A "solution" to a declining dollar.

[rs]

Everyone is expecting a drop in the dollar but the idea that the PTB would allow their holdings to just evaporate seems suspect to me. Sure they don't care about the "ordinary joe" but there is only so far you can get ahead of the curve in shifting money around to protect its value.

According to Wikipedia (that well known "authority") the USA has about $1.4 trillion dollars in circulation. Because of the nature of the dollar, about half of that is located around the world. Most of the stuff overseas is more than likely to be "old" currency (as in printed a while ago) and lately the US mint has been going nuts making cosmetic changes to the currency.

These cosmetic changes (threads, micro-printing, watermarks, color shifting ink) have been sold as being necessary to stave off counterfitters and this is a quite credible possibility and justified fear.

Suppose in the near future it is "discovered" that nearly perfect copies of the "old" currency have been made and that the treasury department cannot reliably tell "real" from "counterfit" bills. So all bills of that type that are in curculation are now null and void. Poof, an instant 700 billion of debt relief because most of these bills are overseas.

Since most of the currency in the US has already made the shift (except possibly for that used by organized crime or the drug trade) there would not be a perceived hardship on the US population. In reality, the now invalid bills would probably still be circulated and used, so it would not be as large a grand theft as it might seem to the world at large which would give the pathocrats solace for their conscience (as if they really need it...).

Anyway with the increasing rate of change of the US currency, I have been wondering for some time if there was a plan to invalidate (by "fiat") old bills. After all, it is "fiat" money and if you can fiat it into existence you can fiat it out of existence.

 

[on_strike_usaexpat]

You overlook the fact that the dollar has been the world reserve currency for the past sixty years. That is all world commodities (except the telling sea change now occurring with oil) are bought using dollars and virtually all government entities have used the dollar as a store of value via purchasing and holding US Treasuries (again bought with US dollars). If the US invalidates the "old" currency and the damn good counterfeits out there (thanks to Iran, North Korea, world drug lords in cooperation with the CIA among others), world confidence in the dollar as a world reserve currency would be destroyed overnight. The US would be rapidly transformed into a third world country as the entire world dumps their dollar holdings and begins transacting vital commodity trades in other currencies.

Of course, the largest hoard of gold in the world exists under the privately held Federal Reserve Bank of New York. I can see a confiscation happening (much of this gold is titled to other countries) and an attempt to impose a new Fed backed currency on the world which I hope fails.

 

[rs]

You overlook the fact that the dollar has been the world reserve currency for the past sixty years. ... If the US invalidates the "old" currency... world confidence in the dollar as a world reserve currency would be destroyed overnight.

Yes this is true, but the outcome you mention may be inevitable and so the US "might as well make something out of it". I am not suggesting that US treasuries will be invalidated (which would piss off governments) but only the paper currency. China does not hold stacks of $100 bills they hold bits in a computer. If the currency collapses there would be a flood of these $100 bills back into the US and invalidating the currency would be a way to stop it.

Its just a though, albeit a wild one... We (as in world wide) are moving into uncharted territory so who can imagine the next non-linear disturbance we will face.

 

[on_strike_usaexpat]

I am not suggesting that US treasuries will be invalidated (which would piss off governments) but only the paper currency. China does not hold stacks of $100 bills they hold bits in a computer. If the currency collapses there would be a flood of these $100 bills back into the US and invalidating the currency would be a way to stop it.

But then what ultimately do those US Treasuries represent? If you take away the punch bowl, the party is for all intents and purposes OVER.

I see a giant Argentina-style collapse coming no matter what the Fed or USG does. And what usually happens when the authorities try to slow down or hinder a natural fiat correction from playing itself out is even more extended pain and damage.

How it actually plays out though, is indeed open.