We all know that the paper dollar is constantly losing purchasing power. What most people aren’t aware of is that all fiat currencies eventually fail. Historically paper currency was never seen as money, but rather a claim or receipt for money- usually gold and silver. We’re essentially running an experiment here.
On a scale from 1-10, how likely is the USD to collapse in the next 3 decades? With 1 being an infintesimally small probability and 10 being an absolute certainty.
Why or why not is a dollar failure likely, how would a currency collapse happen, what effects would it have on American society and the global economy, and what should a prudent saver do to protect himself? Are precious metals, land/property, or even Bitcoin good protection measures? I’ve been getting into silver. I don’t know whether or not I’ll ever need it, but I would rather store my wealth in something that isn’t constantly being devalued.
It’s about as likely as the 2020 election being cancelled. It’s not completely impossible, but would require something extremely bizarre to occur between now and then.
If a dollar collapse were to happen, it would probably be the result of society collapsing, not the cause of it. Despite your assertions, fiat currencies don’t just fail for no reason. Your underlying assumptions about how fiat currencies work and what keeps them stable seems to be fundamentally flawed.
Investing in precious metals assumes that there is some real value in precious metals over fiat currency. Gold and silver only have any worth because they evoke a bit of an “ooh, shiny” response in people, which made them have some value for jewelry and ornamentation. As far as basic survival goes, you can’t eat or drink gold and silver. If things get so bad that the dollar collapses, metals aren’t going to be of any value either.
Invest in food that won’t go bad, some sort of water purification system, an underground fallout and survival shelter, and some weapons and lots of ammo. Chances are that you’ll die of old age and everything you buy will be auctioned off, but there’s more of a chance of that being useful than any types of precious metals.
I’m not aware of any period in human history where gold and silver have been viewed as worthless- though countless fiat currencies have met that very fate. Throughout history’s many, many wars, famines, plagues, disasters, and societal breakdowns- gold and silver, as far as I’m aware, have held value. If you have any counter examples, I’d like to see them.
None of those things you listed are money. Money is the following:
Transportable
Non-perishable
Divisible
Able to store a large amount of value in a small unit
Relatively rare, but not too rare
Durable
A long term store of value
Beyond the basic survival goods (which you will run out of) you need real money- silver and gold- to transfer your wealth from this financial paradigm to whatever comes next. If you have no monetary wealth, you will likely be relegated to generational serfdom. I don’t think there’s ever been a time were people valued canned spam and ammo but not gold and silver, but you can correct me if I’m wrong on that one too.
I’ve got it at about a 1 or a 2. Someone who wanted to protect themselves from it should buy lots of beans, bullets, and blankets. I’m having a hard time imagining a dollar collapse that doesn’t bring down the global economy with it. Not just a recession, or even depression either, I’m talking about an end-of-civilization-level collapse, like making-jerky-out-of-each-others-skin-by-winter. In that scenario, transferring wealth isn’t really the priority. It’s staying alive, avoiding starvation / dysentery / hypothermia / etc. Silver won’t really help much.
Of course, staying alive is the first priority, because you can only reap the benefits of your wealth if you’re alive to do so. But having some sort of real monetary wealth for when commerce resumes is a high priority, imo.
I don’t know if things will get as bad as you describe, perhaps you were exaggerating?
Human civilization will persist in some form.
But I think a USD collapse will be the economic version of the Great Flood. I’m NOT looking forward to it because, while I don’t believe things will be quite as bad as you describe, things will get very ugly for a very long time.
Gold and silver are very volatile in value Gold as an investment - Wikipedia - note that from 1980 to 2000, gold lost more than 75% of its value and silver is even worse Silver as an investment - Wikipedia - this is a log scale, showing that from 1980 to 2000, silver lost more than 90% of its value. By contrast, during this period, the dollar lost about 50% of its value (Inflation Calculator)
zero to one, there is no other currency that has the trust of the US dollar and I would not be surprised if quite a bit of the worlds other nations start to use it primarily for domestic use in your projected time frame.
Time to read some data. Here’s US inflation rate going back over 100 years. The rate since 2009 is quite modest. around 2% on average. Look at the years 1968 to 1996. Quite a bit higher almost all the time.
These are good times, inflation-wise. Some economists are concerned about deflation since interest rates are so low the Fed has little room to maneuver to tweak things.
Regarding purchasing power, the single number inflation rate doesn’t tell the whole story. Food is cheaper now than it’s ever been. Gasoline (not counting local variations in taxes) is cheaper than it was in the early 60s.
To get into some sort of dither over inflation ruining things is absurd.
There are other issues that will affect the country’s long term health. The debt, the demand on the system due to providing SS and Medicare to Boomers, the dramatic shift in wealth to a small percentage of the population, etc.
And as people have been told over and over and over here. Gold is less stable than fiat currency. It goes up and down in swings that are often independent of rational economics.
All economic systems of any sort are at the core based on faith.
Yeah. Every currency does. It’s called “inflation”.
I’m curious why you think the USD is going to “collapse” in the coming decades? Or, more accurately, why do you think the US economy which backs the dollar is going to collapse?
Are you aware that 90% (out of 200%) of all FOREX trades are US dollars? The USD is essentially the reserve currency for the world. So other than something like a meteor destroying the Eastern Seaboard or WWIV, I don’t think the entire world is going to just up and decide the dollar has no value in the coming decades.
The USD is one of if not the biggest reserve currencies in the world. It “collapsing” would be a legitimate SHtF or TEOTWAWKI event. As in “people will be shooting each other in the streets” bad.
Bitcoin/crypto won’t save us; the people running the computer systems and networks making it possible just had their savings and paychecks rendered worthless, they’re not going to be keeping that shit running. Gold is a useless metal, people only think it’s valuable because it’s shiny.
If the USD collapses, it’s taking almost every other currency with it. Have guns, ammo, and stuff to trade with/for.
The inflation rate is 2-3% according to government statistics. But trusting the government to accurately report inflation is like trusting the mafia to accurately report crime. The real inflation rate is really much higher than what the government reports.
I don’t look at silver and gold in terms of fiat Federal Reserve debt notes- but rather purchasing power. What goods and services will a certain amount of silver and gold purchase for me now versus in the past?
In the 1960s, you could purchase a gallon of gas for a silver quarter. A silver quarter contains about $3.30 worth of silver. Average gas prices in my area are $2.30-$2.40. So not only has purchasing power been maintained, it has gone up! Now that’s wealth preservation. With a regular quarter, you wouldn’t come anywhere near being able to purchase a gallon of gas today.
Far enough. In 1980, though, a silver quarter’s amount of silver would have been worth about 28 dollars and would have thus bought 23 gallons of gas. A massive drop in value since then.
Banks and the financial markets care about inflation also, and can measure it in many ways besides the market basket that the basis of the CPI. Are they all in on the lie? All the thousands of people involved in the measurements? When did the government start lying? Were they lying during the time of high inflation?
Do all those who bid on government bonds, setting the price and thus the interest rate, willing to lose money to aid the coverup?
What you are saying is that the facts don’t match your worldview, so you’ll say the facts are lies.
What we have here, my friends, is a lovely example of Flat Earth Economics.
As recently as 2012, a silver quarter’s worth of silver would cost about 9 dollars - or about 3 gallons of gas - so the fact that a silver quarter would only buy one gallon now again indicates that silver is very volatile - i.e. not a great store of value.
The more I’ve thought about this issue, the more I come to the conclusion that money is not any of those things. Fundamentally money is a way of keeping score in the game of exchanging things of value. Modern fiat currency, with a few exceptions*, doesn’t have any fundamental value. A dollar bill is just a small piece of paper, and having an image of Ben Franklin on it doesn’t make it 100x more valuable than having an image of George Washington. Here’s the analogy I use to make sense of it. Money (a dollar bill) is like the score on a scoreboard. Things of actual value (guns, food, services) are equivalent to the actual scoring of a touchdown, making a basket, putting a puck in the net, etc. What happens in the cases of runaway inflation is that the people who control the money in a sense make it easier to score a touchdown or make a basket by shortening the field or lowering the height of the basket (printing more money). Of course this doesn’t change the fundamental value of the things being exchanged in the economy so the money becomes less valuable. The reasons we don’t have to worry about any of this happening to the US dollar has been mentioned by others above. I would be happy to have their input if my analogy is flawed in any way.
Exceptions include things like copper pennies as well as silver, which would have some value in the right hands, even after the apocalypse. Gold, however, is pretty much useless compared to copper and silver.
You need to understand that using well know fringe language like “fiat Federal Reserve debt notes” really harms your arguments. They are not “debt” notes. You use “fiat” like it’s a magically derogatory term when it isn’t.
You want to know the best way to measure purchasing power? Dollars and cents. And you are doing this yourself. You compare the value of silver to dollars to gas. You aren’t comparing the value of silver to gas directly!
That fact that you can’t make interesting comparisons of purchasing power without using dollars is an very important point that you seem to completely miss.
And how on Earth does your mental view of this cope with things like the huge drop in the price of gold from 9/12-6/13. It lost a third of it’s value!!! (And of course the famous long term decline from 1980 to 2000.)
How do you maintain a stable economic system around something to volatile?
none of this exists in a vacuum, though. If I go to a store and pay for something with a 1964 silver quarter, I’m still only going to get 25 cents worth of stuff. literally no place is going to give me $3.06 (it’s current melt value) worth of stuff for one. I have to go find someone who deals in metals (e.g. a jeweler) and sell it. And- since they likely want to turn a profit- will probably at best give me half its melt value.
The other part you’re missing is all of this talk about gold and silver’s values are talking about its value in USD. if the USD goes away, who determines how much any given quantity of gold and silver are worth?
As of this posting (417 pm Greenwich Mean Time on Thursday November 28 2019)
The most recent numbers I was able to find that might come somewhat close to concisely answering your question (no not really) JZ is as follows
1 troy ounce of silver $16.58
Rate of exchange with the British Pound-Sterling(originally based on the troy pound) that is £12.85 as of Wednesday November 27 2019
Like I said, I don’t think this is actually what you were after, but it was an interesting bit of something to do and the British £ is or was based on a troy pound of silver, sterling silver specifically. If you’re interested in the history of sterling silver I encourage you to peruse the wikipedia page on it, it was sort of fascinating, imho, certainly interesting at any rate.
My god on review that reads like spam :smack: uh ces’t la vie I guess
