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Fiat Money is not backed by anything except faith in the entity that minted the money. Let's consider what the opposite of fiat-money would be: Let's say that you have a $10 dollar bill, and theoretically, you could go to the government that printed that $10 dollar bill, and they would give you something of real value in exchange. For example, you could go to the government that printed that $10 dollar bill, and exchange it for a piece of gold. Having the printed money "backed" by gold might give the holder of the $10 bill confidence in the value of the printed money.

 

Realistically, it would be very impractical to take your $10 dollar bill and go to the government and ask for a piece of gold in exchange. If the economy collapsed, and paper money became worthless, theoretically you could go to the government, and get your share of gold in exchange. Again, that would be quite impractical. Imagine if all the people in the entire country had to travel to a place to get their share of the gold that was backing the currency. Either that, or the gold would need to be transported and distributed. Then everyone would need to be carrying gold around with them everywhere to buy and sell things. You could get robbed and have your gold taken from you. Gold and silver is heavy, it's grade would need to be determined, and it would need to be weighed at every business transaction. It would be an inefficient way to transact business.

 

Metal coins made from real silver or gold would eliminate the need of being backed, but they are heavy, and might be considered impracticable to use for anything other than small purchases.

 

In 1971 something happened that got named the Nixon Shock. Foreign countries began asking for gold in exchange for U.S. paper money. Switzerland redeemed $50 million U.S. paper money for gold. In order to deal with this issue, and other problems, the gold standard of U.S. dollars was ended.

 

Fiat money is backed only by trust. Specie-backed money is different than fiat money. Specie-backed money is money backed by something like gold or silver.

 

Would it be practical to have specie-backed money, if in practice, no-one could ever exchange the paper money for the precious metal? And if things did deteriorate to the point where everyone wanted their share of the precious metals backing the currency, would the distribution be fair, and actually be carried out to it's full extent?

 

Governments can declare that it is illegal NOT accept their currency as payment within that nation. In other words, if I go to the grocery store, and offer to buy a loaf of bread with U.S. dollars in the U.S.A, the grocery store must, by law, accept the official currency as payment. If the grocery store decided that the U.S. dollar was worthless, and refused to accept U.S. dollars as payment, they would be breaking the law. As long as I have the amount of currency that equals the price of the bread, it's against the law to not accept the official printed money as payment.

 

So the grocery store can not refuse to take the official printed money. But if they think the money is worthless, they could raise the price of a loaf of bread. So the grocery store could raise the price of a loaf of bread from $3 dollars to $300 dollars. At this point, uncontrolled inflation would rage.

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Very interesting take on the Fiat system Tradewinds. I'm reading "Reminisces of a Stock Operator" at the moment and the 2010 edition has some great footnotes on the late 1800's when the US temporarily abandoned the gold standard.

 

Is part of the trouble with Fiat system international trade e.g. not only can the grocery store in the above example decide the value of a dollar, but also any country or business that chooses to trade with the US e.g. buy bread from a US bakery for sale in it's stores.

 

Looking at Nixon's decision in the 1971, rather than accept the dollar was over leveraged he eliminated the problem by a move obviously supported by those who used the USD as a reserve currency. It's analogous to the credit crunch of 2008: rather than let the banks go bust like any other business they were bailed out. I'd bunch quantative easing under the same banner. Believing in capitalism and letting the natural selection process take place seem to be two different things.

 

Nixon merely put off solving the problem. Of course how could the US for example buy enough gold to back their currency again?

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Of course how could the US for example buy enough gold to back their currency again?

 

I'm not convinced that gold backing of any currency is what really gives the public trust in the value of the currency. I think the debt to revenue ratio is important. I'm no expert on money, but that's the first thing I think of.

 

It's basically an issue of how responsible the government is with it's finances. And how responsible the government is with it's finances is simply a consequence of the individuals who make up the government. So it all comes back to human behavior.

 

History repeats itself. The human race just can't seem to "get their act together". Oh well, I'll just keep plugging along and hope for the best.

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History repeats itself. The human race just can't seem to "get their act together". Oh well, I'll just keep plugging along and hope for the best.

 

Just think if the system was perfect we couldn't take advantage of it to make some money...

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Just think if the system was perfect we couldn't take advantage of it to make some money...

 

Yes, you are right. But what are the ultimate consequences? If we make a lot of money, and it becomes worthless, that won't help us. We could hoard gold, but then we'd need a place to store it. And we'd probably need to have our own mini army or security forces to guard all our stuff. We can't eat gold, so that won't help if there are food shortages.

 

I'm considering the worst case scenario concerning the economy, and the value of currencies, which hopefully won't happen.

 

I think that currency values and exchange rates should be tied to how much bread an hours wages will buy. If I need to work 8 hours to buy one loaf of bread, then something is wrong! That's an extreme example, but it makes a point about what the value of money should be. Of course, that scenario gets into price fixing problems. Then once that happens, the free market is compromised.

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Just think if the system was perfect we couldn't take advantage of it to make some money...

No ... you could actually make MORE money if the system was perfect, by adding value to whatever you are doing. A perfect system would simply ensure that you received what you have earned, not as we now have, a deceitful and manipulated situation, where only those with inside information, or deeper pockets have the advantage.

 

Under a perfect system, those who are lazy and shiftless, would receive the rewards of their attitude - poverty. In fact, under a perfect system, those who don't produce efficiently would be the last hired, and dependent on the welfare of the good grace of those who work diligently.

 

If you worked harder, more efficiently for your employer, both he and you would prosper and win.

If you improved the product you made, and/or made it more efficiently you would be paid more.

 

In a perfect system we would not need Labour Unions because workers would not need to become collective bargainers. By the same token, they would deliver a fair day's work for their pay, and get a fair day's pay for their work.

 

In small groups, small enterprises and businesses, this principle is far more efficient than it is in larger conglomerations. The reason is that a level of personal knowledge and care exists in the relationship between employer and employee, and trust and integrity are valued more than the 10 minutes pay for the unavoidable overtime on the day.

 

There is no need for litigation between small business owners and their employees, because the business owner has personal knowledge of his employees, and vice versa, and problems can be more quickly worked out at the discussion tables, and not the courts, as in big business.

 

Of course, this is in the "perfect" model, not the realistic one we are actually living.

 

Regarding currency, which is getting back to topic ... workers exchange their time and their labour for money, conditions and perks. Something is given and something of value is gained.

 

When someone can create money that has not been produced through the effort of labour (ie printing press, or electronic decimal place manipulation) where no value has been added, then it cheapens the value of the labour that DOES work for the money.

 

Taken to the extreme, this would end up as slavery.

 

Sound familiar? What is inflation, if not enslavement of people?

 

This video is 6 min 46 long ... and I include it to show that there are indeed intelligent forces remaining that would like to see the return of slavery. The Civil Rights movement battled long and hard and had assassinations within its own ranks, before victory was assured.

 

If these forces that are interested in a return to slavery for some (or indeed all) "common" people, are still harboring those values, might it be feasible that they would use other means to effect those ends?

 

ANY other means?

 

[ame=http://www.youtube.com/watch?v=TmMOvLCCO0c]YouTube - ‪Slavery: Presidents and the Constitution‬‏[/ame]

 

The current Fractional-Reserve banking system Fractional-reserve banking - Wikipedia, the free encyclopedia coupled with the current fiat money system Fiat money - Wikipedia, the free encyclopedia and the market economy Market economy - Wikipedia, the free encyclopedia are what we have.

 

What we really need to know and understand, in order to make sense of the Fiat Money vs the Gold Standard debate, is who is benefiting from the current demise of the dollar? Answer that question and you might uncover truth.

 

The current fiat money system ushered in by the eradication of the Gold Standard by President Nixon in 1971, (ostensibly to inflate away the costs of the war in Viet Nam) is now manipulated by those who are hell-bent on devaluing the $USD to pay for consuming excesses and ongoing wars, space programmes, welfare, social security, pension and retirement prgrammes and social medicine bills, all run up in the last 25 years, and doubled in the past 5 years, conservatively speaking.

 

Given that vested interests are in control of the treasury benches, how then are they making themselves prosperous through the trashing of the world's reserve currency?

 

More importantly, since the break-down of the $USD is not in the best interests of the American (and indeed all) working people, what foreign interests are benefiting from the impoverishment of this nation, and others like it in the west?

 

Unfortunately we do not have a perfect system, but that does not mean we should stop striving to build it.

 

But it will not happen until men value their personal character, reputation and integrity more than they do the dollar. And these men must lead their families and teach these same principles to their sons and daughters.

 

Where might we find such men today ... even ONE man?

 

Under a perfect system ... :):)

 

It might not be such a bad idea to wrest back the "executive power" enjoyed and abused by the USA's top power echelons, who are now "governing by executive order" and get back to the founding fathers principles enshrined in the United States Constitution - Wikipedia, the free encyclopedia

 

I have tried to avoid the inclusion of conspiratorial attitudes, but it is hard to avoid, given that the rich-and-powerful have used, and will continue to use, all means political and financial to achieve their ends.

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I have tried to avoid the inclusion of conspiratorial attitudes, but it is hard to avoid, given that the rich-and-powerful have used, and will continue to use, all means political and financial to achieve their ends.

 

as would most people given any system regardless of their wealth and power.

 

''''''''''''''''''''''''

I thought debt and interest was what enslaved us....and then its us who borrows money to enslave ourselves.

There is nothing like a good conspiracy..thanks

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I do not think it's difficult to make a perfect system. Government should essentially be for safety only, i.e. military, police, firemen, etc. with a few exceptions. I believe in feed those who need to be fed, but within reason. I don't think that drug testing for government assistance is against your civil rights. Poor houses should still be called poor houses.

 

Essentially anyone needing the government to really survive can join one of these poor houses, which I would call a Welfare Prison, from here on out called WP. In WP you eat just the bare essentials (In Texas we have lonestar cards, which are essentially food stamps, and people literally bought filets and lobster tails, which I have seen, in one cart and beer in the next cart, when I was eating ramen everyday. How fair is that? In WP you are an employee of the people, you are paid below minimum wage to offset your living expenses, but also to allow you to accumulate a savings. Education is free in WP provided that you pass. Education will only include skilled labor jobs (plumber, welder, contractor, etc.)

 

Honestly handicapped people (paraplegics, amputees, MHMR, etc, not the obese) do not have to go to WP.

 

Sexual offenders will be castrated or sentenced to death, victim's choice. Sexual offenders against a child will be tortured, castrated and then sentenced to death.

 

There will be a flat tax of 15% that everyone pays regardless of income.

 

The perfect society!

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as would most people given any system regardless of their wealth and power.

 

''''''''''''''''''''''''

I thought debt and interest was what enslaved us....and then its us who borrows money to enslave ourselves.

There is nothing like a good conspiracy..thanks

 

No Siuya ... it is inflationary policies that enslave us.

 

We are like slow-boiled frogs - we don't see the danger until it has passed the tipping point.

 

When you are a self-funded retiree, and you can not get a return on your investments because interest rates are held down artificially by a Central Banker who has never had a blister on his little pink hands; and when you are a self-funded retiree who takes his limited income to the grocery store and finds that this week he has to drop eggs from the shopping list because the money is already committed through higher prices in everything else, then you are a slave.

 

In other words our savings are being eroded on two fronts, by people who are the "servants of the system" whether knowingly or not - I don't really care either way..

 

Fortunately for myself, I am a slave to the salary and wages system ... I have not morphed over to the SFR system yet, so I still feel I have a degree of control.

 

I have no mortgage, and no debt. Only moral obligations to those (outside immediate family too) who have come to depend on me. But I do notice the insidious rising of prices at the supermarket. And I notice the price -gouging at the fuel pump.

 

Consider this:

2009 - 2011

AUD ......... crude oil price ............ pump price for gasoline

0.85 ......... $USD147 / bbl ................. $1.45 / litre

1.06 ......... $USD93 / bbl ................... $1.40 / litre

 

One would expect Gasoline to be lowered by both a higher AUD and a lower Crude price.

 

But no - it is as high or occasionally higher.

 

So who is ripping off whom?

And who is watching this occur, and why aren't "they" putting the thumb screws on the companies?

Is it because BP needs to recoup some Gulf of Mexico costs and their mates in the right places are allowing it to occur?

 

Thank goodness for Golf Clubs - where most of these deals are worked out amongst drinking mates out in the open air, away from the prying ears of the wire-tappers!

 

But if I believed that I would be a conspiracist, wouldn't I? ... :rofl::rofl:

 

No one who has half a brain believes for even one micro-second that true inflation is anywhere near 3%. Shadow Government Statistics : Home Page

golf-course.jpg.f975889e33060f7b4f69fa5ce64c96a2.jpg

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I do not think it's difficult to make a perfect system. Government should essentially be for safety only, i.e. military, police, firemen, etc. with a few exceptions. I believe in feed those who need to be fed, but within reason.

 

Sexual offenders will be castrated or sentenced to death, victim's choice. Sexual offenders against a child will be tortured, castrated and then sentenced to death.

 

There will be a flat tax of 15% that everyone pays regardless of income.

 

The perfect society!

In a perfect world this would no longer occur, Pony, because it would be written in the history books what did happen long ago.

 

That would be the best deterrent of all - someone actually DOING what they say will be done, instead of the bluffing and wrist tapping that the courts are best-known for today

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i agree ingot, that normal everyday living cost inflation is definitely more than the 3-4%..... however, its the big ticket items that skew the numbers....

I recently restocked my kitchen whitegoods - new fridge, washing machine, microwave, dish washer, kettle, toaster.....the prices for these were similar if not cheaper than the last time I did it 15 years ago. So these have definitely been deflationary....

 

Back on the inflation v debt slavery..... you know that if you can find the right inflation flattening investments, that the best defense against inflation is to have a lot of debt - ask the governments.....:)

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I agree ingot, that normal everyday living cost inflation is definitely more than the 3-4%..... however, its the big ticket items that skew the numbers....

I recently restocked my kitchen whitegoods - new fridge, washing machine, microwave, dish washer, kettle, toaster.....the prices for these were similar if not cheaper than the last time I did it 15 years ago. So these have definitely been deflationary....

 

Back on the inflation v debt slavery..... you know that if you can find the right inflation flattening investments, that the best defense against inflation is to have a lot of debt - ask the governments.....:)

It is probably the high AUD that is making whitegoods cheaper in this country (Australia.)

 

There may be a jump in inflation once China stops buying Australian resources (soon?) as the AUD goes into free-fall, and imports rise in cost relative to an increasingly unfavourable exchange rate. But that hasn't happened yet, and remains conjecture.

 

Australia has very little manufacturing, despite having all the right ingredients to do so - rare earths, energy (coal, oil, uranium, gas) iron, aluminium, gold, copper, zinc, silver, lead. It has always baffled me as to why Australia does not have the worlds largest ship-building industry for starters. And why we are not the most industrialised and wealthy nation on the planet.

 

It does not wash with me that we don't have the capital to develop these industries, or the skills.

 

We soon find the capital to fund our defense forces - warplanes (F-35 AUD$16billion), warships (AUD$1.5 billion each), useless Collins-class Submarines that are not seaworthy, yet cost AUD$5billion (plus undisclosed "fixing" costs), 24 MH-60R Seahawk "Romeo" Helicopters AUD$3billion, wars in Viet Nam, Iraq, Afghanistan that were not our fights, and these peoples were not/are not our enemies.

 

Somehow we are being sold, and the nation is buying it - that the National Broadband Network (NBN) which is going to deliver "Fibre-to-the-Home" (FTH) at a cost in 2011 dollars of $43billion.

 

That's $43,000,000,000. It will take "10 years (ha ha ha) to build" with "no cost blowout" (insert maniacal sarcastic laughter.) And will somehow deliver incredible economic benefit merely by its existence!!!

 

And the public are buying the story. Sheeeesh!

 

That is a public who see nothing wrong with $22million people - 11,444,000 employed as at May 2011 - to pay for the above $billions of wanton and stupid expenditure. That 11 million "employed" counts people who are in employment for one hour per week in the week of the ABS survey! Ha ha ha ha!

 

It is moot, but even if I am over-stating the situation, there is no real reason Australia could not still rise to be a greater industrialised nation than the mighty Germany. It deeply bothers me that Australia is the dirt-pit of the world - used to supply minerals and energy to people who will turn their backs on us in the blink of an eye when it suits them.

 

To me, it is just proof that:

 

1) Australian Politicians lack Vision

2) Australian businessmen lack Vision

3) Australian Politicians and Businessmen lack guts and determination to make it happen

4) Australia "owes" something to other countries that is not publicly known

5) Australia is simply a prostitute, with no hope of ever getting off her back!

 

Simple question ... why is Australia not the most powerful nation on the planet?

 

Here we are, in the very midst of the greatest commodity and resources boom in the history of the planet, with unprecedented prices, and massive tonnages of minerals leaving our shores every day, and the government STILL NEEDS TO BORROW $130 MILLION EVERY DAY to run the country!

 

Is it something to do with globalisation ... Club of Rome stuff?

 

Or is it more to do with the failure of our dear leaders?

 

Sorry for the rant, and the off-topic stuff ... but I guess this situation has a lot to do with fiat money ... and the reasons we went off the gold standard to begin with. Australian currency has not been backed by gold since 1933, when our banknotes began to show the term "Legal Tender" instead. Museum of Australian Currency Notes: Currency Notes of the 1930s

 

If you are still with me after this tome, you might like to click on the above link, and note that Australia used to pride itself on Manufacturing, Commerce, Pastoral and Agricultural pursuits to provide subsistence for its people.

 

Today we have a sand-pit for an industry, and printing presses for our currency provisions, while we spend $130 million more each day than we produce.

 

Source: KEN O

 

Siuya - I would advise you not to respond ... I am in a "mood" today, and you know you will get 1000 word responses which drift in-and-out of the rational, and largely off topic. I'll be back to normal tomorrow!

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Back on the inflation v debt slavery..... you know that if you can find the right inflation flattening investments, that the best defense against inflation is to have a lot of debt - ask the governments.....:)

 

Yes I think some stocks like Walmart, Philip Morris, P&G are good inflation-defensive stocks as they can pass these onto their customers and pay a decent dividend. I'm also looking at buying real-estate and MOST importantly getting a fixed interest mortgage in US dollars.

 

MMS

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History has a message for us: No fiat currency has lasted forever. Eventually, they all fail. These are all WORTHLESS

 

image1_40.jpg

Yugoslavia - 10 billion dinar, 1993

 

image2_27.jpg

Zaire - 5 million zaires, 1992

 

image5_5.jpg

Turkey - 5 million lira, 1997

 

image11.jpg

Hungary - 10 million pengo, 1945

 

MMS

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History has a message for us: No fiat currency has lasted forever. Eventually, they all fail. These are all WORTHLESS

MMS

 

Is there any currency that has not failed? What is the longest successful currency in the history of money? I don't know, just wondering.

 

Ultimately the issue is about what gives a currency it's value. And it's all about trust. If paper money were "backed" by gold, but then the backer of the currency wouldn't give you any gold, then the trust would be broken. Money is simply a medium of exchange, it has no real value in and of itself. Again, it's all about trust. Gold can't guarantee that the backer of the currency has good character. It all comes down to the character of the people. That is what every issue you could ever think of comes down to. Gold backed currency might give the impression that the character of the backer is more trustworthy, but gold reserves can not guarantee people's character will be good. The government is made up of people, it all comes back to the character of the people.

 

Ultimately it's a moral, and ethical, and character issue.

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Is there any currency that has not failed? What is the longest successful currency in the history of money?

 

I would venture to guess, of modern day currencies, the British Pound is probably the longest lasting. Great quote I saw today

the dollar is an "I owe you nothing," while the euro is a "who owes you nothing."

 

MMS

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There are only several instances in human history where sovereign debt has been paid back. Every other instance has ended in some form of default, restructuring, bankruptcy, etc. But, no matter what you want to term it, it ultimately it means a country is broke. It is exactly why the currencies get devalued asymptotically. Its not a question of if a country can pay its debt back; instead, it is a question of how slowly it can go broke.

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Printing money is Europe’s way out

 

One thing that can’t be underestimated is the political will of Europe’s leaders to keep the euro alive, which is why Europe will likely turn to massive printing of money, writes Matthew Lynn.

 

Printing money is Europe

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Here's a pretty good, short animated video on the value of gold versus fiat money. The video also points out that it's difficult to have major prolonged wars without fiat money. In a way, it's a necessary ingredient as nations engaged in wasteful wars all go bankrupt without the printing press to keep them afloat longer.

 

[ame=http://www.youtube.com/watch?v=RvL_Dm2d99A]‪Gold: Independent Money‬‏ - YouTube[/ame]

 

MMS

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Here's a pretty good, short animated video on the value of gold versus fiat money. The video also points out that it's difficult to have major prolonged wars without fiat money. In a way, it's a necessary ingredient as nations engaged in wasteful wars all go bankrupt without the printing press to keep them afloat longer.

MMS

 

The video correctly pointed out, that there is a finite amount of gold in the world. Because there is a finite amount of gold in the world, and the population is very large and getting larger, how will there be enough gold to back the needed money supply?

 

What would governments do? Would they ration money if the physical supply of gold wasn't enough to support a big enough money supply? For the current population, how much money does there need to be in circulation, and is there enough gold in the world to back it?

 

Consider this: Let's say that every once of gold in the entire world had been mined, and was being used to back the currencies of the world. No gold wedding rings. No gold jewelry, it all has to sit in a warehouse to back the currencies of the world. Then let's say, that even with all the gold in the entire world, it still wasn't enough to back all the money needed in order to keep the economies running. Then what do you do?

 

If an employer paid $1,000 a week, but they could not physically obtain $1,000 dollars, what would they do? There needs to be enough paper bills in circulation to meet demand.

 

Think of it this way. Let's say that there was an ink shortage, and the printing presses, and the U.S. government couldn't print money for a year. A lot of the paper currency would wear out, get torn and destroyed. The population is growing, so the demand for money gets bigger and bigger. What if there was a physical shortage of actual, real bills. Would money need to be rationed? How would people exchange goods and services? Yes, yes they could use checks and debit and credit cards as an alternative. So does electronic money need to be backed by gold?

 

Money is:

 

  • A medium of exchange
  • A counting tool in an accounting system

 

We can't have 100% gold backed money, because there isn't enough gold, and even if there was, it would be such a massive undertaking to store, and protect that gold, that it would be an incredible burden. It wouldn't be worth it.

 

So we won't have 100% gold backed money. So what is the percent of gold backing needed? 50%, 20%, 10% percent? 2% percent? Once you start getting down to the really small percentages, when everyone wants to exchange their paper currency for gold, then you can't do it. So then what good is it? If I have 100 dollars, and the currency becomes useless, and I get 2 dollars worth of gold for it, then I've still lost 98% of my currency value. That's not a real answer. That doesn't solve the problem. Even if we had 20% gold backed currency, it would be a massive cost and a burden to store and guard that gold. It's not practical. And with 20% gold backed currency, you are still looking at an 80% loss.

 

And then, after everyone exchanges their worthless money for gold, what do they do with it? I guess they have to sell it back to the government, because the government would need gold to back the new currency. It doesn't make any sense. If the government hands out gold because the currency is now worthless, then they don't have any gold backing for the new currency. Then what do you do? Your right back to a currency with no gold backing. I'll tell you what would happen, no one would get any gold, the government would keep it all, and the gold backing would be totally meaningless. That's what would happen. So if you think about what would really happen when a currency gets devalued or worthless, then the gold backing is totally useless. Think it through. Think about what would actually happen.

 

These are real scenarios that need good answers. Gold backed currency is not the answer. We need a good answer, but gold backed currency is not the answer.

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A fixed currency is DEFLATIONARY. Using a fixed currency causes Depressions!

 

GB and US moved off Gold standards starting during the great depression. But even before there were problems.

 

The US had a deep depression in the 1890's and Gold was a major contributor. The farmers couldn't get enough cash to operate. The bankers had insisted on a Gold Standard and stopped the US from using Green Backs, (Lincoln had started printing Green backs to pay for the US Civil War). The bankers wanted control over the creation of money and the interest premiums, as opposed to a central government doing so.

 

The farmers and working class wanted the government to return to a dual metal currency so there would be enough in circulation. 16 Oz of Silver would equal 1 Oz of Gold. (Ahhh.... the Wizard of Oz!). That didn't happen. The bankers won, and now the world pays the interest.

 

In New Guinea they once used Dogs Teeth as currency..... yep! So think of it... Dogs Teeth, Gold, BitCoin (electronic currency), how are these different from a fiat currency? They aren't. It's all based on belief in value.

 

This is a great thread! I think with the current nonsense over raising the US Debt limit, discussions on money creation are vital to our understanding and formulation of solutions to the global economic problems. (If only the extreme right wing teaparty fools would read a history book, sigh...)

 

Speaking of money creation and the Fractional Reserve Banking system: Is the US National Debt really a store of value as the monetary BASE for the global money supply? If we were to cut the US National Debt, would the monetary base shrink and in turn shrink global money supply causing another depression? 'Cause that is what has happened every time the US government ran a surplus, (Except once... Clinton had a surplus and it wasn't followed by a depression.......... or was it?)

 

;-)

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The US had a deep depression in the 1890's and Gold was a major contributor. The farmers couldn't get enough cash to operate.

 

I did not know that, but it makes sense to me. Is there a place I can find more info about this?

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In New Guinea they once used Dogs Teeth as currency..... yep! So think of it... Dogs Teeth, Gold, BitCoin (electronic currency), how are these different from a fiat currency? They aren't. It's all based on belief in value.

 

Here is some interesting information about Wampum as money.

 

Wampum: Introduction

Wampum - Wikipedia, the free encyclopedia

 

Interestingly, because Wampum started to be used as a way to trade with the Native American Indians, people started to manufacture Wampum, which eventually resulted in an oversupply.

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Here is some interesting history about gold and the currency.

 

Franklin Roosevelt became president on Mar. 4, 1933. The Great Depression was going on at the time. Many people panicked and took their gold and money out of the banks, causing the banks to have insufficient deposits. People were also hoarding gold out of fear. The gold supply at the Federal Reserve Bank of New York was getting dangerously low, and the nation was looking at an insolvency crisis. So Roosevelt issued Executive Order 6102 on Apr. 5, prohibiting the hoarding of gold. It actually forced citizens to hand over their gold coins for paper currency.

 

double-eagle-gold-coins-mystery-businessweek: Personal Finance News from Yahoo! Finance

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