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Smoke and Mirrors: The Story of Fiat Currency Abuse

Smoke and Mirrors: The Story of Fiat Currency Abuse. Richard Karn Managing Editor The Emerging Trends Report. http://www.emergingtrendsreport.com. An Exercise in Monetary Forensics. US Dollar History: 1774 to 2008 The Fed Period: 1914 to present A 45-year Career: 1965 to present.

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Smoke and Mirrors: The Story of Fiat Currency Abuse

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  1. Smoke and Mirrors: The Story of Fiat Currency Abuse Richard Karn Managing Editor The Emerging Trends Report http://www.emergingtrendsreport.com

  2. An Exercise in Monetary Forensics • US Dollar History: 1774 to 2008 • The Fed Period: 1914 to present • A 45-year Career: 1965 to present www.emergingtrendsreport.com

  3. US dollar is not different, just more sophisticated • better management • more dominant and far better distributed • unparalleled promotion and marketing www.emergingtrendsreport.com

  4. US Monetary History: 1774 - 2008 “A strong dollar is in the interest of the United States.” www.emergingtrendsreport.com

  5. 19th vs 20th Century: gold standard & fiat Technological & Financial Innovation www.emergingtrendsreport.com

  6. Productivity Miracle www.emergingtrendsreport.com

  7. Or was it? www.emergingtrendsreport.com

  8. Ending all pretense to gold convertibility www.emergingtrendsreport.com

  9. “Our experience shows a weak link between money supply and inflation and output.” www.emergingtrendsreport.com

  10. The Fed Period: 1914 to present “Give me control of a nation’s money, and I care not who makes her laws.” The 6 stages of a fiat currency regime: • Implementation • Collusion • Greed overwhelms restraint • Disequilibria • Accelerated cycles • Collapse www.emergingtrendsreport.com

  11. Fiat Currency Regime Life Cycle www.emergingtrendsreport.com

  12. Fed Fix-All: lower interest rates & make more credit available www.emergingtrendsreport.com

  13. A Truly Bi-Partisan Effort www.emergingtrendsreport.com

  14. 1966: $1 of debt produced $.93 of GDP Growth • 2007: $1 of debt produced $.18 of GDP Growth • From 1980 to 2007, the financial industry share of total US corporate profits rose from 10% to 35% www.emergingtrendsreport.com

  15. Fed Nightmare: Consumption now fuels 71% of GDP; Saving starves it equally www.emergingtrendsreport.com

  16. A 45-Year Career: 1965 to 2009 “I’m mad as Hell, and I’m not going to take it anymore!” www.emergingtrendsreport.com

  17. Generations Collide in Twin Tragedies www.emergingtrendsreport.com

  18. Pending Change in the Status Quo www.emergingtrendsreport.com

  19. Saving Fiat in a Negative Real Interest Rate Environment www.emergingtrendsreport.com

  20. “Gold Doesn’t Earn Any Interest” …nice thing about models is that if you keep your data series short enough you can make your model say anything you want it to. www.emergingtrendsreport.com

  21. Best Scenario: Another Trader’s, Not Investor’s, Market? www.emergingtrendsreport.com

  22. Sixth Stage: Collapse • Without sufficient credit/debt growth, Ponzi-style collapse looms • Faith in monetary system shattered: social, political and economic upheaval • Final indignity is the realization of the extent of the betrayal • Occasionally a new democratic republic results, more often a fascist state www.emergingtrendsreport.com

  23. Conclusion • Greed & Fiat Currency Abuse, not Capitalism, behind Global Financial Crisis www.emergingtrendsreport.com

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