Print 86 comment(s) - last by Skywalker123.. on Oct 13 at 1:31 AM

I has two new safety features aimed to reduce counterfeit versions

The new $100 bill will finally make its rounds starting tomorrow after years of delays.

According to The New York Times, the new $100 bill -- which has taken more than a decade to complete -- will begin circulation Tuesday. It represents the last USD note to receive the "New Color of Money" redesign, which aims to enhance security and thwart replication. 

The new $100 bill has some new features, including a three-dimensional blue strip with images that look like they're moving when the bill is tilted, and an image of a copper inkwell with a holographic bell that changes color when tilted.

These features should prevent the production of counterfeit $100 bills, as such additions are hard to recreate. 

The "New Color of Money" redesign started with the $20 bill in 2003, and the $100 bill was set to release in 2011, but a couple of printing hiccups delayed the process: one where the notes were creased and unable to be circulated, and another where the ink smeared.

The Federal Reserve will have to consider the rate of circulation in both domestic and international territory, making sure there's enough of the new $100 bills to go around. International users are of special concern, since old currency tends to be viewed as "useless" and of no value. 

Source: The New York Times

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

I'll take 'em
By DT_Reader on 10/7/2013 1:32:08 PM , Rating: 4
International users are of special concern, since old currency tends to be viewed as "useless" and of no value.

Any international readers who have useless old $100 bills of no value are welcome to send them to me for proper disposal :-)

RE: I'll take 'em
By kleinma on 10/7/2013 2:01:48 PM , Rating: 2
Funny considering some of the more rare older currency are the only ones worth MORE than the face value of the paper...

RE: I'll take 'em
By superflex on 10/7/2013 2:17:50 PM , Rating: 3
Pre 1965 dimes and quarters are worth 16x their face value on today's silver spot.

Paper is good for wiping your ass.

RE: I'll take 'em
By sprockkets on 10/7/2013 4:17:31 PM , Rating: 2
Now if only our wonderful government would kill the useless penny, and maybe even the nickel. And the dollar bill, though a lot might not like that idea.

RE: I'll take 'em
By BZDTemp on 10/8/2013 7:22:30 AM , Rating: 2
Here we are debating when to get rid of non-electronic currency all together. Personally it has been more than a year since I used cash except when traveling abroad.

Doing away with cash may make piggy banks a thing of the past but other than that it will mostly hurt criminals and on the plus side it will also save stores, banks and the government huge sums which is today spend handling the bills and coins.

RE: I'll take 'em
By Kiffberet on 10/8/2013 8:11:07 AM , Rating: 2
Except banks... they charge for handling cash.

RE: I'll take 'em
By superflex on 10/8/2013 8:34:37 AM , Rating: 2
So you believe it saves stores money by not having to handle cash?

Tell that to AMEX/Mastercard/Visa/Discover leaches which charge vendors up to 3% fees on the transaction.

Try buying PM's with a CC vs cash and see how well that transaction treats you.

I pay fiat for everything possible and ask the merchant if they will provide a cash vs credit discount. Obviously, that tactic doesn't fly if you shop at Target or WallyWorld, but for small businesses and mom and pop merchants, you'd be surprised how many times it works.

RE: I'll take 'em
By superflex on 10/8/2013 8:28:41 AM , Rating: 2
Funny, but the nickel (any year) is worth 7 cents in metal value and pre 1982 pennies are worth between 2.5 to 3 cents in copper alone.
I'll take all your pre '82 pennies.

RE: I'll take 'em
By Fritzr on 10/9/2013 4:40:18 AM , Rating: 2
There is a market for (copper) US pennies, but currently it is speculation since its illegal to recycle copper pennies.

Yes it is possible to smelt them and mix with another copper source to disguise the alloy...additional expense...but is rarely done by ordinary recyclers. Cost prohibitive for the person bringing scrap in & risk of sting operations for the recycling centers.

RE: I'll take 'em
By Dr of crap on 10/8/2013 9:03:32 AM , Rating: 2
And that's the problem SOME might not like it.
Its the govt. Make the decision to eliminate the penny and do it. Sorry those of you that don't like it! And then after that cools down eliminate the nickel as well. But a coin dollar instead of a paper one - nope. To much to put in a pocket. Paper is easier.

RE: I'll take 'em
By Fritzr on 10/9/2013 4:54:21 AM , Rating: 2
The Sacajawea dollar settled the sizing problems. Each of the newer dollar coins match that one in dimensions. That was the major drawback to a dollar coin ... no standard size.

They have been available for around 10 years now ... limited circulation due to lack of interest from the stores that could give them in change, but they are out & can be used with a couple of quarters to pay the $1.50 bus fare here. The half dollar is not accepted though ... too big for the coin slot. The Sac dollar is just a shade larger than a quarter & is very convenient to carry. (Our transit system has bill changers that issue dollar coins with quarters to use on the bus)

RE: I'll take 'em
By FoRealz on 10/8/2013 11:37:11 AM , Rating: 2
How would someone get that money for the silver? I thought it was illegal to melt down currency? I've got plenty of pre-1965 coins. :)

RE: I'll take 'em
By superflex on 10/8/2013 1:39:16 PM , Rating: 2
My local coin shop will pay approx 85% of spot on 90% junk silver.
Dont be a fool though. Hold that junk silver. It will be worth much more in the future. We're in a dip right now for silver. Many analysts see $40 silver in 2014.

RE: I'll take 'em
By FoRealz on 10/8/2013 2:17:41 PM , Rating: 2
Sounds good. Thank you for the response!

By darkpuppet on 10/7/2013 2:35:23 PM , Rating: 2
Don't want to point this out to the US Government since I don't want my country liberated, but it's safe 'cause they're on holiday or something...

Anyways, to the point -- these security features have been somewhat successfully counterfeited in other currencies around the world already. Many times, not 100% accurately, but definitely enough to pass casual observers and workers.

Even polymer bills with clear windows and holograms can be counterfeited to some extent -- it's inevitable... .so not sure why the US government is so proud of new bills that are still nearly a half decade behind the rest of the world.... US currency is still one of the easiest to forge even with the new 'security' features.

By chmilz on 10/7/2013 2:43:15 PM , Rating: 1
Canada's and Australia's new bills laugh at American's old money (and also Fahrenheit and imperial measurement). American government has become a reality show where nothing of value happens, but it's full of intense drama that gets the viewers excited.

By Solandri on 10/7/2013 2:51:52 PM , Rating: 4
I got to watch the testing process for the durability of U.S. bills. The security features on American money is so far behind Canada's and Australia's because of one particularly brutal test. They have a machine which rolls the bill up into a tight tube, then smashes that tube straight down to about a half cm in height. They repeat this 10 times.

Any security feature embedded in the money has to survive this before it can be included. No implanted electronics, plastic token, or (up til now) hologram has survived this test. That's why they aren't use on American money.

By johnsonx on 10/7/2013 3:54:17 PM , Rating: 2
yeah, I saw that test on a tv documentary awhile back. It seems rather extreme, I wonder why they think it's necessary to go to such lengths?

By bupkus on 10/7/2013 8:09:42 PM , Rating: 2
I really don't see store cashiers rolling and smashing money all day long to separate the authentic from the counterfeit--maybe at Smashburger. 8p

By inperfectdarkness on 10/8/2013 4:19:42 AM , Rating: 2
Let's switch to tax-included we can round off to $.05 and eliminate the penny. And let's migrate to $1 and $2 coins--and ditch paper altogether. The Euro has never had paper 1 & 2 Euro notes--and it works just fine.

RE: How about we change the rest of the currency?
By Kiffberet on 10/8/2013 8:18:53 AM , Rating: 2
You need the pennies, so retailers can sell things for $9999,99 because consumers won't pay $10000 for the same thing.

As for $1 notes, it has been proven that these notes get abused and destroyed much, much quicker than larger notes. Maybe because they get used more, but probably because people don't give a sh1t about them. Either way, millions need to be replaced every month, and it cost the government a fortune reprinting the things.

Coins cost a lot more to produce but easily last 20 years.

By Dr of crap on 10/8/2013 9:05:30 AM , Rating: 2
Really - just round to 9.95 ! DUH!

By superflex on 10/8/2013 9:16:56 AM , Rating: 2
Rounding up will get us out of debt. Just think. The Gubm'nt can rake between 1 to 4 cents on every transaction.

By Fritzr on 10/9/2013 4:45:39 AM , Rating: 2
Pennies are completely optional. Philippines has a penny coin that is officially in circulation. It is not seen in the wild though and at the cash register the amount you pay is rounded to the nearest nickel.

Occasionally the clerk will round down and throw in a piece of candy for the odd pennies :)

Yes you do see prices like P9.99 in Philippines, but like the US mil ($0.001) used in gasoline prices, the price is just rounded to the nearest coin actually used (P0.05 in Philippines and $0.01 in US)

Not much publicity
By DT_Reader on 10/7/2013 1:29:14 PM , Rating: 2
For something that's been in the works for a decade, there hasn't been much publicity about this. I first heard of it last Friday on the news. Usually don't they give more head's-up time on changes like this, so the public knows it's coming and doesn't freak thinking the new bills are fake?

RE: Not much publicity
By Mitch101 on 10/7/2013 1:31:39 PM , Rating: 2
Like the Taco Bell manager that freaked out over a $2.00 bill and called police.

RE: Not much publicity
By tng on 10/7/2013 4:07:27 PM , Rating: 2
I gave a really old $10 bill (small portrait, no color) to a 20 year old at an In and Out Burger here in CA one day and he had to go to his manger to make sure it was OK. His manager laughed about it and said it was OK.

And yet the US only has 385 billion of gold
By Lord 666 on 10/7/13, Rating: -1
By ClownPuncher on 10/7/2013 1:32:49 PM , Rating: 4

Yes, it's fiat currency.

RE: And yet the US only has 385 billion of gold
By Shig on 10/7/2013 1:45:41 PM , Rating: 2
Fix it again Tony ;)

RE: And yet the US only has 385 billion of gold
By Shig on 10/7/2013 1:46:24 PM , Rating: 1
Honestly anyone still taking about the gold standard, please tell me the name of your economics teacher so I can punch them in the face.

RE: And yet the US only has 385 billion of gold
By Nortel on 10/7/2013 1:58:17 PM , Rating: 2
Milton Friedman

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 2:45:59 PM , Rating: 2
Friedman advocated a steadily increasing money supply.

Furthermore, if he was alive through this recession, there is no way in hell he'd advocate a gold standard. There's almost $20T in bonds and bank accounts earning around -2% real interest, and almost all of it is held by the rich. A gold standard with 0% inflation or even deflation would be a free 2%+ ($400B per year) revenue to the wealthy for doing nothing.

By Skywalker123 on 10/13/2013 1:25:19 AM , Rating: 2
A gold standard with 0% inflation or even deflation would be a free 2%+ ($400B per year) revenue to the wealthy for doing nothing.

Wow! you're a total idiot! We would'nt want retirees to get any money for "doing nothing" would we?

RE: And yet the US only has 385 billion of gold
By ebakke on 10/7/2013 1:59:24 PM , Rating: 1
Do you deny its advantages? Or is your value judgement that the disadvantages outweigh the advantages, the "right" opinion that all others must have?

Just curious what brand of arrogance and/or intellectual superiority you possess.

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 3:03:10 PM , Rating: 2
Keynesian superiority at it's finest.
Next he'll call is a barbarous relic.
It's only been the truest measure of wealth since civilization began, but let's throw that out the window because the US Gubm'nt is printing $85 billion a month in new fiat currency.
All must worship at the Temple of Ben Bernanke and Janet Yellen.

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 3:32:16 PM , Rating: 2
Gold is the truest measure of wealth? HAHAHA. Total gold in the world is worth under $8T. Total US assets are worth ~$200T.

There's a lot more to civilization than gold.

Anyone against fiat currency is a tool for the rich. Inflation is eating away at their wealth and they can't find anyone to milk interest from to make up for it. It would be a dream for them to see a return to a gold standard.

RE: And yet the US only has 385 billion of gold
By Kiffberet on 10/8/2013 8:25:47 AM , Rating: 2
Inflation doesn't just target the rich. Not surprisingly it attacks the poor even more.

The only reason they allow inflation is to encourage people to spend their money, because things will cost more tomorrow. It also cons people into thinking that the pay rise they get every year is making them richer... ha ha ha

By Mint on 10/8/2013 10:22:59 AM , Rating: 2
Inflation doesn't just target the rich. Not surprisingly it attacks the poor even more.
That's a myth with zero evidence.

Zero inflation would give the wealthy a free ~$400B per year for doing nothing. That doesn't come out of nowhere. It comes from higher interest on gov't debt, mortgages, business loans, etc. You also get less investment, layoffs, etc because it becomes more attractive to sit on money instead of investing.

The pay raise they get today wouldn't be there at all in a zero inflation world, so that point of yours is meaningless.

RE: And yet the US only has 385 billion of gold
By melgross on 10/7/2013 3:50:02 PM , Rating: 2
You people don't understand economics. The reason why Nixon took us off the gold standard is because under that, economies can't grow past a certain point, and by then, our economic output was so far beyond the amount of gold that we had, that it was holding us back. If you back your currency with gold, then you can only have that much currency. And in order to use gold as a back for it, the price must remain steady, meaning that it may never go up. So gold today would be still worth $35 an ounce, which is what it was then.

A problem is that the dollar would have begun to increase in value to the point where we couldn't export. That's just one problem.

By Mint on 10/7/2013 4:16:12 PM , Rating: 2
Well, you could export, but wages would have to stay low or drop.

Gold could have worked a bit longer than 1971 if we wanted it to, because interest rates were pretty high. A currency with low inflation (or even deflation) could have been accommodated without much issue because lower nominal wages, prices, and rates would give you an equivalent economy.

That's not true today, however. The recession would be a lot worse if the money supply was fixed and investors just pulled their money out of the market without worry about inflation (even getting deflation as a reward).

By Mint on 10/7/2013 3:59:33 PM , Rating: 2
What advantages? Pre-2000 it could at best be seen as inconsequential compared to fiat currency, at worst letting money become another commodity for speculative bubbles.

Post-2008, gold-backed currency is nothing but disadvantages. It becomes an agent of stagnation as the wealthy get richer by hoarding and watching deflation increase their wealth.

Money is not supposed to have intrinsic value. It's supposed to be a transaction tool. Its time value should be no more than the clearing price in the market, or else it makes us stop building things.

Right now we can't reach the clearing price, because we're hitting the zero lower bound, even with 2% inflation. 0% inflation would make it even worse.

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 1:48:08 PM , Rating: 2
Would you rather have 2 grams of physical gold (current value approx. $86 on today's spot), 4 oz of silver (approx $91) or a pretty piece of paper with some new features signed by our new asshat Treasury Sec Jack Lew? Personally, I'll take physical all day long.
Keep on printing Benny. My stack only gets more valuable.
Fiat currency is for suckers.

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 2:27:46 PM , Rating: 2
LOL. If you bought gold any time between mid-2011 and April 2013, it would've lost ~20% of its value.

Gold is as phony wealth as fiat currency. What is its productive value? So little that most consumption is for freakin' jewelry! The only reason it's worth so much is a collective faith that we'll keep on wanting it in the future.

But hey, if you think that faith will hold strong, then go for it. Just be aware that it's all speculation.

RE: And yet the US only has 385 billion of gold
By Lord 666 on 10/7/2013 2:31:07 PM , Rating: 2
The gold rally leading up to the 2008 market issues and now subsequent loss of value are very indicative of grave upcoming issues.

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 2:49:30 PM , Rating: 2
Ding, ding, ding. We have a winner.
Hold on boys. It's gonna be a bumpy ride.
The dollar is set to plunge, the Dow bubble will burst(possibly 40% drop) and PMs will soar (not those silly paper ETFs).

By Monkey's Uncle on 10/7/2013 5:45:43 PM , Rating: 2
Hold on while I put on my tinfoil hat....

RE: And yet the US only has 385 billion of gold
By Lord 666 on 10/7/2013 6:05:55 PM , Rating: 2
Let's take another index; the price of ammo. A quality box of 9mm ammo used to go for $16 and .40 for $18. Now both are over 30 with rationing. Forget about 5.56 or .45. The only round that didn't go up is GAP .45, which might be a positive thing.

Basic supply and demand, right? Please explain why a domestic agency is stockpiling .40 (non-NATO round) to the tune of 1.6 billion jhp rounds purchased recently. Federal agencies hoarding ammo have increased the price while the Second Amendment is being infringed upon with new seven round magazine limits. Is the US government afraid of being taken over or loosing control of the masses? What is the real reason Chris Kyle and Russia FPS get eliminated? Its sad that POTUS acknowledged the loss of Whitney Houston and not even mention a fallen SEAL.

Don't bother with the tinfoil hat... your rose color glasses from your hippy days are clouding whats really coming. Change is needed, but 1776 style. This is your generation's problem that we have to fix.

By Lord 666 on 10/7/2013 6:20:56 PM , Rating: 2
And before you try to discount the 1.6 billion rounds of .40 claim, here is a article about it along with the armored troop carriers also acquired pictured.

By Mint on 10/7/2013 7:28:59 PM , Rating: 2
You just cherry picked one item out of millions to serve as your index.

When even is busting the myth of 1.6B rounds, you know that you've gone off the deep end.

By superflex on 10/8/2013 8:39:54 AM , Rating: 2
I bet you said the same things when people talked about your smartphone spying on you, the NSA spying on you, the IRS treating people different based on political beliefs, etc, etc, etc.

Your Alinsky tactics aren't working.

By Skywalker123 on 10/13/2013 1:29:43 AM , Rating: 2
I think you need something stronger, maybe plate aluminum or lead foil

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 2:38:16 PM , Rating: 2
I bought $50k in silver at $11/oz. in 2008. Today's spot is $22.30. It's a long term investment. Not something to get me a Tesla Model S or an iPhone 5S next year. I can certainly afford to ride out the dips and manipulation by the Fed and their henchmen, JPM and GS.
Why dont your share with us your investments that have produced 100% ROI in a 5 year window?
Did you get in on that awesome farcebook IPO or are you bullish on TWTR?
A fool and his money...

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 3:12:56 PM , Rating: 2
If you're showing off about a 100% gain now, then you certainly showed off even more 6-24 months ago when it was a 200%+ gain.

I bet you told everyone you knew to cash in on this gravy train. Where are they now? Down up to 50% (silver was over $40 at one point). What worked for you in 2008 has little bearing on what works today.

Note how copper, aluminum, nickel, etc are all down from 2008 prices? How could that be if fiat currency can't hold value?

Gold is part of the same game as real estate and stocks. The wealthy are looking for assets and so unsure about the right place to invest that they're holding ~$20T at negative real interest rates as well. For something like gold, which has zero productive value, prices can change on a whim.

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 4:05:01 PM , Rating: 2
Silver is up 2.7% today. 8% in the 3rd quarter. The 4th quarter should be a hoot.
How are your paper investments doing?

By Monkey's Uncle on 10/7/2013 5:48:01 PM , Rating: 2
Mine double roughly every 7 years or so, so they are doing just fine.

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 8:03:29 PM , Rating: 2
And it's down 35% on the year. What's your point?

For all your mocking of FB, its IPO was $38/share on Mar 18, 2012. Silver was $28.50/oz.

Today, FB is $50.51, and silver is $22.39/oz. Great advice.

By superflex on 10/8/2013 8:43:39 AM , Rating: 2

Living in a bubble. Good luck with that.

RE: And yet the US only has 385 billion of gold
By superflex on 10/8/2013 9:50:34 AM , Rating: 2
I would welcome gold at $1000 and silver @ $15.
Time to add to the stacks.

By Mint on 10/8/2013 10:30:16 AM , Rating: 2
And I would welcome various ETF at 30% below today's price as well. What on earth is your point?

By Skywalker123 on 10/13/2013 1:31:50 AM , Rating: 2
For something like gold, which has zero productive value, prices can change on a whim.

Yeh, unlike paper stocks which can't lose value.

Sheesh, you can't fix stupid

By inperfectdarkness on 10/8/2013 4:25:15 AM , Rating: 2
I agree. We should all use gold-pressed latinum.

RE: And yet the US only has 385 billion of gold
By Solandri on 10/7/2013 2:45:32 PM , Rating: 4
Would you rather have 2 grams of physical gold (current value approx. $86 on today's spot), 4 oz of silver (approx $91) or a pretty piece of paper with some new features signed by our new asshat Treasury Sec Jack Lew? Personally, I'll take physical all day long.

All valuations are virtual. Someone is willing to pay you $86 for your 2 grams of gold because they think the metal is worth that much. Someone is willing to give me 2 grams of gold for paper with $50 + $20 + $10 + $5 + $1 printed on them because they think the paper is worth that much. So there's really no difference between the two.

Ultimately, the value of money comes from the productivity of the people in the country where the money was issued. That is, your gold is not really worth $86. It's worth a certain amount of milk, bread, steak, gas, clothing, part of a car payment, part of your mortgage payment, snow shoveling, food preparation, etc. It's just really inconvenient to value things in terms of milk or t-shirts, so we peg a value for everything relative to one commodity object called a dollar. And the true value of that dollar comes from how much milk, bread, steak, gas, clothing, cars, houses, shoveled sidewalks, prepared food, etc. we produce.

If the population produces goods and services with sufficient value to support the printed dollars, then the money will hold its value. If they turn into people who laze around depending on government handouts instead of holding a productive job, or try to make money by gaming the banking/stock system instead of producing things with any real value, then the value of their money will decline.

On the other hand, if the productivity of the people increases, it does not automatically enrich people holding onto large amounts of dollars. That's the drawback of using gold to back up your currency. If the amount of money available is fixed to the amount of gold, and if people's productivity increases more than the amount of gold increases, the people holding the gold get richer, not the people whose productivity increased. A properly managed fiat currency solves this - the government simply issues more money to keep its value relatively constant in terms of all the goods and services you can buy with it. (In fact you actually want the money's value to decline slowly over time - inflation. This encourages people to do productive tasks to try to make more money, rather than shoving their money under a mattress waiting for its value to go up like happens with gold. What? You're not using your gold to produce electronics, jewelry, and other useful stuff, you're just waiting for its value to go up? Then you are part of the problem.)

RE: And yet the US only has 385 billion of gold
By PontiusP on 10/7/2013 3:20:56 PM , Rating: 2

Good summary and I mostly agree. The bottom line is that money, in whatever form, is simply a measurement of value. Personally I prefer a mix of metals, stocks, digital cash and paper cash.

My problem is with the idea that it's desirable for money to continually lose value. We hear this continually from the Federal Reserve, the government, as well as almost every academic and journalist. However, I have never heard one of them conclusively, and convincingly answer this question:

If the money continually loses value, say 2% per year, then the inflation curve eventually goes vertical. What do we do at that point, and how is that helping society? Do we honestly want a system where the end game is total collapse?

I understand your concern about hoarding wealth, however I don't see the alternative as being a good idea.

Thoughts? Thanks.

RE: And yet the US only has 385 billion of gold
By MozeeToby on 10/7/2013 5:10:20 PM , Rating: 2
At 2%, the value is essentially stable for something like 500 years. Yes, a dollar will be worth a tiny fraction what it is today, but the same is true about a dollar today vs 200 years ago. What happens when a dollar is worth so little it isn't worth keeping around any more? Same thing that happened to the half-penny (heck, the same thing that should have happened to everything below the dime by now). You remove it from circulation and replace it with larger denominations.

And yes, a few hundred years after that things start to seem ridiculous, with a dollar being worth 1/10000th of what a penny is today, but it only seems ridiculous compared to today. To people in 2513, a kilo-dollar being worth just a dollar in 100 years won't seem like such a crisis.

The idea behind encouraging inflation is that it encourage investment, keeping the money that is available in circulation. At present, it's better for me to put my money in the bank where it earns interest(by being invested either in money markets, stocks, bonds, or even in other people's loans). When it's invested it can be used for something; building houses, buying machinery, purchasing supplies. When it's in a sack under my mattress it isn't doing anything at all.

RE: And yet the US only has 385 billion of gold
By ebakke on 10/7/2013 6:07:04 PM , Rating: 2
The idea behind encouraging inflation is that it encourage investment [...] When it's invested it can be used for something; building houses, buying machinery, purchasing supplies. When it's in a sack under my mattress it isn't doing anything at all.
Arguably, the investment is incentive enough. Someone is willing to borrow the money and pay me interest, whether we inflate the currency or not.

By Mint on 10/7/2013 9:56:13 PM , Rating: 2
Yeah, but we found something unexpected in the last five years: The wealthy are willingly choosing to watch their money lose value instead of investing/lending it.

So no, it's not enough anymore, and not even "arguably".

Before 2008, money has ALWAYS found a use (aside from the odd year or two), and theory assumed it always would. We know that because excess reserves were always zero. Inflation didn't matter, as 0% inflation with 3% interest and 1% wage growth is identical to 2% inflation with 5% interest and 3% wage growth. Interest rate is the free market clearing price of money to get all savings lent/invested again, so the market determines how well money holds value over time, regardless of inflation.

But now we've been hitting the zero lower bound for five straight years: that means today's free market is trying to price the time value of money even lower than inflation's -2% , but can't. Fixed currency makes this problem even worse, as people who are barely convinced to invest today would pull their money out without inflation.

Money's time value comes from its use to build a factory and getting profits from the stuff it builds, or build a house and getting rent/payments. It doesn't hold value simply by existing or being in limited supply, and never should.

By PontiusP on 10/7/2013 8:49:10 PM , Rating: 2
Good points MozeeToby, however are you honestly saying that without devaluing a currency, investment wouldn't happen? I find that hard to swallow.

Also, regarding the comments about there not being "enough" gold to facilitate growth, I find that a bit silly too. Even the most die hard anti-gold person has to admit that our gold mining and refining processes today are far above what was done in the past. We produce massive amounts of gold each year. Sure, if there's some rapid spike in economic demand, there might not be a quick enough adjustment in gold to match it. However, with the amount we mine, I'm sure it would happen soon enough.

In the end, I just don't believe that you need to burn 2% of your currency per year in order to get people to trade. It just doesn't add up.

RE: And yet the US only has 385 billion of gold
By wordsworm on 10/7/2013 2:22:47 PM , Rating: 3
The solution to that problem would be to raise taxes and stop spending money on a military working abroad.

RE: And yet the US only has 385 billion of gold
By Shig on 10/7/2013 2:39:14 PM , Rating: 1
The US has more than a few problems beyond "raise taxes and stop spending money".

People want growth, growth based off gold ended 40 years ago. That's the whole point of FIAT money, more growth. FIAT money started during the Reagen era and we all got addicted to debt based growth, by we all I mean the entire world, EVERY country does it this way now.

21st century economics will replace commodities that we don't have that much of (gold) with commodities that we do have a lot of (compute power, bandwidth, digital memory storage). Gold's relative value is now more a derivative of it's effectiveness in tiny amounts in microelectronics.

And if our pathetic government can't get their shit together by October 15th, then we'll default, our credit rating will fall, and the dollar as a reserve currency will get significantly worse. When other countries leave our dollar as their reserve currency, then we're screwed.

By superflex on 10/7/2013 2:53:35 PM , Rating: 2
Fiat money started with the creation of the Fed in 1913 and cumulated in '71 when Nixon took us off the gold standard.

By theaerokid on 10/7/2013 3:22:35 PM , Rating: 2
You drank all the MSNBC Kool-Aid and it's your turn to make a new batch. We don't HAVE to default if the debt limit isn't raised. Default is the scary boogieman this administration is threatening the country with if they don't get another credit limit increase.

There's plenty of tax revenue to service the debt, pay for pensions, and most high-priority budget items. However there isn't enough money to pay for all the ridiculous promises our "leaders" have been making for the last century (which add up to about $120 trillion, give or take a few tens of trillions).

See, when you and I run our credit cards maxed for years and call our credit company and ask them for an increase they'll tell us "We have a better idea. Why don't you pay your bill?" When you're high and mighty you don't have to live by those rules; you just tell the bank what your new limit is and tell them to print more money to lend you.

After telling President Bush that increasing the debt limit is "un-patriotic" in 2007, President Obama seems to think it's necessary now, or apocalypse will be upon us. This and every administration since WWII has been addicted to debt and living beyond the nation's means. It's normal for addicts to throw a convulsing fit when it's time for an intervention.

This is what the fit looks like for this administration, which is going to make sure it's as unnecessarily painful as they want it to be, the same way this administration is unnecessarily shutting down monuments and even simple roadside overlooks to inconvenience as many people as possible and the same way they furloughed the air traffic controllers during sequester.

RE: And yet the US only has 385 billion of gold
By PontiusP on 10/7/2013 3:24:11 PM , Rating: 2
"then we'll default"

You're either a liar, or just a person who believes what the MSM propagandists tell you and regurgitate it verbatim.

There will be no default. The IRS brings in way more money in tax revenue than it pays out in debt service. Further, debt service is senior to any other obligation of the government.

So to be more accurate, if the debt ceiling is not raised, there will be no default. Debt will get paid first, then all other obligations following, with stuff at the tail end getting cut.

By Lord 666 on 10/7/2013 3:50:26 PM , Rating: 2
And the CIA brings in way more money smuggling drugs.

The narco-economy is part of the reason why the US was unhinged from gold in the first place. Why do you think there is this sudden push to legalize marijuana? Politicians have flat out admitted a third sin tax will generate hoards of new revenue.

Its all about G.O.D; gold, oil, and drugs.

RE: And yet the US only has 385 billion of gold
By Shig on 10/7/2013 3:51:29 PM , Rating: 2
You guys know that we've already defaulted once in the past 2 years and our federal credit rating went down right?

If Congress says we are not paying until x x x is done, then yes, we will default. Defaulting isn't a matter of whether we have the money or not, it's about Congress agreeing on a budget, which they are currently refusing.

By Lord 666 on 10/7/2013 4:04:03 PM , Rating: 2
Don't forget the USPS...

RE: And yet the US only has 385 billion of gold
By superflex on 10/7/2013 4:12:36 PM , Rating: 3
We either default now or later. There is no way out of $17 trillion in debt and $150 trillion in unfunded liabilities.
America is Detroit on Steriods.
Man up and accept the responsibility or push this burden on your kids and grandchildren.
I'm sure the WOW/SLi graphics card worshiping crowd here would prefer option #2.
Kick the freaking can.

RE: And yet the US only has 385 billion of gold
By Mint on 10/7/2013 9:17:18 PM , Rating: 2
Getting out of debt completely is a pointless goal. The US is not a household, so spare me the laughable credit card or mortgage analogies.

Debt servicing costs are at historical lows, and will stay there for a long time because bond owners have nothing better to do with their money. Even with all this debt, the wealthy are still stashing another $7T in banks at near zero rates. Despite the deficit, that figure is growing fast. IOW, there's no shortage of money available to buy US debt.

Detroit (and Greece, for that matter) is in an open system where lenders can take their dollars elsewhere. The US dollar, OTOH, cannot escape the US economy. If you exchange for another currency, those dollars become someone else's problem. If you don't buy US debt, someone else earning 0% in a bank will (or the bank itself). If you buy gold or existing real estate or existing stock, someone else sold it to you and now he has US dollars to put somewhere. You can call it a Ponzi scheme if you want, but there is no escape , so default is not inevitable unless you artificially force it.

Only accelerated investment (new houses, new stock issues) or consumption will keep money from being available to be borrowed by the gov't, and you'll need tens of trillions of it for the US to reach that point.

There's no shortage of labor to meet the needs of consumption from SS and healthcare. Those "unfunded liabilities" will be met as long as we desire it as a country.

RE: And yet the US only has 385 billion of gold
By Lord 666 on 10/7/2013 10:16:35 PM , Rating: 2
Will disagree with the "no shortage of labor."

In the medical field, certain procedures are restricted to certain credentials; ie. an LPN cannot push meds but an RN can. Likewise, it is more economical for an NP or PA to see a patient and then get an MD to sign-off.

This is where Obamacare falls apart for me; providers (lpn, rn, np, md, etc) are not being added yet there is on the IRS side. The application for ACA reads like a car loan application. Meaningful Use is attempting to improve care using AI quality measures versus hands on experience. This color by numbers approach might work for the military that can always discharge someone, but ignores civilian patients are all unique.

Anyway, you also forgot to mention the most sure way of accelerated consumption; unsolicited war.

By Mint on 10/8/2013 10:39:15 AM , Rating: 2
There's more doctors per capita today than ever before, and it continues on an upwards trajectory.

War sucks, but I think military spending will finally face some pressure to accept some cuts in the coming decades.

RE: And yet the US only has 385 billion of gold
By superflex on 10/8/2013 8:54:09 AM , Rating: 2
We saw what happened when the FED hinted at a taper. The rates on the 10 YR treasury flirted with 3% which is a great indicator of coming inflation and rising interest rates.
Rising interest rates would be crippling to a 17 trillion dollar deficit.
So Benny and the FED did the only thing they could. Keep pressing Ctrl-P. They have no way out of this debacle. Just keep on printing until it all comes crashing down.
Benny Bucks devalue the ones in your pocket and enslaved you to the FED.
Do you think the FED and it's member banks are responsible for the debt they entail? No, it's the taxpayers who will foot the bill for out of control government spending.

By Mint on 10/8/2013 10:58:08 AM , Rating: 2
Inflation is overwhelmingly a tax on the wealthy.

People with billions in bonds hate that they're getting -1% or -2% real ROI. The gov't would have to tax more without inflation to get the same deficit. People with mortgages or loans love that they're paying 3% instead of 5%. People who got jobs from an expanding company are happy that it didn't instead choose to sit on non-inflating money instead.

Incomes aren't affected by inflation. If prices stopped going up, companies get less nominal revenue, and they either give lower raises or drive wages down another way.

Your myopic view of the "ones in your pocket" have turned you into a propaganda tool for the wealthy. You look at the superficial downside and ignore all of the upside that inflation has on the common man.

By Mint on 10/8/2013 12:46:27 PM , Rating: 2
Interest rates won't rise unless the economy booms. It's impossible.

There's over $2T in excess reserves and growing fast. Until that gets flushed out (which will need ~$20T in unexpected bank loans after money multiplier), banks have no need for your money or the Fed's, so short term rates will stay 0%. The only other way rates will go up is if the Fed wants them to, and increases the interest on excess reserves.

If the 10 yr treasury rate goes up too much, the treasury dept can issue more shorter term bonds.

RE: And yet the US only has 385 billion of gold
By theaerokid on 10/8/2013 9:58:37 AM , Rating: 2
Getting out of debt completely is a pointless goal. The US is not a household, so spare me the laughable credit card or mortgage analogies.

The U.S. may not be a household, but the simple truth still remains. Debt is power; whoever holds your debt holds your b@ll$, and all it takes is one squeeze for you to yield your power over to the holder.

By Mint on 10/8/2013 11:36:17 AM , Rating: 2
Read the rest of the post. It's not like household debt. Holders of US gov't debt are powerless. They need the US to hang onto their wealth.

Unlike Greece's debtholders, there's no other country for US debtholders to put their US dollars into. They either let their money sit and erode, or lend it to the gov't and at least have it erode a bit slower. If they buy goods or create jobs, the gov't is even happier. If they sell US dollars en masse, they lose a huge chunk of value.

None of what I say was true before 2008. But there is so much wealth in USD denominated assets now that it's impossible to convert into real assets anytime soon without major losses.

By PontiusP on 10/7/2013 4:31:34 PM , Rating: 2
Again, you're either lying, or just plain ignorant.

Congress has to take absolutely ZERO action for debt to be paid. The treasury department does it automatically with no interaction or consultation with congress.

The debt will be serviced first, entitlements will be paid second, things on the tail end will be cut.

Anyone talking about default is lying.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
Related Articles
New $100 Bill Due in October
April 24, 2013, 11:52 PM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki