CNN's 5 stunning stats about the U.S. dollar

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CNN's 5 stunning stats about the U.S. dollar

  • Toby Rice

    CNN just released a ground breaking and informative video: 5 stunning stats about the U.S. dollar: https://www.youtube.com/watch?v=4bRhMaXB8OY

     

    I decided to make my own list

     

    CNN: In 2014, 24.8 million bills were printed, worth $560 Million total.

    FACT: Since 2010, the Federal Reserve has created of 3.2 trillion in new dollars; 3.7 times all the dollars that were ever created before 2010.

     

     

    CNN: There are $1.2 trillion in currency in circulation

    FACT: The speed at which money is circulating is the lowest since… since… well, before this chart apparently. When this reverses, beware inflation!

     

    CNN: About 8.9 tons of ink per day are used to ‘print’ dollar bills

    FACT: Dollars used to be fully backed by Gold or Silver

     


     

    CNN: In 2015 the dollar hit an 11 year high against most currencies

    FACT: The dollar has lost 95% of its value since 1913; gold has increased 6218% since 1913 (in dollars)


    CNN: Dollars are not made of paper, but 75% cotton and 25% linen

    FACT: Dollars are not ‘money’, but worthless cotton ‘currency’

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  • Matt Anderson

    Nice post, Toby.

    I don’t think the next ten years are going to be very pleasant for the dollar.

    I’ve been doing a little research on hyperinflations lately and came across this explanation on Wikipedia.

    “Hyperinflations are usually caused by large persistent government deficits financed primarily by money creation (rather than taxation or borrowing).”

    Does quantitative easing come to mind? It seems governments all over the world are engaging in this money  creation in order to finance their deficits

    I can’t help but wonder how the dollar will look 10 years from now. Will it still be around and if so, what will it be worth?

     

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      Toby Rice

      Thanks for the comment, Matt.

      It just amazes me, how people can be so anti-gold in the face of the obvious truth that faith currencies lose money while gold maintain purchasing power.

      Just to pick on Charlie Munger of Berkshire Hathaway for example.

      From bloomberg:In response to a question about the increase in the size of the Federal Reserve’s balance sheet since the 2008 financial crisis. [Charlie Munger said] “You can count on the purchasing power of money to go down over time.”

       

      From CNBC: Charlie Munger:  “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” the Berkshire vice chairman said, “but I think civilized people don’t buy gold, they invest in productive businesses.”

      He’s obviously right about owning businesses, but everyone hold some cash, so why hold your cash in dollars when by his own admission dollars lose value over time…. he’s either stupid or lying about his position on gold (or maybe I’m stupid… he’s the billionaire after all)

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    David Montgomery

    Great roundup Toby!

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    Rick Rule

    Every day that I drive t the Carlsbad offices of Sprott, I pass a “Motel 6”, so named because until 35 years ago, rooms there rented for $6 per night. They now vary between $60 and $69 per night, depending on occupancy.

    I can only think of two possible explanations for the price increase: either the rooms off ten times more utility than 30 years ago, or the purchasing power of the exchange medium has declined by 90%.

    Anybody care to comment on which factor they believe is more relevant?

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      Anonymous

      I’m unfamiliar with the quality of the rooms at motel 6, but to stereotype motels, chances are they are still using the same beds as 35 years ago.

      It is my suspicion that a “greater than normal” deception has been carried out.

      Good point on the velocity. I think this may be where many who are new to the Austrian school may overlook when considering the imminent probability of a hyper-inflation.

      The counterfeiters are reactionary. They always fail to see the writing on the wall and are consequently blind-sided by large market events. More printing in the US is inevitable, regardless of what crony is in power as there is only one exit……a great depression. Politicians don’t like that D word, its bad for their health.

       

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        Matt Anderson

        That’s a great observation, Rick.
        I think it’s safe to say that the utility of a room at a Motel 6 hasn’t gone up at all in 35 years but rather the dollar has fallen by 90%.

        Yes, the dollar continues to decline but at what rate? It took 35 years for you to notice a 90% decline but, as we know, our current economic situation is much worse than it was between 1980 and 2015. With all these insane QE programs we could see another ten fold increase in Motel 6 rates; this time perhaps in 10 years instead of 35. The dollar devaluation seems to be accelerating now.

        Tom, Motel 6’s are at the very low end as far as motels. Pretty nasty and I don’t think they change the sheets too often. lol
        If you ever come to the States avoid them at all costs.

        You pretty much nailed it with the central bankers/counterfeiters being reactionary. The whole situation scares the crap out of me. We can only hope they have a coming-to-Jesus moment and stop counterfeiting before it’s too late otherwise they could light all that financial tinder that Alan Greenspan has talked about, causing a runaway inflation.

        Toby, it amazes me as well that people don’t take gold more seriously. The other day I listened to an analyst stating that the average American’s savings in gold was 0.05%. That percentage is absolutely insane. If that percentage is true, the average American will be in for a nightmarish scenario if any kind of currency crisis occurs.

        I continue to buy more precious metals for, as Rick puts it, “Catastrophe insurance.”
        I think the next ten years are going to be as catastrophic as 1935-1945. I don’t know what the financial system will look like on the other side of this storm so I buy what has been safe for the last 5,000 years: precious metals.

        And even though I hate them, I continue to hold dollars as well. As long as they are still functional in society we have no choice than to deal with them. I just don’t have much faith in them for the long run.

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    Toby Rice

    The more I’ve thought about this, the more I can see the velocity of money staying low for a while. On the one had, I see co workers enjoying these new 7 year car loans, even one guy who recently declared bankruptcy and is now living it up; new car , fancy restaurants etc… but on the other hand. I had one guy moaning 3.5% down on a FHA mortgage is too high and unfair lol. So some people are spending (those that cannot afford it) but most people I know seem to have less disposable income and it seems to only be getting worse. I work in the recruitment industry and so I’m intimately familiar with how companies are cutting staff back to part time hours so they don’t to provide medical benefits. People are earning less and having to spend more on non discretionary things. I cannot see thing changing until the job market improves – and I do see any reason why it will.

     

    I just hope the fed ends up mailing checks to people homes… those that convert it into PMs or other assets while do well while the great army of consumers can drive up inflation by buy all sorts of worthless crap!

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      Maurice Jackson

      Toby, don’t believe you will see an increase in the velocity of currency, remember money is physical gold and silver, until, or IF, the FED increases the interest rates.  The capital that banks required traditionally came from depositors and then they could employ fractional reserve lending, or the currency multiplier through arbitrage to provide loans.  Banks don’t require the deposits to stay in business since the bailout. Providing a loan at 6% to someone with a 750 middle score is much more attractive than receiving 3.75%.  Remember, the word mortgage is derived from the french word mortier, which means to engage in debt until death :).

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    Maurice Jackson

    After briefly reviewing the article, I noticed a grave error!  A dollar is 371.25 grains of silver per the 1792 Coinage Act.  This article is referring to a Federal Reserve Note, they are not synonyms.

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      Rick Rule

      nice to see you here in the scrum sofee, cheers!

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    Anonymous

    In 2008 the then Prime Minister of Australia stole $1000 from the next generation to give to this generation, $1000 per person over 18 to spend to stimulate the economy. Most used it to pay off debt or threw it into the housing bubble where you could get $21k from the govt for a first home…..mysteriously, houses became $21k more expensive overnight.

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      Maurice Jackson

      Tom, I would imagine the beneficiaries would disagree with your comment because they truly believe that they should be entitled to the benefit.  Ahh . . . the joys of theft, Socialism.  As long as the populace is ignorant and easily influenced they unknowingly create their own demise.  If you want security you can’t have freedom.  Ask a prisoner :).

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        Anonymous

        You’re spot on Sofee’. It’s truly a sad period in time when the slaves love their chains.

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    Maurice Jackson

    Admittedly, I just learned how to join a group.

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      Rick Rule

      use the knowledge my friend!!!!

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        Maurice Jackson

        I’m on it! ! ! !

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    Maurice Jackson

    Another little-known fact about the Federal Reserve Note ‘FRN’ is the size.  US currency bills are 2.61 inches wide and 6.14 inches long; they are .0043 inches thick and weigh 1 gram.  If you note, FRN and or currency notes were once larger.  The reason the size has not changed is to prevent other countries from believing something is wrong with our currency, which it is :).  Remember, 85% communication is nonverbal.

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    Maurice Jackson

    Toby, if wish to produce another list, may I recommend demonstrating the correlation between the Federal Reserve and IRS.  Remember your largest expense in life is a home, I’m sorry, I mean TAXES!. The Fed is responsible for the 16th and 17th Amendment.  They call it Gross Income for a reason because it is disgusting to see how much you earned versus how much you will receive. One way to mitigate this loss, theft is to become a Business Owner or Investor.  Corporations and Capital Gains tax are taxed lower than earned as an employee.

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      Rick Rule

      welcome home sofee! I never used the phrase ” Gross Income” in my speeches, but I’m going to, and I’ll give credit. Priceless!

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        Maurice Jackson

        Awesome!

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    Maurice Jackson

    Rick, as a Credit Analyst, what affects do believe will happen to the FRN if SDR’s are introduced into the monetary system?

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      Rick Rule

      above my pay grade Sofee. I’ll store some liquidity in whatever the prevailing exchange mechanism is, and keep the balance of my liquidity in metal, until they pay me sufficient interest to like their lies.

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        Maurice Jackson

        Ditto.  I asked because admittedly I believed:

        1. the ‘Black Swan’ event that most precious metals advocates, such as myself, believed would occur and did not was when Germany was unable to repatriate their gold from the U.S.

        2. When congress introduced a numismatic platinum coin to pay of national debt, not including the unfunded liabilities.

        Therefore, I was curious if the introduction of SDR’s would have more of a duplicitous effect on our currency.

         

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    Maurice Jackson

    Toby, I don’t believe you will see an increase in the velocity of currency, remember money is physical gold and silver, until, or IF, the FED increases the interest rates.  The capital that banks required traditionally came from depositors and then they could employ fractional reserve lending, or the currency multiplier through arbitrage to provide loans.  Banks don’t require the deposits to stay in business since the bailout. Providing a loan at 6% to someone with a 750 middle score is much more attractive than receiving 3.75%.  Remember, the word mortgage is derived from the french word mortier, which means to engage in debt until death :).

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    Anonymous

    Civil war tends to give a helping hand to the velocity of currency, Ukraine can attest to that. However, it is quite an unpleasant way to find the intrinsic value of worthlessness.

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    Matt Anderson

    I asked my 67 year old father in law to provide me with a list of all the items he could remember that he purchased in the 60’s and 70’s.
    He’s got a bit of a photographic memory. Just wanted to prove Rick’s point about the dollar losing its purchasing power with time.

    “My wife’s 1965 VW Bug cost $1,999.00 brand new.
    My 1972 Chevy pick up was $2,400.00 new. I traded in my Honda 450CL motorcycle. They gave me $800.00 and I financed $1,600.00. My payments on a brand new truck were $65.00 each month!
    In 1970 a new surfboard, custom shaped for me, cost $125.00.
    I paid $300.00 for a brand new top of the line acoustic electric guitar.
    Nike running shoes were $25.00! Outrageously expensive!
    License tag sticker for car was $8.50.
    I bought a ten year old Saab in mint condition in 1976 for $495.00.
    Round trip air fare to California was $125.00.
    My first surf trip to the Eleuthera, Bahamas, cost $79.00 round trip!

    Yeah the dollar has slumped alright!”

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    Maurice Jackson

    Matt, I have a better example.  Imagine if you will it’s Aug.14, 1971 a day before Nixon took us off the gold standard.  You are in your kitchen and you have two empty jars.  In jar #1 you place $35 Federal Reserve Notes, and in jar #2 you place an ounce of gold valued at $35 in Federal Reserve Notes.  Now on 28th of March 2015 you open the jars, what is that stupid piece of metal worth?  Did the $35 of Federal Reserve Notes increase in value?  Why?  If you compare an ounce of gold with Dow please make sure you can verify the 30 companies that comprised the dow on 14 Aug. 1971.  The results are . . . :).

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    Matt Anderson

    Great example, Maurice.

    Yes, that gold piece is now valued at $1,200 and in my estimation that $35 is probably worth only $3.50 in today’s dollars.

    I went to the grocery store two nights ago and purchased a few items that amounted to $55. The cashier commented on how little I had purchased for so much money. I responded to her by saying, “The dollar doesn’t buy much anymore.”
    She laughed and said, “No it sure doesn’t.”

    Society is beginning to catch on that the dollar is nothing more than a con. As more and more people wake up to that reality they will begin to panic into the gold market where hopefully all of us will already be positioned.

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    Maurice Jackson

    Remember, you and the cashier were not discussing 371.25 grains of silver (the definition of a dollar, per the 1792 coinage act), but rather a Federal Reserve Note.  If I may, I would encourage you to view this 7 min video I made explaining the difference:  https://www.youtube.com/watch?v=cUcLa1T8j2g

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      Toby Rice

      Great video Sofee! Nice mix of humor and education!

       

      I keep (4) notes in my wallet at all times so I can show people what I’m talking about:

      1) $1 Federal Reserve Note

      2) 1935 $1 “Silver Certificate” (Fully redeemable in $1 silver dollar coins until 1967)

      3) $100 Trillion Zimbabwe note

      4) Valaurum 1/10 gram Gold note

       

      Seems to help people ‘believe’

       

       

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        Maurice Jackson

        Great!  I usually wait for someone to say the word money :). Then I state: “are you aware that that is the most miss used word in the entire world the word money”?  Then I begin my lesson of inquiring: “have you ever noticed that the word money is not printed on . . .  🙂

         

        i too too usually carry an Eagle on me because most people are not aware that they exist.

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        • Toby Rice

          I have to write an research paper for my English course and I think my chosen topic is: Is the US dollar “money”? Should be fun to write.

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    Matt Anderson

    Exactly! What we carry in our wallets is not a dollar by that definition but a con disguised as a dollar.
    I’ll check your video out now, Maurice. Thanks!

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    Bart Peters

    Velocity of money is a wild card I would say.

    It has gone of a cliff but as soon as anything big happens (black swan?) then u might see a rapid increase in VOM and it’ll be pretty much impossible to stop.

     

    But this system is at it’s end regardless of if VOM turns up or not, only thing it’ll do it speed up the process.

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    Maurice Jackson

    The final demise of the dollar is highly probable, which deserves the question.  Are you prepared?  Unfortunately, most people are not and will not prepare themselves.  As much as I advocate my devotion to the ‘Article 1 Section 10 of the Constitution’ and the ‘1792 Coinage Act’ outside of this forum the discussion regarding our currency in virtually any venue I attend or pass does not accept the intellectual contemplation of such as worthy discussion.  Please do protect yourself with best insurance possible which is bullion in the form of gold and silver.  Althought the historically presidence of platinum and palladium as a monetary concession is far and infrequent, I would recommend that you procure some PGM’s into your bullion portfolio.  PLEASE STAY AWAY FROM ETF’s! ! !  The proxies to bullion such as the Sprott Trust’s I highly endorse and own because they are allocated and you can redeem.  It not a matter of if, but rather when.  Do your work now.  If you work when others play, you can play when others work :).

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    Maurice Jackson

    I would encourage all to become generational stewards  and become less depend on a federal reserve note as a store store of measuring wealth/value and acquire money (gold/silver).

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