Do you have an opinion about the Currency Collapse theory?

I have been reading for quite some time about frightening concepts such as "Fractionary Reserve" performed by the banks (which leads to money creation from nothing), huge Derivatives market (which is already equivalent to many times the world production of goods and services), the ever growing countries' debts (which is each time more significant) and "Quantitative Easing" (which has produced an alarming supply of currency).

Based on these concepts and world events, some people claim there will be an unexpected currency collapse in the near future that will make the value of precious metals (as well as other commodities and essential goods) to skyrocket in such a short period that nobody will have time to react.

These people, who claim to be buying precious metals, present this logic very openly and consistently. On the other hand, most of the experts and key stakeholders regarding this matter have been silent. Consequently, there is barely any debate about this very important issue that affects people's lives in the whole world.

With no debate and sharing of knowledge and perspectives, many people like me are left in the dark, looking at some that have been saying whatever they want while others have been silent no matter what.

Can anyone help me understand what's going on and who is right? Are the frightening concepts (mentioned above) for real? Will they cause a currency collapse? If so, will it make the value of the precious metals to instantly rise to insane levels?

 

AFAIK, all currencies that have collapsed into hyperinflation have sent gold and silver to "insane levels" within that country.

The classic example is Germany 1923, when gold cost 100,000,000,000,000 (100 Trillion) German Marks an ounce in late 1923. What it was in Zimbabwe i have no idea.

I am quite certain that gold will hit $5000 an ounce BEFORE the hyperinflation sets in, simply because of what it is, a store of REAL and stable value, and the facts of supply and demand.

And if printing money like they are is a good sensible idea, why have many countries not tried it before? They would ALL have printed their way to prosperity.

JMO



OC

 

Yes.

Learn what is inflation, deflation then hyperinflation, biflation and stagflation.

A collapse doesn't always lead to "hyperinflation" (where currency is debase >20%/month), Bill Still and Professor Steve Keens have discussed things that happened in the 1930's great depression.

To me the depression had features: (1) loss of jobs (2) contraction of money supply (3) increase in prices of essentials like food/energy (4) Decrease in certain asset price eg. electronics, cars etc.

This really is a type of biflation or stagflation.

Now these guys say they are going to run the printing presses and thus create hyperinflation. Hmmm....
Let's examine that for a moment.
1) Do you believe these guys in charge are really retarded or are they smart and sinister?
2) Do you believe for a moment that they have the common person's interest at heart?
3) Do you believe that there is a plan or it's all so accidental?
4) Do you see the common man getting the benefit of the printing press or is just them?
5) Do you see they have continually lied? And they've been "wrong" on everything with 100% accuracy? Coincidence? (from tech boom, housing etc.)

In actuality they can use the debt like a vacuum to suck the money out to the system anytime they want. What can we be sure of?
1) They want the masses to be in fear
2) They want the masses to be made poor
3) They want to depopulation and microchip people
4) They want to control where people live
5) They want people confused (too many disinformation campaigns/agents)
6) They want to remain in power
7) They control the military, bombs and they sure aren't afraid to use them
8) They control all systems of power - go to the hospital - opps wrong injection. go to court - no justice etc. etc.
9) They want everyone to serve them, pyramid system.

Buying gold and silver is one part of a sensible strategy. To me I say pick up a KJV, for me I did a bit of stumbling and stumble across evolution being completely false and simply absurd (except for micro variations of a kind), "abiogensis" - simply the perfect comedy especially if you know anything about entropy and complexity.

You asked the question "will they"? Make no mistake, these evil guys will do anything, they dropped nuclear weapons on innocent people, genocided over 1 million Iraqi people, world wars etc.

Frightening, yeah it can be but I suggest reading the end to the book (KJV). They lose. Still doesn't mean be apathetic, prepare, you know right from wrong, you have eyes and ears.

 

All you say makes sense. But you're assuming the hiperinflation scenario. How can you know that it's what gonna happen?

 

Ok, but how can you logically go from today's situation to a currency collapse? That's what I would like to know because, if it was so obvious, half of the world would be already running into precious metals.

 

Because, EVENTUALLY, printing/money supply/velocity, all lead to hyperinflation!

That is what all the 'experts tell me, and i do not remember anyone telling me that it does not!

OC (B econ - FAILED)

 

What you are witnessing now is a massive deflationary spiral that can wipe out currencies and economies just as easy as hyperinflation. Don't be confused because not everything falls in price in a deflationary spiral. With very little possibility of profit, investment money evaporates and the economy sinks. You only have to look at the major corporations in the world to se that they are holding incredible amounts of cash. They are not investing. This is bad.

 

I don't know of any specific theory of currency collapsing. I understand the idea behind why people think it will collapse.

I certainly think that while you have more than one currency around, you will see some do better than others, and maybe we have enough currencies that some will fall by the wayside. My Father-in-law worked as a ship's captain in Greece, but he insisted that he got paid in gold sovereigns rather than the Drachma, he prefered one over the other and was in a position where he could insist.

Competition between all the different world currencies will drive out the weaker ones, such as the Zimbabwe Dollar, which I think is still being replaced by the US Dollar. Eventually I can see there being a prefered unit of exchange, currently the US Dollar but not necessarily always.

Many will collapse but the others will become stronger as they take over, locally the price of gold may rise for a short while but globally it might not. Banks seem to keep reserves in a selection of currencies so even if one does badly they don't lose everything.

If the US Dollar was to collapse now then we might be in trouble, but it has taken a lot of abuse recently and it shows no signs of weakening, the country produces oil and the whole world seems to run on the stuff. If I had the space I would stack oil.

 

It's not the concept of currency, it's the method in which we create it, and the aspects it rewards. A debt bearing money supply creates an unnatural element of scarcity and competition "more for me, is less for you". It rewards economic hoarding by only taxing exchange. This US adopted monetary system is based on perpetual growth, within a finite world. It may have a conscious change rather then collapse, but one thing's for sure, it's definitely not sustainable at current course.

"Only a fool would think that a fire can burn ever-higher when the supply of fuel is finite" Charles Eisenstein

 

Simple, its when the mass population loses trust in the paper notes and digits they are trading around. When they refuse to use it, thats when the system breaks down. Who knows when that is.

Just the other day I trade some Australian Paper for some US paper. Quite interesting the guy holding onto the whole stack of USD thinking its very very valuable. I brushed it off, give me a bar of Au anyday. Only reason I am holding the paper notes is because thats what is accepted as current trade.

We may go back on another system or may go back to bartering who knows. Lets just see how long this game can last =D. My company is feeling it and I'm probably out of a high paying job soon. It was good when it lasted. Making fiat to fund my currently lifestyle doing bugger all.

Slam

 

Oh that's the simple part. There are a few scenarios and you only need to take a look at history.

But first, it's obvious if you look but most people are self consumed and are completely ignorant. The level of indoctrination is overwhelmingly powerful, it is the "most grand illusion" of the old "boiling frog" story. The media lies as routine, all major news stories are either contrived as theater or solicited. People are happily ignorant or apathetic. Stacker member Old Cougar says "let them and their children starve to death."

Now onto your question...

1) Biflation/Stagflation - Money decreases in velocity. Banks lend but the new money supplied isn't enough to supply the economy to meet the requirement of the total debt obligation. People try to save what they have. Prices of essentials like food/energy/transport go up. Larger corporations reduce working staff or change operations (sound familar? CBA reduce staff, governemnet reduce staff, car manufactuers close down etc.). Unemployment rises. Government direct where money is to be spend e.g. health care, property/first home buyers grant etc. Things get dangerous.

Basically high inflation, lower wages, higher taxes, lower employment.

2) Continued rates of very high inflation.

3) Hyperinflation - This only happens at the end, the very end. Once you see it happen the conclusion is inevitable. Hyperinflation is when you see increases in prices of 20% or more in a month. In this scenario people will buy as soon as they have money and quickly lose confidence in the currency. Government put withdrawal limits at banks and price control on food and essentials (price fixing). Shops close down as they can't purchase for less than they sell. Things get dangerous.

In every scenario where they are in control as is the case, they're going to inflict as much hate on the masses as possible.

As for precious metals they're only part of the possible strategy. Preppers are the real survivalists. Grow your own food, have clean fresh water, protection etc. And there are millions doing this. When the government will (not if) go after these people either by drone strikes or their brainwashed enforcers, then you know what they've got planned is happening at a faster rate.

Just because you don't see people running into precious doesn't mean that it hasn't been happening, lots have. We live a a world where we assume that things everywhere are similar to what is around us, this is unfortunately wrong. Things are different everywhere and there are lots and lots of dangerous places, the world is a relatively unsafe place to live and most of us live in a bubble. Those with money that have gone into precious metals normally do so by trading paper vehicles. Most can only imagine a world of fiat and have never bartered in their lives.

Most here watch price as currency is still "the" medium of exchange. If you are preparing for a SHTF then stop watching price only ounces matter, go on with preparedness skills like permaculture etc.

Personally I find value in trading and not using currency as a medium of exchange.


How will you know if the world changes, it already is. As for a crystal ball, no one really knows other than saying the only certainty is change.

 

The reality is that no-one truly knows. I'm not sure whether you are a newcomer to this or not. I've been exploring it since before the GFC and still not come away with any solid forecasts.

It's just the world we live in. There have been, and are, many ongoing debates happening all the time (including many on this site).

It's up to each individual what they choose to believe. There is no certainty. All you can do i what you think is in your best interests with the information that you have.

There is no guru who knows exactly what's going to happen. Sorry.

One thing I will say. try not to succumb to fear-mongering because it's just paralyzing. Treat it like a potential disaster and that you need an insurance policy just in case it happens and then get on with your life.

 

Maybe the keyword is "eventually". It seems to be true that we have been having increasingly currency printing and stimulus to an ever higher velocity but the fact is that the prices of goods and services are not following such inflation and people's confidence on the currencies is still there.

Thus, I'm seeing a valid but incomplete logic on each of both sides. Which one is correct and why?

 

Are you tell me that a currency can become so strong (so valuable due to deflation) that it collapses?

 

That's an interesting point actually. You basically believe that the fall of some currencies will be just the rise of the others in a balanced free market.

However, I have already heard others claiming for example that the dolllar and the euro are dependent on each other so that if one falls the other does too. Do you disagree about that? If so, how would you prove you're right?

 

So, how could we exit this system without a collapse?

 

But the point is: will it ever happen? What if the world population never finds out the truth and the system goes on without any collapse? Is that possible? Which side you stand for and why?

That's my problem, I see a lot of statements and few arguments. Few try to explain what's going on and support it with facts. There's very little discussion about this mystery of different opinions about something extremely relevant that affects us all.

 

We could transition by tweaking certain things. We could forgive some debt on a larger scale (This has happened by the IMF on a country level). We could reverse usury by introducing negative interbank rates (Swedish central bank did this successfully for 6 months back in 2009, to encourage economic exchange during crisis). We could remove taxes on exchange, the lifeblood of an economy, and focus tax on the mass scale of stagnant concentration of wealth hoarding. Put simply we could give money the same properties of all the things it's supposed to represent; decay with eventual return to its source. Entropy.

The US actually considered this during the great depression in 1933. A system where bills have an expiry date, and for it to be valid after the expiry, a postage stamp of a certain value needs to be fixed to the back. This would focus public funds (taxes) away from exchange and labour and towards wealth hoarding and stagnation. The US Gov didn't adopt this idea, even though it was proposed in parliament. There has been stamp script currencies in the past. The "wara" in Germany during WW1 to name one. It is difficult for a gov to accept this type of currency because it is free-money or decentralised, out of reach of government control.

There is potential for a conscious change, before or after a collapse.

"Debt can endure forever; wealth cannot, because its physical dimension is subject to the destructive force of entropy" Frederick Soddy

 

That is true. But then we have thousands of stock investors, Finance / Economy professors and people that deal everyday with these subjects, who would start running into precious metals if they sensed it was the right move. Such migration would make others follow and ultimately it would alert the general population. My point is: we have so many "watch dogs" that would trigger the change regardless how ignorant the normal citizen is.

But they are not buying precious metals like crazy. Actually, I come here to the forum and there's not even consensus about wether a collapse will really take place. And that's my enigma: who is right?

From 3 onwards is easy to understand. The real challenge is to accept that somewhere we will engage into hiperinflation. What do you mean with this?:
"Banks lend but the new money supplied isn't enough to supply the economy to meet the requirement of the total debt obligation."

In the rest of point 1 you're just describing an economic crisis, not a currency crisis. How do you get to such conclusions?

No, I know they're not doing it. Just look at how much wealth is supported on gold and silver and how much is supported on dollars, euros, pounds and other currencies. The difference is abysmal.

 

Debates about this subject? I made a quick search before creating this thread in order to discover whether this discussion was already taking place but I didn't find it. If you know any, please post it here.

And thanks for your advices.