The US creating dollars: Challenge your beliefs
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The US creating dollars: Challenge your beliefs

This is a discussion on The US creating dollars: Challenge your beliefs within the General Talk forums, part of the General Discussion category; In 2009 the bail out occurred and the US increased its money supply by $900 billion overnight. The total of money supply was around 11 ...

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Thread: The US creating dollars: Challenge your beliefs

  1. #1
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    The US creating dollars: Challenge your beliefs

    In 2009 the bail out occurred and the US increased its money supply by $900 billion overnight. The total of money supply was around 11 - 12 Trillion at the time. Even with that money supply the accumulated wealth was $40-45 Trillion or 4x the money supply.

    Now the US has over reacted to chinese virals and created close to $3 trillion in new money. Before the markets fell the accumulated wealth was nearing $90 trillion. Money supply was $16 trillion so wealth was 5x the money supply.

    $900 Billion / $45 Trillion wealth was 2%
    $3 Trillion / $90 Trillion is 3%

    With no currency capable of competing with the US the likelihood of repercussions like hyper inflation are just about as significant as they were in 2009.

    Preppers, conservatives, capitalist and libertarians share a view this is a bad idea. I often doubt it and did at the beginning of 09. Then I realized they were acting in direct opposite of the 1920’s Great Depression. In that time they refused to stimulate with bail outs instead choosing to fund capital projects in hopes of creating jobs and wages. It was too small, too slow and incapable of curing the depression - only war could.

    As much as it pains me to believe the stimulus is the correct answer if you hope to avoid the collapse of the economy as it’s known. It certainly will put the dollar at risk, but at risk of what? What can replace the dollar in 6-12-24 months ? If you can identify that then the risk is real but with out that the US gets away with “printing” or creating money. It’s too bad it’s not used for something meaningful like the capital projects but that alone would leave the US in a deflationary depression.

    Can some one prove that wrong with out opinion but with fact?
    RedLion and Michael_Js like this.

  2. #2
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    Quote Originally Posted by stowlin View Post
    In 2009 the bail out occurred and the US increased its money supply by $900 billion overnight. The total of money supply was around 11 - 12 Trillion at the time. Even with that money supply the accumulated wealth was $40-45 Trillion or 4x the money supply.

    Now the US has over reacted to chinese virals and created close to $3 trillion in new money. Before the markets fell the accumulated wealth was nearing $90 trillion. Money supply was $16 trillion so wealth was 5x the money supply.

    $900 Billion / $45 Trillion wealth was 2%
    $3 Trillion / $90 Trillion is 3%

    With no currency capable of competing with the US the likelihood of repercussions like hyper inflation are just about as significant as they were in 2009.

    Preppers, conservatives, capitalist and libertarians share a view this is a bad idea. I often doubt it and did at the beginning of 09. Then I realized they were acting in direct opposite of the 1920’s Great Depression. In that time they refused to stimulate with bail outs instead choosing to fund capital projects in hopes of creating jobs and wages. It was too small, too slow and incapable of curing the depression - only war could.

    As much as it pains me to believe the stimulus is the correct answer if you hope to avoid the collapse of the economy as it’s known. It certainly will put the dollar at risk, but at risk of what? What can replace the dollar in 6-12-24 months ? If you can identify that then the risk is real but with out that the US gets away with “printing” or creating money. It’s too bad it’s not used for something meaningful like the capital projects but that alone would leave the US in a deflationary depression.

    Can some one prove that wrong with out opinion but with fact?
    Dang, that's above my Macro Economic Paygrade....but I'll bump this thread up and wait for someone smarter than I to chime in...
    rice paddy daddy likes this.

  3. #3
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    Quote Originally Posted by Slippy View Post
    Dang, that's above my Macro Economic Paygrade....but I'll bump this thread up and wait for someone smarter than I to chime in...
    I actually almost did not graduate high school because I was failing the required 12th grade economics class.
    The teacher took pity and gave me a D, so I was able to graduate.

    I said that to say this - the original post could have been written in Greek and I would have understood it just as well.
    Michael_Js and Slippy like this.
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    The US printing money is nothing more than a back door tax. It won’t cause the economy to collapse as long as we have adequate production of goods.

    In the end, it just makes my retirements and savings worth less, in effect making me poorer. At the same time, some individuals and entities are made richer.

    This boils down to redistribution of wealth, plain and simple.

  6. #5
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    It all boils down to interest rates. The money used for stimulus will have to be backed by using debt in the form of bonds. If interest rates go up...we are in big trouble.

    Sent from my SM-N970U using Tapatalk
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    Only one thing keeps the dollar viable. You have to have dollars to by oil. It’s irreplaceable as the world reserve currency at the moment. When that changes so will the stability of the US economy and the dollar will become worthless.
    Michael_Js, stowlin, KUSA and 2 others like this.
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    You're asking a graduate level question to freshmen...

    It has always been true that strong economies can support massive amounts of debt. Look at the Reagan years. The value of the U.S. dollar was excellent, the economy was strong, and we spent like crazy because we could support it.

    However, there is always a breaking point. It's anyone's guess where that is at any given time. As a conservative, I prefer to not go looking for it at break-neck speed. When you find it, it's too late to do anything about it.
    Michael_Js and stowlin like this.
    "Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats." - H. L. Mencken

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    Ten years I would have agreed with you 110% based upon the opinions I have grown to accept. Now I’m not so sure. If the US did not print your assets would have deflated in value. That is a tax much harsher then inflation. This is also an opinion but one with historical reference for a country with a sound currency. It again reflects on who could possibly take the US dollar down as a safe haven for wealth?


    Quote Originally Posted by KUSA View Post
    The US printing money is nothing more than a back door tax. It won’t cause the economy to collapse as long as we have adequate production of goods.

    In the end, it just makes my retirements and savings worth less, in effect making me poorer. At the same time, some individuals and entities are made richer.

    This boils down to redistribution of wealth, plain and simple.

  10. #9
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    Guess I’m trying to say we’ve been programmed to think “printing” more money is bad. Certainly there is a limit to what we can print, but what we have printed appears with in the capacity of the American system to support.

    Countries that didn’t enjoy the status of the dollar hyper inflated. That is a broad group from 1930’s Germany, to 1980’s Mexico and on to the likes of Venezuela today. No one wants their currency or those currencies but they do want the dollar.

  11. #10
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    Quote Originally Posted by stowlin View Post
    No one wants their currency or those currencies but they do want the dollar.
    For how long?

 

 
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