The US Dollar

"Obama has a $210 billion check in his hand ready to “repay” the US debt. Which is money that goes from one hand, behind the back, into the other."

That would be a funny line, if it were funny. It isn't funny, nor is it magic. If we do that in real life, it is known as kiting, or a scam, or a con.
Good thing the folks in charge are so much smarter than you and i, PIM.

The problem is we were not supposed to know this left hand right hand manipulation, but anyhow good reliable sources in these days are valuable for all of us. Fiat money is as old as civilized society. The Roman Empire was the first known to have fiat currency in use,  it wasn’t actually paper money, but it was one of the first examples of true debasement of a currency. The denarius, Rome’s coinage of the time, was, essentially, pure silver at the beginning of the first century A.D. By A.D. 54, Emperor Nero had entered the scene, and the denarius was approximately 94% silver. By around A.D.100, the denarius’ silver content was down to 85%. In the 11th century, a bank in the Szechuan province of China issued paper money in exchange for the iron coins. Initially, this was fine, because the paper money was exchangeable for gold, silver, or silk. Eventually, inflation began to take hold, as China was funding an ongoing war with the Mongols, which it eventually lost.

The French have been particularly unsuccessful in their attempts with fiat money.

Whether the folks in charge are much smarter than we are is very much in doubt. At least to be smart they should understand what they are doing is wrong. But public memory is short and they count that soon everything will be forgotten far before the next election.

Public perhaps, but the clever Chinese certainly not!
John Law was the first man to introduce paper money to France. The notion of paper money was greatly helped along by the passing of Louis XIV and the 3 billion livres of debt that he left.

When Louis XV was old enough to make his own mistakes, he required that all taxes be paid in paper money. The currency was backed by coinage, until people actually wanted coins.

The new paper currency rapidly became oversupplied until nobody wished to own the worthless junk anymore and demanded coinage for the currency.
It looks like Law didn’t think that anyone would actually want coins ever again. After making it illegal to export any gold or silver, and the failed attempts by the locals to exchange their paper currency for something of actual value, the currency collapsed.

John Law became the most hated man in France and was forced to flee to Italy.

The German Weimar Republic (1920), called their fiat money the Mark
Post-World War I Weimar Germany was one of the greatest periods of hyperinflation that ever existed. The Treaty of Versailles was essentially a financial punishment placed on Germany to make reparations. The sums of money to be paid by Germany were enormous, and the only way it could make repayment was by running the printing press.

This enormous debt that should be repaid as the result of WWI was the initiator for WWII.

Other more recentl collapses in fiat currencies are:
In 1932, Argentina had the eighth largest economy in the world before its currency collapsed. In 1992, Finland, Italy, and Norway had currency shocks that spread through Europe.

In 1994, Mexico went through the infamous “Tequila Hangover,” which sent the peso tumbling and spread economic hardships throughout Latin America.
In 1997, the Thai baht fell through the floor and the effects spread to Malaysia, the Philippines, Indonesia, Hong Kong, and South Korea.

In the early 21st century, it was the Turkish lira experience that stroke hyperinflation similar to that of the mark of Weimar Germany.

Hugh: The folks in charge aren't that smart as we are. They should know what they are doing is completely wrong and unacceptable. But who cares. Public memory is short lived and before the next election is due they hope all this is over. Which won't.

US economy withers
With US unemployment at 17.5% of the workforce by comprehensive measure, American prices won't move at the rate at which the dollar is devalued. Labor will remain cheap. The grass roots of the US economy continue to dry up

You Should Be VERY Concerned About Our Parallels With Japan The Pragmatic Capitalist

"Rather than deal with the problems directly (IT’S THE DEBT STUPID!) they attempted to circumvent the problem by creating an environment where the government spent hordes of money to prop up failing institutions."

The dollar: endgame? – The Richter Report

Former chief IMF economist Simon Johnson points out that the U.S. is intentionally weakening the dollar in order to bail out the too-big-to-fails:

To bail out our banks, we need cheap money, and this implies some inflation. To finance our current account deficit, investors need to think they are buying inexpensive assets from us. Everything points to a cheaper dollar...

Senator Byron Dorgan has some harsh words for the too big to fails:

It's one of the most frustrating things. We essentially have had modern-day bank robbers -- except that they wore gray suits and not masks -- and there's been no accountability for it ...

Every day we see energy speculators, war profiteers, managed health-care providers, media propagandists, and/or financiers given some unfair advantage over the average consumers and taxpayers, and the cumulative effect of the American people watching selfishness prevail over the public interest has been an undermining of the public's trust in government.

This "anything goes" approach to capitalism has injured the very economy we have aspired to create.

I'm a big fan of the free-market system...This is not about a liberal or conservative philosophy. It is about making sure our economy and the free-market system work for everybody...

There's no question the system is rigged against the little guy. The bigger interests have a lot more information. They jerry-rig the system so that they always win.

Dorgan said 3 things are needed to fix the financial system:

One is to separate investment banks and FDIC-insured banks. Second, prohibit FDIC-insured banks from dealing in risky financial instruments on their own proprietary accounts... And third, abolish "too big to fail." If you're too big to fail, you're too big. Too big to fail is what I call no-fault capitalism.

Senator Dorgan was one of only 8 senators who opposed the repeal of the Glass Steagall Act.

This of course is a speclation from the Wall Street story that speculates,  

He is not going to pay the Chinese anything other than pay them a visit. This is all about taxing imports and coming to an agreement it will all be much clearer later on so please "don't panic". lol

Nice story, a good read.

"Every day we see energy speculators, war profiteers, managed health-care providers, media propagandists, and/or financiers given some unfair advantage over the average consumers and taxpayers, and the cumulative effect of the American people watching selfishness prevail over the public interest has been an undermining of the public's trust in government." this snuffysmith is exactly pin-pointing the problem society is in. Free market is the only major regulator that should kept at work. And let the lobbyist with their bribe money go home and be prohibited to interfere at government level.

U.S. Dollar Has A Long Way To Fall

China's right, the U.S. government wants to inflate its way out of debt.

http://www.forbes.com/2009/11/16/dollar-gold-china-markets-currencies-michael-berry.html?partner=alerts

And China doesn't like.

Instead the US accuses China of currency manipulation. However, I believe
China has the US over a barrel hands down this time because it has pegged
its currency to the US dollar. Economic Hardball in the vernacular.