Results 1 to 11 of 11

Thread: What the Fed has done to the value of your dollar since its creation in 1913

  1. #1
    Banned
    Join Date
    Sep 2007
    Location
    My Parents' Basement
    Posts
    14,097

    Default What the Fed has done to the value of your dollar since its creation in 1913




  2. Remove this section of ads by registering.
  3. #2

    Default

    What disgusts me about this so much is that voluntary investment activity leads to exponential growth of wealth and enables an exponential growth in technology. Had the government not borrowed so much, subsidized by the Fed's interest rates, and then squandered the money in ways that actually damage the economy, we'd have a much greater ability to command resources and the private sector probably would have colonized Mars by now. Think about if we could have all this modern technology and productivity, with the massive deflation of the 19th century!

  4. #3

    Default

    Thanks Bobby. I have been looking for something like this to further explain the need for Auditing the Fed. I have posted this picture on one of the TeaParty blogs

  5. #4
    Banned
    Join Date
    Sep 2007
    Location
    My Parents' Basement
    Posts
    14,097

    Default

    Quote Originally Posted by romacox View Post
    Thanks Bobby. I have been looking for something like this to further explain the need for Auditing the Fed. I have posted this picture on one of the TeaParty blogs
    Roma--Glad I can help a fellow forum member who lives only 15 miles from me. We will have to meet in person one day

  6. #5

    Default

    Once the Fed pulls off The Great Credit Contraction of 2010 and makes money scarce, which will wipe everybody out, it will start printing paper again like it did in 1934. I would compare where we are now to 1930-31, before things got really bad. Notice how in 1934 the dollar began a decline?

    I bet the Fed's favorite song was "Pennies From Heaven". During the Great Depression bankers bought up everything a penny on the dollar.
    Last edited by YumYum; 12-15-2009 at 07:15 AM.
    "..and on Earth anguish of nations, not knowing the way out...while men become faint out of fear and expectation of the things coming upon the inhabited Earth." -- Jesus of Nazareth

  7. #6

    Default

    It's unfortunate that the chart doesn't go back further and show the previous 100 years. As it stands, the chart's starting point makes it look like runaway currency devaluation always happens, even in the absence of a central bank...but the purchasing power of the dollar was pretty much the same in 1813 and 1913.
    Last edited by Mini-Me; 12-15-2009 at 07:26 AM.
    Quote Originally Posted by President John F. Kennedy
    And we must face the fact that the United States is neither omnipotent nor omniscient. That we are only 6% of the world's population, and that we cannot impose our will upon the other 94% of mankind. That we cannot right every wrong or reverse each adversity, and that therefore there cannot be an American solution to every world problem.
    I need an education in US history, from the ground up. Can you help point me to a comprehensive, unbiased, scholarly resource?

  8. #7

    Default

    I prefer this one because it shows how the dollar actually GAINED value in the 1800's


  9. #8
    Banned
    Join Date
    Sep 2007
    Location
    My Parents' Basement
    Posts
    14,097

    Default

    Quote Originally Posted by TheState View Post
    I prefer this one because it shows how the dollar actually GAINED value in the 1800's
    Nice-thanks

  10. #9

    Default

    Quote Originally Posted by TheState View Post
    I prefer this one because it shows how the dollar actually GAINED value in the 1800's

    Although the logarithmic scale is slightly deceptive, that chart is far more informative, and it's pretty effective at getting the point across IMO. It'd be even better if it showed recent years though, and especially if it priced the value of a dollar at the date of the Fed's inception (rather than 1940).
    Last edited by Mini-Me; 12-15-2009 at 07:40 AM.
    Quote Originally Posted by President John F. Kennedy
    And we must face the fact that the United States is neither omnipotent nor omniscient. That we are only 6% of the world's population, and that we cannot impose our will upon the other 94% of mankind. That we cannot right every wrong or reverse each adversity, and that therefore there cannot be an American solution to every world problem.
    I need an education in US history, from the ground up. Can you help point me to a comprehensive, unbiased, scholarly resource?

  11. #10
    Banned
    Join Date
    Sep 2007
    Location
    My Parents' Basement
    Posts
    14,097

    Default If The Banks Don't Extend Credit Soon, The Market Is Toast

    Quote Originally Posted by YumYum View Post
    Once the Fed pulls off The Great Credit Contraction of 2010 and makes money scarce, which will wipe everybody out, it will start printing paper again like it did in 1934.
    We're not sure how much stock to put into correlations such as this one -- especially since LOTS of charts have this dual-hump pattern over the last several years -- but this is still some interesting commentary from Gluskin-Sheff's David Rosenberg on the connection between monetary velocity and the stock market.

    ------------

    Chart 1 maps out the S&P 500 with money velocity (GDP/M1 ratio). There is a
    90% correlation between the two. It is one thing to have the Fed pump liquidity
    into the system but it is quite another for the liquidity to be re-leveraged into credit
    and recycled into the economy.

    The Fed’s easing program is over two years old and the rampant Fed balance
    sheet expansion 15 months old, and still to this day, what the commercial banks
    have done (to Obama’s wrath) with all that liquidity is to keep it as cash on their
    balance sheet to the tune of $1.2 trillion. We’re not sure why Obama is as rankled
    as he is because the banks are in fact lending out a good chunk of that Fed-
    induced liquidity — right back to Uncle Sam (the banks now own a record $1.3
    trillion of government securities).



    Back to the chart — there is obviously a close connection between money turnover
    and the stock market. But we can get periodic divergences as we did in the first
    leg of the rally in 2003. But the carry-through from 2004 to 2007 hinged critically
    on that multi-year acceleration in money velocity. If we don’t see the banks begin
    to extend credit in 2010, it is hard to see the 2009 bounce from oversold lows as
    being sustained in the coming year.

    http://www.businessinsider.com/rosen...-toast-2009-12

  12. #11

    Default

    Quote Originally Posted by YumYum View Post
    Once the Fed pulls off The Great Credit Contraction of 2010 and makes money scarce, which will wipe everybody out, it will start printing paper again like it did in 1934. I would compare where we are now to 1930-31, before things got really bad. Notice how in 1934 the dollar began a decline?

    I bet the Fed's favorite song was "Pennies From Heaven". During the Great Depression bankers bought up everything a penny on the dollar.
    The problem is that this time, the dollar is the world reserve currency, and totally fiat. If credit is contracted, foreigners who see that the Fed is following the plan you outlined will dump their dollars while they are strong due to credit contraction, giving a net positive inflation rate (a HIGH rate).

    Everyone sees that the Fed wants to print and is printing. If credit is tightened, it will be seen by most everyone as the last chance to get out of Dodge. That act will destroy the currency (as we have already sewn the seeds of this crisis with 40 years of fiat reserve status), though I'm sure the Feds will hyperinflate to get whatever the foreigners left (from anyone still willing to accept dolars--they will find few takers at that point).






« Previous Thread | Next Thread »


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •