Dollar Failure–not Reset
A reader (“D.”) who posed the some comments and questions (See, A Reader Wonders—Art. 1.10.1 vs Art. 4.3.2) continued:
“However, this economic depression is global and so all currencies are going to fail. I understand that there will be a global reset, but just don’t understand what exactly that entails especially on a global basis where all fiat currencies implode at the same time.”
Your comment and implied questions are roughly correct but imprecise.
On the one hand, you believe that in a coming global economic depression, all (fiat) currencies are going to fail. On the other hand, you believe that there’s going to be a currency “reset”.
You seem to use the terms “currency failure” and “currency reset” as if they were synonymous. They’re similar, alright, but they’re also fundamentally different.
In both cases, the fiat currency loses value (purchasing power)—that’s the similarity. But in the former case (“failure”), the fiat currency loses all value and becomes worthless. In the latter case (“reset”), the fiat currency suddenly loses only a significant proportion of its previous value but still retains some value and utility.
I.e., if we have a fiat currency “failure,” that fiat currency will cease to have any value whatsoever. Virtually no one will accept any amount of that fiat currency in exchange for any good, service or property. In the aftermath of a fiat currency failure, you can offer $1 million to a grocer for a pack of bubble gum, and he’ll refuse make that trade. If the fiat dollar “failed,” it would be worth ZEE-RO and have ZEE-RO purchasing power. Without any value, that fiat currency would be correctly discarded like trash.
After a fiat currency failure, people will be forced to seek a new currency that might be another “new-and-improved” fiat currency or might be a non-fiat currency like gold or silver.
In any case, a fiat currency failure means: 1) a former currency has become completely worthless and has therefore ceased to function as a medium of exchange or transfer; and 2) a new, replacement currency (or money) must be found.
• However, if we have a fiat currency “reset,” that fiat dollar will lose some of its value in relation to foreign fiat currencies, but the devalued fiat dollar will continue to function.
For example, you might go to bed one night and wake up the next morning to learn that, by government edict, the value of yesterday’s dollar had been officially reduced or “reset” by, say, 50% during the night in relation to euros. A “reset” won’t require a new US or European currency—it will keep those fiat currencies but at a new and significantly different relative value.
A currency failure will almost certainly end fiat currencies and cause a return to gold- or silver-backed currency.
A currency reset will cause the fiat dollar’s value to be diminished but will still allow the fiat dollar to keep enough value to continue to function—and thereby allow the Federal Reserve to continue printing paper dollars and allow the government to enjoy enormous power of spinning “money” out of thin air.
A currency failure will destroy that fiat currency.
A currency reset will change that fiat currency’s value on foreign markets.
• For the fiat dollar, a currency reset would almost certainly cause the dollar’s purchasing power to be significantly reduced—primarily in relation to foreign currencies. An overnight “reset” would function like a sudden jolt of inflation—but only in relation to foreign trade. In the aftermath of a 50% downward “reset” in the value of the fiat dollar, a BMW that costs $50,000 today could sell for $100,000 tomorrow.
A “reset” would immediately affect the prices of foreign imports, but affect domestic prices more slowly and indirectly. If the prices for imported resources doubled overnight, the prices of domestic goods and services that depend on that foreign resource might rise by 20% over the next several months.
A government edict might cause the value of the fiat dollar to suddenly decline by 50% in relation to, say, euros, in just one, overnight “reset”. European import prices might instantly double. That would reduce the sales of European products imported into the US.
Conversely, after a reset, the prices of American goods sold into Europe might fall by half. Thus, a currency reset that devalued the dollar in relation to the euro might increase the export of American products to European countries. Increased American exports would help reduce US unemployment and potentially stimulate the US economy.
A currency reset would eventually contribute to some significant US inflation. But before that happened, that same reset might generate increased American exports to stimulate the US economy. Such reset would not require a new currency.
A currency failure would not only destroy fiat dollars but also the power of the Federal Reserve and possibly other central banks of the world. The US economy would collapse. It’s unlikely that any economy would be “stimulated” by a failure of the fiat dollar.
However, a currency “reset” would allow the US economy, fiat currency racket and the Federal Reserve racketeers to continue to function.
• The problem with the reset is that it requires the consent of all of the nations that participate. For example, if the fiat dollar’s value was reset downward by 50% in relation to the euro, that would be great for American exports to Europe but terrible for European exports to the US.
Therefore, we are left to wonder why would Europe (or any other nation) agree to increase the relative value of its currency if that increase caused a loss of its exports to the US?
The world’s economic circumstances would have to be pretty grim before a significant number of exporting nations would consent to a currency reset that lowered the value of the fiat dollar—and thereby diminished those foreign countries’ exports to the US.
In the extremely unlikely event that such agreement could be reached, the resulting “reset” might buy time for the central banks to forestall a currency failure. However, it’s unlikely that a “reset” could actually prevent the ultimate failure of fiat currencies (like the US dollar) from becoming completely worthless.
I won’t say that a currency reset is impossible, but it strikes me as highly improbable. If I’m right, we needn’t watch for a currency reset, but we should keep our eyes peeled for an inevitable fiat dollar failure.
• “D.” also wrote,
“I’m trying to “think outside the box” and am breaking the ‘paradigm’ of what ‘money’ is and how it can best serve humanity instead of the Illuminati who have the total and complete control through the legal tender laws. I know Ron Paul wanted alternative currencies and legal tender laws repealed and I’m wondering if that is also a way to break their monopoly over ‘money’.”
The current fiat currency system does not “serve humanity”. It robs humanity and arguably even predisposes humanity to slavery.
Nevertheless, so long as fiat currency still “spends” (has some value), I doubt that We the People can “break the Federal Reserve’s monopoly over ‘money’” by actively working to cause that result. Nevertheless, I believe that the Fed’s “monopoly over fiat currency” will break under the weight of its own inherent contradictions and irrationality.
So, can we “break” the Federal Reserve’s monopoly on fiat dollars? Probably not.
But the better question may be, Can the Federal Reserve maintain its monopoly over fiat dollars perpetually? Certainly not.
Fiat currency is a lie. Ultimately, it will be destroyed by the truth. But when that failure will happen is anyone’s guess.
The way the fiat currency will ultimately “break” is when market and economic forces cause the people to value that currency as worth zero. When the world loses complete confidence in the fiat dollar’s formerly perceived value, the US and/or the world may also realize that allowing government and the Federal Reserve to spin fiat dollars out of thin air is as crazy and suicidal as smoking crack. It might feel good for a while, but inevitably, once you’re addicted to either drug—crack or fiat currency—you’re headed for personal or national self-destruction.
Anyone who wants to regain control of our “money” from the elite con-artists in the Federal Reserve and national government, should work to restore gold and/or silver as a money that The Powers That Be can’t create with the stroke of a pen.
“I don’t know all the answers, but I’m just sharing with you what’s going on in my head as again, “The Thinker” part of me begins to “think.”
“D.”
We’re all beginning to “think”. With television and public education, I doubt that our government and the Federal Reserve ever imagined that the “great unwashed” would ever again “begin to think”. But we have. I’ll bet that The Powers That Be are frightened by our newfound predilection for thought.
Where our thinking will take us remains to be seen. But our thinking is inversely proportional to our trust in government. The more government exceeds its constitutional powers, the less we trust government. The less we trust the government, the more we think.
A thinking people are a revolutionary people.
