Good video on inflation and the national debt

[RayJohns]

[RayJohns]

Some additional videos of interest:

[RayJohns]

Interesting commentary:

[RayJohns]

Here's a run down I recently posted over at http://www.Ferrarichat.com regarding the state of our dollar and economy:

Let's say you have two people. One makes stuff, the other buys stuff. Each one prints up paper IOU's to pay for everything and these IOU's are based off their respective networths.

So person A, we'll say he makes stuff and sells his products to person B. That's mainly his business.

Person B does mostly buying of Person A's products.

So person A is busy making stuff and selling it to Person B. A is being paid by IOU's from B. Both start out with about the same worth - some might even say B is richer - so it works fine... for a while.

However, one day A realizes that Person B must be slowly going into debt, because all they really do is print IOU's and buy stuff.

Suddenly, Person A realizes that they are being paid with IOU's from B that are not only being diluted in value (i.e. the more that are printed against the total networth of B, the less each one is worth), but that B's networth as a whole is being spent away in order to continue their massive consumption.

At some point, person A will begin to refuse to be paid in B's IOU's because they are no longer worth as much. They have realized that B is going into debt to finance their buying... as demand for B's IOU's comes into question and falls, the value of B's IOU's takes a further dive. Hyper inflation sets in on B's IOU's because they have a lower and lower value and - worse - people begin to question if they are actually worth anything; thus it takes huge sums of them to mitigate the risk associated with accepting them.

In this scenario, the USA is person B. On average, we are a nation of consumers, going into debt in order to keep the party going. Most people have little if any (or worse, negative) savings. Our IOU's (i.e. the US Dollar) is starting to become worthless. This has manifested itself in the decline in buying power the US dollar has against other currencies.

This is also why gold - an IOU which is not tied to any body's specific networth - has been going up. Gold is valuable unto itself and more universally. The US dollar is no longer tied to gold, thus its value is based on how many there are floating around, how easily you can borrow them and of course the overall networth of the Nation.

The USA is rapidly turning into a welfare nation at the hands of the bleeding heart social[istic] class (e.g. democrats & liberals). The borders are being over run be illegals and they are being welcomed with open arms. The cities are being over populated by people who get on welfare, have 10 kids and don't bother to raise them. They turn to crime or selling drugs, etc. People can't face day to day life any more and turn to using drugs, such as alcohol or meth or weed, etc. Anyone who does work hard and tries to get ahead is constantly taxed in order to pay for the lazy who refuse to stop eating, stop borrowing and start working and saving. At some point, 50 or 100 years down the road, there will either be some sort of civil war - along the lines of south africa - or the country will look around one day and it will be broke. People will have to get off their asses and start working, because there won't be enough people to tax to continue to provide for those who are either foolish with their money or those who simply refuse to work and would rather wait for a guy like Obama to tax their neighbor and redistribute the wealth in return for their vote.

IOU's from a country like that won't continue to buy goods. Especially not when person B is printing them at a record pace and then attempting to generate artificial demand for them by shoving them down Person A's throat - whether they want them or not. At some point, Person A is simply going to say "Your money is no good here any more". We've already seen talk of changing standards away from the US dollar.

Ray

[deepblue]

we had better hope that 2010 brings a few republicans back into the house/senate...if only to restore some checks & balances (what in hell was the american public thinking when they granted this administration this much power?).

both parties are to blame for national debt, & fiscal problems...but obama & co. have managed to double a national debt that took 230+ years to accrue (& this seems to bother nary a one of 'em, anymore)...and that's just for starters.

bottom line...the dollar is in serious trouble; it will require a MASSIVE correction (a.k.a. depression, high interest rates, etc.) to mitigate what our beloved leaders have done to this country. if "the borrower is servant to the lender"...then God help us when it's time to pay the fiddler's bill.

i'm really not trying to start a political debate, here...but i have been wondering: are there any "moderate" democrats who are even troubled that your party has been hijacked by socialists & quasi-communists? (and no, i'm an independent; not a republican)...

yes, i know this is christmas day; but i'm hiding from in-laws...