E-money is the ultimate form of Fiat if you ask me. All fiat has a history of corruption and collapse (the american dollar and other world currencies are heading that way as well). Fiat money is the money of the statist, since it allows those in charge of the press to create as much money as they need, while dilluting what the rest of us hold.
The question isn't "what form will money be in", the question should be "what assets will back our money". I don't care if its in the form of rice crispies, as long as it is backed by an asset (gold, food, land, space rocks) and has real value.
All fiat has a history of corruption and collapse (the american dollar and other world currencies are heading that way as well).
Could you explain that concept? Seriously? If the US had not gone to fiat money in the 70s, then the exchange rates on the market would probably have killed the economy entirely instead of simply causing a recession. There were too many dollars compared to how much gold we had in the Reserve, and the gold stock we had was draining fast. Our money supply simply could not grow at the rate that the economy was growing. Fiat money was the only logical solution, and we are hardly alone in that endeavor. The Euro is fiat, as were the Deutschmark and the franc before it. (Honestly don't remember whether the pound is still backed, but I do not think it is.) Japan, too, was a fiat currency, and not fixed to anything. All of those countries did fine.
The only times that fiat money has been a problem, in general, is in third-world countries, and fixing the currencies against the dollar (Argentina) or going to a dollar economy (Ecuador) doesn't seem to have helped them much anyway. Printing money with the purpose of "diluting" cash (raising the real rate of inflation) is not inherently evil, either; in fact, a large number of economists are currently arguing that the Japanese need to print a whole lot of money, intentionally generating inflation and therefore discouraging savings, in order to revitalize their economy and end their ten-year-long recession/depression. (I.e., if your savings start being worth less, then you will have an incentive to spend, which would probably help end Japan's deflation and revitalize the economy. The other thing that's killing them is subsidizing companies that really should be allowed to die, but that's another issue entirely.)
If you're that wrapped up about having your money backed, rent a space in a vault and convert all your money to gold. It's gone up recenty anyway in the uncertainties of the war, and likely will continue to do so until this situation has blown over, so it's probably a decent investment. No one's stopping you. But for the rest of the world, I think fiat courrency is fine.
You have to have inflation under debt currency, otherwise you find yourself struggling under deflationary pressure. Our money is created in the form of loans, so when you get 100K to buy a house it is created into the economy, but has to be returned over time plus interest. So every loan adds money to the economy, and then returns back to nothingness. To pay the interest though, someone else needs to go into debt to keep to make up the difference. There is a natural debt creation/destruction cycle in fractional banking, Fiat money doesn't stop it, it just magnifies the timeframe and magnitude.
Printing money with the purpose of "diluting" cash (raising the real rate of inflation) is not inherently evil
Inflation isnt "good" for an economy, just in ours it is better than the alternative, which is crushing deflation. There is only about 1T in M1 money supply in the US, and there is in the ballpark of 8T in outstanding debt. Paying off debt very quickly contracts the money supply. We have to keep borrowing money to keep from contracting. If you really trust politicians and bankers to do the right thing with your money, more power to you. We'll ignore for now that on the watch of these two groups we have seen:
Massive bubble of the roaring 20s
Bust of the 1930s
Depression
Great Depression
Confiscation of gold and illegalization of its ownership
grinding periods of inflation and recession over the last decades
Increase of debt to GDP to a ratio of 3/1
Uncontrolled government deficit spending
The bubble we just went through, wiping many peoples retirement funds out
I'm not ready to pat these people on the back just yet. They have yet to solve the problem inherent in fractional banking and the creation of debt.
Could you explain that concept? Seriously?
You seem to be saying that Fiat money doesn't collapse, because ours hasn't yet. Name the oldest Fiat currency on earth, and what is the longest time a Fiat currency has ever lasted in History? Not one Fiat currency has ever stood the test of time. The US has already gone through a couple Fiat currencies that have collapsed before the federal reserve note was created.
This is the kind of crap governments pull with money... "The printing of such large sums created a major problem. Paper, engravers and printers were hard to find. In desperation, the Secretary of the Treasury recommended that counterfeit money be utilized. Anyone holding a counterfeit bill was supposed to exchange it for a government bond and the government would stamp it "valid" and spend it." That was the confederacy did to their Fiat money.
Fiat money almost always dies the same death, uncontrolled inflation due to state spending. It also usually results is some very socialist measures as governments try to stop people from running from it. If you get a chance, read up on what happened to Rome when its Fiat money hyperinflated, its pretty funny how they attempted to control prices. I can't name any good links off the top of my head, but this one looks like it has some good examples [sjsu.edu].
The only times that fiat money has been a problem, in general, is in third-world countries...
I think the people of Russia, Germany, Yugoslavia and the Roman Empire might disagree with you there. I don't think those empires would have appreciated being called "third world".
They were empires, not third worlds. That's like saying because the US is in a mature phase of its lifecycle that it is a third world. The Roman Empire certainly wasn't a third world.
"Be there. Aloha."
-- Steve McGarret, _Hawaii Five-Oh_
What is BEHIND that money... that is the question. (Score:5, Interesting)
E-money is the ultimate form of Fiat if you ask me. All fiat has a history of corruption and collapse (the american dollar and other world currencies are heading that way as well). Fiat money is the money of the statist, since it allows those in charge of the press to create as much money as they need, while dilluting what the rest of us hold.
The question isn't "what form will money be in", the question should be "what assets will back our money". I don't care if its in the form of rice crispies, as long as it is backed by an asset (gold, food, land, space rocks) and has real value.
Re:What is BEHIND that money... that is the questi (Score:2)
The only times that fiat money has been a problem, in general, is in third-world countries, and fixing the currencies against the dollar (Argentina) or going to a dollar economy (Ecuador) doesn't seem to have helped them much anyway. Printing money with the purpose of "diluting" cash (raising the real rate of inflation) is not inherently evil, either; in fact, a large number of economists are currently arguing that the Japanese need to print a whole lot of money, intentionally generating inflation and therefore discouraging savings, in order to revitalize their economy and end their ten-year-long recession/depression. (I.e., if your savings start being worth less, then you will have an incentive to spend, which would probably help end Japan's deflation and revitalize the economy. The other thing that's killing them is subsidizing companies that really should be allowed to die, but that's another issue entirely.)
If you're that wrapped up about having your money backed, rent a space in a vault and convert all your money to gold. It's gone up recenty anyway in the uncertainties of the war, and likely will continue to do so until this situation has blown over, so it's probably a decent investment. No one's stopping you. But for the rest of the world, I think fiat courrency is fine.
Re:What is BEHIND that money... that is the questi (Score:1)
You have to have inflation under debt currency, otherwise you find yourself struggling under deflationary pressure. Our money is created in the form of loans, so when you get 100K to buy a house it is created into the economy, but has to be returned over time plus interest. So every loan adds money to the economy, and then returns back to nothingness. To pay the interest though, someone else needs to go into debt to keep to make up the difference. There is a natural debt creation/destruction cycle in fractional banking, Fiat money doesn't stop it, it just magnifies the timeframe and magnitude.
Inflation isnt "good" for an economy, just in ours it is better than the alternative, which is crushing deflation. There is only about 1T in M1 money supply in the US, and there is in the ballpark of 8T in outstanding debt. Paying off debt very quickly contracts the money supply. We have to keep borrowing money to keep from contracting. If you really trust politicians and bankers to do the right thing with your money, more power to you. We'll ignore for now that on the watch of these two groups we have seen:
I'm not ready to pat these people on the back just yet. They have yet to solve the problem inherent in fractional banking and the creation of debt.
You seem to be saying that Fiat money doesn't collapse, because ours hasn't yet. Name the oldest Fiat currency on earth, and what is the longest time a Fiat currency has ever lasted in History? Not one Fiat currency has ever stood the test of time. The US has already gone through a couple Fiat currencies that have collapsed before the federal reserve note was created.
This is the kind of crap governments pull with money... "The printing of such large sums created a major problem. Paper, engravers and printers were hard to find. In desperation, the Secretary of the Treasury recommended that counterfeit money be utilized. Anyone holding a counterfeit bill was supposed to exchange it for a government bond and the government would stamp it "valid" and spend it." That was the confederacy did to their Fiat money.
Fiat money almost always dies the same death, uncontrolled inflation due to state spending. It also usually results is some very socialist measures as governments try to stop people from running from it. If you get a chance, read up on what happened to Rome when its Fiat money hyperinflated, its pretty funny how they attempted to control prices. I can't name any good links off the top of my head, but this one looks like it has some good examples [sjsu.edu].
Re:What is BEHIND that money... that is the questi (Score:1)
Re:if the shoe fits (Score:1)