Liberty Dollar?
- Thread starter Phoenix
- Start date
Liberty Dollar?
Yes, I've seen this several times before. I have clients and friends who've asked me about it. At some point in the future, this will be the only acceptable form of money, i.e. money backed by something, in this case precious metals. Fiat currencies (not backed by anything) have a history of blowing up and becoming worthless. The biggest examples of the last two hundred years were the John Law debacle in France with his Companie des Indie, and the South Sea Bubble which occured in Great Britain. Sir Isaac Newton lost about $1 million pounds in the South Sea Bubble according to the historical accounts of the affair. The problem with fiat currencies is that the central bank can print as much "new money" as it wants because it doesn't have to be backed by anything. The more you have of something the less value its individual components will have. Almost all world currencies are now fiat.
The world went off the gold standard in 1946 with the Bretton Woods agreement. The dollar was adopted as the world reserve because it was the only one to still be backed somewhat by gold. Fort Knox became a huge repository for all world government gold reserves. Each country had their own "space" at Fort Knox and gold was physically moved between the respective countries' gold stocks as transactions required. French Pres. Charles DeGaulle started redeeming U.S. dollars for gold in the late 1960's because France had a huge trade surplus with the U.S. DeGaulle saw the problem with accumulating too much of one currency and wanted the gold for France. Nixon then "closed the gold window" in 1971, refusing to redeem dollars for gold. The world continued to use the U.S. dollar as its reserve currency because everyone had accumulated a pile of them, and to try and change to some other currency could have been disruptive to the world economy and not really accomplish much. Besides at the time, the U.S. was the biggest creditor nation (the rest of the world owed the U.S. a lot of money). Since then, and especially since Alan Greenspan became Fed Chairman in 1987, the U.S. has multiplied the supply of dollars several times (more than doubled it since 1987) and has now become the world's biggest debtor nation (the U.S. now owes the world a lot of money).
At some point there will be "tipping point" where the rest of the world will not want any more U.S. dollar assets. The economic disruption will be catastrophic. There will probably be other attempts to make another fiat currency as the world reserve currency, but all fiat currencies fail. They always have, they always will. At some point after massive economic and financial devastation, precious metals will be in high demand, and hopefully world governments will again insist on "money" backed by something of worth, probably precious metals. The dollar has been in a multi-month rally this year after losing over 20% against other world currencies in 2003 and early 2004. When this rally is over, expect the dollar to fall between 30% and 50% from the top of the rally. The expected "turn" date is later this year or early next.
At some point it will be a wise move to buy precious metals, preferably old silver coins. They're still considered legal tender. Confiscation by the government is a concern if you have precious metal bars. Think the government can't confiscate your precious metal holdings? Roosevelt conficated all personal gold in the 1930's by paying those who turned in their gold a fixed price (about $25/ounce if memory serves). Penalties for not turning in your gold was a $10,000 fine and up to six months in jail. So how could the government catch those who didn't turn in their gold? They obviously couldn't catch everybody. But after the confiscation of gold was announced, you had to have an IRS agent meet you at your bank if you wanted to open you safety deposit box. The agent would check the contents to make there was no gold. If so, it was confiscated without payment, and you faced prosecution for not turning in your gold.
Sorry for the long post, but some background was appropriate to explain why something like Liberty Dollar is even happening today.
Cary
Yes, I've seen this several times before. I have clients and friends who've asked me about it. At some point in the future, this will be the only acceptable form of money, i.e. money backed by something, in this case precious metals. Fiat currencies (not backed by anything) have a history of blowing up and becoming worthless. The biggest examples of the last two hundred years were the John Law debacle in France with his Companie des Indie, and the South Sea Bubble which occured in Great Britain. Sir Isaac Newton lost about $1 million pounds in the South Sea Bubble according to the historical accounts of the affair. The problem with fiat currencies is that the central bank can print as much "new money" as it wants because it doesn't have to be backed by anything. The more you have of something the less value its individual components will have. Almost all world currencies are now fiat.
The world went off the gold standard in 1946 with the Bretton Woods agreement. The dollar was adopted as the world reserve because it was the only one to still be backed somewhat by gold. Fort Knox became a huge repository for all world government gold reserves. Each country had their own "space" at Fort Knox and gold was physically moved between the respective countries' gold stocks as transactions required. French Pres. Charles DeGaulle started redeeming U.S. dollars for gold in the late 1960's because France had a huge trade surplus with the U.S. DeGaulle saw the problem with accumulating too much of one currency and wanted the gold for France. Nixon then "closed the gold window" in 1971, refusing to redeem dollars for gold. The world continued to use the U.S. dollar as its reserve currency because everyone had accumulated a pile of them, and to try and change to some other currency could have been disruptive to the world economy and not really accomplish much. Besides at the time, the U.S. was the biggest creditor nation (the rest of the world owed the U.S. a lot of money). Since then, and especially since Alan Greenspan became Fed Chairman in 1987, the U.S. has multiplied the supply of dollars several times (more than doubled it since 1987) and has now become the world's biggest debtor nation (the U.S. now owes the world a lot of money).
At some point there will be "tipping point" where the rest of the world will not want any more U.S. dollar assets. The economic disruption will be catastrophic. There will probably be other attempts to make another fiat currency as the world reserve currency, but all fiat currencies fail. They always have, they always will. At some point after massive economic and financial devastation, precious metals will be in high demand, and hopefully world governments will again insist on "money" backed by something of worth, probably precious metals. The dollar has been in a multi-month rally this year after losing over 20% against other world currencies in 2003 and early 2004. When this rally is over, expect the dollar to fall between 30% and 50% from the top of the rally. The expected "turn" date is later this year or early next.
At some point it will be a wise move to buy precious metals, preferably old silver coins. They're still considered legal tender. Confiscation by the government is a concern if you have precious metal bars. Think the government can't confiscate your precious metal holdings? Roosevelt conficated all personal gold in the 1930's by paying those who turned in their gold a fixed price (about $25/ounce if memory serves). Penalties for not turning in your gold was a $10,000 fine and up to six months in jail. So how could the government catch those who didn't turn in their gold? They obviously couldn't catch everybody. But after the confiscation of gold was announced, you had to have an IRS agent meet you at your bank if you wanted to open you safety deposit box. The agent would check the contents to make there was no gold. If so, it was confiscated without payment, and you faced prosecution for not turning in your gold.
Sorry for the long post, but some background was appropriate to explain why something like Liberty Dollar is even happening today.
Cary
HackimerRob
Member
- Messages
- 391
Liberty Dollar?
CaryP thanks, great post. This is quite intriguing to me. Here's the thing to bring it home to our forum, or the "question" as it were...Why didn't Titor or anyone else mention that we'd have a whole new system of money that takes over? I know there was something about money being wierd.
Well, IMHO I'd use it because it makes more sense than the money we have now, and it also doesn't seem to say "In God we trust" on it, which personally, I don't. Not that he's a bad dude, but I'm just not a believer. That's another thread on another forum though. All in all if I knew the average pakistani selling street meat on the corner of 3rd and Lex would take it, I'd be all about it. Until I see that trend I'll be sticking with our good old hypocritical icon laden garbage money.
Thanks!
Hack <_<
CaryP thanks, great post. This is quite intriguing to me. Here's the thing to bring it home to our forum, or the "question" as it were...Why didn't Titor or anyone else mention that we'd have a whole new system of money that takes over? I know there was something about money being wierd.
Well, IMHO I'd use it because it makes more sense than the money we have now, and it also doesn't seem to say "In God we trust" on it, which personally, I don't. Not that he's a bad dude, but I'm just not a believer. That's another thread on another forum though. All in all if I knew the average pakistani selling street meat on the corner of 3rd and Lex would take it, I'd be all about it. Until I see that trend I'll be sticking with our good old hypocritical icon laden garbage money.
Thanks!
Hack <_<
Unintentional
Active Member
- Messages
- 577
Liberty Dollar?
Can we support the board with Liberty dollars?
Can we support the board with Liberty dollars?