Collapse of fiat money

[ukusa]

Hi all.

I'm reading some increasingly alarmist articles suggesting that we face the possible collapse of fiat money, along with all the apocalyptic scenarios that this implies. Frankly, much of the economic theory is way over my head, and I'm having difficulty separating reputable writers from simple doom-sayers.

So could you educate me please? Is the collapse of fiat money a remotely possible scenario, or is it just fringe lunatics promoting this idea?

Thanks!

 

[Mr. H.]

You've come to the right place.
Nothing but reputable writers around here.
Yessiree bob.

 

[ukusa]

You've come to the right place.
Nothing but reputable writers around here.
Yessiree bob.

Well I'm struggling to find anywhere better to get the question answered

 

[expat_panama]

...Is the collapse of fiat money a remotely possible scenario, or is it just fringe lunatics promoting this idea? Thanks!

Help me out on what your question is and tell me what you mean by 'fiat money'. Can you give me an example of any currency or other form of money in general use that wasn't first established by some form of government? I mean, like all money is 'fiat money' isn't it?

 

[ukusa]

...Is the collapse of fiat money a remotely possible scenario, or is it just fringe lunatics promoting this idea? Thanks!

Help me out on what your question is and tell me what you mean by 'fiat money'. Can you give me an example of any currency or other form of money in general use that wasn't first established by some form of government? I mean, like all money is 'fiat money' isn't it?

I guess gold would be the obvious answer.

The alarmists (or realists, depending on your take) often site Weimer Germany as a case study for what to expect - but on a much larger scale. Hyperinflation and paper currency becoming effectively worthless.

Like I said, I have no background in economics, which makes it difficult to evaluate whether such predictions are realistic or just the lunatic fringe (or people with a vested interest in selling gold!). There are some pretty scary predictions floating around at the moment, and I'd like to know whether they should be taken seriously.

 

[expat_panama]

...give me an example of any currency or other form of money in general use that wasn't first established by some form of government? I mean, like all money is 'fiat money' isn't it?

I guess gold would be the obvious answer...

We're not communicating.

Please tell me when, OK gold --has been named as money for general use by anything other than some form of government. What we've got here is the fact that whenever gold is money it's because of government fiat. A year or so ago some clown in North Carolina iirc decided that gold was money instead of dollars. He got put in jail. During the Washington administration Americans were ordered to use pound notes from the UK for money. All money is fiat money.

 

[editec]

Hi all.

I'm reading some increasingly alarmist articles suggesting that we face the possible collapse of fiat money, along with all the apocalyptic scenarios that this implies. Frankly, much of the economic theory is way over my head, and I'm having difficulty separating reputable writers from simple doom-sayers.

So could you educate me please? Is the collapse of fiat money a remotely possible scenario, or is it just fringe lunatics promoting this idea?

Thanks!

Of course anything is POSSIBLE, but certainly there isn't much chance of hyperinflation right now.

The fringe lunatics are most GOLD BUGS or the folks who buy and sell gold.

Of course you can probably understand why it is in their best interests to tell people that hyperinflation is around the corner.

Because FEAR drives sales of gold.

Note that THEY are selling gold?

What does THAT tell you about how much THEY believe their own hyperinflationary hype?

Do you really think they're be selling GOLD if they really thought hyperinflation was about to happen?

Gold is wildly overpriced, in my opinion.

Oh yeah, one more thing...

Using Gold as the specie does NOT prevent inflation.

Read some economic history, amigo.

The period post WWI through WWII will tell you a LOT that the gold bugs do not want YOU to know.

 

[Ernie S.]

Fiat money is essentially worthless without the backing of a stable economy.
Gold and silver are relatively stable.
Consider, when I was a kid, an ounce of silver was worth $1. It bought 10 loaves of bread. Today, that same ounce sells for $33.24 and still buys 10 loaves of bread.
The FED decided yesterday to print up a bunch of dollars to try to pump up the Euro. The price of gold, silver and the Dow, all went up, not because of consumer confidence, but because a cheapened dollar buys less gold.

 

[Sundial]

Hi all.

I'm reading some increasingly alarmist articles suggesting that we face the possible collapse of fiat money, along with all the apocalyptic scenarios that this implies. Frankly, much of the economic theory is way over my head, and I'm having difficulty separating reputable writers from simple doom-sayers.

So could you educate me please? Is the collapse of fiat money a remotely possible scenario, or is it just fringe lunatics promoting this idea?

Thanks!

It's not remotely possible, and the people promoting the idea are fringe lunatics and snake-oil salesmen.

So long as peole need dollars to pay taxes and to repay loans, there will be a demand for dollars.

Fiat money is used by every first-world country, and the rise of fiat money has coincided with the greatest expansion of wealth the world has ever known. Gold - on the other hand - has failed everywhere it's been tried. Gold is inconsistent with rapidly increasing wealth.

 

[Truthmatters]

Gold prices can and have been manipulted in the past.

Anyone who wants us back on the gold standard dont know history

 

[Ernie S.]

Gold prices can and have been manipulted in the past.

Anyone who wants us back on the gold standard dont know history

Of course gold can be manipulated. Consider the Hunt brothers and their silver. They got what they deserved, and the silver price fell right back to where it belonged.
I even made a few grand in the 2 month run-up.

Hey, TDM! Here's from free apostrophes for you. Make good use of them.
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''

 

[Mad Scientist]

Only Gold and Silver cannot be fiat currencies because you can't print unlimited amounts of them and drive down the value.

By the way ExPat, I think the guy you're referring to was this guy:
Local Liberty Dollar 'architect' Bernard von NotHaus convicted » Evansville Courier & Press

The Constitution mandates Gold and Silver for payments (article 1, section 10), but when you've given that power over to the Bankers who run the Privately Owned Federal Reserve, a devalued Dollar is what you get.

 

[expat_panama]

...Gold and silver are relatively stable...

Which, gold or silver?

In 1979 an oz of gold could be bought for twenty eight oz. of silver, and in 1989 it cost 89 oz. That's 10% annual inflation for 12 years while the dollar's inflation averaged only 5%. Right now an oz of gold buys only 36 oz of silver so for the past twenty years gold's inflation's averaged 5% compared to 2% for the dollar.

Gold and silver really look neat, but dollars are stable.

 

[Mad Scientist]

Gold and silver really look neat, but dollars are stable.

The dollar has lost 98 percent of it's value since the Federal Reserve was set up in 1913.

How much value has Gold lost (in relation to dollars) during that same time?

 

[william the wie]

Fiat money depends on three things:

A lack of arbitrage with other currencies.

A lack of arbitrage with assets and not just precious metals. A lot of money goes to libraries of copyrighted materials, which under modern copyright laws is highly competitive with gold.

The deflationary effects of the internet and product life cycle can be ignored.

I don't see any of these conditions being met.

 

[uscitizen]

How would one expect Fiat money to work out?
Their cars are crap.

 

[expat_panama]

...The dollar has lost 98 percent of it's value since the Federal Reserve was set up in 1913...

Then again, a 1913 one dollar silver certificate goes for $200 now so it hasn't lost any value after all.

In real life Planet Earth there's nobody around with a weekly paycheck from 1913 that they're about to cash, so inflation from one century to the next does not affect us as much as inflation from one year to the next. Back then we had double digit inflation one year followed by crippling deflation the next. This was the typical from the nation's founding through the 20th century when gold/silver were finally ditched.

Being able to count on last year's dollar to be within a couple percent of today's makes dollars much more stable than gold or silver.

 

[cbirch2]

A dollar is a Federal Reserve Note. If you know about classical bank notes, youll know theyre just a guarantee that youll be able to withdraw some amount a later date. Since the dollar is not backed by gold, it doesnt quite work like that with dollars

A dollar bill is a note of the Federal Reserve, but an obligation of the US Government.

Since the US government took the dollar off the gold standard the value of the dollar resides with the governments ability to tax, which relies on both the strength of the economy and the legitimacy of the government

 

[cbirch2]

...The dollar has lost 98 percent of it's value since the Federal Reserve was set up in 1913...

Then again, a 1913 one dollar silver certificate goes for $200 now so it hasn't lost any value after all.

In real life Planet Earth there's nobody around with a weekly paycheck from 1913 that they're about to cash, so inflation from one century to the next does not affect us as much as inflation from one year to the next. Back then we had double digit inflation one year followed by crippling deflation the next. This was the typical from the nation's founding through the 20th century when gold/silver were finally ditched.

Being able to count on last year's dollar to be within a couple percent of today's makes dollars much more stable than gold or silver.

Not to mention inflation isnt simply a horrible term.

U.S. Economy Barely Moving Amid Creeping Disinflation, Beige Book Shows - Forbes

Thats goldman sachs, calling for more inflation. On forbes.com. Im not sure you could possibly get more of a right wing bias...

inflation is just what the economy needs if its suffering from a liquidity crisis.

 

[Ernie S.]

...Gold and silver are relatively stable...

Which, gold or silver?

In 1979 an oz of gold could be bought for twenty eight oz. of silver, and in 1989 it cost 89 oz. That's 10% annual inflation for 12 years while the dollar's inflation averaged only 5%. Right now an oz of gold buys only 36 oz of silver so for the past twenty years gold's inflation's averaged 5% compared to 2% for the dollar.

Gold and silver really look neat, but dollars are stable.

The historical average is about 35:1 Short term trends derive from artificial bubbles and manipulation.
If you'd have used my entire quote, I gave an example of PM stability.