FED: U.S. Dollar COLLAPSE!!

NEVER in history has this happened before.

As of Oct. 23, Non-Borrowed Reserves and Bank Reserves equal nearly the entire monetary base.

The Federal Reserve now needs a reserve for the reserves. Hyperinflation, here we come (prior to total collapse.)

10/23 Bank Reserves 328,597 MILLION; Monetary Base 1,143,873 MILLION; Non-Borrowed Reserves (-362,550) MILLION; TOTAL Borrowed 691,147 MILLION

www.federalreserve.gov...


[edit on 25-10-2008 by worried08]

reply to post by worried08


Ok, so could you expound a bit more in detail about what this means so those who don't understand it unlike you and I can figure out what this means.

reply to post by worried08


I must admit, I'm a pretty smart guy...but, I just don't have a true finance/economic mind.

Would you mind shedding more light on what this means in the near-future or long-term to come?

Charts are helpful in some cases.

Monetary base is the volume of "money" in the system.
Non-borrowed reserves is a measure of the amount of money banks are required to keep "on reserve" with the Fed.

Monetary base:


Non-borrowed reserves:


This is money going to banks, basically. A crapload of T-bills have been issued, then you've got the bailout bucks...and it's all sitting on the books of the big banks.
You can see that here:


Where is that coming from? Well....


A portion of the monetary base is currency in circulation, but if you'll take a careful look at the following chart, you'll see the size of that "portion":



Does anyone feel sick yet?

Thanks for the cool visual charts anachryon.


Thus creating hyper inflation. So any guess when the dollar will come tumbling down in value and the cost of everything going insanely upwards.

[edit on 25-10-2008 by TH3ON3]

reply to post by anachryon


It does make me sick. What scares me even more is if I go and buy all sorts of silver and gold which I am strongly considering and then the governments flood the market with it to get money killing the price of gold and silver. Im at a standstill Im not sure where the hell to put my money.

I'm so sorry. This still doesn't make sense to me?

Charts look pretty and all but the jargon doesn't make sense to me.

Can someone explain for the dummies?

reply to post by dingleberry77


I'm not the smartest when it comes to this stuff, but what I think it means is that the fed has over lent their reserves which means all the money that they had in reserves is gone and now all the money that they loan out will have to be printed which means hyper inflation. Because the money will be newly created therefore new money introduced into the market.

Correct me if I'm wrong anybody.

Originally posted by TH3ON3
Thanks for the cool visual aids anachryon.

Thus creating hyper inflation. So any guess when the dollar will come tumbling down in value and the cost of everything going insanely upwards.

No prob. I love charts and graphs - they make things much easier to digest.

Right now we're somewhere between deflation and stagflation. We've been in a period of fairly heavy inflation for awhile now, and are "correcting" via deflation/stagflation. Well, the gov't doesn't like deflation because deflation generally goes hand in hand with a recession and, if it spirals, will lead to a true depression.

Soooo, deflation is countered by inflationary practices such as lowering interest rates and increasing the monetary base. Just like extensive deflation leads to depression, though, extensive inflationary practices lead to a hyper-inflation situation (ref: Zimbabwe).

In other words...yes, this is an inflationary move and could result in hyper-inflation. Also keep in mind the part of the bailout bill that no one talks about - zero reserve. With all factors combined, yes, this is potentially hyper-inflationary in the long term.

Originally posted by dingleberry77
I'm so sorry. This still doesn't make sense to me?

Charts look pretty and all but the jargon doesn't make sense to me.

Can someone explain for the dummies?

A lot of banks are in serious trouble because of the current financial crisis. Many are technically insolvent, meaning they do not have the funds to cover their requirements (deposits, etc). This can be hidden for a time due to accounting tricks.

The banks can borrow money from a number of sources to stay afloat. One such source is the Federal Reserve, which is what all these charts and jargon deal with.

Thanks to the bailout, banks can also receive Fed money by trading shares of their stock for cash. This was initially touted as a means for banks to get money for them to lend out to the general public, but very quickly it became obvious that the banks were hoarding the money or using it to buy other banks.

This money has to come from somewhere. It's not sitting in a vault or in Ft. Knox or somewhere; it's simply "printed" up. These charts show the incredible expansion of the amount of money created (the monetary base) and how it's sitting on the books of various banks (excess and non-borrowed reserves).

As long as the money sits there in the banks, it's not a huge deal. The instant it starts moving into the day to day economy - via loans, interest paid, hiring, building new bank branches, etc - though, the economy starts to inflate.

Inflation is what causes prices to go up due to the increase of the amount of money "in the wild." Think about what $100 could buy you 10 years ago and compare it to what $100 can buy you today; this is due to inflation. A dollar just ain't worth what it used to be, ya know??
When inflation gets out of control, it can become hyper-inflation. We're seeing this in Zimbabwe, where it costs like a billion dollars for a loaf of bread.

This has extremely far-reaching consequences in terms of the U$ due to how prevalent the dollar is in the worldwide economy.

Does that make more sense?

I knew this bailout business was bad news, but I'm just starting to realize the whole scope of it. I think a lot of banks realize what's going on and the hordeing of cash is to stave off the hyperinflation as long as possible. I wonder (this is only speculation) if Paulson forced these small banks to take the money so they could own them but told them to horde the cash and then when/if Obama gets in to release it like a time bomb or something. "Keep the economy afloat just enough for W. you know"

We're more royally screwed than I first thought.

OK .. hear me out.

I am a smart guy. I like to think anyways lol. And I have no problem admitting I am just not understanding the actual "implications" ..

We have a massive influx of "money" put onto the banks books.

But to actually SEE inflation, the people need the money, not the banks. Or to see deflation the money in circulation needs to be cut..

All these funds on the banks books, made up, borrowed or what have you.. what is the DIRECT effect on US?

And what is the time frame to see the "trickle down" of effect from the massive influx.

Typically trillions pumped into the markets would crash the currency.. but if every major market does it at the same rate we do, and every currency devalues at the same rate, or nearly, could it void out the effects of Hyper inflation?

I think I am just thinking about this all backwards, upside down and inside out.

Originally posted by Rockpuck
I am a smart guy. I like to think anyways lol. And I have no problem admitting I am just not understanding the actual "implications" ..

You are a smart guy and I always enjoy your posts!

We have a massive influx of "money" put onto the banks books.

But to actually SEE inflation, the people need the money, not the banks. Or to see deflation the money in circulation needs to be cut..

All these funds on the banks books, made up, borrowed or what have you.. what is the DIRECT effect on US?

I touched on this a few posts up. Yes, for the inflation to actually happen, the money has to be, well, monetized. As long as it sits on the banks' books, it's not monetized. It has to be out in the wild, in the economy, being spent. This is why right now the meteoric increase isn't a huge deal.

But as soon as that cache is actually used for anything, it enters the wild. It can be used to pay salary, pay dividends, pay interest, build new bank branches, buy new artwork for the lobby, go on Bigfoot hunting trips...as soon as it's used, it becomes monetized. That's when it becomes potentially inflationary.

You have to question how long that cache will sit there. Forever? If that's the case then we're fine. Eventually, though, it will be used in some capacity. It has to be. It can't sit there for eternity.

And what is the time frame to see the "trickle down" of effect from the massive influx.

No real way to tell, unfortunately. Maybe a year. Maybe ten years. It depends on how long the banks sit on it.

Typically trillions pumped into the markets would crash the currency.. but if every major market does it at the same rate we do, and every currency devalues at the same rate, or nearly, could it void out the effects of Hyper inflation?

Well, not really. The amount of coordination required to get every major market to crank out an equal amount of currency is mind-numbing. Why would Japan, for example, want to inflate its Yen if they know a devalued U$ would increase their general power in the world?
Also, if every major currency hyperinflated, it would still be hyperinflation. It would still cost a U$1M or ¥942k or €1.26M to buy a loaf of bread.

It would just be coordinated hyperinflation and the only industry that would make out well would be wheelbarrow manufacturers.

if i got this right then the Bailout actually hurt more than helped

if this is the case then the government is causing hyper inflation in the economy and could lead us into a depression

I found this website that really breaks down inflation by showing you what food costs throughout the years. For instance, six 12 oz. cans of Pepsi in 1974 cost $0.88 in Morristown, NJ. Enjoy the link. This really demonstrates what adding currency into the system does.

www.foodtimeline.org...

reply to post by anachryon


amazing explanation.
I follow your posts often.
Thank you kindly,
-from the non-finance people

Originally posted by Odessy
reply to post by anachryon

 

amazing explanation.
I follow your posts often.
Thank you kindly,
-from the non-finance people

the reason we are not seeing inflation yet is because except for the YEN, all first world currencies are in the same boat. the dollar has actually strenghtened lately against most other currencies...but one things for sure and the OP is right about once the fed reserve currency is used up, printing more dollars will become inflationary. it is now a tightrope we are walking in regard to other currencies and how they valuate against the dollar.

The US Dollar will get it's death blow once OPEC decides it will accept other countries sovereign currencies as a means to purchase oil.

Right now, the Dollar is the only currency used for oil purchase. Once that ends, well..

It won't be pretty

Edit to correct missing part of sentence

[edit on 10/26/08 by redhatty]

I remember being in economics one when the European union was consolidating its currencies under the Euro. I also remember hearing many economists making the claim that if the European Union worked, which it is, then America and the entire world would have no choice but to do the same. But strangely enough, it was Europe that claimed that they had no choice but to create the European Union because America was too much of a global industrial player in the technology and military markets.

Basically, the American system is what forced the European Union system, and yet that system will force the American Union system and then together, they will both force the Asian union, and then combined, all three will have to come together in order to get anything done at all in the entire world. Then is when you will have the one world government and the book of revelation will be fulfilled.

What is happening now, in many peoples minds, is an orchestrated chain of chaotic events that will enable our governmental systems to consolidate enough to easily fall under or over the American Union system of government that the elites and the globally diversified companies insist must be done in order to compete with china and the European Union in manufactured goods in the global markets. Why is this so important? It is because Adam Smith in the Wealth of Nations explains that only manufactured goods offers the potential for high profits. Our ever increasing state of technological improvement only proves this idea to be true.

My next door neighbor is 97 years old and lived through the great depression. He thinks that times will get tough very soon, but then, America will see the greatest boom period in its history. Me, I think it’s a little more complicated then that. I think that we will see the worst times in American history but they will not be protracted for very long before global war ensues. I think we will have about 3 years of bad times or maybe only just a year or two before war breaks out around the globe. Food riots were taking thier toll not too long ago and the news media hasn’t talked about the food prices for many months now. In my view that means that it is still very bad in many countries. When the inflation starts to hit hard, then the wars will break out.

I think that the one world government of the book of revelation is an absolute certainty and I think it will continue to take the form of the American / European Union model of government. China will be content with controlling (American style) a new Asian union. Russia, is the wild card. Russia knows that at the new world table there is very little room for them. But I don’t think that the Iran’s, Venezuela’s, and Russia’s of the world will go quietly. I think there will be a fight with them before it is all over and the true World Government starts to take shape.

Okay I'm starting to understand the effect of concurrent variations in valuations of different currencies, and also the 'delay factor' involved in various efforts to affect particular nations' money supplies.

It's a confused mess, in detail, but the overall picture is clearer.

But one point I've heard mentioned, time and time again by the various 'financial elite' of different nations is: "we must avoid protectionist measures".

Why? Everyone seems advocating fluid exchange rates, reduction of the cost of translating national liquidity into international liquidity. Wouldn't establishing measure to 'stem the flow' result in potentially huge advantages to particular nations? Especially those with GDPs based on more tangible assets?

What's the reasoning for this?