Taxation by Currency Devaluation - PeachParts Mercedes-Benz Forum

Ken300D · #1 03-14-2008, 01:07 PM

Did you know the US Government can devalue your currency at will, without much in the way of Congressional oversight and restrictions?

And it is not only an income tax, it is a tax on everything you own that is directly linked to currency - everything you hold in a dollar denomination.

Currently, based on the trend of the past six months, the annual taxation rate is a 40% loss of your net worth. That's based on the Japanese Yen.

http://www.metaquotes.net/forex/usdjpy/

This is a "hidden" tax that no one discusses very much on Capital Hill. But it is very real, and a direct result of the Federal Government spending money that it doesn't have (i.e. "printing money" without value). The money that the Federal Reserve pumps into the economy (in this election year) is created from valueless thin air. And massive amounts are being created.

All this makes what you hold in Dollars, and your salary, worth much less over time.

This is how the Social Security issue is being solved. Yes, you will get your predicted SS check for (say) $1500 a month in retirement. It will be approximately enough to pay your monthly electrical bill - not your living requirements.

Invest in something with more lasting value. Ideally, borrow money today to buy something of lasting value (real estate?) and pay it back later with money worth much less. [ The trick is to keep your income so that you can pay back the loan. ] [ The other trick is making your income steady - how can you get a 40% annual pay increase? ]

This should be an election issue.

Ken300D

Hatterasguy · #2 03-14-2008, 01:21 PM

Yep thats what I have been saying for awhile. Don't hold a lot of cash, its going to be worthless. Barrow now and when you pay them back its going to be worthless.

If I had $100k sitting in the bank right now I would get it the F out of there and into stocks or real estate.

LaRondo · #3 03-15-2008, 11:23 PM

Quote:

Originally Posted by Hatterasguy

Yep thats what I have been saying for awhile. Don't hold a lot of cash, its going to be worthless. Barrow now and when you pay them back its going to be worthless.

If I had $100k sitting in the bank right now I would get it the F out of there and into stocks or real estate.

Keep your cash in a foreign currency and use those assets to expand your credibility for investments.

Yet, stock is not that save these days, you'd have to be very picky, Personally I wouldn't trust the stock market.

Even with real estate it can get you. If under worst circumstances a new currency will be installed ( which is what i think we're looking at in the foreseeable future ) your mortgage loan or even your real estate value will be completely reset.

Emmerich · #4 03-16-2008, 01:24 AM

Guess nobody was complaining when the dollar was going the other way and you were getting "hidden" tax rebates....

If there is no inflation, the devaluation of the dollar doesn't matter much unless you trade with foreign countries. Its a tradeable commodity just like anything else-the opportunity is there to make money off of it as long as it is moving one direction or the other.

Does anybody feel poorer over the last 6 months? Didn't think so. The boom in real estate (including the mortgage fiasco) was caused by a robust economy (with the addition of some excesses by some). Where I live (Dallas) Mcmansions are popping up everywhere, they cost a fortune, and most are not in danger of foreclosure. If we were in a real recession, none of that growth would happen.

LaRondo · #5 03-16-2008, 01:38 AM

Watching The Dollar Die
By Paul Craig Roberts
3-14-8
I've been watching the dollar die all my life. I sometimes think I will outlast it. When I was a young man, gold was $35 an ounce.
Today one ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.
Our coinage was silver. Our dimes, quarters, and half dollars had purchasing power.
Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy.
If a kid could collect 5 discarded soft drink bottles from a construction site, the 2 cents deposit on the returnable bottles was enough for the Saturday afternoon movie.
Gasoline was 32 cents a gallon. A dollar's worth was enough for a Saturday night date.
Our silver coinage was 90 per cent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops.
Except for the reduced silver (40 per cent) Kennedy half dollar which continued until 1970, 1964 was the last year of America's silver coinage. The copper penny departed in 1982.

As Assistant Secretary of the Treasury, I opposed the demise of America's last commodity money, but I couldn't prevent the copper penny's death.

During World War II (1941-1945), nickel was diverted from coinage to war, and the US mint issued a wartime silver (35 per cent) nickel.
It is not easy to find items to purchase with today's US coins, but the silver coins of the same face value still have purchasing power.
The 10 cent piece of my youth contains $1.42 worth of silver at today's silver price.
The quarter is worth $3.55, and the half dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value.
These are just the silver values of coins that might be worth far more depending on condition and rarity.
The silver in the wartime nickel is worth $1.10, which is 22 times the coin's face value. Even the copper penny is worth 2.5 cents.
When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one US dollar.
The euro, which is today's equivalent to the mark, costs $1.55.
People who haven't accumulated much age have little idea of the corrosive power of "acceptable" inflation.
Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services it drives up prices, thus driving down the value of the money. I
f freely traded currencies are excessively printed or if inflation, budget deficits, and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls.

Today the US, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar's foreign exchange value.
The US inflation rate is about twice as high as the government's inflation measures report.
In order to hold down Social Security payments, the government changed the way it measures inflation. In the old measure, inflation measured the nominal cost of a defined standard of living.
If the price of steak rose, up went the inflation rate. Today if the price of steak rises, the government assumes that people switch to hamburger.
Inflation doesn't go up. Instead, the standard of living it measures goes down.
This is just one of the many ways that the government pulls the wool over our eyes.
With the dollar value of the euro rising through the roof, today a vacation in Europe is far more costly than in the past.
Thanks to China, so far Americans have been sheltered from the greatest effects of the dollar's declining value.
Our greatest trade deficit is with China. The prices of the goods from China have not risen, because China keeps its currency pegged to the dollar.
As the dollar goes down, China's currency goes with it, thus holding down price rises.
The resignation of Admiral William Fallon as US military commander in the Middle East probably signals a Bush Regime attack on Iran. Fallon said that there would be no US attack on Iran on his watch. As there was no reason for Fallon to resign, it is not far fetched to conclude that Bush has removed an obstacle to war with Iran.
The US is already over stretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel's back.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.
He is coauthor of The Tyranny of Good Intentions.He can be reached at: aulCraigRoberts@yahoo.com>PaulCraigRoberts@yahoo.com

Botnst · #6 03-16-2008, 09:19 AM

Worked for Carter ... right up until he ran for re-election.

Brian Carlton · #7 03-16-2008, 09:34 AM

Quote:

Originally Posted by Emmerich

If there is no inflation, the devaluation of the dollar doesn't matter much unless you trade with foreign countries.

Does anybody feel poorer over the last 6 months? Didn't think so.

Have you been to the supermarket lately? How about the the gas station? Purchase home heating fuel in Texas..........or don't need any heat? Fix that Mercedes lately and need to buy any OE parts?

Either you're hiding in your house..........or you're not paying attention.

Everybody up here is hurting due to the fuel and food pricing. I'm ultra conservative on the use of heat and this house is going to use $2400. of oil for this calendar year. You answered your own question erroneously.

The devaluation of the dollar will slowly erode the purchasing power of the consumer. Either some change happens soon, or those McMansions might be empty in the future. The economy cannot move forward without the consumer.

Botnst · #8 03-16-2008, 09:43 AM

^^^ Like he said.

Energy is the one attribute of modern society in which we all have a vital stake. Inhibition to energy of any sort will result in increased prices somewhere and if the inhibition is sufficiently general, it will have a general effect on everything.

Controlling oil controls the world.

B

DieselAddict · #9 03-14-2008, 01:30 PM

That's why there has been a lot of investing in oil futures for example. The dollar is just about worthless. I don't mean to turn this into a political rant, but this is what really irks me about most republicans. They like to issue tax cuts and not worry about the deficit which is actually worse than a tax increase when you consider the currency devaluation and interest payments that go along with deficits.

BENZ-LGB · #10 03-16-2008, 03:14 PM

Quote:

Originally Posted by DieselAddict

That's why there has been a lot of investing in oil futures for example. The dollar is just about worthless. I don't mean to turn this into a political rant, but this is what really irks me about most republicans. They like to issue tax cuts and not worry about the deficit which is actually worse than a tax increase when you consider the currency devaluation and interest payments that go along with deficits.

No, true Republicans are fiscally conservative. Deficit spending is NOT a Republican trait.

The Federal budget can't be blanaced because of prok-barrel spenidng and EVERYONE participates in that.

Hattie, buy euros as a hedge inflation. Or buy gold. If you buy RE, be prepared to hold it for a while before it goes up again (which it will sooner or later!)

Righ tnow I would not invest in the stock market, unless it is high-tech stock.