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Are we on the edge of the Peter Schiff dollar collapse?

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I've been blocking out the economic news for the last few years to my detriment, but the events of the last few weeks have really captured my attention. After six years of 0% interest rates, the markets are in turmoil and signs point to a recession on the horizon. It is clear that the Fed will not raise interest rates or keep them high for long if the economic data is negative. So what are they going to do now? Print print print print print print money is my assumption. Peter Schiff seems to think the dollar collapse he's been predicting for years is nigh. My other favorite analyst, Jim Rogers, points out that the world still thinks the U.S. Dollar is a safe haven even though it's not one, so it might stay strong a little longer, but says that soon the world will lose confidence in the Fed and the dollar.

What do you think? Is likely that the U.S economy will suffer some real pain in the next few years, either a big stock market drop + recession, or if the Fed refuses to raise rates, a very high rate of inflation?

Edited by happiness

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Folks like Schiff and Rogers are right about a lot of theory, particularly with a long-term view, but they seem to have a very strong anti-US bias. Not in the sense of disliking the US, but in thinking the US is in a worse off state than most. All the evidence points to US dollar strength vis-a-vis other fiat currencies for the near-term. If one looks at public debt, the Yen would seem to be the most risky major currency. If one looks at private debt and mal-investment, China looks like it went crazy in the last few years. Yet, libertarian commentators like these focus on the U.S. To do so indicates to me that they care more about the U.S., and are therefore more concerned about U.S. issues, and are trying to make a political argument rather than something a financial adviser would make.
 

To put it another way: I agree with much of their criticism of the U.S., but that's a political argument. When it comes to financial advice, one's own political concerns can blind one with a huge bias. 

 

But forget the people. Your underlying question is about a US$ collapse. I'll ask a question in return: what is the mechanism by which this would happen? What are the steps in which it plays out? For instance, does China start to sell its US$ bonds? Do U.S. citizens start to use something else trade with each other? What such things would one look for?

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But forget the people. Your underlying question is about a US$ collapse. I'll ask a question in return: what is the mechanism by which this would happen? What are the steps in which it plays out? For instance, does China start to sell its US$ bonds? Do U.S. citizens start to use something else trade with each other? What such things would one look for?

A currency crisis would start with the realization by investors that the Fed is going to continue printing a lot of money for the forseeable future, which I imagine might result from another episode like the 2009 recession where the economy were in imminent danger of experiencing another recession, big drop in the stock market, or wave of bank failures. This would make the USD an unattractive store of value, causing Investors who hold dollars and countries who hold dollar reserves to seek alternatives and the dollar to fall against other currencies. In particular, Schiff and Rogers predict that China will eventually decide to float is currency against the USD. Due to the loss of purchasing power, U.S. debt holders would likely want to sell their bonds, and interest rates on the debt would rise. Now the U.S. Government would have a real problem, and how things would play out from tere would depend on whether the government were to admit bankruptcy and default or the Fed just were to ramp up the printing presses to pay the interest on the debt. The idea that Americans would start transacting in something other than US dollars would only happen in the worst case scenario of hyperinflation if we took the latter route.

Edited by happiness

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This would make the USD an unattractive store of value, causing Investors who hold dollars and countries who hold dollar reserves to seek alternatives and the dollar to fall against other currencies.

What alternatives? Also, when they use US$ to buy these alternatives, someone else will end up with the US$: who?

E.g. If they buy Euros, the ex-holder of the Euro now has dollars. If they buy gold, the ex-holder of the gold now has US$. These ex-holders of alternative assets could be foreigners, in which case those foreigners now hold US$ instead of the original foreigners. If they buy U.S. real-estate or U.S. stocks, then the US$ comes back to US holders (let's assume).

I'm not saying that moving the US$ from one foreigner to another is neutral. In fact, it can result in a fall (or rise) in the US$, depending on the details. I'm just wondering if you have some thoughts about what avenue the US$ will take.

Edited by softwareNerd

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What alternatives? Also, when they use US$ to buy these alternatives, someone else will end up with the US$: who?

If they buy Euros, the ex-holder of the Euro now has dollars. if they buy gold, the ex-holder oft he gold now has US$. These ex-holders of alternative assets could be foreigners, in which case those foreigners now hold US$ instead of the original foreigners. If they buy U.S. real-estate or U.S. stocks, then the US$ comes back to US holders (let's assume).

I'm not saying that moving the US$ from one foreigner to another is neutral. In fact, it can result in a fall (or rise) in the US$, depending on the details. I'm just wondering if you have some thoughts about what avenue the US$ will take.

 

Any currency could be an alternative for an individual holder of US$. The fact that an asset is falling doesn't mean nobody will buy it; speculators will buy anything to bet on short-term price movements. It will just take more US$ to buy the currencies it falls against. People will also trade dollars for tangible assets (gold, RE, oil pumped in Canada, John Deere tractors, etc.). In the dollar collapse scenario, a lot of the dollars held by foreigners would wash up back here while tangible goods would leave.

Edited by happiness

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In the dollar collapse scenario, a lot of the dollars held by foreigners would wash up back here while tangible goods would leave.

So will we have the reverse of what happened in the recent past between the U.S. and China: i.e. last decade or so of US$ moving to China and Chinese tangible goods flowing to the U.S.?

Is the scenario you see unfolding that China (and other foreigners) start to buy a lot more (net) US tangible goods with the US$ they have accumulated? If so, would this mean more jobs and more plant-investment in the U.S. --- presumably with the Chinese taking a share in the ownership of such plant as well?

Edited by softwareNerd

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So will we have the reverse of what happened in the recent past between the U.S. and China: i.e. last decade or so of US$ moving to China and Chinese tangible goods flowing to the U.S.?

Is the scenario you see unfolding that China (and other foreigners) start to buy a lot more (net) US tangible goods with the US$ they have accumulated? If so, would this mean more jobs and more plant-investment in the U.S. --- presumably with the Chinese taking a share in the ownership of such plant as well?

 

The high cost of goods in this scenario would create a strong incentive to invest in U.S. manufacturing, but for all the reasons we've already lost so much manufacturing capacity—all the taxes and regulations we have—I'm concerned the needed investment and industrial output would be delayed for God knows how long. And that instead of removing those barriers, the government, in the name of protecting the public from the businessmen whose greed they would blame for the high prices, would impose price controls that make it altogether impossible for said investment to happen at all.

Edited by happiness

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Folks like Schiff and Rogers are right about a lot of theory, particularly with a long-term view, but they seem to have a very strong anti-US bias. Not in the sense of disliking the US, but in thinking the US is in a worse off state than most. All the evidence points to US dollar strength vis-a-vis other fiat currencies for the near-term. If one looks at public debt, the Yen would seem to be the most risky major currency. If one looks at private debt and mal-investment, China looks like it went crazy in the last few years. Yet, libertarian commentators like these focus on the U.S. To do so indicates to me that they care more about the U.S., and are therefore more concerned about U.S. issues, and are trying to make a political argument rather than something a financial adviser would make.

 

It's not that the U.S. is a worse country than anywhere else, just that it has the most to lose since its the USD holds reserve currency status and thus so many people have bought its debt and currency in the past under the false assumption that these assets are safe havens. Nobody ever believed that Japan was the world's best economy or invested in trillions of dollars of its debt or pegged its currency to the yen. The U.S. has been following wildly irresponsible monetary and fiscal policies for at least the last 15 years and probably a lot longer, but has been benefiting from memories of a bygone era when we were the world's uncontested economic superpower and had the industrial capacity to balance our trade. Meanwhile, the Asians have been building factories, underconsuming, and saving.

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The currency creation process is not widely understood.  The Treasury will print for two reasons.  To supply dollars to the domestic market to cover value loaned by private institutions, or to create currency to support government debt in bonds and notes issued.  Yes, the specifics are way more complex.  But what Americans don't know, is that the amount of currency floating in the world economy is based on government and private debt because it is these factors that are the basis for printing over and above physical currency replacement.  So, our currency is not based on wealth created or a precious metal substitute designed to curtail printing?  No, it's based on debt and the amount of debt is manipulated by a pseudo-government agency of banking interests called the FED by setting the rate at which lenders can borrow money.  Lower rates, my banker borrows more and tries to market to me to borrow from the bank.

 

In 1913 the crony capitalists (not to be confused with producers) decided it would be better to base currency production on debt, rather than wealth creation because debt creation was easier to track and easier to control.  The first interesting result of this change was called The Great Depression.  More recently this method of national currency monitoring resulted in the Housing Boom.  The FED forgot that the acquisition-desire for property assets was independent of the need to keep the rest of the economy on track with low interest rates - and then they blamed it on confusing derivatives and tranches. 

 

This scenario of government control was instituted to take out the wide swings and bank failures common before 1913.  We now pay the cost in tax dollars to bail out the banks (bigger than ever) and some of us lose our retirement nest eggs in the process. 

 

Public service positions do not attract the same kind of person (especially at the higher management levels) as private sector positions in which the company is providing a clearly valuable product or service to a market that demands the supply.  This is not rocket science.

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I suspect the direct problem is not the movement of US debt from one holder to another - the debt load to the lender does not change.  The real problem is (and if you know more than me about this, please jump in)  no one will buy the new, current debt instruments that are used to pay off the old ones and fund the domestic programs.

 

Logic tells you at any level of earning and spending, you cannot consume more than you produce forever.  What will happen is the US will not be able to find buyers for new debt.  Then, we must produce wealth to be taxed to pay off the prior debt that can no longer be financed with new debt instruments because there's no buyers. 

 

Then there are two bad options for the people in charge - default or inflate.  Tell the borrowers to buzz off or pay them off with physical money that has no value in wealth creation.  They'll pick #2 which will destroy the domestic economy because . . . you cannot consume what you have not produced. 

 

I thought this scenario would have happened by now, but the productivity of the American work force (60 hours a week and skip vacations) is postponing the inevitable.  It could be 5 years, it could be 25 years.  My kids are holding (like me)  10+% of their assets in junk (40-90% precious metals) coins.  Waste of PV?  Compared to what safe rate.  Keep enjoying each day of your life.  Happiness is the primary value, not knowledge of monetary disaster strategies.

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The high cost of goods in this scenario would create a strong incentive to invest in U.S. manufacturing, but for all the reasons we've already lost so much manufacturing capacity...

Chinese businesses are already investing in the U.S., and some states even give them incentives to do so. [Rich Chinese are also buying homes in the U.S. and Canada.] When the Chinese tried huge investments -- like taking over a major port -- there was political push-back. The same would happen if they try to come big as a phone company. But, they'll find ways in which they can move investments abroad. Ramping up production is not such a big deal -- the capital assets that are being sent to China will be diverted to the U.S. and building does not take that long. 

 

Here's the thing though -- if what you say is true and the Chinese are unable to invest in U.S. assets then they're unable to cash in their dollars. As Hazlitt's "One Lesson" teaches, there has to be an "other" side to each such transaction. If we hypothesize that the Chinese will trade in their US$ for U.S. assets, we have to hypothesize that they can do so. If we think regulations etc. will stop them from doing so, then we have to hypothesize that they will not be able to trade in their US$.

China's US holdings are not a primary goal of the Chinese government, but an artifact of their import-driven economy with tight state control of the exchange rate. Essentially, the Chinese government has sat in the middle of the Yuan-US$ trade, taking a tax on every transaction by keeping the Yuan lower than market forces would allow. This was hidden by the fact that the Yuan was pegged to the US between 1996 ans 2005, and allowed to strengthen against US$ from then till very recently. If they shift their economy to be less import-driven, they will start to whittle down their US$ balances by buying more from the US$ (net), by buying U.S. based assets and by investing in the U.S.    Again, the point is: there are two sides to this coin. The Chinese can only reduce their US$ holding by buying US stuff.

 

If one gets below the monetary and fiscal cloud, and consider the 'real' economy: the secret to China's success is that they had so little economic freedom that they had huge scope to catch up. In addition, like the U.S. of 100 years ago, they had far less stifling regulation holding things back once entrepreneurs were free to do their stuff. Starting off relatively poor, it is natural that labor-intensive manufacturing would migrate there. The migration itself has networking effects, creating a robust supply-chain inside China. With every passing year, they get relatively richer, but in doing so they lose a little bit of their competitive advantage. Also, as they become richer, there are calls for more regulation (most Chinese are justifiable sick of the pollution in their major cities).

 

As foreign investors start thinking about moving some money out of China, and as Chinese do the same, the Chinese government has motivation to weaken the Yuan as they did very recently. This means capital being converted from Yuan gets less US$ on the way out of China. It also fits the popular hope that weak currencies boost the economy by helping imports. Governments are notorious for doubling down on bad policy, so it would not be hugely surprising if the Chinese all the Yuan to weaken a bit more in the next year or so. 

 

We've had a few years of a very strong US relative to other currencies, but even if U.S. policy were to change in the wake of a recession, other countries will be "printing" too.

 

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So while it's hard to predict that the dollar will collapse against other currencies, do you agree that it's reasonable to predict that it and many currencies may collapse against the value of hard assets? The markets are clearly in turmoil, and the Fed and other central banks explicitly operate on the principle of printing money every time their economies enter recession. The Fed increased rates by a meaningless amount last month—according to Schiff, a symbolic move—and we right now it seems the news is getting pretty bad. As Rogers often points out, we historically have a recession every 4-6 years in the U.S., and it has been almost 7 since the last one, and rates are still near rock bottom. How can one conclude that the Fed is going to do anything other than print, print, and print some more in the coming years and that we are going to suffer major inflationary pain?

Edited by happiness

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While printing presses cannot outpace starvation, the prices in the supermarkets and restaurants continue to increment steadily upward, while other commodities drift temporarily downward. Barring a discovery or innovation that indicate the decline is technologically driven, what gives?

What's to say that the boom and bust cycle (the 4-6 year recession, going on 7 now) couldn't be ironed out like the Friday effect? Investors noted that on paydays, 401-k funds went into the markets to purchase their shares. Day-traders, seeing this, purchased shares in advance, to sell into this slight rise. Other traders, identifying this trend, purchase shares in advance to sell to the day-traders. The effect disappeared almost as quickly as it was identified.

Identify a 4-6 year cycle that takes place in the markets, and savvy investors may discover a way to anticipate and profit from it, essentially ironing out the effect..

The Fed has been print, print, printing since 1913. While an end-game may seem most likely inevitable, it relies on causal factors that have not come into play as of yet. This should not rule out, however, that the forces of good cannot overcome those that might seek otherwise.

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On 1/14/2016 at 7:04 PM, happiness said:

So while it's hard to predict that the dollar will collapse against other currencies, do you agree that it's reasonable to predict that it and many currencies may collapse against the value of hard assets?

I think this will probably happen at some point in the future, but since the "great recession" we've been in a "deflationary" phase and with people panicking about the state of the global economy in 2016, it is likely that this year  will continue that trend. 

I put "deflationary" within scare quotes because there's little agreement on the terminology. The monetarists, with Milton Friedman as the famous spokesman, succeeded in making something like the following into accepted doctrine among lay-people:

  • the economy has goods and money;
  • money chases goods and is spent on those goods, and since velocity is mostly sticky, there is a near linear relationship between money and price-level [aka linear quantity theory of money and prices];
  • money can be seen as various types - core/high-powered, bank-deposits, time-deposits, and if the core layers are increased, then the other layers expand as well, through a "multiplier";

Some Austrians argued against this, but many others conflated monetarist and Austrian theories and took a fairly monetarist view. In fact:

  • a conceptual framework that thinks only of money and goods lacks explanatory strength. It is essential to include debt and financial assets in the framework
  • Ludwig von Mises argued against the linear quantity theory, and recent experience has proven him right
  • banks do not mechanically translate high-power money into deposit, based on a multiplier that (in turn) is an inverse of their reserve ratios. In a world of Fed guarantees and FDIC insurance, reserve ratios have long been of little importance

I wouldn't claim to have an integrated counter-theory, but debt/credit levels are de-linked from the level of high-powered money; household/consumer debt/credit level is a component of aggregate nominal demand; after growing as a percent of GDP, these levels have been falling since the great-recession, with the effect of damping the growth-rate of nominal aggregate demand. Meanwhile, low interest rates and creation of so much high-powered money has led people to look for yield in riskier assets, leading to a stock market boom. However, at the end of the day, the fundamental value of financial assets is based on the cash-flows coming to the physical assets behind them. If that nominal aggregate demand is not growing as far as before, it leads to changing assumptions and a revaluation of financial assets. This implies a "write-off" deflation of financial assets along with layoffs etc. if there is a bust. Gold can perform decently in this type of deflationary environment, because people can shift to it from fear. Also, when rates on cash-like holdings are near-zero, the cost to carry gold is negligible.

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Markets around the world are tanking, and gold is rallying like I've never seen it. Listening to Bloomberg radio I've never heard so much talk in the mainstream questioning the credibility of central banks. The markets reacted negatively to the recent jobs report despite the unemployment rate dipping under 5%, which means people are actually beginning to question the credibility of these statistics. Basically the picture looks terrible. All this confirms to me Schiff's prediction that the Fed is going to reverse course and lower rates again to attempt to save the markets, which means negative real interest rates and diminished confidence in treasuries and the dollar.

Edited by happiness

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8 hours ago, happiness said:

Markets around the world are tanking, and gold is rallying like I've never seen it.

It is? For the past month, gold is up 15% to the USD, and under 10% to the JPY, EUR and other currencies. It's rallying, but like you've never seen it? I've seen it rally a lot more than this.

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11 hours ago, happiness said:

...  diminished confidence in treasuries and the dollar.

Confidence impacts value, and that's what we're really interested in. But, the thing with economic values is that they're expressed in terms of something...in that sense they're relative. If the value of US$ falls, it falls in terms of something else: housing, gold, YEN, RMB... etc. At this point, the US$ has risen quite a bit relative to other currencies. However, other countries still seem keener than the US to see their currencies devalued vis-a-vis the US$. It is more likely than not that the Chinese will throw in the towel sometime this year, and devalue further against the US$. So, if you want to short a currency, the RMB is probably a better target than the US$. I suspect this is true of the YEN too, even though that might be a nail-biting ride as Japanese investors run from foreign lands.

Back to the main point I wanted to make: US$ falling... relative to what? Are you speaking of gold? Are you speaking of the generalized price-level? Or something else?

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I think at the very least we can expect the USD to fall in terms of gold, and for the same reason, against commodities and tangible goods and services in general. It may be the case that all countries are debasing their currencies, but that won't negate the consequences of us doing so. As far as other currencies, at the present, the U.S. dollar is perceived as a safe haven, but that would be a flawed assumption—the U.S. is the biggest debtor nation in the history of the world in absolute terms. If interest rates rise and it becomes apparent that the government cannot pay the interest on the debt, that will change the world's perception of the USD as a safe haven and cause it to fall against other currencies, flawed as they may be.  

On ‎2‎/‎12‎/‎2016 at 4:25 AM, softwareNerd said:

Confidence impacts value, and that's what we're really interested in. But, the thing with economic values is that they're expressed in terms of something...in that sense they're relative. If the value of US$ falls, it falls in terms of something else: housing, gold, YEN, RMB... etc. At this point, the US$ has risen quite a bit relative to other currencies. However, other countries still seem keener than the US to see their currencies devalued vis-a-vis the US$. It is more likely than not that the Chinese will throw in the towel sometime this year, and devalue further against the US$. So, if you want to short a currency, the RMB is probably a better target than the US$. I suspect this is true of the YEN too, even though that might be a nail-biting ride as Japanese investors run from foreign lands.

Back to the main point I wanted to make: US$ falling... relative to what? Are you speaking of gold? Are you speaking of the generalized price-level? Or something else?

 

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20 hours ago, happiness said:

I think at the very least we can expect the USD to fall in terms of gold, ...

How much, how soon? Not asking for a prediction to hold you to. Rather, I'm trying to understand your rough assumptions. For instance, a "long term buy-and-hold index investor" might have a rough assumption that stock market will rise by N% over a 10 year period. Similarly, what assumption or range of assumptions underlie your thinking. E.g. There's a better than even chance that gold will be ... $1500 in 2 years... $2000 in 10 years? When you think of this personally, what approximate horizon do you consider and how big a change to do think of?

 

In terms of "real value", good corporations, with strong balance-sheets and making real values which are not particularly faddish are probably better than gold. They own real assets -- these may not be commodities, but they're things of real value. Further, they do not merely convert those assets into dividends over time. rather, they use those assets to create new values. In other words: real assets, but also growing assets. If true, then a Warren Buffett style of investing seems a better bet than gold... at least for the bulk of one's portfolio.

Edited by softwareNerd

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4 hours ago, softwareNerd said:

How much, how soon? Not asking for a prediction to hold you to. Rather, I'm trying to understand your rough assumptions. For instance, a "long term buy-and-hold index investor" might have a rough assumption that stock market will rise by N% over a 10 year period. Similarly, what assumption or range of assumptions underlie your thinking. E.g. There's a better than even chance that gold will be ... $1500 in 2 years... $2000 in 10 years? When you think of this personally, what approximate horizon do you consider and how big a change to do think of?

 

In terms of "real value", good corporations, with strong balance-sheets and making real values which are not particularly faddish are probably better than gold. They own real assets -- these may not be commodities, but they're things of real value. Further, they do not merely convert those assets into dividends over time. rather, they use those assets to create new values. In other words: real assets, but also growing assets. If true, then a Warren Buffett style of investing seems a better bet than gold... at least for the bulk of one's portfolio.

I don't have any firm independent assumptions about what price level gold is going to reach or the time it will take to reach it—I'm not a sophisticated market analyst. Instead, I rely on the commentary of analysts whom I respect to inform my expectations of what is to come. Schiff predicts gold will eventually go 1:1 with the Dow, and Rogers predicts gold will overshoot and end in a bubble 2-4 years from now. I know only the following: 1) the financial mainstream has held the belief that we have been on the path to economic "recovery" and for the last 7 or so years; 2) seven years post-crisis, interest rates are still near 0%, yet, instead of economic recovery, we have a weak economy dependent on ongoing QE, and there are now clear warning signs of impending recession; and, 3) the moral that central bankers live by in our time is to print money like crazy whenever there is distress in the market. All of that is bullish for gold. Now even Schiff, the ultimate gold bull, recommends owning more stocks than metals, and chosing them according to the old fashioned Benjamin Graham approach, but qualifies this by saying you have to be invested according to the right macroeconomic assumptions: the US dollar is going to weaken, Americans are going to get poorer, and the countries currently subsidizing our consumption and those with stronger macroeconomic fundamentals are going to get richer (here's how his flagship international fund is invested).

 

 

 

Edited by happiness

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The original dollar printing program was started by Woodrow Wilson to help BOE in evading rationality (‘Sir’ Alan has written a good article about it in “Capitalism -- The Unknown Ideal”, but later he turned renegade, turn-coat etc -- Why? -- because GOP had taken over the agenda from the Dems and is printing far more dollars for their military-industrial complex (MIC) and plutocracy than the Dems’ welfare state. It is GOP’s MNCs that have driven American factories to China to evade huge taxes, min wages etc while talking nonsense about China and Russia being threats. All those factories were owned by their plutocrats at least when the pushing happened and China was resuscitated, brought out from grave.

But now the things have gone too far and mere discussion about dollar’s value, Fed’s printing program, economics etc is not going to help -- discussion can be done for academic purposes, but I don’t think it will help. These Von Mises, Friedman, Ayn Rand -- all may be geniuses, but genius is a liability in the game they call as “Democracy” (see Toohey’s lecture to Dominique after the Stoddard trial); none will get 5% votes while Dame Hillary commands around 50%. What is needed is a fundamental change, viz. going back to Founding Fathers’ (FFs’) constitution, which also involves countering GOP’s MIC and plutocracy, not merely the Dems’ welfare state. The Fed, the power-grab by the Federal Govt, all of it will come under question -- all of it has one single root -- democracy, into which FFs’ Republic has slid decades back.

 

Bretton-Woods was meant to do away the dollar-printing factory because of the experience of the Great Depression. GOP was not that very bad a party, in fact they were opponents of New Deal and dollar printing, etc but the reason why Nixon became Wilson’s son (he hung his photo in White House to justify delinking dollar from gold) because of GOP’s inability to counter Dems’ welfare state. Demo Party Platform of 1960 is a massive downward jump -- the Man’s Rights that they declared therein is as good as a covert civil war, except that it is slow-poisoning by the drop by drop, ml by ml, mm by mm method of the welfare state, therefore not identified as civil war so far. But America is eroded because of the actions of the Dems post Wilson!

All these complex issues, how to undo democracy and go back to FFs’ Republic etc are all explained by Michal Spencer in the blog which I visited thanks to Democles.

This discussion about dollar collapse has lot of knowledge -- the problem is that knowledge has very low value in the system that is ruling us today, democracy.

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14 hours ago, Jacob Smith said:

It is GOP’s MNCs that have driven American factories to China to evade huge taxes, min wages etc while talking nonsense about China and Russia being threats. All those factories were owned by their plutocrats at least when the pushing happened and China was resuscitated, brought out from grave.

What is wrong with businesses trying to avoid paying higher taxes and minimum wages by moving to a different location? 

BTW: MNCs are not "GOP's MNCs". It is one of the enduring myths of American politics that the Democrats are less in league with big-business than the GOP.

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14 hours ago, Jacob Smith said:

It is GOP’s MNCs that have driven American factories to China to evade huge taxes, min wages etc while talking nonsense about China and Russia being threats. All those factories were owned by their plutocrats at least when the pushing happened and China was resuscitated, brought out from grave.

What is wrong with businesses trying to avoid paying higher taxes and minimum wages by moving to a different location? 

BTW: MNCs are not "GOP's MNCs". It is one of the enduring myths of American politics that the Democrats are less in league with big-business than the GOP.

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On 25 February 2016 at 6:53 AM, softwareNerd said:

What is wrong with businesses trying to avoid paying higher taxes and minimum wages by moving to a different location? 

BTW: MNCs are not "GOP's MNCs". It is one of the enduring myths of American politics that the Democrats are less in league with big-business than the GOP.

The wrong part about it is as follows: Woodrow Wilson was the first one to delink dollar from gold, followed by fellow Dem FDR’s note-printing program. It was opposed tooth and nail by GOP as their major political plank. But when the Dems took socialism to the hilt, GOP could not produce good intellectual arguments – means in fact they failed in defending America’s original theory of individualism, which they claim to uphold as Conservatives. So instead they took the other irrationality as their election plank – the Dems’ main plank was “love for the poor” (socialism); the GOP’s became “capitalism” form behind which they perpetrated plutocracy, helping the money-bags via war-mongering, etc. That GOP became a party hand in hand with MNCs is not a causeless myth, it was so after Dems’ massive socialist push. War-mongering was meant to support the MIC (military industrial complex) of MNCs, and to support it, Nixon delinked dollar from gold, shamelessly hanging Woodrow Wilson’s photo in White House so as to pre-empt opposition from Dems. (Reagan continued the line with his famous quote – “Debt does not matter”). There is nothing wrong in some MNCs shifting base to low-tax locations – but as a planned move because of inability to uphold one’s proudly proclaimed philosophy (individualism and opposition to socialism), it is shameful. The other points related with this: China was far beyond mild socialism – it was arch-communism, also projected as a scarecrow by Conzs – but it was on death-bed because of Mao’s actions, and the same Conzs shamelessly resuscitated it – means opposition to socialism, China as a the most evil empire and threat to America and plus bringing China out of grave and strengthening it. To resuscitate China Nixon gave the world one of his three famous shocks – first one was overnight delinking dollar from gold without the world having any idea; for the second shock, Kissinger became unwell in Islamabad and suddenly appeared in Beijing, till then the most evil monster. That was because their MNCs needed to use cheap China labor. The third time Nixon himself too got shocked along with the world – Watergate!!

For an appreciable time after the New Deal most MNCs were with GOP – only after the realization that Dems’ doles vote block was solid, they could not be kept away from power for too long, and the need for immigrants to do software etc works (including banking for Wall Street too), a substantial number of money-bags shifted to Dems. Also see contradiction: a major reason for GOP’s opposition to migrants is loss of American jobs – but shifting all factories did not do that? Not merely low tax, they also wanted cheap labor; but for that the solution is not shifting all factories, war-mongering etc, but to defend properly against Dems’ socialism, for which they do not adequate intellectuality.

Both the parties are equally cheap and have contributed to the erosion of America, though Dems’ socialistic push is sort of the more harmful blow. While I detest both the parties equally, it was for the first time that Michael Spencer’s blog shed light that they are not doing this purposely so as to destroy America, but that democracy is more of a culprit, the competition being to get more votes – since the majority goes on increasing as we go to the lower side of the social pyramid, their policies are aimed at winning these voters, hence giving in to evil. This is the first time that I saw such good analysis about why America is slowly but surely sliding without breaks. Also: it’s a bit surprising what Spencer has to say about the policies of the two parties – below I am quoting from his website

Quote              What American politicians have done is not a “first time genius” – they have just repeated a classic and well-documented performance! See how old the original is: A man named Plato wrote, to surprising accuracy, what the Romans would exactly do a few centuries later, to be again repeated by Americans 2400 years after him. I am not an admirer of Plato’s philosophy; rather consider his “Philosopher-Ruler” to be every rational man’s biggest enemy. But Plato has made one of the most important and original studies of the decay of society, Greeks and Romans learnt a lot from it, and Americans improved upon Romans. Yet nobody has been able to bring a solution to the problem of erosion of republic into democracy and then collapse. Plato is describing what I have called above as ‘compulsions of majoritarian democracy’.               Unquote

I am quoting only a very small part, but I do believe that all those serious about restoring rationality in American society should study this website. The ideas are absolutely unique, nobody has studied democracy the way he has, and are absolutely necessary if we want to stop the slide. Especially for Objectivists who consider Ayn Rand to be infallible goddess and really believe O’ism will  conquer the whole world in future: Michael Spencer has dedicated his book to her, but the fact remains that neither Ayn Rand nor any of her followers studied democracy. They wrote extensively on Capitalism and Dictatorship, but democracy is a mixture of these two and also has characteristics of its own, and cannot be stopped without studying those characteristics. See further details on Spencer’s website.

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On 25 February 2016 at 6:53 AM, softwareNerd said:

What is wrong with businesses trying to avoid paying higher taxes and minimum wages by moving to a different location? 

BTW: MNCs are not "GOP's MNCs". It is one of the enduring myths of American politics that the Democrats are less in league with big-business than the GOP.

The wrong part about it is as follows: Woodrow Wilson was the first one to delink dollar from gold, followed by fellow Dem FDR’s note-printing program. It was opposed tooth and nail by GOP as their major political plank. But when the Dems took socialism to the hilt, GOP could not produce good intellectual arguments – means in fact they failed in defending America’s original theory of individualism, which they claim to uphold as Conservatives. So instead they took the other irrationality as their election plank – the Dems’ main plank was “love for the poor” (socialism); the GOP’s became “capitalism” form behind which they perpetrated plutocracy, helping the money-bags via war-mongering, etc. That GOP became a party hand in hand with MNCs is not a causeless myth, it was so after Dems’ massive socialist push. War-mongering was meant to support the MIC (military industrial complex) of MNCs, and to support it, Nixon delinked dollar from gold, shamelessly hanging Woodrow Wilson’s photo in White House so as to pre-empt opposition from Dems. (Reagan continued the line with his famous quote – “Debt does not matter”). There is nothing wrong in some MNCs shifting base to low-tax locations – but as a planned move because of inability to uphold one’s proudly proclaimed philosophy (individualism and opposition to socialism), it is shameful. The other points related with this: China was far beyond mild socialism – it was arch-communism, also projected as a scarecrow by Conzs – but it was on death-bed because of Mao’s actions, and the same Conzs shamelessly resuscitated it – means opposition to socialism, China as a the most evil empire and threat to America and plus bringing China out of grave and strengthening it. To resuscitate China Nixon gave the world one of his three famous shocks – first one was overnight delinking dollar from gold without the world having any idea; for the second shock, Kissinger became unwell in Islamabad and suddenly appeared in Beijing, till then the most evil monster. That was because their MNCs needed to use cheap China labor. The third time Nixon himself too got shocked along with the world – Watergate!!

For an appreciable time after the New Deal most MNCs were with GOP – only after the realization that Dems’ doles vote block was solid, they could not be kept away from power for too long, and the need for immigrants to do software etc works (including banking for Wall Street too), a substantial number of money-bags shifted to Dems. Also see contradiction: a major reason for GOP’s opposition to migrants is loss of American jobs – but shifting all factories did not do that? Not merely low tax, they also wanted cheap labor; but for that the solution is not shifting all factories, war-mongering etc, but to defend properly against Dems’ socialism, for which they do not adequate intellectuality.

Both the parties are equally cheap and have contributed to the erosion of America, though Dems’ socialistic push is sort of the more harmful blow. While I detest both the parties equally, it was for the first time that Michael Spencer’s blog shed light that they are not doing this purposely so as to destroy America, but that democracy is more of a culprit, the competition being to get more votes – since the majority goes on increasing as we go to the lower side of the social pyramid, their policies are aimed at winning these voters, hence giving in to evil. This is the first time that I saw such good analysis about why America is slowly but surely sliding without breaks. Also: it’s a bit surprising what Spencer has to say about the policies of the two parties – below I am quoting from his website

Quote              What American politicians have done is not a “first time genius” – they have just repeated a classic and well-documented performance! See how old the original is: A man named Plato wrote, to surprising accuracy, what the Romans would exactly do a few centuries later, to be again repeated by Americans 2400 years after him. I am not an admirer of Plato’s philosophy; rather consider his “Philosopher-Ruler” to be every rational man’s biggest enemy. But Plato has made one of the most important and original studies of the decay of society, Greeks and Romans learnt a lot from it, and Americans improved upon Romans. Yet nobody has been able to bring a solution to the problem of erosion of republic into democracy and then collapse. Plato is describing what I have called above as ‘compulsions of majoritarian democracy’.               Unquote

I am quoting only a very small part, but I do believe that all those serious about restoring rationality in American society should study this website. The ideas are absolutely unique, nobody has studied democracy the way he has, and are absolutely necessary if we want to stop the slide. Especially for Objectivists who consider Ayn Rand to be infallible goddess and really believe O’ism will  conquer the whole world in future: Michael Spencer has dedicated his book to her, but the fact remains that neither Ayn Rand nor any of her followers studied democracy. They wrote extensively on Capitalism and Dictatorship, but democracy is a mixture of these two and also has characteristics of its own, and cannot be stopped without studying those characteristics. See further details on Spencer’s website.

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