The Historic Demise Of The Ever-Shrinking Dollar: An Infographic

Tyler Durden's picture

The almighty Dollar is looking less mighty these days. By almost every measure, the purchasing power of the US Dollar is in precipitous decline. The following infographic, whose contents should be well-known to our readers, visualizes the sad state of affairs that the average American seems to have ignored for far too long. And since the whole world is now engaged in the 4th year of all out currency debasement one can safely channel Lester Burnham and say it's "all downhill from here."

Shrinking Dollar Infographic

Infographic By Wholesale Gold Group

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RockyRacoon's picture

Private debt, not public debt will be our demise.  Governments have options, people don't.

falak pema's picture

the whole idea is to transfer the first to the second; and its working. So all is well....according to your logic! 

Pladizow's picture

When Obummer said he would double exports in the next 5 years, cutting the value of the $ in half was how he planned to do it!

TruthInSunshine's picture

Even most intelligent people are missing the forest for the tree (or is through the trees?).

In this era of fractional reserve central bank radical interventionism in every aspect of markets, thus breaking markets, the entities and individuals who have Deeply Captured alleged representative and regulatory bodies within the U.S. & European Nations are perpetuating a scheme whereby they are actually wish to suppress private sector consumption (aka encourage private sector deleveraging), while at the same time encouraging governments to ratchet up deficit spending from here until eternity (never mind the once in a blue moon focus on "deficits," "debt" and calls for governments to reign in spending; it's all part of the staged play).

As long as governments keep running massive deficits, which leads to larger and larger debts accumulated, the Financial-Banking-Military complex makes money, and the larger the deficits and debts, the more money they make.  They care not that the former 2/3rds of consumption was fueled by private consumption.

This is a new era, and the way to maximize profits is to get governments to spend as profilicly as they possibly can, and if that means the organic economy withers and shrinks, and living standards of hundreds of millions of individuals fall as a sacrifice to be paid in order for a corrupt system of political and economic rot be perpetuated, so be it...CronyKapitalism & Deep Capture.

RockyRacoon's picture

Oooh!  I musta touched a nerve with my opening salvo.  Here is some info that may expand upon my terse comment:

IT'S PRIVATE DEBT, NOT PUBLIC DEBT, THAT GOT US INTO THIS MESS

The arguments that the American Government caused this crisis through overspending on entitlements -- serving the so-called losers of society -- this is the standard line of the Far Right -- doesn't show up in this chart.

Government debt vis-a-vis Gross Domestic Product is not astronomical, according to this chart. It was not high in 1929 either, the last time the global economy had a heart attack and died. Public Debt is, in fact, at the time of this chart at least, lower than in 1945, when the public financed American involvement in World War II.

The Far Right illusion is that if government just 'gets out of the way' of private enterprise, the world will fix itself. But this chart gives a different picture of reality.

This chart says it is PRIVATE DEBT that is at astronomical levels vis-a-vis GDP. Private Debt in America was at 240% of GDP in 1929, before the global economy crashed then; and Private Debt in America was at 300% of GDP in 2009 -- and is still at 260% of GDP now, higher still than in 1929.

ATM's picture

But it was government and the fed that drove the private debt with low rates, cheap money and forced lending to shitty borowers. 

If the Fed/Gov didn't set rates, and they were actually set by the markets we would borrow under a true cost of capital rather than the fantasy land rates now and in the early 2000s. You can claim it's private debt that's the problem, and I would have agreed with you 4 yrs ago but now that debt has been nationalized. Now whose problem and fault is it?

Whatta's picture

bingo!

and part of the debt, a big part, was/is housing. the gubermint made that problem worse by forcing loans to be made to those that could not afford them!!!

Private debt may be bad, but government set the table for that debt.

AldousHuxley's picture

40% of US GDP depends on debt sales or trade by financial sector and 65% of economy depends on idiots using credit to purchase useless things.

 

US is dependent on ever-shrinking dollar system like an addict is dependent on substance abuse.

TruthInSunshine's picture

For anyone who doubted my rant above, read this article, which wasn't even published yet when I wrote what I did earlier, from The New York Times (though the author/Times try to cast exactly what I said is happening as "aw, shucks, what else can they do but sacrifice savers to allow governments to borrow cheaply?"):

Governments, with the aiding & abetting of central banks, are screwing their citizens over worse than they have in many, many decades (and in some cases, generations):

Low Interest Rates Benefit Governments, but Not Savers
  • As Low Rates Depress Savers, Governments Reap Benefits
By Published: September 10, 2012

A consumer complaint is ricocheting around the world: low interest rates are eating away at savings.

...

 

Though bad for people trying to live off their savings, low interest rates happen to be quite good for anyone borrowing money, like governments themselves. Over time, interest rates below the inflation rate allow governments to refinance, erode or liquidate their debt, making it easier to live within their budgets without having to resort to more unpalatable spending cuts or tax increases.

Along with keeping rates low, governments are using a variety of tactics to encourage captive audiences, like pension funds and banks, to buy their debt. Consumers, in other words, are subtly subsidizing governments without even knowing it. Economists have compared this phenomenon to a hidden tax on people’s wealth.

“If you ask a central banker is that what you’re doing, and why you’re doing it, they’ll say ‘No, we’re just trying to get the economy going by making it easier for the private sector to borrow,’ ” said Neal Soss, chief economist at Credit Suisse. “But I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”

This is not the first time governments have benefited by depressing interest rates, something economists refer to by the ominous name of “financial repression.”

In the three and a half decades after World War II, interest rates in the developed world were on average below zero after adjusting for inflation, according to Carmen M. Reinhart, a professor at the Kennedy School of Government at Harvard. This helped Europe, the United States and Japan slowly whittle away much of their war debt as their economies grew faster than their debt burden.

“The difference is that the postwar period was one of strong growth, when rebuilding and capital investment was going on across the Continent, and there were strong demographics,” said Stefan Hofrichter, the chief economist at Allianz Global Investors. “But these elements are not necessarily in place today.”

For that reason, economists are less certain that the success of the strategy will be repeated.

Many major economies are already slowing down, if not outright contracting. And the actions taken by governments to keep interest rates low can restrain how much savers have to spend and force fragile banks and pension funds to take on more risk. Ultimately, it could crowd out private borrowing.

Governments have different mechanisms to keep their borrowing costs artificially low.

The Chinese government can just make a call to banks and dictate how much they will lend and at what interest rate.

“By forcing them to lend at low interest rates, China’s central bank is taxing banks at high rates,” said Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics. “They make it up to the banks by dictating that banks pay depositors even lower rates, so consumers are getting taxed too.”

Oliver Jones's picture

Is this the same China that encourages its citizens to put their savings in gold and silver?

RockyRacoon's picture

I'll agree with you about the impetus for the debt.  Lay the blame wherever it is, but it's the debt itself that is important, not where it came from or whose fault it is.   The article doesn't intend to look back, it lays out the present conditions.  All the nasty down arrows are from those who think I am letting the crooks off -- not so.

johnQpublic's picture

i would like to point out that in 1980 you couldnt eat,...er, buy an ipad at any price

nmewn's picture

Kuznets was pretty clear about what his "invention" of the GDP measurement was...and what it was not. He specifically said do not use this for a measure of the well being of a nation.

""The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above."-Kuznets

Don't be fooled by GDP Rocky, a full third of its measure is double counting for what has already been produced by the nation as a whole...that third is re-distribution by government.

Just sayin ole friend ;-)

 

RockyRacoon's picture

I'm aware of the phantom accounting in the GDP.  I think it's gotten all off track with my post.  People don't have the same options as governments, I say again, and it's the private debt that is going to do us in.  Folks will just stop buying and the carousel will stop playing calliope tunes and come to a stand-still.  We can see it all around.   The knee-jerk reactions to comments is getting weird.  Perhaps it's a symptom of the unease.   A little reflection and careful reading of available sources of information are warranted, not reflexive attacks on a shallow reading which lead to misunderstanding.  That's not true in your case, but it sure seems to be, based upon the inordinate number of red arrows from folks who don't post a reply comment.  Sigh...

nmewn's picture

"Folks will just stop buying and the carousel will stop playing calliope tunes and come to a stand-still. We can see it all around."

Nice.

I was just noticing that yesterday. As you know, I live in "the sticks" and have a long commute to work. Yesterday, a Monday, the start of a full work week, I found myself completely alone on the highway when usually people are flying around, passing, signaling, late to wherever they're trying to get to. As far as the eye could see (front & rear)...no one. 

It had a strange feel. I found myself observing we are often times annoyed by the people we find around us but when they're not there we wind up longing to see them again.

Of course you know it wasn't me (I didn't rate it one way or the other) but I did this one. I was green number two for you here.

Just for waving at Galt as he drove by ;-)

DanDaley's picture

As far as the eye could see (front & rear)...no one.


You mean like these photos of empty streets in Greece (coming to a town near you -or already here)?

http://www.businessinsider.com/greece-photos-the-economy-2012-8#our-read...

Spastica Rex's picture

Of the people, by the people, for the people...

Debt = the future consumed today.

The Bernaysians made the future look so provocative that the plebs were forced to rape it. Yeah, right.

Good on ya, RR: +1

steelhead23's picture

Thank you for setting us all straigh Rocky.  It is my opinion that this nation is suffering from a double whammy - a recession, partly attributable to the dot-com bust, plus a financial crisis caused by the financial industry itself and idiotic government policies and lack of oversight.  I happen to believe that most, if not all of the financial crisis was caused by a huge looting operation connected to derivatives.  The Magnetar trades were not an abberation of the market - THEY WERE THE MARKET.  It was not an accident that fast-food workers qualified to buy McMansions - it was a feature.  The real failure of the U.S. government in all of this is simply that it has chosen to ignore the vast thievery that has occurred and continues to occur.  They failed to put people in jail for stealing - billions (Yes John, I mean you).  Sheesh.  Wake up folks, the son of the then-sitting Sec. Treasury raked in $15 billion in the swindle and is welcome in any boardroom on Wall Street.  And he is not alone.  Wanna blame the government?  Blame them for that!

RockyRacoon's picture

You've pointed out that it is not simple.  All your observations are pretty much spot on.  However, to beat a dead horse, it is what it is.  Yesterday will only be useful in pursuit of prosecutions, it is today that needs to be analyzed, and tomorrow that will require action.   I think we all have a role to play because we care, as is evidenced by our presence here.

Libertarian777's picture

you completely missed the boat, the theme and the entire point of 99% of all articles on this site.

It's not about either of the debts (public OR private), they are symptoms. It's not about the Republicrats or Obamney. It's not about the unemployed or welfare recipients, BLS lies, or propaganda.

Those are ALL symptoms of a core disease...

CENTRAL PLANNING.

Central economic planning by the fed.

Central planning by the federal government of education, healthcare, welfare (in the real sense), spending, etc.

Corporatism and facism can only survive in a centrally planned economy.

Everything you see is a symptom... we cannot possibly hope to solve ANY issues while we maintain this idea of central planning.

Ron Paul's idea of individual freedom (and individual responsibility) is the only cure.

fourchan's picture

a government cant create an economy.

old naughty's picture

Sure they create...

dependency.

palmereldritch's picture

I would think the biggest private debt has to be the FED's itself when it created all those FRNs, ostensibly backed by the US Treasury and then sent them abroad to numerous foreign banks, corporations and nations without formal approval of Congress ca 2008 to date...

I sure hope they have the private reserves available, as a private bank, to cover the debt they created unilaterally in the name of the US taxpayer without their consent. I mean, you can't write those kind of notes without assets...

I'm sure if effective US citizen and legal resources were brought to bear on those FED agents they would be able to identify their shareholders' and employers' significant wealth secreted away that would be more than sufficient to satisfy such a private debt that is clearly not the responsibility of the US Treasury nor the taxpayer...

I say collect where the assets are located...that's where any smart creditor looks....

delacroix's picture

he meant double the export of jobs

q99x2's picture

He exported my bread to the Chinese. Left me with 3 slices.

diogeneslaertius's picture

falak

yes the whole point is to move debt around and in the process create an entangling web of dependencies which render state to the banking cartel oligarchy

OutLookingIn's picture

Debt is, DEBT! Is DEBT, is debt.  

By any other name is still DEBT.

All debt will be paid.

Either by the borrower or by the lender. It will be paid.

Either with dollars worth pennies, or with pennies worth dollars. It will be paid.

Sam Clemons's picture

Much like the debt that European countries owed the US for helping to finance WWII?

oldschool's picture

Not quite.  My private debt isn't being transferred to the public sector.  And, in the end, I'll end up paying too large a share of that "public" debt to boot.

r00t61's picture

Only because governments can print money, and force everyone to use their printed money, and criminalize the use of alternate tender.  And additionally, governments then use that printed money to employ goon squads armed with badges and guns that then go around extracting money from the hapless people.

 

RockyRacoon's picture

Like I said, governments have options.  Many/most of them very unsavory.  If we did the same by pillaging our neighbors we'd be in prison!

LMAOLORI's picture

 

 

The U.S. Govt. really doesn't have an option on repaying the debt it is in our Constitution but what the government has an option on is not stealing from one to give to another in the first place. 

 

 "Sect. 4 of the 14th Amendment. It reads in part:

”… .the validity of the public debt of the United States, authorized by law… shall not be questioned”

 

And second, there is this Criminal Mischief statute

18 US 1361. Government property or contracts

Whoever willfully injures or commits any depredation against any property of the United States, or of any department or agency thereof, or any property which has been or is being manufactured or constructed for the United States, or any department or agency thereof, or attempts to commit any of the foregoing offenses, shall be punished as follows:

 

If the damage or attempted damage to such property exceeds the sum of $1,000, by a fine under this title or imprisonment for not more than ten years, or both; if the damage or attempted damage to such property does not exceed the sum of $1,000, by a fine under this title or by imprisonment for not more than one year, or both.”

 

 

RockyRacoon's picture

That's correct as far as it goes.  In today's financial system there are STILL government options that are no weirder that what we've seen so far -- things that we thought could never happen.  I offer as evidence:

Beyond Debt/Deficit Politics: The $60 Trillion Plan for Ending Federal Borrowing and Paying Off the National Debt
Zap Powerz's picture

Its hard to think of a more effective business model.  Customers have two choices: particpate in a game with ever changing rules or......go to jail.

Mr. Fix's picture

I think we all know by now

the dollar is turning to crap.

El Oregonian's picture

Well those government thieves stole $80 Million worth of gold from a private citizen (5) 1933 $20.00 Saint Gaudens Gold coins. How's that for debasement...

lastboyscout's picture

This is most ignorant comment I've witnessed in a long time. Question: Who do you suppose is on the hook for all that public debt our U.S. Govt is ringing up? Answer: You and me and every U.S. citizen alive. We pay taxes, and when the Govt spends more than is receives in taxes, it borrows, and those who lent money to us eventually want it back...with interest. The Govt. operates with tax money collected by it citizens, and pay back Debt with money from its citizens. You are delusional if you think the Govt has its own stash of money. All debt matters!

 Let's not even get into expanding the money supply!

Debt is the money of slaves. Every U.S. citizen is a slave

 

 

derek_vineyard's picture

i have conceded and dropped my pants and bent over

RockyRacoon's picture

Man is free at the instant he wants to be. - Voltaire

Watauga's picture

Voltaire was full of shit, and man is never free in this world.  Don't delude yourself.  We are beholden to someone and/or something at all times and in all places.  There is only one way to be truly free; we all know it; yet we deny it in our actions.

exi1ed0ne's picture

Freedom is a mode of operating, a mindset.  It is often incorrectly confused with the concept of no limits.

I did a thought experiment once.  I closed my eyes and imagined a version of myself that had the chains of social conventions, laws, and moral constraints removed.  It was the most horrifically inspiring moment in my life - I was alone and naked in that moment of freedom.  I realized in that moment how the chains that bound me were of my own design, forged of fear and the desperate need for social context.

Id fight Gandhi's picture

Nope, people everyday say I can't pay and walk away.

JeffB's picture

Of course it's the government's central bank, the Fed, that is directly precipitating the private debt and enabling the massive spending leading to the untenable government debt.

When you artificially suppress interest rates to near zero levels, you discourage saving and investing and encourage spending and borrowing.

It shouldn't be much of a surprise that after decades of artificial goosing of the economy that the consumers are as far over their heads in debt as their idiotic spendtrhrift government.

It's a "consumer driven economy" after all.

When they want to goose the economy, they goose the consumers. When they run out of money, they loan them more... at lower interest rates. If they can't pay it back, they renegotiate the loans down and then bail out the banks that loaned them the money they couldn't repay just to keep the game going a little longer.

 

 

geoffb's picture

Really Rocky, government debt isn't a problem? I'd love to hear what "options" the PIIGS have.  Never forget, its not the stock of debt, its the flow baby. The article is using the wrong measure. When the music stops it stops for everyone, not just the private sector.

RockyRacoon's picture

You inferred that public debt was not a "problem".   Quote me where that is stated and I'll buy the next round.  Your reading of the information was only half-assed.

Flakmeister's picture

I suppose that if you make more of them faster than they decay, it becomes a wash...

As for the viability of a gold standard, I suggest people read the Lords of Finance...

It is not the panacea that most here believe it to be....

Pladizow's picture

There is no panacea, its which medicine does best!

nmewn's picture

They all come from debt, if debts don't matter, then neither does wealth, wages...or...taxes.

Just gimme my free shit ;-)

So, if thats the case, then we get onto the slippery slope of...why should I work for the same things as the guy who isn't working at all, just sitting over there under the tree watching?

I believe that was tried and failed.