Collapse of fiat money

[cbirch2]

...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.

If you dont correct for inflation you could make any commodity look like a great investment over time....

Think oil is expensive? Lets correct for inflation.

 

[expat_panama]

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...

--and if you know about real life currencies you'll know that virually all of them have had valuation changes regardless if they were backed by gold, by silver, by platinum, or by a basket of consumer purchases. All money is fiat money and fiat dollars have been more stable than those of the past.

 

[Toro]

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!

Yes, it is plausible. It isn't probable, and it isn't as certain as the nutter fringe would have you believe, but the probability isn't zero either.

All currencies are only good as the confidence the public has in them. The best way to undermine confidence in a currency is to debase the value of that currency. You can debase the value of the currency by printing too much of it, or loading too many liabilities against it. That's the problem we have now. I can give you a very solid thesis for why each of the euro, yen and dollar could experience a currency crisis over the next decade.

The problem is that the gold standard is also a bad system. The question is whether or not fiat currencies are ultimately less bad than the gold system. That's probably true, but I cannot say with certainty it is the case.

 

[SAT2]

...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?

Taverns used to issue their own coins. Before unions, some companies issued company scrip.

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.

Their value is still subject to what people think that they are worth. That's the nature of money.