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.
Lets look at the currency called the American Dollar.
It is no longer backed by gold, as you said. Instead, it merely is backed by a promise that it is worth something. How is this different from a gold-backed currency like the old American Dollar. Well, since the old dollar did not actually come attached to a piece of gold and in fact was not even exchangable for gold it's last 40 years.
So, what is the difference between the two? Little. Both are backed by promises. The only difference is what the promise is. If you cannot trust the US to back the current dollar, why could you trust them to back the old one, in the absence of proof that it is equivalent to gold?
With E-Money, you have to trust the issuer that they exchanged real money for it and did not just "print it". Do you trust them?
"How is this different from a gold-backed currency like the old American Dollar. Well, since the old dollar did not actually come attached to a piece of gold and in fact was not even exchangable for gold it's last 40 years."
I'm going to ignore the insult to my intelligence in the title to your reply, and just say you made my point for me. In 1933 the ownership of gold by you and I was made illegal to keep banks and the Fed solvent. Since then we have moved toward a fully Fiat system, and under Nixon we achieved full Fiat status. We are allowed to own gold again, but its not the legal currency of the US. Inflation like we have now didn't exist before going Fiat, and depressions usually lasted less than a year. We are very likely entering a new one now, as we are at the end of a K-wave cycle and debt accumulation is strangling growth. This is the result of central control of money supply, as the roaring 20s and the great depression that followed were as well.
"If you cannot trust the US to back the current dollar, why could you trust them to back the old one, in the absence of proof that it is equivalent to gold?"
The US didn't back the old dollar, the US never has backed the dollar. Banks have always been and still are private in the US. Even now, the Fed is a private institution. Our money now is Fiat, that means there IS NO BACKING, even if the US claims otherwise. All the FDIC promises is to print more money if banks get in trouble, which dilutes everyones money.
Before 1933 gold was money. When you carried a note, you could physically walk to a bank and trade it for gold. Money was an asset, and notes were titles to that asset. Now all that makes money valuable is the trust (and law) that others will accept it as payment. If that trust is broken, the dollar collapses. Switching to an electronic dollar only makes it easier for banks to recklessly create money. Without sound policy behind them, all we gain is a loss of privacy, and the banks save a few pennies per dollar on printing costs.
Before you go insulting someone with a statement such as "you have a shallow understanding of the issues", maybe ask them a few questions to make sure you can verify that.
Okay, I guess I misunderstood your understanding of the issues. I assumed your beef was with Nixon's switch from the gold standard.
But you say that the real problem started in 1933 when we stopped exchanging notes for gold. That the dollar became fiat then.
Well, I guess I have to say then that the enormous growth and wealth of the US since 1933 does not support your claims that a fiat currency doesn't work.
Today's economy is impossible without the trust in those that they will pay you what you say. This not only goes for our currencies, but for promissory notes (checks) and other financial instruments.
How could we conduct business without lines of credit and promissory notes? Every transaction would have to be delayed until the payment owed was remitted in real cash the gold that backed it.
I'm sorry, the modern financial system is based upon trust any many levels. There is no more risk in accepting a fiat Dollar than there is in accepting a check, or delivering goods with an invoice for 90 days payment.
Perhaps you should spend less time being insulted and more analyzing the true basis of commerce.
It's not that it doesn't work. All Fiats work fine until they bite the dust, and that usually happens quickly once they start to crumble.
Also, the enourmous wealth growth of the past 70 years isn't as obvious as you think. Those who lived through the depression, and my mother and grandmother who just lost their retirement funds might disagree with you. All of those living on credit cards might also take your view of the sucess of Fiat money into dispute. We have also seen an increase in the gap between wealthy and poor, as well as an increase in the total number of people in poverty. The US is now a socialist government, and it has Fiat money to thank for that. Even Alan Greenspan is a believer in asset based money, and recognizes that Fiat is the money of the statist and works counter to freedom.
"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."
Alan Greenspan
The US was creating enourmous wealth before Fiat money. Be careful not to confuse the wealth of the industrial revolution (cars, planes, electronics, rockets, physics, medicine, etc) as a success of fiat money. All of those industries would have existed with or without Fiat money.
You also seem to keep attacking me as if im some extremist you need to beat down. I'm simply stating that our money is Fiat, and being such, it has a finite lifespan now. It will continue to funnel an increasing % of our national product to the financial sector, and will continue to fund government expansion. That has nothing to do with isolation or whatever you are accusing me of. It's just a statement.
No one is beating you down. You're not that important. The world revolves without both of us.
We are arguing with you because your statement that our currency has a finite lifespan now is itself fiat. You sure are convinced of it, but your facts do not convince others.
You'll be able to laugh when your gold becomes incredibly valuable versus our dollars.
You are so quick to quote Alan Greenspan. Does his recent performance convince you that he knows well how to handle difficult financial situations? Also, this is the man who said we cannot be buying back all our financial instruments because they would destroy wealth by removing strongly-backed securities? Are the US T-Bills backed any differently than our fiat Dollar? No, either is backed by the full faith and credit of the US government. No more, no less. These instruments have value, and so does the Dollar. Greenspan knows it and so should you.
Finally, fiat is not capitalized. Just because there happens to be an automobile group with the same name (whose name actually is FIAT) doesn't mean you capitalize it.
Alright, this conversation has ended. When you title your initial reply "you have a shallow understanding" no further argument is needed. Was nice doing business with you Anonymous Coward.
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.
you have a shallow understanding of the issues (Score:0)
It is no longer backed by gold, as you said. Instead, it merely is backed by a promise that it is worth something. How is this different from a gold-backed currency like the old American Dollar. Well, since the old dollar did not actually come attached to a piece of gold and in fact was not even exchangable for gold it's last 40 years.
So, what is the difference between the two? Little. Both are backed by promises. The only difference is what the promise is. If you cannot trust the US to back the current dollar, why could you trust them to back the old one, in the absence of proof that it is equivalent to gold?
With E-Money, you have to trust the issuer that they exchanged real money for it and did not just "print it". Do you trust them?
This is one of the largest obstacles for E-Money.
Re:you have a shallow understanding of the issues (Score:1)
Where to start...
I'm going to ignore the insult to my intelligence in the title to your reply, and just say you made my point for me. In 1933 the ownership of gold by you and I was made illegal to keep banks and the Fed solvent. Since then we have moved toward a fully Fiat system, and under Nixon we achieved full Fiat status. We are allowed to own gold again, but its not the legal currency of the US. Inflation like we have now didn't exist before going Fiat, and depressions usually lasted less than a year. We are very likely entering a new one now, as we are at the end of a K-wave cycle and debt accumulation is strangling growth. This is the result of central control of money supply, as the roaring 20s and the great depression that followed were as well.
The US didn't back the old dollar, the US never has backed the dollar. Banks have always been and still are private in the US. Even now, the Fed is a private institution. Our money now is Fiat, that means there IS NO BACKING, even if the US claims otherwise. All the FDIC promises is to print more money if banks get in trouble, which dilutes everyones money.
Before 1933 gold was money. When you carried a note, you could physically walk to a bank and trade it for gold. Money was an asset, and notes were titles to that asset. Now all that makes money valuable is the trust (and law) that others will accept it as payment. If that trust is broken, the dollar collapses. Switching to an electronic dollar only makes it easier for banks to recklessly create money. Without sound policy behind them, all we gain is a loss of privacy, and the banks save a few pennies per dollar on printing costs.
Before you go insulting someone with a statement such as "you have a shallow understanding of the issues", maybe ask them a few questions to make sure you can verify that.
your conclusions are unsupported by your facts (Score:0)
But you say that the real problem started in 1933 when we stopped exchanging notes for gold. That the dollar became fiat then.
Well, I guess I have to say then that the enormous growth and wealth of the US since 1933 does not support your claims that a fiat currency doesn't work.
Today's economy is impossible without the trust in those that they will pay you what you say. This not only goes for our currencies, but for promissory notes (checks) and other financial instruments.
How could we conduct business without lines of credit and promissory notes? Every transaction would have to be delayed until the payment owed was remitted in real cash the gold that backed it.
I'm sorry, the modern financial system is based upon trust any many levels. There is no more risk in accepting a fiat Dollar than there is in accepting a check, or delivering goods with an invoice for 90 days payment.
Perhaps you should spend less time being insulted and more analyzing the true basis of commerce.
Re:your conclusions are unsupported by your facts (Score:1)
It's not that it doesn't work. All Fiats work fine until they bite the dust, and that usually happens quickly once they start to crumble.
Also, the enourmous wealth growth of the past 70 years isn't as obvious as you think. Those who lived through the depression, and my mother and grandmother who just lost their retirement funds might disagree with you. All of those living on credit cards might also take your view of the sucess of Fiat money into dispute. We have also seen an increase in the gap between wealthy and poor, as well as an increase in the total number of people in poverty. The US is now a socialist government, and it has Fiat money to thank for that. Even Alan Greenspan is a believer in asset based money, and recognizes that Fiat is the money of the statist and works counter to freedom.
The US was creating enourmous wealth before Fiat money. Be careful not to confuse the wealth of the industrial revolution (cars, planes, electronics, rockets, physics, medicine, etc) as a success of fiat money. All of those industries would have existed with or without Fiat money.
You also seem to keep attacking me as if im some extremist you need to beat down. I'm simply stating that our money is Fiat, and being such, it has a finite lifespan now. It will continue to funnel an increasing % of our national product to the financial sector, and will continue to fund government expansion. That has nothing to do with isolation or whatever you are accusing me of. It's just a statement.
don't pump yourself up (Score:0)
We are arguing with you because your statement that our currency has a finite lifespan now is itself fiat. You sure are convinced of it, but your facts do not convince others.
You'll be able to laugh when your gold becomes incredibly valuable versus our dollars.
You are so quick to quote Alan Greenspan. Does his recent performance convince you that he knows well how to handle difficult financial situations? Also, this is the man who said we cannot be buying back all our financial instruments because they would destroy wealth by removing strongly-backed securities? Are the US T-Bills backed any differently than our fiat Dollar? No, either is backed by the full faith and credit of the US government. No more, no less. These instruments have value, and so does the Dollar. Greenspan knows it and so should you.
Finally, fiat is not capitalized. Just because there happens to be an automobile group with the same name (whose name actually is FIAT) doesn't mean you capitalize it.
Re:don't pump yourself up (Score:1)