http://www.lewrockwell.com/north/north550.html
The Five Stages of Counterfeiting
by Gary North
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The FED does whatever it can to figure out what the public will expect next. Most important, it keeps its activities and plans secret. But, step by step, word is getting out. The dollar is falling. The government’s debt is rising.
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While North is focusing on how the fiat currency “burrows” into the civilization’s thinking (i.e.paradigm shift), I was focusing on the meme of money. There’s no doubt that the debasement of the currency has caused the downfall of several empires, civilizations, and nations. The French Kings, the Byzantine, and Zimbabwe to cite just three quick examples.
The 64k$ question is “when?“.
When does the SHTF?
When is the Gadswell “tipping point”?
When does the money fail to support the division of labor?
I’m an ingineer, not an ekkynonymist. I’m not even sure that those three whens are in the correct order. In the history of the USA, and before that in the United States of America, we have never seen such an event. There have been several close calls. The Carter 21% inflation, the Nixon Wage Price Controls, and the Long Term Capital Finance derivative mess.
The tipping point on when the American dollar can no longer be inflated imho is when the Chinese accept something else as a reserve currency. The recent “news” that they were diversifying out of dollars was telling. It’s a toe in the water. When OPEC wants payment in other than dollars, when the Chinese make WalMArt pay in other than dollars, when the Mexican “illegals” start sending home something other than dollars, htt will be the tipping point. Look out below.
The SHTF when the legal marketplace begins to fail and the black market begins to boom in other than drugs. Ebay starts auctioning food. Amazon sells move books on Victory Gardens. And, the politicians start “jawboning”.
Money is a unique meme. The store of value function is what is being messed with by gooferment. Money allows capitalism and the division of labor. On Crusoe’s island, Robinson has to save five days of fish to make a the fishing net to allow him to catch twice as much. Tool building is the hostage of savings. If there were ten castaways on the island, they could each “invest” a ½ fish in making a net. (Dumb analogy. But you get the idea.) So to substitute money in for those saved fish, money saved allows small sacrifices to be “collected” more easily into one big “investment”. Note that money isn’t the saved fish. But printing more money doesn’t make more fish. When money devalues so quickly that there is a paradigm shift by the population, that’s when the division of labor breaks down. When people are growing “victory gardens” instead of working for money, the division of labor is a “toasty critter”. Stick a fork in it we are done. We only support the number of living souls based on the division of labor. If we begin to regress to subsistence farming, then there will be a lot of dead people around.
When the big question is not if, but when?
So what does one do?
* Become Amish? Or a Mormon. No debt, frugal life style, seek valuable skills.
* Orient savings and investments away from fiat currencies. Stick to defensive investing regardless of what your politicians and bureaucrats tell you.
* Minimize your exposure to taxes. Call the shots as you see them. Save and plan for what does one do when the transition occurs.
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Reinke Faces Life 
The dollar ceases to be a reserve currency once world central bankers no longer accept the dollar as legal tender. The central bankers will no longer accept the dollar as legal tender once their citizens realize they are exchanging their goods and services for worthless paper, called currency.
I think we are at the beginning stages of your When: already we read reports of countries using a “baskets of currencies” as legal tender, one of then being the dollar. It will be a matter of time when the dollar is kicked out of the basket.
We read reports of dollar holders using their dollars to buy assets in other countries, ranches in South America, beach homes in Central American, and rental buildings in Eastern Europe.
We read reports of people buying commodities simply to store because they no longer want to hold the dollar in their savings account.
The dollar is becoming a worthless currency because our government, our institutions and the consumers use debt to finance ongoing activities. The only way government can pay off the debt is to issue more currency; increasingly, institutions and consumers are paying off their debt thought the bankruptcy process.
So when the “When” plays itself out, who is holding the bag? Most of our debt financing is coming from foreign holders of the dollar; in terms of losses, they will be the big losers. America will no longer play a moral role in world affairs and the America people will be like the poor through out the world, using black market practices to obtain the goods and services they need in order to survive.
Life goes on, and the lessons to be learned from this sorry episode of America history will be the subject of scholarly studies a thousand years from now.
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