the Yuan will be equally worthless.

In theory, all worthless fiat will be convertable but no one will be able to afford to buy gold. What's to stop the world all inter-trading using equally worthless fiat?

Well that is the question. It is thought the Exchange Stabilisation Fund has been soaking up Treasuries. There is also a greater reliance on the public. Hmmm we can see where this is going.

HawkHybrid talked about buying with the yuan - so i was asking how are you getting your yuan when you have a wallet full of worthless paper? i also (deliberately) put the rider in "All the paper currencies are going down together, unless they are backed. " i suggest the China are buying thousands of tonnes of gold with a purpose.

The world's economy just collapse b/c confidence in the (worthless) fiat currencies evaporated - if people were happy to carry on inter-trading using equally worthless fiat there would be no collapse. The fiat is in reality worthless, it is just a confidence trick has been played.

[sixgun]

4 minutes ago, HawkHybrid said:

 

zimbabwe dollar -> us dollar

HH

But this is an isolated very very minor currency collapse - when the USD goes everything will go. Something like 80% of the world currency movements are in USD.

[HawkHybrid]

3 minutes ago, sixgun said:

if people were happy to carry on inter-trading using equally worthless fiat there would be no collapse. The fiat is in reality worthless,

 

why wouldn't they? it takes years of sometimes difficult

negotiations to get trade deals in place to make possible

the inter-trading of faith amongst different countries and

maybe cultures. let's give it all up. fiat is faith based, it's

worthless, but I'm trading my faith in your goods and

services for your faith in my goods and services.

 

currency are designed to facilitate trade.

 

HH

[sixgun]

Just now, HawkHybrid said:

why wouldn't they? it takes years of sometimes difficult negotiations to get trade deals in place to make possible the inter-trading of faith amongst different countries and maybe cultures. let's give it all up. fiat is faith based, it's worthless, but I'm trading my faith in your goods and services for your faith in my goods and services.

currency are designed to facilitate trade

HH

We are talking about the (inevitable) scenario where the USD collapses. We can't talk about the USD in isolation, what we are actually talking about is the collapse of all the unbacked fiat currencies. People wouldn't carry on using worthless fiat - the currency system has just collapsed - credit has frozen up.

Sound money is designed to facilitate trade - watch the video. Everything else is a confidence trick designed to steal all the value you have.

[HawkHybrid]

23 minutes ago, sixgun said:

We can't talk about the USD in isolation, what we are actually talking about is the collapse of all the unbacked fiat currencies.

 

what I'm saying is a dollar collapse won't lead to the collapse

of all other unbacked currencies just as a zimbabwe dollar

collapse did not lead to a collapse of maybe similar currencies

in neighbouring regions.

the question would be do you want to amend the existing trade

deals or in order to trade or not? I can't see china giving up all

exports to the uk because it can't amend some deal in order to

accept the pound as payment. things get worked out when the

stakes are high.

 

35 minutes ago, sixgun said:

Sound money is designed to facilitate trade - watch the video.

obviously biased misleading information in favour of silver and

gold.

sound money is a store of value. if gold and silver money is

designed to facilitate trade then it's been doing a lousy job

about it in the uk since 1947. sound money can be used in

a trade if no currency options are available. in zimbabwe

they chose to use the zimbabwe dollar in trades. it's only

when it was no longer suitable as payment did some change

to charging in gold as payment. sound money was never the

first choice. now they are back to using currency.

 

HH

[sixgun]

5 minutes ago, HawkHybrid said:

what I'm saying is a dollar collapse won't lead to the collapse of all other unbacked currencies just as a zimbabwe dollar collapse did not lead to a collapse of maybe similar currencies in neighbouring regions.

Yes it will. Over 80% of currency trades involve the USD. The train of events that are leading to the collapse of the USD is affecting other currencies. Everything is connected, this is called Globalisation. Why did people in the UK lose their houses when the housing market in the USA blew up?

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the question would be do you want to amend the existing trade deals or in order to trade or not? I can't see china giving up all exports to the uk because it can't amend some deal in order to accept the pound as payment. things get worked out when the stakes are high.

Credit will freeze up. A friend of mine used to do £millions of international trade. When we had 2008 he just shut down. It became too risky. He would be selling steel to India. The banks would not guarantee the payments. One bank didn't trust another. It became too risky so he just stopped and went back to data mining. Credit got harder to get. 2008 was minor compared with a USD collapse - all credit will freeze. Everything connects to everything else.

Now the process is likely to be in stages and alternatives will emerge - alternatives that are not the same old same old paper confidence trick. When confidence is gone, you need something that everyone has confidence in. This is why gold holds value and is the universal money.

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obviously biased misleading information in favour of silver and gold.

For the purpose of your argument it is misleading and biased. Centuries of using gold and silver tell a different story.4

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sound money is a store of value. if gold and silver money is designed to facilitate trade then it's been doing a lousy job about it in the uk since 1947.

The UK was bankrupt after WWII. There could have been peace in 1940 but traitors for their own gain denied the people peace and prosperity in favour of death and debt. The Empire spent all the gold - it got sent to Uncle Sam. All the silver came out the coins in 1947. So let's not blame gold and silver for the actions of traitors and incompetents.

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sound money can be used in a trade if no currency options are available.

Exactly - we are talking about the time when fiat finally dies. All currency deposits, the 'money' under the mattress, in the back of the drawer, in bank accounts - after years of becoming worth less and less, will be worthless. All the value will have been stolen out of it and what will be left is gold and silver.

[HawkHybrid]

unbacked currencies will not die out. the dollar is likely to go

the way of the pound and other dominant currencies that

came before them. many decades later the pound is still

collapsing but not dead and taking all other currencies down

with it.

 

HH

[4Nines7Hills]

The dollar may never collapse.  it's not like a normal currency it's the current world currency and doesn't operate the same as other currencies , you can print as much as you want and export inflation .

The current China USA trade war is all about the dollar retaining reserve currency ststus.

 

We won't go back to a gold standard especially on a 1:1 ratio, it's not feasible

[KDave]

We have both systems now imo, gold and fiat side by side. For me and you gold stays in line with the 'general price level'/cost of living, it is money that preserves capital. Gold is used at national level in trade when confidence is not enough. Fiat is for day to day commerce, facilitating trade where confidence and perceived stability of value is enough, and allows government and finance to steal from us with inflation and to fund a welfare state to get votes what is not to like. 

Government will never give up fiat and people on the street just want an easy life and easy money. If the dollar collapses it will be a reset event, lots of perceived value will be gone, but you can guarantee some form of the fiat dollar will be back, and you can guarantee that gold will still be at the general price level and preserving your hard earned capital.