Full Money Market

Archive for the ‘fiat currencies’ Category

I remember reading that Hayek proposed a system of privately-issued, competing fiat currencies. Most libertarians I talk to have only evil things to say about fiat currencies so how does this work out? Can paper currency without any store of value actually exist as Hayek proposed?

http://en.wikipedia.org/wiki/History_of_money#Trade_Bills_of_Exchange

In theory. Theory has it that unlike government-issued fiat currency, which gets its value from being accepted by the government in payment of taxes, and the associated clout of the government, private money gets its value from the reputation of the issuing bank. Theory has it that private banks, having more to lose and less to gain than the government, will be less likely to debase the money they issue.

Going further, even if they were to tell you that their notes were backed one-for-one by gold in a vault, how could you tell if they were telling you the truth? Are you going to rely on the government to regulate them?

Of course, we have seen how responsible banks and other corporations are these days.

I for one believe that though, in theory, there is no difference between theory and practice, in practice, …

I realize that inflation is inherent in any economy, but abandoning the gold standard cause inflation to grow more quickly.

Since our dollar pays for less and less every year is it fair to equate this increased inflation to an aggressive tax?

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.

Alan Greenspan 1967, Federal Reserve Chairman from 1987 to 2006.
One of the biggest causes of the current economic conditions were his actions as the Fed, yet he had telegraphed it decades earlier.

http://www.buckneronbusiness.com/blog/say-goodbye-to-the-dollar/

paste that in your browser.

What do you think?

Is the weakness of the dollar all part of the master plan?

Thanks a lot to everyone that took us off of the gold standard and modified gold standard.

Fiat currencies are about worthless. How long will it take for the USD to become worthless?

I was shocked when Bush let the dollar slip by 50% in relation to the Euro in his terms – at the same time as his policies made the National Debt DOUBLE!
I predicted it would be a disaster for this country and it was.

What are the benefits and consequences of each. Which is better, which is worse? What would happen to the economy if we re-instated a hard currency system?

There’s not enough gold out there.
There it is, pure and simple.

Furthermore, no country in the world still uses the gold standard; our money would be worthless.

It is money which value does not represent any fixed amount of a commodity. Fiat money does only have a value because the government says it has a value, and that the law says it has to be accepted in its home country as payment. Fiat currencies includes the Dollar, the Euro, the Yen or most other modern day currencies.
The opposite is a representative money, like the Dollar on the gold standard, where one dollar was worth a fixed amount of gold.
Fiat money is the favored system nowadays because it gives central banks more tools to help the economy in hard economic times, like purposefully imposing inflation when facing the risk of deflation.
On the other hand if a fiat currency is not managed properly, it can potentially go in to hyperinflation. Something that is not possible for a currency on the gold standard.

Where is the Constitutional Authority for paper money, when all I see is that Congress must afix either gold or silver to our currency

There is none. In 1913, the illegal, unconstitutional Federal Reserve (a non-governmental institution) was created. See ‘history of the Federal Reserve’, and ‘Fiat Currency’ for an eye-opening synopsis of the root of ALL of our financial problems.

ever survived long, let alone prospered?

NOPE

Stand by for the Ultimate "FLUSH" gurgle, gurgle

Is there a problem in discarding the use of the current fiat currency?
i do not mean carrying gold coins. i mean tagging the currencies to an actual value of stored gold.

Because there is not enough stored gold to guarantee the value of the currency in circulation. That is why the US went to the silver standard. Then we found out that there is not enough silver to guarantee the value of the currency in circulation. That is why US currency is now backed by "the full faith and credit of the United States."

I know most if not all official currencies in circulation in the nations of today are FIAT currencies, but I am curious if there are still places in the world where precious metals are still used as tools of barter or even currency.

Probably for Barter in Africa. Certainly for some of those guns in the Congo. I also know a lot of Muslims say silver and gold are the only acceptable mediums of exchange according to the Koran.

How can the dollar hold support if interest rate cuts are imminent?

How can he afford to raise interest rates with inflation everywhere?

In the past, fiat currencies have inflated their way out of their debt obligations. We have huge debt obligations in the US. How long or how far can Bernanke really cut interest rates?

He’s going for short term cuts to try and ease the credit crunch. It won’t be a long term strategy. It’s predicated on the short-term problems we presently face.