Originally Posted by SodFarmer
MacLorry �
You are confusing two entirely different things. Yes other nations do in fact depend on the value of the dollar to give their currency its value. Yes, the market does set the exchange rate. The USD is what backs the currency of other countries. However, that is not the only factor involved in setting the exchange rates between currencies. Lets take Japan for example. When Japan recently decided to devalue their currency to enhance their ability to export their products, they simply printed more yen, thus devaluing their currency. They did not change their reserves, but they did increase the supply of Yen thus diluting the value of the Yen in the world market.


It doesn't work that way. Apart from Panama which uses the U.S. dollar as it's official currency and a few other small nations, the exchange rates of all major currency is established by the Foreign Exchange market. Just click the links and read the facts.

No major currency is officially pegged to the dollar any more. It hasn't been that way in over 30 years. Whatever you've been reading is long out of date, or it's some nonsense published by gold merchants seeking to swindle you out or your life savings.

Originally Posted by SodFarmer
I don't mean to be offensive, but it is obvious that you still do not grasp the concept of real money. Currency and money are not the same thing. Without backing our currency by something SOON, the rest of the world WILL own the US in the very near future. Our currency is well on its way to becoming worthless.[/url]

The concept of "value" is just an idea; a complete human construct. There's no physical or mathematical explanation for "value" and there's no scientific means to measure it. The only thing that gives anything value is the market. The dollar is evaluated 24 hours a day 5 days a week on the Foreign Exchange market relative to all other major currencies (see link above). That's where the dollar and all other currencies get their value, not from some link to each other or to some commodity like gold.

[quote=SodFarmer]Let me explain by going back to something very basic. The purpose of the Federal Reserve is to keep the economy moving without going too fast which would result in massive inflation. The Fed is like the gas and brake peddals on a car. They lower interest rates (gas) to spur the economy, or raise interest rates (brake) to control inflation. The Fed has had interst rates set at 0 to .25% for about two years. They are trying to spur economic growth, but have been unsuccessful.


First, without the Fed, which many of the hard money proponents want to get rid of, there's no gas or brake pedal on the economy, to use your metaphor.

The first time I had this discussion on 24hr I posted links to the 10 financial crashes, panics, and disasters that preceded creation of the Fed. Of course, historical facts have no effect on the thinking of true believers, so I won't bother posting that information again. Just think about this; the U.S. was on the gold standard (hard or real money) and had no central bank to create business cycles or mess with the economy, yet the financial crashes and panics were so frequent Congress was compelled to create the Fed. It's that failed system that some now want to go back to becasue those who don't learn from history are doomed to repeat it. Learn your history and you'll realize that what seems like wisdom is really a bunch of nonsense.

You say the fed has been unsuccessful, but as with any fork not taken, you don't know what would have happened without the fed's intervention in the economy. It's like explaining what would have happened if we hadn't invaded Iraq to take out Saddam. We can speculate, but we can't know.

The jury is still out and right now the economy is improving. If the inflation the hard money people predict occurs then they will have proven their point, if not, they will be disproven.

I think one thing we can agree on is that the die is cast and it's way too late to change our financial system to deal with the current debt or inflation. Either the fed with its fiat money does what they claim or it will give fuel to the hard money proponents. The 2012 election is likely lost to the hard money proponents, so whatever happens will be high on the list of topics for the 2016 election.