Fiat Fantasy

Nominal vs. Real Dollars
July 11, 2011 by Bob Livingston
Nominal dollars are the everyday paper dollars that we think of and call money. These dollars change every day (depreciate). The value of these dollars goes down constantly as the money printers continue to debase our currency.

The point is that Americans don’t know the difference. They don’t know that their savings and their retirement are being destroyed, and they are being systematically impoverished by depreciating or debased nominal dollars. If this is not all important, I don’t know what is.

Nominal dollars, or depreciating currency, are destroying America. America is a giant Ponzi scheme, no different from Enron. As with Enron, we are locked into an economic death spiral.
The U.S. national debt will never be paid off.

Nominal depreciating paper money dollars are by default headed for the same trash heap of the rest of the unfunded paper money.

The few who wake up to the real world begin exchanging their depreciating paper money for gold and silver and Swiss annuities (Swiss francs). They also buy value gold stocks and other stocks that go up as un-backed paper money depreciates.

Most people think that a dollar is a dollar. Not so. Today’s dollars (nominal dollars) are quicksand money that financially destroys all who trust it.

Those unaware of the inflating debasing nature of nominal dollars live in a fickle and imaginary world. They believe all is well and all is safe. They are further deceived by rising stock prices in nominal dollars. One can be up 100 percent in a stock portfolio but still be losing in real dollars — very deceptive! How many investors in Warren Buffet’s famous Berkshire Hathaway realize they have been losing in real dollars for years? I don’t believe they mention this in their sensational annual reports.
Look at the nominal dollars in your pocket. They are nowhere near the value of the dollars you had as a child or that you have under your mattress.

We have had paper money since 1913, and most of that time it was being debased (inflated). Now it’s at a 92 percent loss. We are only as rich or as poor as the purchasing power of our money.
Have you ever wondered why banks and politicians love paper money? Because they profit from it!
All modern money is nominal dollars. Look at the money in your pocket or your savings account or your retirement. You are being deceptively impoverished, and the fact that you are unaware of it makes your eventual impoverishment certain.

What can we do? Until there is a change in the monetary regime of the United States, we must get out of U.S. dollars as much as we can. Buy farmland, buy food to store, buy gold and silver!

Since we expect inflation (now visible), we also buy fertilizer and pesticides ahead. We fix things that need repair.

We predicted that the money printers would pull us out of the 2008 financial collapse at least one more time. Well, the indicators tell us they are doing it, at great cost to the value of your dollars.
In this inflating economy we could have a skyrocketing Dow Jones, but that will create deceptive losses in nominal dollars.

Take caution for a possible deflationary shock. Nothing goes straight up or straight down; and sometime in the near future, we could have a bone-crushing deflationary shock for a short while. I expect it.

Therefore, keep some cash (you be the judge of how much) to tide you through. You will need it.
If we understand nominal dollars vs. real dollars, it will absolutely change the way we think. They are not the same.