If the dollar does collapse what happens?

[donheld]

Someone please explain to someone economically ignorant.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1264160

[burrowowl]

1. The richest of the rich will get richer

and the rest of us will have hell to pay.
I recomment: Kevin Phillips: Wealth and Democracay.

[DuaneBidoux]

25. Yes, an excellent book.

[radfringe]

39. the chinese and others

will forclose

[Deja Q]

53. I don't see how. If the dollar is worthless, then how can they benefit?

[DenverDem]

2. Gas costs $100 a gallon

and you better have a garden and solar power.

[Paranoid_Portlander]

55. Assuming that gardens and solar power are still legal.

The gov't can already dictate what you plant in your garden (no pot). Iraqis are required to buy, rather than save, certain seeds. Bushco will want to suck money out of solar power somehow.

[rockymountaindem]

3. Imported goods will become more expensive.

[candy]

4. I'll be waiting for the replies too.

I don't know whether to buy foreign currency or gold ot what. I know nothing.

[nashville_brook]

8. the way i understand it, we are headed for deep shit

either big recession or hyper-inflation. google inverted yield curve.

i take this to mean interest rates will be going up. money will be more expensive to borrow, but should (soon) earn more in conservative investment. gold is a place-holder.

we are fairly secure in terms of employment, so we are going to take advantage of low iinterest rates right now to do some work on the house, b/c we are afraid if we wait we won't be able to afford the loan.

if we were less secure in employment i totally wouldn't take on any debt right now.

there's also the chance that property values could plunge if interest rates surge. but that largely depends on if you are in an over-valued market.

[donheld]

15. I hope this will finally really mobilize people?

If the dollar colapses, will the media bother to tell us?

[donheld]

16. Most people the US are in heavy debt

what will these people do? I would guess many people will not be able to afford gas to even get to work.

[nashville_brook]

30. that's basically what will happen

foreclosures. bankruptcies.

no wonder bush is pushing back on our bankruptcy laws. the shit is going to hit the fan and they can't stand to think that common folk have a safety net.

[zann725]

36. Clearly he's planning to fill those Debtor Prisons with "free labor" for

his 3rd World vision of Amerikka in the 21st Century.

[Emboldened Chimp]

58. I just googled inverted yield curve and it means rates go down...

inverted yield curve
An uncommon situation in which long-term interest rates have lower yields than short-term interest rates. This is often a sign that interest rates are expected to decline. also called negative yield curve.

http://www.investorwords.com/2597/inverted_yield_curve.html

[nashville_brook]

61. it's not as simple as that -- it's counter-intuitive

here's a piece on Marketplace

http://marketplace.publicradio.org/shows/2005/02/18/PM200502181.html?rsssource=1

short term interest are rising
long term interest rates are dropping

every recession since 1960 has been preceeded by an inverted yeild curve. one of the best forcasting tools available to economists.

you are supposed to have short term interst rates keep up with inflation.

[DuaneBidoux]

24. Buy Euros, But NOT stocks in Europe. Just the cold hard cash and

hold it. European gov't bonds denominated in foreign currencies are okay, but you got to know a little more and watch a little more closely because things can more easily go wrong here (if you get into a global hyper inflation scenario) I've put 2000 Euro in my safe deposit box just in the last 6 months. Gold is good. Never hurts.

See my post below for the most likely scenario. The subject line goes "It would go approximately like this (can't be predicted..."

The last Federal Reserve Chairman Paul Volcker puts the odds of a major financial "accident" (His term) in the next four years at 75%.

[yodermon]

31. If everything goes to hell

how do you cash in on the Euros? Do you mean you have physical Euro's in a physical safe deposit box? How about opening a foreign bank account?

Although if things get so bad that banks are unable to honor foreign currency, i guess we'd be well & truly fucked anyway at that point.

[DuaneBidoux]

45. There will still be a world on the other side....

Study S. American countries and their experiences to see what is important. If you really truly think it will be a complete meltdown then forget Euros and go with gold, guns, and canned food.

[candy]

52. Thanks for your multiple posts on this subject--very helpful!

[benburch]

5. We eat the rich.

And then things really get bad.

[leveymg]

12. Or They Eat Us - See "Soylent Green" for one scenario.

Edward G. Robertson's last film, alas. Not Charleton Heston's. Damn.

Another scenario is global nuclear, chemical and biological war. Charleton Heston also stars in that 1970s end of the world classic - See, "The Omega Man"

Third scenario is the end of human civilization and enslavement by apes. Well, you've probably seen that one.

Heston was in a bunch of these apocalyse films. He always ends up surviving a lot of chaos, gunfire and mutants. On the job training for a job with the NRA, I suppose.

[Swamp Rat]

32. We should stuff Heston when he dies and display him in a museum. n/t

[shadowknows69]

40. Compared to what "The Chimp" has in store for us

the apes are looking pretty good. I, for one, welcome our hairy new overlords :hippie:

[bywho4who]

6. They will come for your GUNS THATS THE PLAN eom

[Goldmund]

7. And make you be gay too

[donheld]

9. So what happens to me?

I'm already gay, and i have no guns. :shrug:

[Goldmund]

11. They will give you free health care

[followthemoney]

10. Withdraw your cash in small denominations

You can stay warmer by burning a thousand singles than by burning ten hundreds.

[bywho4who]

13. Welcome to DU

I like your screen name and your choice of PRESIDENT, DJK is for-real-for-real.:toast:

[donheld]

14. Will this get people ready to protest?

I mean really protest. Unlike anything we've seen in many years.

[followthemoney]

20. No, This is a nation of Chauncey Gardeners. We will press the Buttons

on our remote controls.We will be back after a brief commercial announcement.

[rman]

28. Serious though rhetorical and somewhat off-topic question:

Follow the money: where *does* the money go?

Rhetorical because everyone knows where the money ends, generally. It's not a secret. If money is power then most power is where most money is. Well, at least it seems obvious to me. Doesn't the money end in the same place where it starts?

[followthemoney]

54. A topic of endless fascination for me.

You may remember when the Reagan administration proposed eliminating much of the food stamp program in order to force the hungry stand on their own two feet. This discipline was never acted on because the CORPORATE AGRICULTURE lobbyists cried that disrupting this flow of cash would be devastating. The program was saved not for its value to the under-employed but for CORPORATE WELFARE purposes.

Foreign aid becomes domestic corporate welfare aid by the same means. The concentration of wealth in the top 1% does not come through merit nor by accident.

[GumboYaYa]

44. A nation of Chauncy Gardners...LOL...

I think that may be a little too generous for the dunderhead repukes.

[sendero]

41. I hate to tell you...

... but protest at this point would accomplish nothing.

The forces arrayed against us, i.e. our huge government and personal debt, cannot be protested away.

I would implore everyone here, get your financial house in order, we are probably in for a bumpy ride.

The price of imported goods will skyrocket. Interest rates will rise precipitously, and there will probably be some serious price inflation.

Oddly enough, getting out of debt per se might not be your best plan. After all, if the value of a dollar drops, the value of your indebted assets rises (in dollar terms) and you pay it off in inflated (worth less) dollars.

For most people - I would do these things:

1) If you need a car, get one that gets good gas mileage. Gas is going to get really really expensive.

2) Buy some survial foods. Not that expensive freeze dried nonsense, just have a store of rice, beans, flour, oil, baking soda, maybe some ramen noodles and canned tuna.

3) Buy some hard assets that will retain their value in a serious inflation cycle. Silver and gold bullion comes to mind, but they are not the only things.

4) Credit-card debt is probably bad. Why? Because if there is inflation most CCs can change the interest rate on what you already owe on a whim. So they can stay ahead of the power curve at your expense. A home mortgage, on the other hand has a fixed rate, unless you have an ARM. If you have an ARM, CONVERT IT TO A FIXED RATE MORTAGE POST HASTE, you are sitting on a powder keg.

[JVS]

17. You won't be able to afford leaving the country

[necso]

18. I'm guessing

hyperinflation (here at least) for a start -- collapse of international trade, world-wide depression, massive civil unrest (if not civil war -- here, there and almost everywhere) -- and stuff like that.

Having things like our currency be so greatly effected by the "free market" (which amounts to "speculators" and "manipulators" in practise) is, generally, a bad idea. These speculators (et al) can force governments to react to contain these traders' ("traitors" also comes to mind) greed and gambling, fears and follies. And if these traders become panicked (which they do regularly), the end result could be beyond any government's ability to deal with it. (And it is foreign governments that are taking the principal actions to contain the dollar's fall -- one hell of a position to be in -- relying on nations that do not share our interests or have our well-being at heart to bail us out.)

However, this sort of "free market" activity is "gospel" to the lunatics in charge. Indeed, some of the (dark) "lights" of this movement would like to see the dollar fall dramatically. One can only surmise that they have some sort of plan to direct the mobs away from themselves (or perhaps they'll just run) -- and that they are holding foreign currencies.

Oh, and if this does happen (a dollar collapse), I recommend abolishing personal debt (that owed by individual persons) up to one million dollars per individual debt-holder.

If you take away the value of the average citizen's assets (as measured in more international terms), then you should take away his debt on those assets.

Government and corporate debt, and that of extremely wealthy, can stand -- it will cost a lot less to repay, which is part of the objectives (and, again, as measured in more international terms -- as is their normal purview).

[depakid]

19. Foreclosures

Lots of them.

The housing bubble wil finally burst, and people will find themselve upside down in their mortgages, like in the late 80's.

[TWiley]

49. I believe "butt-load" of foreclosures is the term.

Greenspan encouraged the peasants to refinance their homes with the low interest rates. Many borrowed the max, converting equity to cash. He did this to artificially prop up the failing economy of the bushtapo.

When the dollar takes a dump, equity which was converted to cash will be absorbed by the super rich as inflation kicks in. The final insult will come when the bushtapo exports the last job, and folks loose the homes that they had been paying on for the last 20 years.

The republicans hated Clinton because the middle class was given a place at the supper bowl. The bushtapo intends to return this "middle class windfall" back to American royalty.

[Viking12]

57. Yes, I believe "butt-load" IS the technical economic term

:toast:

[lala_rawraw]

21. We

barter with one another, like in the far past...also, the rest of the world will attack us, but that is a whole other nightmare... the missing 9 billion and other funds is perhaps a nest egg the Bush regime is building?

[applegrove]

22. Wal Mart kids only get a tax break of $20 million each :cry:

[DuaneBidoux]

23. It would go approximately (can't be predicted exactly) like this:

Dollar falls dramatically,

Foreigners pull their assets out of the states because they are tired of watching their investments decline relative to their home currency.

As a result of foreigners pulling investments there are not enough people lending the US govt and individuals, and companies (The US now borrows 80% of all money saved globally). When a bond is sold, many people bid and interest goes down, when a bond is sold and no-one wants to buy (foreigners all gone remember) then interest rates climb.

In worse case scenario we overnight see interest rates of 12 and up percent without the growth to justify such rates (such interest rates are okay if you have a hotly burning economy and lots of demand).

Suddenly people holding a lot of debt, for example variable rate mortgages and lots of credit card debt watch their house payments double overnight as interest rates spike. But this is like a plane stalling out, because now with everyone struggling just to keep up with their debt payments nobody can spend money on things like clothes, food, cars, house, and we begin a vicious circle of defaults, deflation, and finally the big D: "Depression."

Roughly something like that. Now at the big D point the government may panic and simply start running the printing presses and handing out cash to everyone. Under this scenario we then go into hyper inflation (like when in Germany everyone was carrying wheel barrows of cash to buy bread). Then, unless we get a strong Democratic government that says "okay...here are the rules and we play straight with everyone" there will usually follow lots of guns and mobs roaming the streets. Just your standard everyday Apocalypse (the kind we used to have about every 20 years before FDR).

[donheld]

26. I wish all responses could be like yours

I wanted good explanations. That's what i got from you. I know it's a painful scenario, but we may have to face it anyway.

[DuaneBidoux]

46. The clarity probably has something to do with how I make my living:

I'm a professional writer/speaker/trainer.

(and I must stay anonymous)

[nothingshocksmeanymore]

47. Question: When the yen was dropping, Japan compensated at home

by lowering interest rates leading to DEFLATION...no?

[Art_from_Ark]

60. When the yen was dropping, when?

Interest rates here in Japan have been low for years.

Deflation in Japan has a variety of root causes.

[rman]

27. * wil blame the rest of the world

and will use it to rally support for more wars.

[donheld]

34. Can the US start wars with no money?

I know * is stupid enough to try.

[zann725]

37. He'll fund it with the Trillions he steals from SS lockbox.

That's why he's so desparate to eliminate SS.

And if people become deeply in debt, and no job are available, they'll literally become "serfs" owned by the Fascist dictatorship. And will be used as unpaid labor to pay off their debts. And a very large part of that unpaid, unfed workforce will be Soldiers...in which people of both sexes and all ages are drafted into. And just like today's soldiers, the soldiers will not be adequately fed, nor will they receive adequate medical treatment, nor will they be paid (like numerous ones now have not received paychecks for months).

The prospects are indeed "dark"...and far worse than any Dickens novel.

[rman]

59. having support from the powers behind the scenes, money is no object.

-

[shadowknows69]

42. that's the plan

when the rest of the world plays their financial trump card against us then "in the interest of national security" the US will have to "secure the natural resources of the world by any means necessary". Cue gobal warfare nu-cu-lar weapons included. If the murican way of life can't be preserved we'd all rather perish right? The cockroaches are waiting with baited antenae.

[TWiley]

50. Naaawww, They will blame Clinton.

in their odd, twisted, and republican kind of way.

[Stirk]

29. *Could* our economy collapse as it did in 1929?

As I understand it, the Pentagon system was set up after the Depression to stabilize the economy. It's a massive goverment spending machine, and our economy is basically fueled by that spending.

So- could our economy collapse as bad as it did in 1929, or are we protected by our essentially fascist economy (for once)?

[Swamp Rat]

33. Lots of angry, jobless and homeless people with guns...

... lots of people 'going postal'. :(

[shadowknows69]

43. we'll have a terrorist event resulting in martial law

and the consfication of your guns (except for a few loyalty oath signing folks from the NRA) to prevent mass chaos in this time of national crisis. We'll give them back afterwards...we promise.

[TWiley]

51. Martial law would mean NO elections.

We would get a shrub stuck up our arse for the next decade.

[lovuian]

35. Argentina has just gone through something like this

http://news.bbc.co.uk/1/hi/business/1722935.stm

Bush backs IMF austerity measures


US President George W Bush has urged Argentina's next leader to carry out the austerity measures proposed by the International Monetary Fund (IMF


Its easy for Bush to tell starving people to carry out the austerity measures!!! Americans won't get much compassion from him thats for sure!!!



http://www.verdant.net/argentina.htm

Argentina:A country that has been mortgaged to where even the educated middle class are starving

To try and pacifiy the bankers, public employees and others are now going to be paid in a new currency, The Argentino, that will exist alongside both the Peso and the dollar which will be reserved for outgoing payments to the bankers.

What about mortgages and company debts denominated in dollars?

How do you pay them if you're paid in monopoly money like the Argentino?

(Forget going to the banks to withdraw your savings in dollars.

They're only allowing you to withdraw $1,000 per month-at least for the time being.)

Just some interesting points when there is a run on a currency!!! This is due to corrupt politicians running amok with the people's money!!! This is what has the Republicans nervous this debt is large and you can be like Enron and change the numbers and defraud the people but there will be a day of reckoning!!!

[pabloseb]

38. I'm from Argentina

The news you quote are over 3 years old in some cases, and rumours that ran over 3 years ago but never materialized in other cases (like the Argentino currency). But it's true that Argentina went through something like that in 2001 - the country defaulted on the national debt and the local currency and economy collapsed.

However, I don't think it makes much sense to compare both. The collapse of Argentina's economy had only a regional impact, while if anything remotely like that happened in the US one can't even start to imagine the reach of the crisis that would follow.

My assumption is that if there's anybody left with a brain in the * administration, their gamble is that there will be no run against the US dollar because everybody would then lose.

The fact is nobody knows what's going to happen, but there is no question that the growing national debt makes America much weaker in the medium run and it's a huge burden to future generations.

[newportdadde]

48. Duane summed it up pretty nicely.

here are areas to put your money to protect from the dollar falling, gold etc, although how this would play out in a real world scenario.. ie purchasing with gold I'm not sure.

I was in gold stocks for a bit but the risk is there that a market collapse will take all stocks with it including gold stocks. Currently I'm in an oil, we are in a commodity bull market for now.

[Padraig18]

56. I dunno, but we've started buying gold and silver.

It seems like the sensible thing to do.