US Dollar worth Debate

[Wimbien]

To continue from the other thread where we got off topic.

As Greenspan points out, a government can never run out of its own currency. Therefore, the cashflow of a government will never be insufficient to service its internal debt. It can simply create as much money as it needs through the issue of new debt. It should also be noted that governments never have to concern themselves with the value of the assets used as security against their loans, because there are none. The asset which backs all government debt is the full faith and credit of the government.

Conclusion

The entire US financial system is based on confidence - the confidence of foreign investors who continue to pour money into US dollar assets, and the confidence of local investors who are betting their life savings on a continued stock market boom. Recent experience in Asia suggests that this extraordinarily high level of confidence in financial assets may be overdone.

In the near term, the above-ground stock of gold will most likely continue to be a hindrance to any sustainable rally in the gold price. The supply of gold will probably increase over the coming months as European CBs sell gold in the lead up to selection of the initial EMU participants in May 1998. At the same time, uncertainty regarding EMU and on-going problems in Asia should continue to support the US dollar.

[Karavi]

The entire US system is not based on confidence. It's based on complete, accurate details from Fort Knox, otherwise their entire system crashes. They have to know what's going in, what's going out, and where it's going to.

From me in other thread:
There is a set amount of money sent out from Fort Knox every so often that the government tracks, and knows about. That money HAS to be from Fort Knox, otherwise it is illegal. After every few years, money is destroyed, and a new circulate of money goes out that they track again from Fort Knox. They can not go over the amount in Fort Knox. The entire United States currency revolves around Fort Knox, all money is from Fort Knox, and without that gold, you would have an empty pocket.

The only money that is not from Fort Knox, is the money that they are unaware of, and that is illegal. Like, if you fraud your taxes, it's illegal, because you're getting money that Fort Knox does not have... Which in turn fucks the governments economic system all up. They rely solely on Fort Knox for their currency and economic standings, they have to know how much is out in the United States, how much is where, how much they need, which helps them see who may be frauding their money, and so on.

[Wimbien]

Money is printed in the US Bureau of Engraving and Printing, Prints and circulates paper money (U.S. currency). Also government securities, U.S. postage stamps.

[Valen]

True money is created and destroyed, but usually money destroyed is money that has been ripped, torn, etc. The American currency is fiat. The only reason it is worth anything is because the government says it is worth something. We haven't been on the gold standard for a long time. If people today tried to exchange their money for gold there would not be enough and the U.S. would go bankrupt. Read an economics book. Ask your economics teacher. I will even go so far as to go ask my teacher today and get quotes from the book if you like.

[Wimbien]

Oh and by the way the Bereau of Printing and Engraving is located in Fort Worth, Texas. So any money that isnt from fort worth is technically not tender.

[Karavi]

There are two locations of printing: Washington D.C. and Fort Worth.

http://www.moneyfactory.com/locations/index.cfm/3

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Federal Reserve notes are "backed" by all the goods and services in the economy. However, the currency has been established by Fort Knox and other gold reserves located around the country (Fort Knox just happens to be the largest, though there are 5 others located in other places). The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue.

Federal Reserve Act of 1913: http://www.multied.com/documents/Federalreserve.html (I will not copy and paste all that >_>)

I'll go do more research if needed.

As for it not being backed by gold - Yes, that's quite obvious... It's the gold reserve, no one is permitted to use gold as a legal form of money anymore, and every bit of gold except for that of which people wear are located in different bullion reserves located in various places. However, the gold reserves set the standard for the federal reserve notes. They cannot exceed the amount they have in the gold and federal reserves, otherwise they reach a higher deficit, and again they are all fucked up.

I research all this. I don't need my Economics book, but when I do get it from my locker I'll be sure to post entire articles from it stating what exactly it is they do. I'll also talk to my teacher, as well, and quote what she has to say... Even though she is a biased, horrifyingly stupid teacher who I think should be fired. Unfortunately though, people generally don't understand what I'm saying, and assume too much instead of clearly looking into my meaning. Most of what's being brought up to me, I had never even stated or implied..

[Wimbien]

So there is no way of knowing how much USD is in circulation to back. Fiat money is what the US Dollar is. The definition states: 1) fiat money
n.
Legal tender, especially paper currency, authorized by a government but not based on or convertible into gold or silver.
2)Fiat money, irredeemable paper currency, not resting on a specie basis, but deriving its purchasing power from the declaratory fiat of the government issuing it.
3)n : money that the government declares to be legal tender although it cannot be converted into standard specie

Ever since 1971, when US president Richard Nixon took the dollar off the gold standard (at $35 per ounce) that had been agreed to at the Bretton Woods Conference at the end of World War II, the dollar has been a global monetary instrument that the United States, and only the United States, can produce by fiat. The dollar, now a fiat currency, is at a 16-year trade-weighted high despite record US current-account deficits and the status of the US as the leading debtor nation. The US national debt as of April 4 was $6.021 trillion against a gross domestic product (GDP) of $9 trillion.

http://www.freerepublic.com/focus/f-news/663618/posts

[Karavi]

Everyone who has taken basic economics know what Fiat Money is, and that has yet to explain much of anything, all it means is that it's a legal tender that can't be converted. Nothing can be converted, that's why gold reserves are there.

They do know how much is in circulation. Not exactly, but do you know how many pennies are located randomly around your house? They have to have a basic knowledge though, so they can see fault points of those who are doing things illegal and take action on it.

The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue.

And that, was directly quoted from a government site.

[Wimbien]

But for gold to back the US dollars in circulation that would mean gold would have to be worth $25,000 per ounce which it is clearly not.

[Valen]

I will agree with Karavi on this one point the government has an idea of how much money is in circulation because if they allow too much into the economy there is inflation.

[Karavi]

But for gold to back the US dollars in circulation that would mean gold would have to be worth $25,000 per ounce which it is clearly not.
I not once said that federal reserve notes were backed by gold.

What I said was:
Federal Reserve notes are "backed" by all the goods and services in the economy.
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue.
These are specifically stated on the treasury department's website.

[Pats]

I learn so much more in this forum than in history class.

[brudaman]

lol me too

[Wimbien]

I know what you are saying Karavi but what im trying to say its not backed by anything but the faith in the dollar now. Yea sure gold used to until the dollar became more widely accepted. But still the US doesnt give out as much goods and services as it should to equal what people give us. So we basically use the currency to make up for that deficite. In all actuallity if no company wanted to accept the US currency it would become worthless. That is what the point i was trying to get to. Sorry if we were thinking on different ends.

[D3adcell]

Yeah I was going to go on a field trip to the federal reserve in fort worth but we ended up going to some brokrage company in fort worth instead. Oh well.

And that is true for any currency wimbian. If i had a huge ass company and stopped taking bat or yen wouldn't it become worthless?

[Wimbien]

No because the other countries have backing for the cash. Only a part of our money is backed by gold and silver but the rest is backed by the fact that you can use it to buy anything. If no one accepted the US it would be worthless. But in other countries their currency is backed. Even the Euro is backed by some form of colateral.