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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (16333)	11/19/2004 3:09:08 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 116555

Looks like Bush is going to promote home ownership... news.yahoo.com

To: mishedlo who wrote (16333)	11/19/2004 4:46:27 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Date: Fri Nov 19 2004 11:10 trotsky (P. Yorkie) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "The US dollar is represented by the goods and services of a country..." this is a popular misconception, forwarded usually by defenders of the fiat system of unbacked paper money. in theory, the dollar is a claim on US based assets - in practice, it's just a piece of paper, or an electron on a hard disk drive these days. it's 'value' is derived only from a gun held to everybody's head ( "this shall be 'legal tender'" ) and the fact that the state accepts it for payment of taxes. aside from that, it's a pure confidence game - since when you present your dollar at the Fed, you get 'a dollar' in exchange for it, i.e. nothing. confidence can vanish overnight, for a number of reasons. since the currency forms the basis for a fractional reserve banking system, it is far more vulnerable than people generally think. all that has to happen to produce a complete repudiation is that about 20% of depositors show up and demand their 'money' at the same time.