Breaking $2 trillion

Page 1 of 212>
September 14th, 2020 at 1:47:53 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 978
Posts: 11417
Quote: TIME (AUGUST 15, 2016 )
It was 45 years ago, on Aug. 15, 1971, when President Richard Nixon announced that the decades-old monetary system that had controlled the U.S. dollar—and thus the world’s currency values—for more than three decades just wasn’t working anymore. To most Americans the news, known as the “Nixon shock,” wasn’t actually shocking. War in Vietnam had drained America’s resources, world currency speculation was rampant and 1970 saw the biggest deficit thus far in U.S. history.

Quote: TIME (AUGUST 30, 1971 )
Washington cut the dollar’s tie to gold by serving notice that it will no longer cash in foreign-held dollars for gold bullion held at Fort Knox. Ever since 1944, when the present monetary system was devised at Bretton Woods, N.H., the dollar has had a special and internationally unique relationship to gold. Technically, gold is the asset by which nations pay their debts to one another. But practically, under the rules of the 118-nation International Monetary Fund, which evolved from the Bretton Woods conference, dollars are actually the medium of exchange through which nations settle those debts. The system was made possible by a promise from the U.S. Treasury to redeem dollars for gold at $35 an ounce. Because of that promise, IMF member nations had been assured that whenever they wanted gold in exchange for the dollars that they held as payment of debts, all they had to do was ask the Treasury Department in Washington.

U.S. gold reserves have dwindled steadily as a result of the nation’s balance of payments deficits in seven out of the last ten years. When Nixon got a look at the figures for the first six months of this year, he knew that drastic action was necessary. Last week the Department of Commerce released those figures: the U.S. ran a record first-half deficit of $11.6 billion. At that rate, the deficit would be $23 billion by year’s end.

Foreigners held three times as many dollars as the U.S. was capable of redeeming in gold, and they were demanding more and more gold because they were losing confidence in the U.S.’s will or ability to whip its economy into order. To prevent a run on Fort Knox, the President thus declared that the nation would no longer exchange dollars for gold.That meant that the dollar was no longer as good as gold. Thus foreigners had to sell their dollars in money markets for whatever they could get. Since a surfeit of dollars was sloshing around the world already, they could not expect to get much. In effect the dollar had been devalued.



Federal reserve notes in circulation at the end of 1971 were $51.305 billion. As of September 9, 2020, there was $1.98 trillion worth of Federal Reserve notes in circulation.
September 15th, 2020 at 2:29:48 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 113
Posts: 2915
I've been predicting hyper-inflation now for decades. That the economists are puzzled as well makes me feel a little better.
The light at the end of the tunnel can be a freight train coming the other way!..Fleastiff
September 15th, 2020 at 2:34:02 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 128
Posts: 13258
Quote: odiousgambit
I've been predicting hyper-inflation now for decades. That the economists are puzzled as well makes me feel a little better.


Many of us have. IMHO what is saving us is so many dollars leave the USA never to return. Eventually it will collapse. And the world with it.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
September 15th, 2020 at 6:10:07 AM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 978
Posts: 11417
Federal Reserve Notes (increased by 19.04% from 1950 to 1960)
$22,760,285,000 1950
$27,093,693,000 1960
$47,626,751,000 1970

Population of US (increased by 18.50% from 1950 to 1960)
151,325,798 1950
179,323,175 1960
203,392,031 1970

Federal Reserve Notes per inhabitant (increased by 0.45% from 1950 to 1960)
1950 $150.41
1960 $151.09
1970 $265.75

It was a long way until "It's All About the Benjamins" which was released by Puff Daddy on ‎August 12, 1997. I doubt many people ever saw a $100 bill in the 1950s.


Quote: odiousgambit
I've been predicting hyper-inflation now for decades. That the economists are puzzled as well makes me feel a little better.


It's interesting to note that in the 1950s even though we had robust GDP growth, the number of banknotes increased at roughly the same rate as the population. This was in a time when credit cards were very rare and we had virtually no wire transfers or any other means of conducting transactions. Of course, the amount of cash in circulation was tied to our gold reserves.

Now, of course, the circulation value of banknotes is increasing at a rate of about 10x population growth and we have an explosion of credit cards, paypal, venmo, zelle, along with the big bears like quantitative easing.

People talk about impending cashless society, but in reality the odds of us returning to a point where cash grows at the same rate as population (like it did in the 1950s) is almost unthinkable.

Federal Reserve Notes per inhabitant
1950 $150.41
1960 $151.09
1970 $266
1980 $572
1990 $1,092
2000 $2,285
2010 $3,347
2020 $6,000 +
September 15th, 2020 at 9:19:30 AM permalink
terapined
Member since: Aug 6, 2014
Threads: 52
Posts: 6441
I'm very scared of inflation
Surprised it has not happened
I have some of my money in an Inflation Protected Bond acct called PRIPX
Sometimes we live no particular way but our own - Grateful Dead "Eyes of the World"
September 15th, 2020 at 11:10:41 AM permalink
Evenbob
Member since: Oct 24, 2012
Threads: 138
Posts: 21938
Quote: odiousgambit
I've been predicting hyper-inflation now for decades. .


Germany had hyper inflation after
WWI because there was no
infrastructure left to back up the
currency. We have a ton of it,
there might not ever be an inflation
problem of any consequence.
If you take a risk, you may lose. If you never take a risk, you will always lose.
September 15th, 2020 at 8:27:32 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 978
Posts: 11417
Quote: Evenbob
We have a ton of it, there might not ever be an inflation problem of any consequence.


In finance the US is still the biggest dog in the world. Until China and Japan cooperate on an Asian currency that is unlikely to change.

List of countries by nominal GDP using official exchange rates(World bank 2019)
United States $21,427,700
China $14,342,903
Japan $5,081,770
India $2,875,142

List of countries by GDP using Purchasing Power Parity (World bank 2019)
China $23,460,170
United States $21,427,700
European Union $20,794,743
India $9,611,679
Japan $5,459,155

Although the ECB was for several years circulating more currency than the Federal Reserve, that is true no longer
$1.980 Trillion in Federal Reserve banknotes in circulation as of September 9, 2020
€1.378 Trillion in EURO banknotes as of August 1, 2020
€0.030 Trillion in EURO coins as of August 1, 2020
September 16th, 2020 at 5:01:30 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 113
Posts: 2915
infrastructure?
The light at the end of the tunnel can be a freight train coming the other way!..Fleastiff
September 16th, 2020 at 5:47:21 AM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 978
Posts: 11417
Quote: odiousgambit
infrastructure?



The mother of all infrastructure projects (up to that time) began in 1956 when production of money was about the same as population growth.

I don't know if there is a connection between grand infrastructure projects and money supply. It seems like some of our greatest infrastructure projects were completed before WWII or before money began to grow at incredible rates in the 1960s and shed its historical connection to precious metal.
September 16th, 2020 at 11:30:37 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 113
Posts: 2915
inflation becoming a problem, explained simply, is that too much money is chasing too few goods

so infrastructure as I understand it doesn't instantly come to mind for me
The light at the end of the tunnel can be a freight train coming the other way!..Fleastiff
Page 1 of 212>