imported post
Dead either way 
. Darn I was off by over 3T for unfunded liabilities - but hey what is 3T among friends?
We have 81T in unfunded liabilities and there isONLY 9.5T USD in existence - wow. That will work
. Or GDP is 12T (in one year) and we owe81T.
That means if the gov spends$0 it would take over 30 years to pay the current 81T in unfunding liabilities because of the compounding interest. And we know the gov is not going to spend $0 they are over spending by 473B THIS year.
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People and governments world-wide are in
fact losing confidence in the dollar - at a very rapid pace. Here are the factors undermining that confidence:
• A $617 billion per year (2004) US trade imbalance.
• A $473 billion projected US federal budget deficit for 2005.
• $2-plus trillion international indebtedness of the US government (net outstanding treasury bonds liabilities).
• $78 trillion total private, local, state, and federal government indebtedness.
To put just these last two figures in perspective,
the total current US money supply (M3) circulating is about $9.5 trillion dollars. Of those, only $697 billion are in physical cash currency. The total estimated US GDP in 2004 was only slightly under 12 trillion dollars. That's all US economic activity added up for one whole year.
Irredeemable Debt
The debt racked up under the current dollar system cannot be redeemed. It doesn't matter how hard Congress tries to restrict its spending (good luck!) or how well the economy is functioning.
The reason: the dollar itself is nothing but debt. It is a money-substitute that has been totally denuded of any connection with that which it is supposed to be substituting for. In other words: real money - gold and/or silver.
This is not news for most of you who read this, but it is worth remembering when we talk about "paying back the national debt."
How can such numbers ($78 trillion in total private and public indebtedness) ever be paid back - even if the means of payment (fiat dollars) was actually capable of retiring that debt?
Why go into all of this?
Because even die-hard gold investors are still "not quite sure" about gold being destined to go up in dollar terms for a long, long time (and actually going off the charts before too long - and staying there for the foreseeable future!)
And, as you can easily deduce from all the foregoing, gold is not going to do this just in dollar terms alone. This is happening - and will be happening - all across the entire fiat currency spectrum. The only difference is that some of the other currencies out there might actually survive this.
There are basically two scenarios here, but the outcome for the dollar will be the same.
It will happen either slowly - or quickly.
A Slow Death:
If it happens slowly, maybe the dollar in its current fiat incarnation (you can't really call it an "incarnation" because there is really no "flesh" on its bones) can survive as a currency in some form of use by some people.
Instant Death:
If it happens quickly (a so-called "crash-landing") the dollar and its underlying economy will disintegrate on impact.
Dead - Either Way:
But in either case, just as in the case of a landing or crashing airplane, the direction of the dollar's future movements (down) and the distance it is destined to travel (all the way down) remains the same.
What is the meaning of "all the way down" then, in practical terms?
It means all the way until all of the debt the dollar has racked up over the decades is either repaid (a literal impossibility, as we have seen) or repudiated, i.e., defaulted on.
What is the effect of total repudiation of all debt racked up under the dollar system?
The dollar - itself being a mere instrument or legal fiction evidencing that debt - will simply cease to exist, as there will no longer be any reason for its existence!
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