Wednesday, 10 August 2011

Fiat is NOT forever!.............from Rico

They never tell you in advance. That would defeat the purpose!
- The Government and Central Bankers, I mean, when they 'change' the rules of the game overnight.

Have you ever had the experience of 'waking up' to discover your paper money was now worth half as much as it was the day before? Or worthless, and needed to be exchanged for 'new' paper currency?
- It's NOT fun.

Here is a look at the 'former' greenback. The one before the present one. It 'went away' and is worthless now as a medium of exchange or store of wealth.

Paper fiat is NOT forever!

Few still remember the notes called Silver Certificates. They were pulled from circulation after LBJ changed the rules of the game.
- Here is an example from 1957. It is worth comparing to the Federal Reserve Note from 2003.

Note the 'changes' from one to the other. If you've never 'seen' the former, the latter looks pretty much the same, but it is NOT.
- The 1957 note says "this certifies that on deposit in the Treasury" and "in silver payable to the bearer on demand" for example.
- The 2003 FRN makes no such assertion that anything is in the Treasury, does NOT promise to pay you back in anything but a 'promise' and while you could try and trade this at the bank for Silver, at +/- $40 per ounce it's NOT going to happen. Besides, the Dollar has decreased in purchasing power by over 60% since 2002 while silver has skyrocketed in.

Note: When there isn't the revenue to match the political promises, then the promises will not be kept.

Having given you two examples of defunct US paper currency, do you really believe that the current FRN will be with us forever? It is dying before our eyes, and will eventually have no purchasing power [read: value]. Today's Greenback has about 5-7 cents of the purchasing power a 1913 Dollar had.

While we are presently the US of AA+ if you bother to look something Zimbabwe this way comes!

It would be good to have a backup plan. The proverbial "Plan B."

1 comment:

tom said...

Sure is a shame some people are determined to continue to attempt to scupper our ship.