How much has the USD depreciated?

Discussion in 'The Guru's Pub' started by death_samurai, Dec 6, 2009.

  1. DaShoota

    DaShoota Master Guru

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    The dollar is at a real risk of collapse, it is getting weaker and will continue to do so.
    Historical timeline of the dollars value. Note how much is has depreciated since the creation of the federal reserve:

    [​IMG]

    Basically, it has lost 96% of its value since the creation of the Fed.

    For about a hundred years until 2002, the U.S. has accumulated 6 trillion dollars in debt. As of 2009, the national debt stands at more than $12 trillion! Basically, in a span of 7 years the U.S. has doubled a debt that took 100 years to accumulate. If that is not dollar depreciation, I don't know what is.

    [​IMG]
    Price of gold from 1975 until now.

    People are dropping the dollar like flies. Just last month India purchased 2 metric tons of gold from the IMF. Even China, the State's biggest creditor, has been encouraging its citizens to invest in precious metals.

    Price of gold against the dollar since the beginning of 2009
    [​IMG]

    It is not a good idea to be investing in the dollar. Too much of it is being printed. It's position as the world's reserve currency is the only reason it is holding up right now. That may soon change. Dollar being undervalued? More like the complete opposite! It is being rapidly inflated at a pace unlike any other in the country's history.

    The Dollar Bubble: http://www.youtube.com/watch?v=eZA0qNsf4m0

    Interesting documentary on the fiat-credit currency system:
    http://www.youtube.com/watch?v=vVkFb26u9g8
    (5-parts)

    Essentially all paper fiat currencies go back to their real value: zero.
     
    Last edited: Dec 7, 2009
  2. hawkeyefan

    hawkeyefan Maha Guru

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    We're on the same page with this, but approaching from two entirely opposite angles where this discussion of simple exchange is concerned. Nowhere have I argued the dollar as being undervalued over the span of decades, or as compared with pre-Fed dollars or prior to Smoot-Hawley. I'm talking about its value simply juxtaposed against other fiat currencies, right now, today. I'm not arguing for the long term viability of a fiat currency.

    Of course India and China are buying up gold, because their currencies float against the dollar and are wildly undervalued themselves. This by itself results in a massive overstating of Asian assets and is a source of much of the instability in markets across the globe. You could include Russia in this group as well as Malaysia, Singapore, Taiwan and Indonesia. Japan is the odd man out here.

    Conversely, there are huge overvaluations across Europe except for Britain. The Scandinavian nations appears the worst but some of that is inherent to their political ideologies. It's fundamentally worse in EU nations.

    Now, what you're alluding to is something in which I believe very strongly...global collapse of fiat currency. And yeah, the US isn't setting itself up for success in that event. Obviously, Keynes was dead wrong, so was Bretton Woods. At least to my (admittedly limited) understanding.
     
    Last edited: Dec 7, 2009
  3. DaShoota

    DaShoota Master Guru

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    Well, when comparing the dollar to other currencies, I can take your point on that. Still, I don't see dollar investing as a sound move. Thinking long term, it is smart to move paper into commodities and precious metals, something which I have started doing.

    I just hope we go back to sound money when the markets implode and not to some one world currency I have been hearing about from time to time.
     
    Last edited: Dec 7, 2009

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