The U.S. Government.. Ponzi Scheme...

[Lumpy 1]

MMM.. just how much longer can this Ponzi scheme of the Federal Reserve ordering the printing of more U.S. dollars to pay for government, raising the national debt, denying inflation go on before investors realize U.S. bonds are relatively a broken promise and worthless paper?

 

[jwoodie]

This is not a Ponzi Scheme! A Ponzi Scheme is illegal. This is a Bernanke Scheme.

 

[Wiseacre]

The lack of alternatives sorta plays in our favor I think. What other currency or assets would you want to trust more than the US dollar? To answer your question, it could be quite awhile; the Japanese have a very large debt to GDP ratio somewhere north of 200%, but investors still buy their gov't debt.

 

[Saigon]

It's called Quantitative Easing.

Both Japan and the EU have been doing the same thing.

It can noyl be a temporary fix, but the IMF support it as a short-term solution.

 

[P@triot]

The only solution - whether short term, medium term, or long term - is a free market and a government forced to strictly adhere to their Constitutional limits.

With each step of government interfernce, we have seen a giant step in failure (higher unemployment AFTER all of the stimulus, higher debt, etc.).

 

[Wiseacre]

Meanwhile, the hole gets deeper and we haven't put down the shovels yet. I feel really bad for future genrations that will have to clean up this mess and pay for it too.

 

[Lumpy 1]

I need some study on this, I'm an admitted novice but it seems to me that there is actually nothing backing the dollar but the faith investors/other nations have in the US dollar. The gold standard was, "temporarily halted" back in the Nixon years and has never been re-instated since.

There is no way of knowing how much gold reserves the US has, how much has been physically transferred to other nations or how many, "trusting investors" have purchased the same ounce/brick of gold that's held (?) in reserve.

All trust seems to be centered on the United States Department of the Treasury and Federal Reserve which.

According to the Board of Governors, the Federal Reserve is independent within government in that "its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government."

Federal Reserve System -
Wikipedia, the free encyclopedia

mmm.. perhaps a little knowledge is a dangerous thing.....it's just how I'm seeing it!!

 

[Intense]

MMM.. just how much longer can this Ponzi scheme of the Federal Reserve ordering the printing of more U.S. dollars to pay for government, raising the national debt, denying inflation go on before investors realize U.S. bonds are relatively a broken promise and worthless paper?

As long as they have bullets and missiles?

 

[oldfart]

it seems to me that there is actually nothing backing the dollar but the faith investors/other nations have in the US dollar.

Nothing backs any modern currency except its use in trade. No body is on the gold standard anymore. A dollar has value only to the extent of what it will buy.

There is no way of knowing how much gold reserves the US has, how much has been physically transferred to other nations or how many, "trusting investors" have purchased the same ounce/brick of gold that's held (?) in reserve.

You shouldl have kept reading in Wikipedia. The largest stock of gold in the world is at the Federal Reserve Bank of New York.

Currently, it is reputedly the largest gold repository in the world (though this cannot be confirmed as Swiss banks do not report their gold stocks) and holds approximately 7,000 tonnes (7,700 short tons) of gold bullion ($415 billion as of October 2011), more than Fort Knox. Nearly 98% of the gold at the Federal Reserve Bank of New York is owned by the central banks of foreign nations. The rest is owned by the United States and international organizations such as the IMF. The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal, which it stores at no charge to the owners, but charging a $1.75 fee (in 2008) per bar to move the gold. Moving the bars requires special footwear for the staff, to protect their feet in the case that they drop a 28 pound bar on their feet. The vault is open to tourists.

While only a very small part of the United States gold reserves are held in New York, most of the gold in the Bullion Depository is owned by the United States Treasury.
While not on view, a strict accounting of the gold is kept.

The United States Bullion Depository, often known as Fort Knox, is a fortified vault building located adjacent to Fort Knox, Kentucky, used to store a large portion of United States official gold reserves and occasionally other precious items belonging or entrusted to the federal government.

The United States Bullion Depository holds 4,578 metric tons (5,046.3 short tons) of gold bullion (147.2 million oz. troy). This is roughly 2.5% of all the gold ever refined throughout human history.

For comparison, her are the larger holdings of monetary gold:

United States of America 8,133.5 metric tons
European Union 15,784.1 metric tons (in possssion of 27 members)
--- Federal Republic of Germany 3,396.3 metric tons
--- Italian Republic 2,451.8 metric tons
--- French Republic 2,435.4 metric tons

International Monetary Fund 2,814.0 metric tons
People's Republic of China 1,054.1 metric tons
Swiss Confederation 1,040.1 metric tons
Russian Federation 883.2 metric tons
Japan 765.2 metric tons
Republic of India 557.7 metric tons
European Central Bank 502.1 metric tons


Note: Monetary gold is not sold to investors. Private companies buy gold on the open market and sell the gold as bullion to be shipped to te buyer or warehoused with the company.

The real value of gold (price in constant dollars adjusted for inflation) varies dramatically over time and is chiefly determined by real interest rates (low rates=high gold prices). The current run up in the price of gold is the most dramatic example of this. When real rates of interest begin to rise, the price of gold will plummet, possibly by up to 85% if real interest rates return to historically average rates.

 

[bripat9643]

It's called Quantitative Easing.

Both Japan and the EU have been doing the same thing.

It can noyl be a temporary fix, but the IMF support it as a short-term solution.

Over the past 20 years Japan has had QEs 9 times, and their economy has been in the toilet the entire time.

It looks like they didn't "fix" anything.