The Value of One Dollar

Art as added value. A very old concept. Well, done. I just wonder what the legal implications could be or are. I know that in Germany it is a crime to burn, damage or discard money on purpose. Now this would qualify under that law.

The Origami is wonderful. I still have a plane my son made out of dollar bill years ago. LIVE BELOW your means. It helps.

Hugh it neither hurts or helps the economy taking out dollars. These are printed by the feds at such an enormous speed, you can't keep up with them. Never ever!

I've heard of people living out of school buses, but never a garbage truck.

Pretty cool post - the guy's pretty creative, I liked the crab.

Thanks Blue Crush, that garbage truck is really an invention and have you noticed all the luxury one needs is in it.

Prior to the creation of the Federal Reserve System in 1913 by Woodrow Wilson signing the Federal Reserve Act, a dollar was worth the face value of 100 cents.

To answer the question posed in the story....

After a century of abuse by the FED in creating artificial fiat debt paper currency in the form of "Notes" with interest attached, manipulated inflations and deflations, creation of the Internal Revenue Service, Wall Street schemes and corrupt banking practices, the dollar is worth approximately $.02 cents as compared to the beginning of the last century.  In fact, it cost more to produce each one dollar bill than the comparative value... approximately $.06.2 cents per dollar bill printed.

The quoted part of news came in a Sri Lankan News Paper, under the head line "Sri Lanka buys 10 tonnes of gold from IMF"

PIM, Any insights would be appreciated. What is this article talking about?

.Agent.

.Agent that article you refer to is talking about Fiat money, which before 1971 was backed by gold, to avoid printing of unlimited quantities of dollars to inflate its value. As the fed is doing now since 2001. Under Nixon the gold connection was abandoned and consequently inflation took off. Fortunately Paul Volcker came in charge in the 80s of the the fed and he implemented austerity by increasing the rate of interest. He did an excellent job, for which he was not appreciated at his time, only thereafter he was. Someone like him should be in charge at the fed again nowadays.

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

Why would it be different this time? Actuality, it isn’t. In fact, there has been several failed attempts using paper currency, and today’s currencies are nothing different. Fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.

Today’s monetary situation has many similarities with the historical stories that led up to the eventual collapse of currencies. The reality of the world’s economy has been obscured by a perceptual illusion. Fiat currency has value based on perception it only can function with proper management and controls. The most obvious thing is that the banking and monetary systems have flaws in their foundation, the base design of fiat currency is related to interest. Inflation could be considered a measure of theft or system leakage. When reality meets the illusion of mismanaged fiat currency the bubble will burst and what was perceived to have value will be seen for the truth.

To read more about the history of fiat money go to this essay. Hope yr question is sufficiently answered?

Thank you, PIM. Yes, I got more light on the question, and understood the essay a bit more.

Last week ( Week 47, Nov 2009) , there was a news in most of the Indian news papers that the country buys 200 tonnes of gold from IMF. Maybe the Government is trying to get rid of ever de-valueing dollar. IMF was planning to sell around 400 tonnes and the most expected buyer was China.

Since Sri Lanka too jumped in the bandwagon, one must thing that something seriously going to happen in US in the near future.

Collecting more information...

.Agent.

Yes you're right. .Agent. India and before China bought gold partly to hedge against the ever devaluing US dollar and partly to get rid of as many dollars as possible in a neat manner. If China and Japan the biggest creditors to the US (3 Trillion amongst them 2 :1) dump the US dollar in too large quantities too fast the the bottom will fall out this currency and real world wide panic and chaos will be the result. However their holdings of US Dollars are so large that it will take ages to do it this way. And since it looks like Ben Bernanke will not change course, worse may to come. Thus buy gold privately too.

It is no secret that "dollar alternatives" are openly discussed among large holders of US paper. So shaky is the dollar, in fact, that even a discredited rumor in an English paper about OPEC nations ditching the buck sent the world's "reserve" currency into a tailspin, tipping off gold's current trailblazing rise - itself another indicator of fear and loathing of the once almighty buck.

maybe you guys should do a little research and see what country has the largest gold reserves in the world. Then, do me a favor and kick yourselves in the a$$ for being morons.

You couldn't be more polite blyke! Another drop in the dollar = another big day for the equities markets,as gold is on the rise again, precariously perched above the psychologically pertinent $1,200 an ounce mark.

"Governments all around the world are printing money, so that changes the demand. Commodities, and gold in particular, have to rise in price when governments are creating so much money (and) interest rates are so low.”

“That’s not a bubble, it’s just the reaction to the debasement of paper money.”

It just is what kind of accent on implementation is applied. For the longterm, gold is better than US Dollars since the feds are debasing this currency by printing more of it, at least for the unsee able future to come!

Here in detail how it works aureleus: It are even more the speculations and manipulations that drives up the stock with the feds money in hand by lousy and arrogant bankers.
The stock market is not oblivious to the dollar's weakness either...nor to the inflationary implications of the greenback's withering purchasing power. In fact, the stock market is behaving very much like a pure inflation hedge. Every day that the dollar loses big, the stock market gains big...and vice versa. In other words, the struggling American economy does not seem to validate the soaring stock market. But the dollar's weakness does...at least partly.
Finally, everyone is catching on learning how it works. The big banks take the feds' money, and then they speculate with it, or lend it back to the Fed for an easy 4% gain.
So for all taxpayers’ troubles, providing the billions that were paid in bailouts, the tireless political battles, the violent market swings, what have been delivered in return? ‘Too Big to Fail’ banks are even bigger, and they are hoarding their larger market share. They hardly can be blamed for it, with such an easy ride as the Feds provide them, - you would be thief of yourself - however the taxpayer is swindled on the largest scale ever.

"How Wall Street Will Kill the Recovery," is a headline in BusinessWeek magazine.

Moreover: “It is much easier to manipulate speculative markets than it is to manipulate the real economy. Want to drive up prices? Just give speculators some free money to play with! Guarantee their debts! Bail them out of their stupid positions! That's what the feds have done. And that's why the banks - the recipients and conduits for the free money - are making profits. Goldman allocated $527,000, per employee, in compensation for the first 9 months of this year.” That is an increase of 46% over last year.

The dollar's value is taking direct hits from various sides as above is explained. Bernanke and Geithner, two hands on one belly, are claiming victory against Deflation and Depression, which as people coming to their senses well understand is not true and won't be true, as long the creation of more debt is applied by the Fed and the Treasury to resolve this financial crisis. In my opinion whether the Fed or the Treasury are in charge it won't make a dime of difference. It is more the philosophy - a growing economy is the solution that will happen by injecting more money in the financial system - of the ones in charge is applying the wrong medicine.Either the patient will die or become terminal ill. This crisis is only solved if.... all the DEBT is eliminated and that will take a long time. The longer the debt burden is increased by the Fed and/or the Treasury the worse it will become and the longer it will take. A man like Paul Volcker in charge who was fed chairman in the 80s would do the trick.

Yes you're right. Theoretically, but practically to organize qualified people to handle this job???? Difficult to get in place. Too many people with too many different opinions are not a good option either. I would better trust someone with the capabilities of Paul Volcker heading the rescue team, to do the job.

arelius we both mean the same, but maybe with some difference in interpretation. What I before wrote in an essay, it is the free market that drives the economy, that determines the kind of creative destruction that is required to reduce overcapacity in the system, either the flow of money or goods. But before to come out of this unbalanced environment someone has to jump start the process. Higher interest rates will revalue the US Dollar and so on. Business is clever enough to find the best solution to work under all circumstances.

Unfortunately, the "someone"s in charge of so called jump-starting the process don't believe in a truly free-market-economy.  Therefore nothing will change as evidenced by the stimulus and bailouts. Higher interest rates will do nothing for those at the bottom or to enable growth.

I believe a more reasonable and equitable solution would be to put the flow of money into the hands of the people through public governance, including making funds available to small business and entrepreneurship as the backbone needed to effectively stimulate the economy through a revitalization of our manufacturing base to create real employment, stablilize prices and insure growth while ridding the economy of so-called "toxic-assets" and false wealth.

To have you better informed about what the market does and what I meant I'll try to explain this in more detail: Markets are complex natural systems they can never really be controlled or predicted. That's what makes them so interesting.
Markets are always teaching or correcting something. Those are the moral lessons in the broadest sense.

The purpose of a bear market (after Aug. 2007) is to correct the errors of the preceding boom (before Aug. 2007). Most prominent among those errors is to think that money can be made by speculation. When this idea is successful for a while, good sense is lost. People buy dotcoms with no business plan, and houses not to be lived in by them.
 
When people don’t want anymore be involved with those stuff, the market has changed and that can take a long while. Don’t wonder if another crash the next leg down of the double W-cycle is in this historic economic correction that will teach another moral lesson. The media are telling that the recession is almost over, because the declines are less, but still are there. Wishful thinking, says fewer declines equal economic improvement, which isn’t true either.
Apparently Central Banks haven’t learned this lesson so far. All over the world they're trying to solve a problem caused by too much credit by providing trillions more of the same. If this money is distributed by public governance it won't make the change as envisioned. So there we arrive at the point putting money in the hands of people, but without structured business plans that won't work either. Money is made by return on investment and that finally will put money in the hands of people, Aurelius.

What should be understood is for example that also China, which is a communist controlled - another form of 'public governance' -  economy with its vertical hierarchy, where the market has gone wild because of the government’s half a trillion stimulus that now is spent.
In the rest of the world they've been less successful either. But they still haven't given up. On the contrary, they've put at risk an amount equal to nearly twice the GDP of the entire US economy, and now are talking about Stimulus II. And God may know how many stimuli are coming thereafter?

All the above should be voided and what should be accepted is that consumers have become wiser. They seem to have learned their lesson. Savings rates have gone from zero to 7% in the past 12 months, which is a remarkable turnaround. Penny-pinching is back in fashion. The word ‘Thrift’ has been put back in the dictionary. Consumers are tired of carrying huge debt loads. They're eager to get rid of their debt as soon as is possible. But look at Japan that now for over two decades is in and out of recession, but their crisis that started in 1989 still isn't solved and won't be if they continue on this road to recovery that will lead to nowhere.

Even so neither Wall Street, nor Washington, nor any other Central Bank seem to have learned much. Wall Street is still continues to handing out billions in bonuses, leaving its institutions short of capital reserves instead of providing business with it! Investors still seem ready to jump onto whatever wagon with the most people on it. But in this situation it is impossible to put money into peoples hands with or without public governance. The idea is sound, but in this stage it cannot work, how much we may like it!

You misunderstand me PIM. While it's true that markets are "self-correcting," unfortunately this is not the case currently, mainly because of debt backed stimulus and federal bailouts due to the "to big to fail" doctrine alleged by corporatism and supported by The FED and political cronies. These policies are not in keeping with a truly free-market-economy.

The only way to "correct the errors of the preceding boom," is to naturally allow the "bear market" to take place and permit these institutions to fail so that the market CAN correct itself without interference by artificially propping them up. Speculation is fine but speculators, who choose to gamble on risky investments, should also be willing (and required) to accept the loss when such speculation proves unyeilding. Stimulus and bailouts only serve to prolong the problem until the market DOES ultimately correct itself, which will become evident by crashing at a future date.

The FED, Central Banks and associated World Banks are at the core and are the root of the problem in my opinion.  They have become delusional, living in their economic fantasyland caused by their years of dominance of the world economic systems. They want to (and believe they can) continue to do business as usual under former established rules they created but this can no longer continue and as I think, will either lead to their demise or utter world chaos resulting in complete economic slavery.

The main difference between China's stimulus and the United States is that China is a nation that SAVED while making sound investments backed by hard assets.  They did not squander or depend upon credit as the US and other nations have. Whereas China did not have to borrow money in order to provide a stimulus to their economy thereby minimizing any risk, the United States had to borrow money to provide its stimulus, thereby jeopardizing its economy and putting her soverignty at risk.  Has very little to do with comparative national political structures, in my opinion.

What should be understood is that paper-money (banknotes) is nothing but a symbol of what is valued and in itself, has no intrinsic value as you are aware.  Real money (value) is created through production (labor) by people by making things (products) that can be sold on the open market. 

Putting the control back in the hands of the people is not only possible, it would allow people to create the value (real money) once again through “structured business plans", not by the swipe of a pen as a bookkeeping entry with interest, by the banks.  It would induce a stronger economy built upon a proven foundation of hard assets through products produced and aid to regulate the phony paper assets that have infected the economy.

Small business development through entrepreneurship would eventually flourish as a result of public control over the economy, effectively diverting us from being an entirely service-based economy by supporting a strong manufacturing base where we make things once again and opening the door for full-employment.

Foremost in regards to economic-governance where democracies are concerned, is that PUBLIC control would be most effective and desirable in propping up and supporting free-markets.  It would allow for more transparency (not to mention, self-correcting) where, at present, there is none under the secret governance of the Federal Reserve Corporation. The Fed could be dissolved with control given back to the Treasury where it belongs, eventually leading towards reducing and paying off the federal debt and ultimately, eliminating the Internal Revenue Service, whose only purpose through its creation during the beginning of the 20th Century, was to tax individual income in order to service the debt created by borrowing from the Federal Reserve.

In my opinion, it's time to abandon the out-dated, unreliable and dysfunctionaly corrupt banker's system, allowing ways for people to think and act outside the box and stop relying on the status-quo for imagined recoveries that have been promised ever since the FED took control a century ago, and we stopped being a productive nation.

aurelius we both, each of us in the above 2nd paragraph state that the bear market has to correct the errors previous made, amongst others primarily paying down private and public DEBT. Without that, whatever is undertaken, nothing will result in an improvement. A free market is not influenced by government nor by the fed, if so than it isn't a free market at all. Consumption is needed to create economic growth, but as explained the consumers are gone for a long time to come because they first will pay down their debt and than they are too scared to consume on a level as before 2.007. In such a situation control in the hands of people sounds good but it won't bring the results envisioned. Of course it is small business that will be the job creator. As an example: After WWII it was Germany that with their stimulus of small business created the ‘Mittelstand’ that became the growth engine and created millions of new jobs. Resulting in the strongest world economy after the USA at the time. The Mittelstand was for decades the cork that kept Germany’s economy floating through most of all downturns!

But in the present market condition, small businesses are hunkering down and trying to weather the storm. Their focus is not on adding more employees, buying more equipment, or expanding real estate. They just want to stay solvent and live to see another day, rather than help the recovery.

But before new ways successfully can be employed the 'rubbish' -errors- have to be moved out aurelius. I understand you want to start immediately with the redecoration but it won't take hold yet. Consumption will remain, but not anymore on pre- 2007 -level. Society has to readjust itself, and for sure it will go much faster without government and fed intervention.

After the clean-out yr idea will take hold and create improvements you do envision, but unfortunately not earlier.