Lets suppose all fiat currencies go to zero, what does that really mean?
cohodk
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Lets not talk about what would happen to gold or silver, but rather about American civilization, or all humankind for that matter.
Would people still have jobs?
Would my lights still work?
Could I still procure food at the grocery store, gas at Wawa?
What would happen to my mortgage?
Would the stock market cease to exist?
What would happen to our military?
How about overseas...What would happen in China, India, Russia?
Excuses are tools of the ignorant
Knowledge is the enemy of fear
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Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
The problems we have nowadays include massive derivative debt that is unaccounted for, a destruction of the accounting rules themselves, a fiat currency with bad management in control, and the kicker in the equation..............................................computers and flash trading.
You don't think it can happen. I do.
I knew it would happen.
to get worse and worse.
Point #2.... Because of point #1, what good will worrying about it do?
Point #3...Most of us have done the best we can, on an individual bases, to
prepare for such a development. There is nothing more to be done at this
point.
Point #4...Most people tend to survive. We may have to depend on family and friends
We may have to drastically change life styles. We may go hungry many nights and day.
We may live in Hooverville towns, we may find our cloths are in tatters. Our only locomotion
may be our feet and shoes may become a luxury.
But most of us will survive, gaunt, hollow,
hungry, cold and wet, but we will survive. At least, most of us will. The old and the sick will
die, the babies will get sick and die and what is left, will survive.
Camelot
<< <i>Lets not talk about what would happen to gold or silver, but rather about American civilization, or all humankind for that matter.
Would people still have jobs?
Would my lights still work?
Could I still procure food at the grocery store, gas at Wawa?
What would happen to my mortgage?
Would the stock market cease to exist?
What would happen to our military?
How about overseas...What would happen in China, India, Russia? >>
All currencies since the beginning of money have been debased and end worthless. Everybody dies
and this includes the healthiest and youngest among us and the same will befall currency.
They are replaced by something can believe in and then that one is debased as well.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
All current fiat currencies go to zero (but not all at the same time).
Those holding assets denominated in, or backed by current governments have worthless paper. Stocks, bonds, real estate, all worthless paper, like Tzarist Russian bonds or real estate deeds, or Confederate bonds, or paper backed by any number of failed states. Those that are politically connected to the new powers will have something in the new economy as commerce moves forward. Old money that can not be transported out of the country in tangible form gets wiped clean, a fresh start with new wealthy, a new privileged class.
It is unlikely that all current currencies fold at once, but one at a time, the odds approach 100%, given enough time line. Maybe some say 100 years out, or longer, but who knows? Maybe it is more like 20 years out? Who in 1920 would have predicted another, even more devastating world war in 20 years, led by a beaten, defanged, deindustrialized Germany? Which government bonds continually rolled over from 100 years ago have held some value? Maybe five countries of all the 100+ nation states in the world? UK, US, Canada, Australia, Switzerland and that's about it? Which will be good 100 years hence? Same five out of a 100 odds? I'd guess about the same. Will the U. S. be among that lucky five for the next spin of the wheel? Who really knows?
Now add some more fire into the mix, say another major world war, or other major political and economic crisis sweeping the world. Now what kind of odds and timeline might be involved?
By the looks of it, most commerce ended up being done in USD, but if all currencies went to zero, or even just the USD, not sure.
Things tend to work though as long as there is still a currency of barter, but not sure what that would be. Food keeps growing on the farms and oil still gets refined, everything just doesn't run as efficiently and people will get poorer and go hungry, industry will still happen, just not as much.
<< <i>They will not ALL go to zero. That much I'm sure of (especially in our lifetimes). They certainly won't ALL go to zero at the same time. MJ >>
Eventually they will ALL go to zero...that much is fact. They certainly wont ALL go to zero at the same time.
<< <i>totally unrealistic and not worth seriously debating. up there with asteroid strikes in terms of likelihood. >>
Agree. Actually, an asteroid strike is far more likely. Any hypotheticals should have an actual chance of happening even if it's only a 1% chance.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
<< <i>
<< <i>They will not ALL go to zero. That much I'm sure of (especially in our lifetimes). They certainly won't ALL go to zero at the same time. MJ >>
Eventually they will ALL go to zero...that much is fact. They certainly wont ALL go to zero at the same time. >>
How many have gone to zero during your lifetime? MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
In another thread someone wrote, to paraphrase, that the dollar could appear to be stable if all currencies declined at the same rate. So my thought was, what if they did all decline at the same rate? How would this impact the lives of humans all around the world? And in the above discussion, it was mentioned that all currencies would not decline at the same rate at the same time. So this brings to my mind the talk of the "dollar is worthless, or dollar going to zero." Is that really possible?
If so, then what would that really mean for the average US citizen? Would he no longer have a job? Would he have to pay back his mortgage? What would happen? And if you say, INFLATION, then what does that really mean? $10 toilet paper? $20 gasoline? How would one pay for this if the dollar was worthless? Some new currency, but then what happens to old debts or the value of assets?
I read over the weekend that a dozen eggs in Oslo, Norway costs $8.50. I guess they dont eat many eggs? Is this hyperinflationary? Is it really so great in Scandinavia?
Its no wonder these people get a month of paid vacation, cuz there is no way they could save for it on their own.
Prices across the globe are approaching a point of grossly diminished demand.
Knowledge is the enemy of fear
They should all choke on what they "created" here. We're leaving.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Spent over $800 at publix this last month. This part of the west coast of Fla reminds me of a third world country. LOTS of government.
They should all choke on what they "created" here. We're leaving. >>
I hear you, but where would you go? Prices in Thailand are similar to the USA, but the Thai have 1/5th the income. How can they afford to live?
Again prices across the globe are becoming unaffordable.
Knowledge is the enemy of fear
<< <i>Ok, so I still didnt get any answers about how such a scenerio would affect one's life.
...
Prices across the globe are approaching a point of grossly diminished demand. >>
Um, because as many pointed out, your premise has a probability approaching zero, that all major currencies fail at the same time. Why plan for or discuss something that has a near zero probability? The scenario for gold is rolling failures. Any student of history understands that governments fall all the time, that it is not an unusual or even unexpected event. Every decade in history a few countries fall. Every century in history the vast majority fail. That's why gold works as insurance in a historical context. If the meteor comes (which is basically the way your scenario unfolds) gold doesn't help, neither does anything else except preparation for the next life and making peace with yourself and others. However, if it is human localized events, a person can move somewhere else. If not them, then their kids or grand kids can start life over without starting from zero (which is the average human condition).
As for where to go, just this week, a friend of a friend is moving to Mexico to retire. Food, shelter, medical are all a fraction of what it costs in the U. S. Mexico may not be a good choice if there is a huge turmoil in the U. S. as refugees will flood over, but for now it is one place some folks short of money are going.
<< <i>
<< <i>Ok, so I still didnt get any answers about how such a scenerio would affect one's life.
...
Prices across the globe are approaching a point of grossly diminished demand. >>
Um, because as many pointed out, your premise has a probability approaching zero, that all major currencies fail at the same time. Why plan for or discuss something that has a near zero probability? The scenario for gold is rolling failures. Any student of history understands that governments fall all the time, that it is not an unusual or even unexpected event. Every decade in history a few countries fall. Every century in history the vast majority fail. That's why gold works as insurance in a historical context. If the meteor comes (which is basically the way your scenario unfolds) gold doesn't help, neither does anything else except preparation for the next life and making peace with yourself and others. However, if it is human localized events, a person can move somewhere else. If not them, then their kids or grand kids can start life over without starting from zero (which is the average human condition).
As for where to go, just this week, a friend of a friend is moving to Mexico to retire. Food, shelter, medical are all a fraction of what it costs in the U. S. Mexico may not be a good choice if there is a huge turmoil in the U. S. as refugees will flood over, but for now it is one place some folks short of money are going. >>
I didnt want to talk about gold in this discussion as very few people actually own it or would benefit from it.
BTW---Its not my premise, but what I constantly hear is that all currencies are in a race to the bottom. If it isnt going to happen, then why do so many repeat the mantra?
Agree that Govts fail and currencies are devalued all the time. I can think of Mexico, Argentina, Poland, Russia in the last 20 years.
For the sake of arguement, lets suppose all the worlds currencies decline by 50% overnight. How would J6P's life change? Would he even notice?
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Ok, so I still didnt get any answers about how such a scenerio would affect one's life.
...
Prices across the globe are approaching a point of grossly diminished demand. >>
Um, because as many pointed out, your premise has a probability approaching zero, that all major currencies fail at the same time. Why plan for or discuss something that has a near zero probability? The scenario for gold is rolling failures. Any student of history understands that governments fall all the time, that it is not an unusual or even unexpected event. Every decade in history a few countries fall. Every century in history the vast majority fail. That's why gold works as insurance in a historical context. If the meteor comes (which is basically the way your scenario unfolds) gold doesn't help, neither does anything else except preparation for the next life and making peace with yourself and others. However, if it is human localized events, a person can move somewhere else. If not them, then their kids or grand kids can start life over without starting from zero (which is the average human condition).
As for where to go, just this week, a friend of a friend is moving to Mexico to retire. Food, shelter, medical are all a fraction of what it costs in the U. S. Mexico may not be a good choice if there is a huge turmoil in the U. S. as refugees will flood over, but for now it is one place some folks short of money are going. >>
I didnt want to talk about gold in this discussion as very few people actually own it or would benefit from it.
BTW---Its not my premise, but what I constantly hear is that all currencies are in a race to the bottom. If it isnt going to happen, then why do so many repeat the mantra?
Agree that Govts fail and currencies are devalued all the time. I can think of Mexico, Argentina, Poland, Russia in the last 20 years.
For the sake of arguement, lets suppose all the worlds currencies decline by 50% overnight. How would J6P's life change? Would he even notice? >>
What happens if prices for basic food, fuel and other commodities goes up 100% overnight (the equivalent of a 50% decline in all currencies)? Pain. In first world countries average people cut way back. They eat less, they travel less, they buy less. Instead of 15% to 25% of the budget for food that becomes 30% to 50%, add in 5% to 10% for fuel perhaps becoming 20%, and there is a lot of pain. Folks get more roommates, move back in with family, sometimes two or three families might share a single small home. Many folks will become homeless. The empty home and empty apartment rate in certain neighborhoods will skyrocket and squatter villages may face off with riot police and troops trying to evict them. For the working poor with families that can no longer afford to eat, if there is not enough charity to help them out, public protest and civil disobedience will become common. When the working poor can not afford to eat, they will riot, and those are the seeds of many historical revolutions.
In the third world, mass starvation occurs for the 40% of the world's population that lives on $2 or less a day as the 80% of their money that goes to subsistance food becomes -60% and people literally drop as entire regions become littered with mass graves.
Pleasant thoughts for a Monday. Get out and get some sunshine. This doom and gloom is not healthy for you.
/edit to add: I have some friends that lived in war time England (WW II). Food rationing, and rationing of all sorts existed for their entire childhood. Eggs and milk were powdered AND rationed. Fruit was a rare treat. A slice of a fruit was a luxury, having an entire piece of fruit to yourself was an unimaginable luxury. Many folks basically had two sets of clothes, one to be worn the entire six day 10+ hour a day work week, the other for Sunday at church. This is the kind of life that occurs during difficult times. And this is the country that WON that war. Conditions in Germany and Japan were 100x times worse as the war wound down.
But to further upon your thoughts..
Isnt this de (dis) inflationary.....
They eat less, they travel less, they buy less. Instead of 15% to 25% of the budget for food that becomes 30% to 50%, add in 5% to 10% for fuel perhaps becoming 20%, and there is a lot of pain
And as per the link I posted earlier, dont people in Europe already spend a greater % of their budgets on basic needs?
public protest and civil disobedience will become common
What effect would this have on a country's currency?
Do you think Europe is closer to this than the USA?
Knowledge is the enemy of fear
<< <i>Im not trying to doom and gloom. In fact im sitting by my pool.
But to further upon your thoughts..
Isnt this de (dis) inflationary.....
They eat less, they travel less, they buy less. Instead of 15% to 25% of the budget for food that becomes 30% to 50%, add in 5% to 10% for fuel perhaps becoming 20%, and there is a lot of pain
And as per the link I posted earlier, dont people in Europe already spend a greater % of their budgets on basic needs?
public protest and civil disobedience will become common
What effect would this have on a country's currency?
Do you think Europe is closer to this than the USA? >>
Provoke thought? Eventually the inflationary cycle leads to disinflation yes, but after the revolutions, after the wars, after the towns are burned, the executions, and the slaughter. It isn't a fancy video game where the working people are game pieces for you the financial wizard. Real people suffer, real pain. Lives are changed, lives are lost.
at the same rates. But the only real question is how long it takes to get to zero for each currency. It could be from months to years to decades, or longer. The USDollar will probably
be around for decades to come. But how much will it be worth compared to the 2011 version? These questions can only be answered by allowing time to pass.
roadrunner
Of course if there are riots then people will die. Look at Los Angeles in 1992.
Thanks for your comments about WWII. My wife grew up in communist Poland and lived through hyperinflation and currency devaluation, so I do have some concept of the situation. And that is why I am curious of the probability in this country and its possible effects.
So do you consider this to be a likely event?
Thanks for the comment although I think it is misplaced.
Knowledge is the enemy of fear
And I guess this is part of my questioning. The dolllar is valued at 1/2 the level vs the basket than it was in 1982. Has this decline meant anything to J6P?
Knowledge is the enemy of fear
And approx 40% down from the peak in 2001.
I think what it means to J6P is that his paycheck buys him less than ever before. He works farther into the year with each succeeding year just to pay his taxes.
The wife's income is required just to keep the household afloat. And their kids (ages 14-18) probably have some part time jobs to help contribute to paying expenses.
Yeah, the decline has meant a lot to J6P, especially if he wasn't savvy enough to put away something into stocks from 1982-2000. And also smart enough to get out by 2001.
roadrunner
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i> And I guess this is part of my questioning. The dollar is valued at 1/2 the level vs the basket than it was in 1982. Has this decline meant anything to J6P?
And approx 40% down from the peak in 2001.
I think what it means to J6P is that his paycheck buys him less than ever before. He works farther into the year with each succeeding year just to pay his taxes.
The wife's income is required just to keep the household afloat. And their kids (ages 14-18) probably have some part time jobs to help contribute to paying expenses.
Yeah, the decline has meant a lot to J6P, especially if he wasn't savvy enough to put away something into stocks from 1982-2000. And also smart enough to get out by 2001.
roadrunner >>
Well, at least Roadrunner wants to play
Do you think it is wholly the decline in the dollar that has caused this? The weaker dollar has probably kept lots of people employed as our goods are cheaper to overseas customers. I think we also spend much more money on things we didnt have 25 years ago. Such things as cell phones ($1200/yr), cable TV ($1200/year), gadgets--iPhone, iPod, GPS, Satellite radio, ect.
If your arguement is that the falling dollar has fueled inflation then I'll agree. But I think we also spend much more on "lifestyle" than we did in the 60's and 70's.
So why does everyone fight deflation so? Fear of job losses? Well the current strategy of inflation hasnt exactly been good for jobs. Wouldnt deflation actually make the lives of many better?
I thought I posed some interesting questions about Europe, (and other parts of the world) but no one seemed to care.
RedTiger seems to think we are headed toward an inflationary spiral that will result in death and revolution. If he's right, then why dont we try to stop it now?
Maybe I should stick with communication via numbers as my language skills seem to be inept.
Knowledge is the enemy of fear
If so, then what would that really mean for the average US citizen? Would he no longer have a job? Would he have to pay back his mortgage? What would happen? And if you say, INFLATION, then what does that really mean? $10 toilet paper? $20 gasoline? How would one pay for this if the dollar was worthless? Some new currency, but then what happens to old debts or the value of assets?
As long as someone wants something from someone else, there will be an exchange, and there will rarely be an "even exchange", so there will always be a trade imbalance, therefore seldom will the currencies all move together in the same direction.
Over time, as all fiat currencies all depreciate in purchasing power because of government mismanagement, some governments will be conservative and some will be outrageously mismanaged. These two factors - trade imbalances and uneven government currency manipulation will always wreck havoc in the markets, as Ron Paul would tell you - causing disruptions in both production & supply, resulting in pricing inefficiencies and mis-allocations of resources. Very inefficient. This makes everything more expensive for everybody, regardless of the price of the moment.
Inflation of the currency benefits those on the front end of the cycle - those who receive the infusions of money first. As the dilution effect spreads out, making everything cost more in nominal terms the people who are on the back end of the cycle bear the burden of the higher costs without having been compensated in any way by higher interest rates on their savings or higher wages. THIS is what puts pressure on prices, interest rates and wages.
When the government juggles the books and manipulates interest rates artificially low while injecting more liquidity into the system to cover losses by corrupt bankers who gambled on the real estate and interest rate derivative markets, then money is being created to fill the pockets of the central bankers. Eventually, the money spent on these payoffs will be laid on the doorstep of taxpayers in the form of higher taxes, cuts in government services, dilution of retirement promises and across-the-board price increases.
Someone I know is a psych professional. A business owner had to lay off her best friend because business was so bad. Other cuts will also be required just to keep the doors open. The rest of the employees got pissed at her. She gave away all of her money and possessions and was interdicted by the cops just before committing suicide. We will be seeing more of this type of thing.
We've also got a dependent class that shows up at hospitals making demands for constant care, drugs, medication and "3 hots & a cot". They get much better service at the hospital than at the shelter. This is in a state that hasn't yet been overwhelmed by the dependent class. In states like California, New York and Illinois, the system is already broke down and it won't be long before the government layoffs come. It's a huge rolling train wreck, and it will get worse along with the economy, while destroying the work ethic in the process.
More people are being shoved into lesser situations by this economy, and the socialists thrive on it.
I knew it would happen.
It means that a one-world government has taken over the planet and it is most likely socialist.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Lets suppose all fiat currencies go to zero, what does that really mean?
It means that a one-world government has taken over the planet and it is most likely socialist. >>
And by design. 1992 UN Conference on "Sustainable" communities; a radical reorientation of humankind called Agenda 21, which seems to have been reinvigorated by "Spooky Dude."
Fortunately, most change is more gradual.
Also fortunately, life has an amazing ability to adapt to change. Specific weak organisms get weeded out in a "selection event", but the result is a stronger population.
Artificially propping up the weak only delays the inevitable pain, and makes it worse.
Liberty: Parent of Science & Industry
Of course if there are riots then people will die. Look at Los Angeles in 1992.
Thanks for your comments about WWII. My wife grew up in communist Poland and lived through hyperinflation and currency devaluation, so I do have some concept of the situation. And that is why I am curious of the probability in this country and its possible effects.
So do you consider this to be a likely event?
Thanks for the comment although I think it is misplaced
My mother left Czechoslovakia in the late 1940s(now two countries) when the Communists took over. Her mother was a merchant and owned a store and several homes(Capitalism at its finest). All their properties were confiscated, my grandmother virtually left penniless as well as my mother and her two sisters. To this day, this traumatic event still plaques my mother. The U.S. was her salvation. My grandfather was a U.S. Citizen and had dual citizenship(though he died after the communists took over), so this helped my mother immigrate to the U.S. With fortitude at age 18 she worked as a nanny for a rich Jewish family here in Baltimore and managed to save over $10K for ten years.
Will the U.S. ever have its currency devalued and its citizens stripped of their wealth?
Would the U.S be bold enough to confiscate private wealth(trillions in private pension funds) for its own salvation? They certainly took the steps in 08 of transferring the treasury(government and public funds to private industry and the banks in order to avoid the end of the U.S. as we knew it or at least the destruction of its economy. In this scenario, I believe they had no other option. FDR did it with gold. So anything is possible.
I don't think it will happen because the U.S. will probably just not pay back the $14 Trillion it owes(either through inflation or even if it means WWWIII and world isolation. Screw the global economy. Printing money to infinity will have its consequences.
Box of 20
Will the U.S. ever have its currency devalued and its citizens stripped of their wealth?
Would the U.S be bold enough to confiscate private wealth(trillions in private pension funds) for its own salvation?
///
Yes, already happening via the FR.
And yes. But I think the world will be so bold and demand it. I'm not sure in what form.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>To answer the thread's title, anarchy with a barter system for goods and services. G & S will always retain an intrinsic value which people can relate their needs to, that's why they are recognized as a good tool for exchange. >>
AKA the mad max scenario
This is the point im trying to get at. The above quote could even be isolated to specify the US dollar. The question becomes, as the dollar has decline over the past 80 years, has life in the USA gotten better or worse? I suppose one could argue for both, but I wonder the response of someone who may have lived 100 years ago if he could somehow live today. Would he say life is so much easier/better today, or in 1911?
Also the decline in "purchasing power" has for the most part been offset with one holding/earning more fiat currency? Yes? No?
Another question that comes to mind will be the impact of declining population on currencies. Obviously, as a population grows the supply of fiat currency needs to be increased. But now, many countries(Japan, Russia, Europe, China in 20 years) will experience stagnant or declining popluations. Will these countries contries continue to increase supply, or will demand for those currencies decrease?
Knowledge is the enemy of fear
If the US dollar (the biggest currency in the world) failed unexpectantly (and they'd be propping it up right till the end), then confidence in every other currency would fall to zero and would lead to runs on the system due to sheer panic. That could cause every market to fail around the world.
Every financial market is linked, you just need to look at how every marked crashed after the planes hit the WTC.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire