regarding currency

[rainsonme]

When I was young, money was made of silver, and paper notes could be exchanged for silver (for gold if you were a Frenchman). Then it became just metal tokens and paper notes vaguely tied to oil. Now currency is all electronic currency, an abstraction of an abstraction from money. I read that 92% of all US currency is electronic, but I think it must be far more than that ---- it just isnt feasible to print $1trillion dollars in paper. This currency is created when needed, moved over-night to Brussels and from there to whatever Euro bank needs this electronic credit on its balance sheet to feign solvency. And sometimes back to the US fed. All with the click of a few keys. If a bond sale is lagging, they can create more of these 0's and 1's, and buy up excess bonds with new electronic currency. It is a brave new world. The time is near when, if I wanted to sell my gold or silver, I would have to either trade it for some item, or sell it for electronic 0's and 1's credited to my account and duly recorded for whoever was interested in my finances. It will be difficult for this new system to fail, because they can create, or destroy, these 0's and 1's as they choose; they can back stop any financial collapse, retire debt, and if they needed to reduce the net currency available. We are monitorizing everything, and giving much fuller control to the governments. They control the 0's and 1's. That might work out OK --- Physical currency will likely disappear soon. I have no point to make; just my observation of what has occurred in my short life regarding currency.

[Recyclersteve]

It would be scary to me to sell physical silver, for instance, and be paid in bitcoin. I could just imagine my wife saying "You sold what? And you got what? What has gotten into you?"

[68Camaro]

An ability to expand money supply by just saying "make it so" does allow TPTB to react to flash blips in markets. If/when they release that created "money" out into commerce, they have just inflated costs and devalued your savings. But the 2008 TARP (and follow-on even larger electronic backstops, some of which they haven't talked about much) didn't create the inflation that some of us (like myself, who was still being educated in modern money flow) thought would happen, as fast as we thought, because most of it never flowed out past the banks - rather it just covered bank losses from their bad investments in mortgages and derivatives. Some of that electronic money printing is seeping out and we are seeing some higher inflation, but still most of it just went on the books and stayed there (for now).

They can't do this perpetually, at large volume. But they can and have done this for now, in the hopes that no one will notice over the span of time they are doing this such that various executives can use it to their advantage to get rich and exit the markets. However I believe that they have let the genie out of the bottle - human nature can't be caged for long - successive generations of decision makers will now continue to go back to this approach under the theory that their predecessors got away with it, so why can't they do the same thing. Greed is a powerful, powerful motivator for these people, especially when they believe they won't be caught. So they will go back to it one more time. And one more time. And again. Eventually this mounting debt will collapse under its own weight. When? When - while markets are still somewhat free - enough people lose confidence.

[InfleXion]

Gold and silver are the physical currency. What we use are only poor derivatives of them. I anticipate the day will come when parting with my stack I will not say that I sold it, but that I spent it. Until then it's a great opportunity to trade something that has no intrinsic value for something that does where both serve the same function, particularly since only one of them will outlast our government's ability to avoid default on debt that can never be fully repaid due to the nature of compounding interest being exponential vs. GDP growth being linear at best.

[theo]

An ability to expand money supply by just saying "make it so" does allow TPTB to react to flash blips in markets. If/when they release that created "money" out into commerce, they have just inflated costs and devalued your savings. But the 2008 TARP (and follow-on even larger electronic backstops, some of which they haven't talked about much) didn't create the inflation that some of us (like myself, who was still being educated in modern money flow) thought would happen, as fast as we thought, because most of it never flowed out past the banks - rather it just covered bank losses from their bad investments in mortgages and derivatives. Some of that electronic money printing is seeping out and we are seeing some higher inflation, but still most of it just went on the books and stayed there (for now).

They can't do this perpetually, at large volume. But they can and have done this for now, in the hopes that no one will notice over the span of time they are doing this such that various executives can use it to their advantage to get rich and exit the markets. However I believe that they have let the genie out of the bottle - human nature can't be caged for long - successive generations of decision makers will now continue to go back to this approach under the theory that their predecessors got away with it, so why can't they do the same thing. Greed is a powerful, powerful motivator for these people, especially when they believe they won't be caught. So they will go back to it one more time. And one more time. And again. Eventually this mounting debt will collapse under its own weight. When? When - while markets are still somewhat free - enough people lose confidence.

Our banking system creates money by creating debt. Theoretically that money is suppose to be "destroyed" by paying that debt back. The financial system is intended to be stabilized by this balance of monetary creation and destruction. Since most of this debt cannot to be paid back via the traditional method, the monetary destruction must occur through other means. The 1987, 2000 and 2008 market crashes along with all the mini-panics in between actually serve the purpose of stabilizing the system by removing monetary pressure. The problem is that these crashes destroy a lot of private wealth in the process. Unfortunately the elites are willing to pay that price to keep the system going. This process is also unsustainable, but it has succeeded in extending the current system longer than any of us could imagine, giving them time to consider future options.

[rainsonme]

Well, now that currency is abstracted so far away from any store of physical value, such that it can be created or destroyed with no public announcements by someone at the right keyboard, and it can be transferred onto whatever balance sheet at whatever institution globally with no public announcement, and when large portions of "debt" are held on central bank balance sheets ---- I think TPTB (and I wonder who they are ---- central bankers or gov leaders?) have far more control now than ever before. "They" can create, destroy, or move currency and sovereign debt with a few key strokes. I think with the massive debt created at private, corp, and governmental levels, we have monitorized everything including future growth. And we have given unprecedented control of that currency to the governments. less than 8% of our currency is physical; the rest is imaginary 0s and 1s controlled completely by unseen hands on unseen key boards. Market cap of any major company is just a series of these 0s and 1s. As is my income --- my pay is direct deposit, and soon I believe i will not have the option of taking paper tokens from the bank for that amount. it will all be electronic, and all completely controlled. A completely controlled economy. This could work out ok ----

Mr. Theo had a good insight about the market crashes adding stability by removing wealth/currency.

I dont think gold and silver are money, I dont think they are even currency. Our currency is far abstracted from anything physical. If I am still alive in 20 years, I believe the only way I will be able to buy gold and silver will be with electronic 0s and 1s that will be monitored as a natural course of all transactions, by the government that will control all those 0s and 1s.

And I think this can be sustained much longer, because "they" have control that no government ever had before. They can create, destroy, move, monitor, re-value, limit, control ----- this will likely go on beyond my lifetime. My kids might do well to hang onto some of those funny coins crazy dad has been hoarding over the years ----

[68Camaro]

For something to be money it must have the attributes of: portability, homogeneity, divisibility, and durability. But there is one more attribute missing, for it to be "good" money. Money should be intrinsically valuable. A good money is something many people want or can use, which is what it allows to function as a means of exchange. Gold still operates as money at the central bank level, where is it used as a reserve currency because of its intrinsic value. But over the past 100+ years governments have been working to substitute for the "intrinsic value" attribute the attribute of "acceptability". Governments have made gold and silver no longer acceptable as legal tender in standard commerce, replacing PMs with fiat money, which derives its value solely by declaration from the government as legal tender. Government pulled the PM backing from currency and when they did the currency failed the intrinsic value requirement. Their solution to that was simple - they redefined the definition of money. Over decades the public has been re-educated to accept paper and electronic bits as money.

Because PMs are not now accepted broadly as a medium of exchange PMs are currently not money. The standard of PM value has become the U.S. dollar instead of the other way around, which is backwards.

But PMs are remain wealth, and they are a great place to store wealth for future generations for protection against government debasement of currency.

All fiat currencies eventually fail - there is a 100% failure rate of fiat currency over history. All money eventually returns to gold and silver.

But your concern about what happens in the interim is valid. In the interim (which could last longer than we can tolerate as individuals), things could get messy.

[rainsonme]

thanks for responding; I enjoyed the discussion.

[beauanderos]

out of curiosity (due to India) I've just spent about an hour browsing to see if I could determine what percentage of US currency exists
in each denomination.

I'll be dadblasted if I couldn't find a good answer!!

I did learn that about 45% of new currency printed each year is new one's, to replace the old ones (designed to last about six years).
Hundreds, apparently, will last up to fifteen years as they do not circulate much. I researched several treasury and bureau of engraving
and printing sites without finding out what I want to know.

Best I could do was this link:
http://www.theatlantic.com/business/archive/2012/11/-100-bills-make-up-80-of-all-us-currency-but-why/265518/
which indicates 1's and 5's make up maybe 4 or 5% of bills, 10's and 20's perhaps 17 to 18%. I imagine the ratio is in a constant state
of incremental flux, with a shift towards total value held in 100's gaining at the expense of smaller bills. Apparently, about 60% of US
currency is held overseas. Interesting tidbit... it costs about 8.7 cents to print a $100 bill, but because of seignorage, the Treasury
Dept makes almost pure profit when these bills wind up overseas. $20 billion in the last fiscal year.

So, if the total approximate amount of currency circulating (as of 10/16/16) is around 1.43 trillion... you do the math.

My emergency fund will continue to be built on 20's, with the change each time I buy something saved and compiling stacks of smaller
denominations. Good thing about small bills, it makes it real hard to spend them impulsively on ill thought out purchases.

[68Camaro]

https://www.moneyfactory.gov/resources/ ... nnual.html

Shows annual production of each note starting 1980 if someone wants to the math.

[Recyclersteve]

A completely controlled economy. This could work out ok ----
----

What happens if people cannot access the internet or if (due to massive ID theft) your bank/brokerage accounts suddenly go to zero. In the case of accounts going to zero on a widespread basis, even FDIC/SIPC insurance wouldn't be sufficient for all the claims. You could try filing a claim and the insurance company would declare "force majeure" (something so widespread and massive that insurance (and even reinsurance) would not be able to cover it). What do you do then?

[beauanderos]

A completely controlled economy. This could work out ok ----
----

What happens if people cannot access the internet or if (due to massive ID theft) your bank/brokerage accounts suddenly go to zero. In the case of accounts going to zero on a widespread basis, even FDIC/SIPC insurance wouldn't be sufficient for all the claims. You could try filing a claim and the insurance company would declare "force majeure" (something so widespread and massive that insurance (and even reinsurance) would not be able to cover it). What do you do then?

FDIC is a joke. If you think you're covered... think again. 32 billion of insurance against the potential of 6 trillion in claims. Only the naive continue to have trust in banks nowadays.

[hobo finds]

How much U.S. currency is in circulation?

There was approximately $1.48 trillion in circulation as of October 20, 2016, of which $1.43 trillion was in Federal Reserve notes.

[beauanderos]

A completely controlled economy. This could work out ok ----
----

What happens if people cannot access the internet or if (due to massive ID theft) your bank/brokerage accounts suddenly go to zero. In the case of accounts going to zero on a widespread basis, even FDIC/SIPC insurance wouldn't be sufficient for all the claims. You could try filing a claim and the insurance company would declare "force majeure" (something so widespread and massive that insurance (and even reinsurance) would not be able to cover it). What do you do then?

FDIC is a joke. If you think you're covered... think again. 32 billion of insurance against the potential of 6 trillion in claims. Only the naive continue to have trust in banks nowadays.

My numbers were a bit off.

MUST read article linked below:
http://www.thecommonsenseshow.com/2014/05/28/unless-you-want-to-go-to-prison-read-this-before-taking-money-out-of-your-bank/