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What should be used to back currency

Fiat
27
52%
Gold
10
19%
Silver
No votes
0%
Gold and Silver
2
4%
Barter System
2
4%
Other Commodity
3
6%
Other
8
15%
User avatar
By Stormsmith
#13180228
Dr House wrote:Fiat. The currency is ultimately backed by the export performance of the economy itself, and as long as the currency isn't inflated too far too fast a fiat currency is doable. Additionally, hard specie has industrial uses, so storing it as money is somewhat wasteful.


How would this work, if there is a significant trade deficit?


http://www.globalpolicy.org/component/c ... trade.html
User avatar
By Dr House
#13180421
Stormsmith wrote:How would this work, if there is a significant trade deficit?

What do you mean?
User avatar
By Stormsmith
#13180495
If I understand your post, the amount of money garnered from the sum of all exports is the 'thing' on which the value of the greenback is based. I don't quite see how it would work when the "value of the exports" is smaller than the "value of the imports", or a trade deficit. If trade is positive for the country in question, meaning more exports than imports, then the [sum of all trade] has value. But if the sum is negative, then why would the value of exports, regardless of how much it is, be collateral for the dollar?

I feel like I'm missing something here..
User avatar
By Nattering Nabob
#13180509
Fiat...and I'm still waiting for that hyperinflation so recently predicted to materialize...
By Huntster
#13180733
Gold, fiat currencies are never stable long term.

^ And you know this how?


History.

More:

Alan Greenspan, Federal Reserve Chairman from 1987 to 2006, was a critic of fiat money in his early career, arguing in his essay, Gold and Economic Freedom, that,

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.


Fiat money is a tool of tyrants.
User avatar
By Cheesecake_Marmalade
#13180737
History.

Anything in particular you'd like to share? Perhaps something in depth instead of just "all of the most successful countries used the gold standard"?

was a critic of fiat money in his early career

So the expert that you are quoting changed his mind about fiat currency? Nice.
By Huntster
#13180749
History.

Anything in particular you'd like to share? Perhaps something in depth instead of just "all of the most successful countries used the gold standard"?


This should be a good primer. The cited instances involving the Weimar Republic and post WWII Hungary should flick on a light for you. If you need more detailed instruction after reading it, let me know.

Quote:
was a critic of fiat money in his early career

So the expert that you are quoting changed his mind about fiat currency? Nice.


It was more than nice. It was accurate.

September 9th, 2009 (19 days ago, unless he's "changed his mind" since then):

Gold prices that jumped above $1,000 an ounce this week are signaling that investors are buying metals to hedge against declines in currencies, former Federal Reserve Chairman Alan Greenspan said.

The gains are “strictly a monetary phenomenon,” Greenspan said today at an investment conference in New York. Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies,” he said.

The price of gold has jumped 13 percent this year as rising government debt coupled with declines in the dollar spurred demand for the metal as a haven. Silver, platinum and palladium also gained.

“What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment,” Greenspan said........


It should be obvious. Paper is cheap. In the end, it's worthless. It can't even stand up to the weather. It can even be easily counterfeited.

Go ahead. Horde it.

Good luck.
User avatar
By Figlio di Moros
#13180751
In other words, Hunster, "People have turned fiat into printing presses in the past" is your argument, neglecting that the rate of inflation can and has been standardized?
By Huntster
#13180759
In other words, Hunster, "People have turned fiat into printing presses in the past" is your argument, neglecting that the rate of inflation can and has been standardized?


My argument is more than "people have turned fiat into printing presses in the past". It includes the fact that people will turn fiat into printing presses in the future.

I do not (nor does Greenspan) ignore the fact that for the past few decades in the United States the inflation of fiat money has remained controlled.

However, as he points out in his September 9th comments, those days may be coming to a close as we watch.

Got your gold? Or are you also so confident that the paper (plastic?) in your wallet will suffice?
User avatar
By Figlio di Moros
#13180776
Huntster wrote:Got your gold? Or are you also so confident that the paper (plastic?) in your wallet will suffice?


Uh, I'm a country-boy, and hyperinflation has only happened a few times in history. If you consider hyperinflation v fiat monetary systems, I'd say the odds of it happening are pretty low.
By Huntster
#13180807
....hyperinflation has only happened a few times in history.


Really?:

Angola
Angola went through its worst inflation from 1991 to 1995. In early 1991, the highest denomination was 50,000 kwanzas. By 1994, it was 500,000 kwanzas. In the 1995 currency reform, 1 kwanza reajustado was exchanged for 1,000 kwanzas. The highest denomination in 1995 was 5,000,000 kwanzas reajustados. In the 1999 currency reform, 1 new kwanza was exchanged for 1,000,000 kwanzas reajustados. The overall impact of hyperinflation: 1 new kwanza = 1,000,000,000 pre 1991 kwanzas.

Argentina
Argentina went through steady inflation from 1975 to 1991. At the beginning of 1975, the highest denomination was 1,000 pesos. In late 1976, the highest denomination was 5,000 pesos. In early 1979, the highest denomination was 10,000 pesos. By the end of 1981, the highest denomination was 1,000,000 pesos. In the 1983 currency reform, 1 Peso argentino was exchanged for 10,000 pesos. In the 1985 currency reform, 1 austral was exchanged for 1,000 pesos argentinos. In the 1992 currency reform, 1 new peso was exchanged for 10,000 australes. The overall impact of hyperinflation: 1 (1992) peso = 100,000,000,000 pre-1983 pesos.

Austria
In 1922, inflation in Austria reached 1426%. From 1914 to January 1923, the consumer price index rose by a factor of 11836. With the highest banknote in denominations of 500,000 Austro-Hungarian krones.

Belarus
Belarus went through steady inflation from 1994 to 2002. In 1993, the highest denomination was 5,000 rublei. By 1999, it was 5,000,000 rublei. In the 2000 currency reform, the ruble was replaced by the new ruble at an exchange rate of 1 new ruble = 1,000 old rublei. The highest denomination in 2008 was 100,000 rublei, equal to 100,000,000 pre-2000 rublei.

Bolivia
Bolivia went through its worst inflation between 1984 and 1986. Before 1984, the highest denomination was 1,000 pesos bolivianos. By 1985, the highest denomination was 10 Million pesos bolivianos. In 1985, a Bolivian note for 1 million pesos was worth 55 cents in US dollars, one-thousandth of its exchange value of $5,000 less than three years previously.[13] In the 1987 currency reform, the Peso Boliviano was replaced by the Boliviano at a rate of 1,000,000 : 1.

Bosnia-Herzegovina
Bosnia-Hezegovina went through its worst inflation in 1993. In 1992, the highest denomination was 1,000 dinara. By 1993, the highest denomination was 100,000,000 dinara. In the Republika Srpska, the highest denomination was 10,000 dinara in 1992 and 10,000,000,000 dinara in 1993. 50,000,000,000 dinara notes were also printed in 1993 but never issued.

Brazil
From 1986 to 1994, the base currency unit was shifted three times to adjust for inflation in the final years of the Brazilian military dictatorship era. A 1967 cruzeiro was, in 1994, worth less than one trillionth of a US cent, after adjusting for multiple devaluations and note changes. A new currency called real was adopted in 1994, and hyperinflation was eventually brought under control. The real was also the currency in use until 1942; 1 (current) real is the equivalent of 2,750,000,000,000,000,000 of old reals (called reais in Portuguese).

Bulgaria
During 1996 the Bulgarian economy collapsed due to the BSP's, slow and mismanaged economic reforms, its disastrous agricultural policy, and an unstable and decentralized banking system, which led to an inflation rate of 311% and the collapse of the lev, with an exhange rate $1:Lev reaching 1:3000. When pro-reform forces came into power in the spring 1997, an ambitious economic reform package, including introduction of a currency board regime and pegging the Bulgarian Lev to the German Deutsche Mark (and consequently to the euro), was agreed to with the IMF and the World Bank, and the economy began to stabilize.

Chile
Beginning in 1971, during the presidency of Salvador Allende, Chilean inflation began to rise and reached peaks of 1,200% in 1973. As a result of the hyperinflation, food became scarce and overpriced. A 1973 coup d'etat deposed Allende and installed a military government led by Augusto Pinochet. Pinochet's free-market economic policy ended the inflation and except for an economic depression in 1981 the economy has recovered. Overall impact of the inflation: 1 current Chilean Peso = 1,000 Escudos.

China
As the first user of fiat currency, China has had an early history of troubles caused by hyperinflation. The Yuan Dynasty printed huge amounts of fiat paper money to fund their wars, and the resulting hyperinflation, coupled with other factors, led to its demise at the hands of a revolution. The Republic of China went through the worst inflation 1948-49. In 1947, the highest denomination was 50,000 yuan. By mid-1948, the highest denomination was 180,000,000 yuan. The 1948 currency reform replaced the yuan by the gold yuan at an exchange rate of 1 gold yuan = 3,000,000 yuan. In less than 1 year, the highest denomination was 10,000,000 gold yuan. In the final days of the civil war, the Silver Yuan was briefly introduced at the rate of 500,000,000 Gold Yuan. Meanwhile the highest denomination issued by a regional bank was 6,000,000,000 yuan (issued by Xinjiang Provincial Bank in 1949). After the renminbi was instituted by the new communist government, hyperinflation ceased with a revaluation of 1:10,000 old Renminbi in 1955.

Free City of Danzig
Danzig went through its worst inflation in 1923. In 1922, the highest denomination was 1,000 Mark. By 1923, the highest denomination was 10,000,000,000 Mark.

Georgia
Georgia went through its worst inflation in 1994. In 1993, the highest denomination was 100,000 coupons (kuponi). By 1994, the highest denomination was 1,000,000 coupons. In the 1995 currency reform, a new currency lari was introduced with 1 lari exchanged for 1,000,000 coupons.

Germany
Main article: Inflation in the Weimar Republic
Germany went through its worst inflation in 1923. In 1922, the highest denomination was 50,000 Mark. By 1923, the highest denomination was 100,000,000,000,000 Mark. In December 1923 the exchange rate was 4,200,000,000,000 Marks to 1 US dollar.[15] In 1923, the rate of inflation hit 3.25 × 106 percent per month (prices double every two days). Beginning on 20 November 1923, 1,000,000,000,000 old Marks were exchanged for 1 Rentenmark[15] so that 4.2 Rentenmarks were worth 1 US dollar, exactly the same rate the Mark had in 1914.

Greece
Greece went through its worst inflation in 1944. In 1942, the highest denomination was 50,000 drachmai. By 1944, the highest denomination was 100,000,000,000,000 drachmai. In the 1944 currency reform, 1 new drachma was exchanged for 50,000,000,000 drachmai. Another currency reform in 1953 replaced the drachma at an exchange rate of 1 new drachma = 1,000 old drachmai. The overall impact of hyperinflation: 1 (1953) drachma = 50,000,000,000,000 pre 1944 drachmai. The Greek monthly inflation rate reached 8.5 billion percent in October 1944.

Hungary
Hungary went through the worst inflation ever between the end of 1945 and July 1946. In 1944, the highest denomination was 1,000 pengo. By the end of 1945, it was 10,000,000 pengo. The highest denomination in mid-1946 was 100,000,000,000,000,000,000 pengo. A special currency the adopengo - or tax pengo - was created for tax and postal payments [1]. The value of the adopengo was adjusted each day, by radio announcement. On 1 January 1946 one adopengo equaled one pengo. By late July, one adopengo equaled 2,000,000,000,000,000,000,000 or 2×1021 pengo. When the pengo was replaced in August 1946 by the forint, the total value of all Hungarian banknotes in circulation amounted to one-thousandth of one US dollar. [16] It is the most severe known incident of inflation recorded, peaking at 1.3 × 1016 percent per month (prices double every 15 hours) [17] . The overall impact of hyperinflation: On 18 August, 1946 400,000,000,000,000,000,000,000,000,000 or 4 × 1029 (four hundred octillion [ short scale) pengo became 1 forint.
One source states that this hyperinflation was purposely started by trained Russian Marxists in order to destroy the Hungarian middle and upper classes. The 1946 currency reform changed the currency to forint. Previously, between 1922 and 1924 inflation in Hungary reached 98%.

Israel
Inflation accelerated in the 1970s, rising steadily from 13% in 1971 to 111% in 1979. From 133% in 1980, it leaped to 191% in 1983 and then to 445% in 1984, threatening to become a four-digit figure within a year or two. In 1985 Israel froze all prices by law. That same year, inflation more than halved, to 185%. Within a few months, the authorities began to lift the price freeze on some items; in other cases it took almost a year. By 1986, inflation was down to 19%.

Japan
After WW II, Japan went through the highest denomination at that time, which was a 75,000,000,000 Yen bank cheque. The Japan wholesale price index (relative to 1 as the average of 1930) shot up to 16.3 in 1943, 127.9 in 1948 and 342.5 in 1951. In the early 1950s, after achieving independence from USA, Japan controlled its own money. Through its rapidly growing export trade, Japan stabilized the Yen quickly.

Krajina
Krajina went through the worst inflation in 1993. In 1992, the highest denomination was 50,000 dinara. By 1993, the highest denomination was 50,000,000,000 dinara. Note that this unrecognized country was reincorporated into Croatia in 1998.

Madagascar
The Malagasy franc had a turbulent time in 2004, losing nearly half its value and sparking rampant inflation. On 1 January 2005 the Malagasy ariary replaced the previous currency at a rate of one ariary for five Malagsy francs. In May 2005 there were riots over rising inflation, although falling prices have since calmed the situation.

Mozambique
Mozambique was one of the world's poorest countries when it became independent in 1975. Mismanagement and a brutal civil war from 1977-92 led to continued inflation. The highest denomination in 1976 was 100 meticals. By 2004, it was 500,000 meticals. In the 2006 currency reform, 1 new metical was exchanged for 1,000 old meticals.

Nicaragua
Nicaragua went through the worst inflation from 1987 to 1990. From 1943 to April 1971, one US dollar equalled 7 cordobas. From April 1971 to early 1978, one US dollar was worth 10 cordobas. In early 1986, the highest denomination was 10,000 cordobas. By 1987, it was 1,000,000 cordobas. In the 1988 currency reform, 1 new cordoba was exchanged for 10,000 old córdobas. The highest denomination in 1990 was 100,000,000 new cordobas. In the 1991 currency reform, 1 new cordoba was exchanged for 5,000,000 old cordobas. The overall impact of hyperinflation: 1 (1991) cordoba = 50,000,000,000 pre-1988 cordobas.

Peru
Peru went through its worst inflation from 1988 to 1990. In the 1985 currency reform, 1 inti was exchanged for 1,000 soles. In 1986, the highest denomination was 1,000 intis. But in September 1988, monthly inflation went to 132%. In August 1990, monthly inflation was 397%. The highest denomination was 10,000,000 intis by 1991. In the 1991 currency reform, 1 nuevo sol was exchanged for 1,000,000 intis. The overall impact of hyperinflation: 1 nuevo sol = 1,000,000,000 (old) soles.

Philippines
The Japanese government occupying the Philippines during the World War II issued fiat currencies for general circulation. The Japanese-sponsored Second Philippine Republic government led by Jose P. Laurel at the same time outlawed possession of other currencies, most especially "guerilla money." The fiat money was dubbed "Mickey Mouse Money" because it is similar to play money and is next to worthless. Survivors of the war often tell tales of bringing suitcase or bayong (native bags made of woven coconut or buri leaf strips) overflowing with Japanese-issued bills. In the early times, 75 Mickey Mouse pesos could buy one duck egg[18]. In 1944, a box of matches cost more than 100 Mickey Mouse pesos.[19].
In 1942, the highest denomination available was 10 pesos. Before the end of the war, because of inflation, the Japanese government was forced to issue 100, 500 and 1000 peso notes.

Poland
Poland went through inflation (second time) between 1989 and 1991. The highest denomination in 1989 was 200,000 zlotych. It was 1,000,000 zlotych in 1991 and 2,000,000 zlotych in 1992; the exchange rate was 9500 zlotych for 1 US dollar in January 1990 and 19600 zlotych at the end of August 1992. In the 1994 currency reform, 1 new zloty was exchanged for 10,000 old zlotych and 1 US$ exchange rate was ca. 2.5 zlotych (new).
Previously, between 1922 and 1924, Polish inflation reached 275% and exchange rate in 1923 was 6,375,000 Polish marka (mkp) for 1 US dollar (before the inflation there was only 9 mkp for 1US$ in 1918), and the highest denomination was 10,000,000 mkp. In the 1924 currency reform there was new currency introduced: 1 zloty = 1,800,000 mkp.

Republika Srpska
Republika Srpska was the breakaway region of Bosnia. As with Krajina, it pegged its currency, the Republika Srpska dinar, to that of Yugoslavia. Their bills were almost the same as Krajina's, but they issued fewer and didn't issue currency after 1993.

Romania
Romania is still working through steady inflation. The highest denomination in 1990 was 100 lei and in 1998 was 100,000 lei. By 2000 it was 500,000 lei. In early 2005 it was 1,000,000 lei. In July 2005 the leu was replaced by the new leu at 10,000 old lei = 1 new leu. Inflation in 2005 was 9%. In 2006 the highest denomination is 500 lei (= 5,000,000 old lei).

Russian Federation
Between 1921 and 1922 inflation in Soviet Russia reached 213%.
In 1992, the first year of post-Soviet economic reform, inflation was 2,520%. In 1993 the annual rate was 840%, and in 1994, 224%. The ruble devalued from about 40 r/$ in 1991 to about 5,000 r/$ in late 1997. In 1998, a denominated ruble was introduced at the exchange rate of 1 new ruble = 1,000 pre-1998 rubles. In the second half of the same year ruble fell to about 30 r/$ as a result of financial crisis.

Taiwan
As the Chinese Civil War reached its peak. Taiwan also suffered from the hyperinflation that has ravaged China in late 1940's. Highest denomination issued was 1,000,000 Dollar Bearer's Cheque. Inflation was finally brought under control at introduction of New Taiwan Dollar in 15 June 1949 at rate of 40,000 old Dollar = 1 New Dollar

Turkey
Throughout the 1990s Turkey dealt with severe inflation rates that finally crippled the economy into a recession in 2001. The highest denomination in 1995 was 1,000,000 lira. By 2005 it was 20,000,000 lira. Recently Turkey has achieved single digit inflation for the first time in decades, and in the 2005 currency reform, introduced the New Turkish Lira; 1 was exchanged for 1,000,000 old lira.

Ukraine
Ukraine went through its worst inflation between 1993 and 1995. In 1992, the Ukrainian karbovanets was introduced, which was exchanged with the defunct Soviet ruble at a rate of 1 UAK = 1 SUR. Before 1993, the highest denomination was 1,000 karbovantsiv. By 1995, it was 1,000,000 karbovantsiv. In 1996, during the transition to the Hryvnya and the subsequent phase out of the karbovanets, the exchange rate was 100,000 UAK = 1 UAH. This translates to a hyperinflation rate of approximately 1,400% per month. And to this day Ukraine holds the world record for most inflation in one calendar year, which was set in 1993.[20]

United States
During the Revolutionary War, the Continental Congress authorized the printing of paper currency called continental currency. The easily counterfeited notes depreciated rapidly, giving rise to the expression "not worth a continental."
Between January 1861 and April 1865, the Lerner Commodity Price Index of leading cities in the eastern Confederacy states increased from 100 to over 9000.[21] As the U.S. Civil War dragged on the Confederate States of America dollar had less and less value, until it was almost worthless by the last few months of the war.


Yugoslavia
Yugoslavia went through a period of hyperinflation and subsequent currency reforms from 1989 to 1994. The highest denomination in 1988 was 50,000 dinars. By 1989 it was 2,000,000 dinars. In the 1990 currency reform, 1 new dinar was exchanged for 10,000 old dinars. In the 1992 currency reform, 1 new dinar was exchanged for 10 old dinars. The highest denomination in 1992 was 50,000 dinars. By 1993, it was 10,000,000,000 dinars. In the 1993 currency reform, 1 new dinar was exchanged for 1,000,000 old dinars. But before the year was over, the highest denomination was 500,000,000,000 dinars. In the 1994 currency reform, 1 new dinar was exchanged for 1,000,000,000 old dinars. In another currency reform a month later, 1 novi dinar was exchanged for 13 million dinars (1 novi dinar = 1 German mark at the time of exchange). The overall impact of hyperinflation: 1 novi dinar = 1 × 1027 1.3 × 1027 pre 1990 dinars. Yugoslavia's rate of inflation hit 5 × 1015 percent cumalative inflation over the time period 1 October 1993 and 24 January 1994.

Zaire (now the Democratic Republic of the Congo)
Zaire went through a period of inflation between 1989 and 1996. In 1988, the highest denomination was 5,000 zaires. By 1992, it was 5,000,000 zaires. In the 1993 currency reform, 1 nouveau zaire was exchanged for 3,000,000 old zaires. The highest denomination in 1996 was 1,000,000 nouveaux zaires. In 1997, Zaire was renamed the Congo Democratic Republic and changed its currency to francs. 1 franc was exchanged for 100,000 nouveaux zaires. The overall impact of hyperinflation: 1 franc = 3 × 1011 pre 1989 zaires.

Zimbabwe
Main article: Hyperinflation in Zimbabwe
At Independence in 1980, the Zimbabwe dollar was worth about USD 1.25. Since then, rampant inflation and the collapse of the economy have severely devalued the currency, causing many organisations to favour using the US dollar or South African rand instead. Inflation was stable until Robert Mugabe began a program of land reforms that primarily focused on taking land from white farmers and redistributing those properties and assets to black farmers; this in turn sent food production and revenues from export of food plummeting.[22][23][24] Though inflation in Zimbabwe was a monetary phenomena (the result of Mugabe's government printing money) as can be seen by the appearance of ever higher face value printed notes (whose face value exceeded the sum of all previously existing notes).
Early in the 21st century Zimbabwe started to experience chronic inflation. Inflation reached 624% in 2004, then fell back to low triple digits before surging to a new high of 1,730% in 2006. During that time, the Reserve Bank of Zimbabwe revalued its currency on 1 August 2006 at a rate of 1,000 old Zimbabwean dollars to 1 revalued Zimbabwean dollar. In June 2007 inflation in Zimbabwe had risen to 11,000% year-to-year from an earlier estimate of 9,000%. On 5 May 2008 the Reserve Bank of Zimbabwe issued bank notes or "bearer cheques" for the value of ZWD 100 million and ZWD 250 million.[25]. Ten days later on 15 May, new bearer cheques with a value of ZWD 500 million (then equivalent to about USD 2.5) were issued.[26] Five days later on 20 May a new series of notes in the form of "agro cheques" were issued in denominations of ZWD 5 billion, ZWD 25 billion and ZWD 50 billion. An additional agro cheque was issued for ZWD 100 billion on 21 July.[27] Meanwhile inflation has officially surged to 2,200,000%[28] with some analysts estimating figures surpassing 9,000,000 percent.[29] As of 22 July 2008 the value of the ZWD had fallen to approximately 688 billion per 1 USD, or 688 trillion pre-August 2006 Zimbabwean dollars.[30] On 1 August 2008, the Zimbabwe dollar was redenominated by removing 10 zeroes. ZWD 10 billion became 1 dollar after the redenomination.[31]. On 19 August 2008, official figures announced for June estimated the inflation over 11,250,000 percent.[32] Zimbabwe's annual inflation was 231,000,000% in July[33] (prices doubling every 17.3 days). For periods after July 2008, no official inflation statistics were released. Prof. Steve H. Hanke overcame the problem by estimating inflation rates after July 2008 and publishing the Hanke Hyperinflation Index for Zimbabwe. [34] Prof. Hanke’s HHIZ measure indicates that the inflation peaked at an annual rate of 89.7 sextillion percent (89,700,000,000,000,000,000,000%) in mid-November 2008. The peak monthly rate was 79.6 billion percent, which is equivalent to a 98% daily rate. At that rate, prices were doubling every 24.7 hours. [35]
At its November 2008 peak, Zimbabwe’s rate of inflation approached, but failed to surpass, Hungary’s July 1946 world record. [35] On 16 January 2009, Zimbabwe issued a ZWD100 trillion bill.[36] The hyperinflation officially ended in January 2009 when official inflation rates in USD were announced. [35]


That's just the modern era. All the above examples (with the exception of the Chinese Yuan Dynasty) were just in the past 250 years with the vast majority in just the past 50 years.

Time to review your history books?
User avatar
By Figlio di Moros
#13180837
Time to establish cause-and-effect relationship in order to establish your assertion on the inevitibility of a fiat monetary system establishing hyperinflation while systematically eliminating any other relevent factors inherent in those systems, such as corruption or lack of meritocratic systems?
User avatar
By Invictus_88
#13181148
Syd wrote:Flat.


I think we have general consensus on the supremacy of flat money. Spherical money would be a bitch to fit in one's wallet.

:|
By Kman
#13181163
Fiat money gives the government a way of taxing people without openly saying it, the government just prints money en masse to pay its debts, this causes inflation and it causes the currency to fall in value (IE you have less purchasing power while the governments gets more) effectively taxing people not only on their wages but also on their savings.

With a gold standard the government cannot just print money like it pleases and this ensures that the only way for government to steal peoples money is by raising taxes.
By Wolfman
#13181187
With a gold standard the government cannot just print money like it pleases and this ensures that the only way for government to steal peoples money is by raising taxes.


Really? Why not? Why cann't a gold backed currency be printed ad infinitum? And how is taxing people stealing from them?
User avatar
By Paradigm
#13181196
Wolfman wrote:Really? Why not? Why cann't a gold backed currency be printed ad infinitum?

As it so happens, medieval nobles would often use the mint in the same reckless way which opponents of fiat money talk about the government using the printing press. There were some very inflationary regimes using not just gold-backed money, but actual gold and silver coins. However, the people didn't mind too much, because the inflation was expected, and basically was treated as a de facto tax.
By Huntster
#13181200
Time to establish cause-and-effect relationship in order to establish your assertion on the inevitibility of a fiat monetary system establishing hyperinflation while systematically eliminating any other relevent factors inherent in those systems, such as corruption or lack of meritocratic systems?


Why? I did not assert that fiat money without corruption inevitably causes hyperinflation. Clearly, corruption might be a supporting factor as might simple negligence, war and it's related infrastructure collapse, or any number of other supporting factors.

The fact remains, however, that currency based on something more "solid" than fiat is not hyperinflationary. One simply cannot hyperinflate an economy by flooding it with gold, regardless of other factors, but fiat currency has a clear and undeniable history of resulting in hyperinflation.

It's really that simple. But don't believe me.

Buy dollars.

I believe the best teacher is experience, especially for those who refuse to learn otherwise.

With a gold standard the government cannot just print money like it pleases and this ensures that the only way for government to steal peoples money is by raising taxes.

Really? Why not? Why cann't a gold backed currency be printed ad infinitum?


Because gold has limited availability. If one prints currency "ad infinitum", it is no longer "gold backed", because the amount of gold is limited.

This is simple English. Don't words work with you, or are you a lawyer?
By Wolfman
#13181205
Because gold has limited availability. If one prints currency "ad infinitum", it is no longer "gold backed", because the amount of gold is limited.

This is simple English. Don't words work with you, or are you a lawyer?


Read the post above you.

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