What if the USA were to force a new currency conversion

Bear

Thus you could trade your money in for new money

but either you had to prove how you earned the money

or a limit were placed on how much money could be

exchanged. After a short transition period, the old

money would would be dead and no longer legal.This would,

in effect, confiscate untold money from the American people,

in addition to underworld money.

Weiss

A response to North Korea's forced conversion today?

Bet there are some people who have gold socked away. And the government can't reassign a value to it.

wayneme

Something is going to happen !!
you just have to wonder what ??
we'll never pay this off your bet is as good as mine!!

ProofCollection

You mean like in this article?

MoneyLA

it will NEVER happen. what keeps US currency the "prime currency" of the world is that our "old money" has never been demonetized. and, that our government has never been overthrown also helps.

and Washington must love the cheap dollar now... it helps exports, it helps american companies sell more, it helps production, it helps to end the recession.

but eventually, the cheap dollar will gain value as our economy improves and others falter. then....

Bear

Know I know how the fox feels when the hounds and horses

and hunters are chasing it. There is almost no where to hide.

Convert dollars and also conficate PMs. Thus only Federal

governments can buy and sell PMs.

roadrunner

If jelly dougnuts were the conversion currency I see a smooth transition. But the scenario you mention Bear would bring out guns, knives, pitchforks, and other such weapons. A black market would result. That gold would still be worth something overseas. Are they going to search every inch of every cargo ship leaving the country with a metal detector. And with a steel hull good luck with that.

Continued devaluing of the dollar also means less profits for businesses and hence continued loss of jobs. That's not good for getting out of a recession. The Romans didn't default on their currency for literally hundreds of years.....but they did eventually.

roadrunner

Justacommeman

<<it will NEVER happen>>

Isn't that what the Romans said? How did that work out.

There are places in forgein countries that no longer accept the US dollar.

The hubris of your retort Alan slays me. MJ

And I see RR made a Roman reference as I was typing mine : )

ProofCollection

<< <i>Continued devaluing of the dollar also means less profits for businesses and hence continued loss of jobs. That's not good for getting out of a recession. The Romans didn't default on their currency for literally hundreds of years.....but they did eventually. >>



Yes and no... the weak dollar is great for US companies with a majority of income from overseas... and that's a lot of companies.

MoneyLA, you're very definitive in your response. I don't know how anyone can be so sure about the future.



<< <i>but eventually, the cheap dollar will gain value as our economy improves and others falter. >>



What makes you think others will falter, particularly as we recover? Why won't they (most of the world) recover just as we do? Why does the US recovery have to be at everyone else's expense?

renman95

<< <i>it will NEVER happen. what keeps US currency the "prime currency" of the world is that our "old money" has never been demonetized. and, that our government has never been overthrown also helps.

and Washington must love the cheap dollar now... it helps exports, it helps american companies sell more, it helps production, it helps to end the recession.

but eventually, the cheap dollar will gain value as our economy improves and others falter. then.... >>



/

It may not have been demonetized but it is worth much less. Since the beginnings of the Fed it now takes $21.00 to purchase $1 in 1913. And as far as the overthrow of the US government, I say that the enemy lies within and has been there for quite some time.

wayneme

Your right LA nothing will ever happen to the GOOD OLD USA OR THE DOLLAR [SEE ANY THING STUPID HERE!!]
nope i guess not
carry on your good bud
no banks will fail no car companys or anything else [o ya no 124 banks till they change the rule's]
yep your fine carry on bud

jmski52

there are some people who have gold socked away. And the government can't reassign a value to it.

Au contraire. That's exactly what FDR did. He issued his gold confiscation proclamation when gold was officially valued at $20 per ounce, and a few months later he revalued gold to $35 per ounce. Immediately the budget problems were not so bad for the US Government.

MoneyLA

a question about inflation: name one country that hasnt had inflation, and a country with currency with the same buying power today as it had in 1913 when our Fed was created?

Konahead

<< <i>You mean like in this article? >>

jmski52

a question about inflation: name one country that hasnt had inflation, and a country with currency with the same buying power today as it had in 1913 when our Fed was created?

None comes to mind. All fiat currencies get inflated and fail.

MoneyLA

wayne, here is what's stupid: you wrote:

"Your right LA nothing will ever happen to the GOOD OLD USA OR THE DOLLAR [SEE ANY THING STUPID HERE!!]
nope i guess not
carry on your good bud
no banks will fail no car companys or anything else [o ya no 124 banks till they change the rule's]
yep your fine carry on bud."

Yes, banks go under-- they have been going under for centuries.

Car companies fail.

Other businesses go under.

But your US dollar will never be refused. It might buy fewer slices of bread, but it will still be money.

And if you dont have faith in your dollar and your government, and you think both (or either) will fail, you shouldnt be wasting your time on this message board. You should be packing and starting your hike to the Himalayas.

Have a good trip.

Justacommeman

<<But your US dollar will never be refused.>>

It was at the Tah Mahal starting last year and still is. The sign reads US dollars no longer accepted.

I live in China several months of the year. I have had trouble exchanging large amounts of USD's on various occasions the last eighteen months. They didn't want to touch it as it was depreciating so quickly.

They used to covet the chance to buy my dollars. The worm has turned sir. MJ

Bear

We may be entering a world changing turning point.

This is the point at which the dominant empire ceases

its growth and expansion and starts the long inexorable

decline. A clear sign is usually the prolonged debasement

of the empires coin of the realm. We have already removed

all intrinsic value from our coinage, currency is no longer redeemable

in gold or silver coinage and now we are seeing the loss of faith in the

value of the mighty greenback. Deceiving the public knows no special

part or politician. Our regulatory agencies have become merely a facade

for public consumption. They no longer regulate, enforce, or otherwise perform

their functions. Protective legislation to protect the public welfare has been ruthlessly

yet stealthily purged from most legislation and corruption has twisted and undercut

the balance of powers set to protect the Nation. All parties and political leaders have

contributed to this pollution of Ideals and conscience of all of our elected bodies. We are

treated as children, by a supposedly benign government, that is anything but benign. Government

is merely a revolving door for lobbyists and corporate interests that has become pervasive and

deeply embedded in our legislative and financial structures. Oh, occasionally, the masses are given

cheap bread and games to keep us entertained, while our financial security is eroded from under our

feet. Rome ruled the known world for 400 years before it fell. I am not so sure that we shall enjoy that

length of time.

jmski52

your US dollar will never be refused. It might buy fewer slices of bread, but it will still be money.

Alan, don't bet on it. Using California as an example, what is happening out there right now? The state is issuing IOUs in lieu of paychecks and many banks aren't accepting them. What happens next? They're cutting services and selling state properties, and it's not nearly enough. If banks aren't accepting state pay vouchers, how are state employees going to pay their bills?

The same thing can and probably will happen to the dollar. It will be telling to see what happens in California because that is where the rest of the country might be headed.

RedTiger

To those that say never, I say read some more world history. Governments and countries fall. Things change, often quickly. The U. S. has been blessed by a solid financial history, mostly because two oceans have protected it from the events of the world. Will oceans offer much protection in the next century? Unlikely. Oceans are ineffective moats against what is coming in the next century.

Besides the U.K. is there another country that can claim long term stability in financial markets and currency? Ok, Switzerland, but after that the list gets very short and very shaky. Canada? Australia? Each of them have relatively short financial histories, and relatively tiny financial markets. Most of the other major world powers have seen their currency and financial markets get tossed and turned, often with the rug pulled out entirely, often with those holding paper assets such as paper money, bonds, stocks, getting virtually nothing when the time of change came.

Dual currency is a mechanism that I've written about before on this forum. The most likely usage will be when a trade war or shooting war starts up with another major power. The assets of that other country and their nationals may only be redeemable in the lesser currency, and trade separately. Think about 1941 when all Japanese assets were seized, including assets of third generation Americans that had ancestors from Japan.

When economic times turn desperate, people often become politically radical because they have nothing left to lose. Dual currency may seem like a mild solution compared to what some extremists will publicly call for. Again, the majority of Americans haven't lived through anything resembling hard times by world standards, so most can't imagine such events happening in this country.

As always, I tend to think that "muddle through" is the most likely scenario. Problems come and go. The "bogeyman" from ten years ago, often turns out to be another false cry of wolf by alarmists. Still, those that say "never," may be in for a rude and unpleasant surprise. "Never" is a very long time. When things change, they often change quickly and in unexpected ways.

wayneme

LA
sit back relax
and think about it did any thing go under this time NOPE WHY!!
Can you see anything here not right here if
you can't see anything wrong carry on your good!!
this isn't personal but look around are were missing some thing
think!!!
wayne

1jester

<< <i>wayne, here is what's stupid: you wrote:

"Your right LA nothing will ever happen to the GOOD OLD USA OR THE DOLLAR [SEE ANY THING STUPID HERE!!]
nope i guess not
carry on your good bud
no banks will fail no car companys or anything else [o ya no 124 banks till they change the rule's]
yep your fine carry on bud."

Yes, banks go under-- they have been going under for centuries.

Car companies fail.

Other businesses go under.

But your US dollar will never be refused. It might buy fewer slices of bread, but it will still be money.

And if you dont have faith in your dollar and your government, and you think both (or either) will fail, you shouldnt be wasting your time on this message board. You should be packing and starting your hike to the Himalayas.

Have a good trip. >>



I don't see what having faith in the dollar and government has to do with prudence and preparation. I don't even see any connection between faith in the dollar and government. Our government allowed the Federal Reserve to come into existence, against the Constitution, and ruin the dollar; it could (and hopefully will) eradicate the Fed as well. So those two things (dollar and government) aren't necessarily the same.

Besides, who's to say that Wayneme is an American or in America? I doubt he is either.

By the way, I don't see why you have such blind faith in the dollar. It's completely misplaced, in my opinion.

Justacommeman

<<Besides, who's to say that Wayneme is an American or in America? I doubt he is either>>

Is South Dakota in the US?

MJ

MoneyLA

jmski... the state ious is not the currency of the USA.

Its like you walking into a supermarket and giving the cashier your own IOU. maybe they will accept it, but maybe they wont.

look, Im not going to discuss this (actually argue this) anymore. if you want to be a gold nut, then be a gold nut.

I look at gold as an investment that someday can be sold for US dollars -- paper dollars.

if you think that gold is the "end all" then we will never see eye to eye and the battle will just go on forever.

enjoy your gold. if you shave it thin enough it makes for a wonderful edible topping for ice cream sundaes.

ProofCollection

MoneyLA, your point is well taken. But if you think that anything in this world is too big, too important, or to whatever to ever fail or lose status or prominence, you are naive. I'm not saying the USD will fail, but I do remember 1 fantastic example... it's a ship that no one thought would sink. You may have heard of it, it's called the Titanic. Is the USD your Titanic?

ksammut

US Debt Clock

I know the debt clock has been linked to many times before but I believe the answer to Bear's OP is staring all of us in the face when we view the site. Now add to the growing debt and future liabilities (SS, Medicare, Prescription Drug) the cost of the ongoing wars, Cap and Trade, Health Care, less taxes being collected, possibly hundreds of billions of dollars to fund the FDIC when hundreds of additional banks fail, interest on the debt that will need to be paid etc.

An improving economy may help make a dent in the overall indebtedness but we are a year or two away from seeing any real recovery. If Cap and Trade and Health Care are passed, the additional costs to individuals and companies may push any recovery even further down the road.

Even if the government taxed everyone at 100% of their earnings, the debt and liabilities would not get paid off anytime soon. Think about that and even the most flag waving American should take pause and realize we are in deep xxxx. I am in my 50s and love my country dearly but I have to admit my head has been in the sand until the last few years. We have lived beyond our means and the social programs created over the years were nothing more than ponzi schemes. There may have been good intentions behind them but the bill always comes due at some point.

Whatever your politics, we must all come together to fix the problems and fixing the problems will be very painful. Politicians will not make painful choices and will only compound the problem until our economy collapses. I hope I am wrong but as an insurance policy I will continue to add gold and silver to my portfolio and continue to purchase PM stocks.

For those who say "you cannot eat your gold and silver," that is true but you will be able to exchange them, at much higher levels, for whatever currency(ies) that survive the mess we created.

Back to the point of this thread, the government will not do what really needs to be done. Our leaders will become so desperate as they realize only drastic measures will save the country even if it means no longer having the USD being seen as the Reserve Currency. If it means a currency exchange (old dollars for new dollars), then that is what they will be forced to do. If they cannot pay off the quickly growing debt, they will have to inflate it away and gold and silver will be highly sought after.

KUCH

I'll chime in here.....

I've now determined that gold is not so much a currency, or hedge against inflation, but rather a hedge against the NON-CONFIDENCE in government. As long as this continues, PM's will continue to be bullish.

There is no doubt our financial troubles are real AND in recession. We've been here before, recession and depression, each time it took years, but the country survived and once again prosperity and growth occured.

I'm with MoneyLa, we'll come out of this, be confident.

It's not to say it won't be long and difficult. However, inch by inch we've got to chip away and bring back those values and financial decisions whereby government becomes smaller and FREE enterprise grows.

BEST CASE SCENARIO...... contact your government and voice your opinion! The election of 2010 will determine how much longer the recovery will take. Truly important. There is no getting around this point. Fight every tax increase, that pertains to business, property, sales, inheritance, license... the list goes on. (personally it took us 2 years to lower property tax, but we got it done)

roadrunner

a question about inflation: name one country that hasnt had inflation, and a country with currency with the same buying power today as it had in 1913 when our Fed was created?

The entire world has been on pure fiat for over 38 years. And every developed nation that owns a currency is in a race to keep depreciating it against the dollar. It's a race to the bottom to see which govt and those politically connected who get to "win." But the losers will be the citizens of the world...you and I. The fact that the whole world is diluting their currencies doesn't make it better or justify the govt actions. That's even more reason to find alternatives in tangible assets.

The nations that don't have a paper currency (but use tangible assets to barter) don't have these problems. In a way, their backwardness is a blessing in disguise.

roadrunner

jmski52

jmski... the state ious is not the currency of the USA. Its like you walking into a supermarket and giving the cashier your own IOU. maybe they will accept it, but maybe they wont.

Alan, the state ious are being handed out to state employees because the state doesn't have any currency of the USA. They can't eat ious and the grocery stores probably don't take them either if the banks won't.

if you want to be a gold nut, then be a gold nut.

I look at gold as an investment that someday can be sold for US dollars -- paper dollars.

Gold nut, as in "nuts" or "crazy"? Not only can gold be sold for dollars someday, but any other currency as well. And for the record, I'm not married to gold (or silver, or platinum). At this particular moment in time, I simply can't think of any other liquid asset that I can trust not to be trashed by the government.

I may be a "gold nut" as you say, but you are in denial that the dollar is A-OK. Don't worry though - you're not alone, most of the financial establishment is operating under the same presumptions as you. And Alan, please don't take this as me arguing with you. You wouldn't be here if you weren't somehow intrigued with why gold is acting like it is acting. I am actually trying to help you see what's going on now. The arguments are over.

You can't make 40 to 1 bets all over the place, lose the bets - and then still expect the people that you owe money to forget all about it. That's the Wall Street Banking Model.

And you can't implement Social Security and Medicare Plans that pile up unfunded obigations out the wazoo. When the time comes for the people who have paid in for 40 or 50 years to collect those benefits they are told that the benefits are being scaled back or eliminated because there is no money to pay for them. That's the Government Finance Model.

You really can't expect those people to believe the government when they are now being told that we can "insure" 30 million more people with health care coverage for less money! That's the Government Finance Model once again.

Back to the point. The dollar is what's used to model these stupid schemes. The dollar is what the government uses to "pay" for these stupid plans that don't work. The dollar is what the Chinese have 2 Trillion of that they really don't want because they can see plainly what is happening.

If the US Government would act like any legitimate organization, they would be able to justify their spending and would not spend more than they can justify as taxes. The people won't stand for taxes that take everything they earn, so the government takes it in various other ways, like inflation, like unfunded government benefits programs, like transferring debt to future generations, and so on.

Problem is, that only works for awhile. And we're about at the edge again - not just the US, but the whole rotten global banking system.

If you want to be in denial about this stuff, be my guest. I prefer to keep what I can keep, any way that I can. If that means keeping my money in precious metals until the government becomes honest again, I'm certainly not going to tell myself that everything is ok, when it's not.

renman95

I saw on CNBC yesterday afternoon with Maria B. and the subject was bank failures. The guest said that there will be 1,000 more failures. It caught Maria off guard and asked him to repeat it and when. The guest said next year or the length of this crisis will cost 1,000 more failures.

Also heard yesterday on CNBC, I think Kudlow(?), that if China increases their gold purchase program from 2% to 4% that it would spike gold to over $2,000.

Justacommeman

Alan, you sound like a dollar nut. If that's what you choose to be, so be it.

I read the pm forum as much as possible. I really can't say I recognize a gold nut on here.

Please point them out in the future or pm me. Im curious.

I actually see mostly level headed coherent posters on this forum.

MJ

mhammerman

"...they are told that the benefits are being scaled back or eliminated because there is no money to pay for them. That's the Government Finance Model."

That is the assumption that most folk take, that the social security obligations are in peril because the gov doesn't have the money to pay for them. That is pure BS. The money was paid in and then the SS program was gutted to pay for other govt programs to help fund the great society. The money was there, it's still coming in every day, every pay period, every self employment tax payment...the money is there but it is siphoned off for education programs, food programs, health programs, and other benefits. Hey, who's against all those programs? No one. But to tell us that the money isn't going to be there and leave it at that is wrong, they should finish the sentence: The money isn't going to be there because...

"...you are in denial that the dollar is A-OK. Don't worry though - you're not alone, most of the financial establishment is operating under the same presumptions as you."

The dollar is not OK, nor is the stock market, nor is the GDP, nor is the housing sector nor the employment status, do you live in a hole? Look around, read the newspaper...do you see anything?

What to do...well, it seems that it would be better if people were able to contribute to the greater good. By far the best way to contribute to the greater good is to be, at the very least, responsible for your self and your own sustainability, at the very least. To be able to sustain yourself, you have to preserve and nurture your assets so that you don't become dependent on the largesse of the public or the govt. In simple language, buy and hold some asset that will preserve and sustain your individual wealth and at the very least, not make you dependent. Holding gold and silver at this time is very patriotic.

adamlaneus

*

So

many

views on

this forum.

But who is right

is something that only

time will tell. For the folks

that are uncertain, maybe a basket

of different assets are in order so as to spread

the risk around. And then there is Bear's post:


<< <i>We may be entering a world changing turning point.

This is the point at which the dominant empire ceases

its growth and expansion and starts the long inexorable

decline. A clear sign is usually the prolonged debasement

of the empires coin of the realm. We have already removed

all intrinsic value from our coinage, currency is no longer redeemable

in gold or silver coinage and now we are seeing the loss of faith in the

value of the mighty greenback. Deceiving the public knows no special

part or politician. Our regulatory agencies have become merely a facade

for public consumption. They no longer regulate, enforce, or otherwise perform

their functions. Protective legislation to protect the public welfare has been ruthlessly

yet stealthily purged from most legislation and corruption has twisted and undercut

the balance of powers set to protect the Nation. All parties and political leaders have

contributed to this pollution of Ideals and conscience of all of our elected bodies. We are

treated as children, by a supposedly benign government, that is anything but benign. Government

is merely a revolving door for lobbyists and corporate interests that has become pervasive and

deeply embedded in our legislative and financial structures. Oh, occasionally, the masses are given

cheap bread and games to keep us entertained, while our financial security is eroded from under our

feet. Rome ruled the known world for 400 years before it fell. I am not so sure that we shall enjoy that

length of time. >>


Wow! Bear's post

looks like half

of a christmas

tree! With the

top cut off. And

I guess I finished

it off for him.

Merry Christmas, everyone! Have a happy new year too!

Bear

wHATSAMATTER WITHYOU

You don't like Christmas trees?

For myself, I have turned most of my cash into

rare coins and silver. If a cash conversion should

happen, I will not be caught on the wrong side of

the equation. As for a mixed bag of investments, I

view everything as having inherent weaknesses. All

one can do is the best they can and hope that things

will work out. I do not believe that even the great

depression was as fraught with as many dangers as we

are facing today. I fear that all is not well and the public is

being informed of only a fraction of the dangers overhanging

our entire financial structure. If in fact, 2500 banks are on

the endangered list, with 1000 expected to fail, then the FDIC,

which is basically broke, will no longer be able to guarantee you

money up to 250,000. It will more then likely be reduced to

25,000. Faced with deflation or inflation, the Government will

almost always choose inflation, if only to reduce the mountain of

debt. I do not look forward to 2010, with anything but apprehension.



As for the world not wanting out T Bills, I can see the Government telling

the people that the only government guarantee will exist in backing the

T Bills and other Federal Debt instruments. Perhaps, the too big to fail is

about to become, the too big to exist when it comes to banks. I just do not

see things going bank to business as usual.



If anything, I view the folks on this Forum as the most astute, well prepared

and aware people on the planet. We can anticipate what might be happening,

the average person merely has a sense of apprehension and dread but does

not yet realize what may be already underway.



As for my strange style of typing with the double spacing and Christmas Tree I

am sure that it would make the basis, for a psychiatric Doctoral thesis for someone.

Bear

In spite of my dour complaints, I still believe that this

Land and its people are still the best of the best. I am reminded

of a poem entitled "The man without a Country".

"Breaths there a man with soul so dead

That never to himself hath said

This is my own my native land

This is my own my home.................."

Perhaps we complain so much, because we expect this Nation

to always do the right thing, be upright, noble, truthful, frugal and

a symbol to all the people of the earth, of what mankind should

aspire to. Perhaps the dream was never possible, but hope continues

untill the ending of the world.

ttown

Looks like we'd be late to the game:

North Korea Revalues Its Currency