JWR: A Full Scale U.S. Dollar Panic Before November?

[Lex]

The news wires were abuzz last week about the global credit squeeze. Bankers are unwilling to make loans when they can't calculate risk. What risk? Here is a big one: Many of their clients have derivatives exposure, which means that lenders can no longer calculate their credit worthiness. In the banking world, the standard "safe" answer to any loan question in the absence of data is almost universally no. I surmise that if this situation gets any worse, governments may step in and make loan guarantees. (Meaning that the taxpayers would shoulder the risk instead of the bankers.) That may be the only thing that will get bankers to start making new loans to derivatives holders--which include nearly every major corporation, these days.

Read the rest...

[Lex]

Cause right now, Im thinking the world monetary system is just a web of promises.

Sounds like you've got a pretty good idea of what it's all about 

[Lex]

Can someone provide a link to a good solid, non technical overview that will help me understand this topic?

You'll have to be more specific about what you want to know.

[Lex]

Im sure youve heard the term 'unknown unknowns' before?

Did you read all of the articles linked to from the post?

[error]

You don't know what you don't know.

The first thing to understand is the nature of fiat currency, why it always collapses, and why the founders were so adamant that we never have it.

[Braddogg]

Did someone delete my post, or did my computer just have a hiccup? ???

[Lex]

the good news is that if the dollar crashes, assuming deflation means higher incomes, my student loans will be easier to pay off.  I just need to consolidate at a fixed rate soon.

A deflationary collapse will be bad for debtors (less money to pay the debt). An inflationary collapse collapse will be bad for creditors (more money to pay the debt).

[Dave Ridley]

i just watch the historical graphs and plan for basically the same thing to happen as in the past....  the 30s, the late 70s.

of course it will be different somewhat but what has happend before is probably what will happen again.  Not the end of the world but a real rough spot in the road with more violence than the 30s and 70s.  outside chance it results in a breakup of the u.s.

i do know that even our own liberty community in NH is way underprepared for a monetary crisis.  but we'll do better than most

[Friday]

Fed injects $2B more into banking system

http://money.cnn.com/2007/08/13/markets/fed_markets/index.htm?cnn=yes

[KBCraig]

Okay, help me out here.  when the fed 'injects money' into the banking system, is this not just code for 'devalues currency'?  since there is no more real wealth than yesterday, right?

Exactly right.

[Friday]

Fed injects $2B more into banking system

http://money.cnn.com/2007/08/13/markets/fed_markets/index.htm?cnn=yes

Okay, help me out here.  when the fed 'injects money' into the banking system, is this not just code for 'devalues currency'?  since there is no more real wealth than yesterday, right?

It means inflation.  Go ahead and lock in the fixed rate on your student loan.