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Question about Fiat Currency
Submitted by brightdRRkness on Wed, 11/19/2008 - 05:25
Is it possible to sustain an economy under a fiat system if you are not running a Deficit, or are they doomed to fail from the start? » |
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The real problem is the influence of the BANKSTERS.
This is where the action is and fiat money is the engine of the corruption they cause. Banks create most of the money in circulation. What you have heard about bank reserves is a big lie. Many banks operate with only a few % reserves. They do this through a nightly virtual sweep of funds into defined accounts. Banks will soon be permitted to operate with zero reserves under recent legislation. Today, many bank's reserves equal the cash in the teller drawers used for day to day transactions. There is almost no money in the vaults.
This means the bank lends you money by simply creating an account for you in their computer system. If you take out a mortgage, the money is made available for you to purchase a house. The money may end up in another bank but the bank now holds your promise to pay - a valuable instrument. You will repay the principal and another amount - possibly equal to the principal in interest over the life of the loan. Depending on the investment policy of the bank, they will hold your loan or sell it in the market.
They earn a tremendous profit for making a few keystrokes on a computer keyboard. If you fall behind in payments, the bank gets you house and all your equity in it. Notice that the bank has your promise to pay or your house and no bank owner or shareholder ever lent you anything. They simply exercised their privilege to create money out of thin air.
Preserving this giant compound interest scam is what the bank bailout is all about. Are you scared that this fraud might end and the value of fiat currencies may go to zero? I don't think it would be that bad. If the government and its guns stayed out of the way, we would recover in a few years and markets would be healthier forever. This is why Ron Paul says let the markets rule and end the suffering.
Unfortunately, the banks OWN the US Congress, except for one man and a few others. Getting rid of the criminals in our government is not going to be easy. We are approaching dictatorship - if not already there. We don't have much time - as the good doctor says.
Fiat currencies only exist to facilitate theft.
There is no reason to institute a fiat currency other than to use it as a device for theft. As soon as the theft (inflation) begins the currency is doomed. I can a imagine the arrival of an ethical manager (a benevolent dictator) and a period of price and money supply stability. We all know the benevolent dictator will be eventually replaced with one who is not so friendly and restrained.
You should also consider whether government should have any involvement in defining money. The United States government did not at its inception. A mint was established only for the benefit of those citizens who wished to have their metals refined and made into coins of accurate fineness and weight.
The government should have NO INVOLVEMENT in the definition of money. Any involvement will result in theft.
No
The problem is human nature. Asking government to run a fiat system and keep the money supply stable is like asking a coke addict to guard the evidence room.
Politicians BECOME politicians because they want money and power. Inflation of the fiat currency helps to give them both but conceals the cost from the electorate. With inflation, a politician can payoff his special interest groups, lavish benefits on his constituents, and never be seen to raise taxes. This is why, eventually, government will succumb to the siren song of inflation and destroy the currency.
You are seeing this happen now.
Yes im aware of that. It was
Yes im aware of that. It was more of a hypothetical. If the ruling bodies had some moral responsibility.
Okay
Your question assumes a kind of human being that has never existed. But let's go with that. I believe that if you had a fiat currency that remained fixed in supply forever, it would work.
But as soon as you started expanding it, even just one or two percent to supposedly respond to economic growth, it would induce distortions and create problems. So why would the expansion of a fiat currency at one percent create problems while the expansion of a gold money would not? Because expansion of fiat currency, by definition, comes through government channels and bestows benefit on government and those close to government at the expense of everyone else. Expansion of the gold supply comes from the market place - various mines, recyclers, prospectors, etc. The mild inflation produced is injected in a less destructive way.
The pattern of fiat inflation encourages MORE inflation by expanding and strengthening the factions that benefit most from it and are driven to control it and increase it. Gold does not work that way.
Thank you. Very informative.
Thank you. Very informative. Just something that i was kicking around my head. A "what if" they didnt inflate the money supply. I reolize that that would never happen though.
any help here?
any help here?