Fiat currencies are a WMD

[Pints with Plato]

No exaggeration.

From the "Obama: By the Numbers" thread, per Malcolm's recommendation:

Fiat money is a weapon used against everyone in society (except for the counterfeiter, and to a lesser extent the ultra-wealthy), but which strikes most deadly against the poor.



This is a currency regime which allows the government that manages it almost limitless - for a time - opportunities for expansion and growth into as many areas and markets of society as those who control it wish. For a government to grow and expand into many areas and markets of society without an inflationary currency, those who control it must impose onerous taxation on the citizenry.

This is true in regards to domestic policies as well as foreign policies. American society is generally divided between those who wish to see government expand and grow into "social-welfare" areas of society such as care for the elderly, the poor, etc., those who wish to see government expand and grow into "personal-morality" areas of society such as drug and alcohol use, offensive speech, modes of behavior and style, etc., and those who wish to see government expand and grow into international relations, be it for perceived national security or for the assurance of American trade relations.

So politicians have every motivation to make some combination of these goals part of their political rhetoric, to appeal to a large enough percentage of the voting public. However, politicians realize that the achievement of these goals come at a considerable monetary cost, which paradoxically if they require the voting public to pay for they will be held to account come election day. Thus, the fiat currency regime is the great blessing of the political class - give the public what they want, and don't charge them an apparent dime for it. An "apparent" dime, because...





...an inflationary monetary policy is the most pernicious tax there is. We have come to believe we are rich, when in actuality we have been made poor; stripped bare.

Along the way, however, it seems that everything is provided. We are ensured unemployment protection, poverty-in-retirement protection, protection from foreign enemies, protection from offensive speech...

The loose monetary system also creates a consumption culture, where debt is encouraged through low interest rates, which discourage savings and the traditional manner of providing against the threat of unemployment and preparation for retirement. The values of "hard work", saving to make a desired purchase, and the self-respect that develops from hard work, savings and ownership are disregarded for a "get-rich-quick", toy-accumulation society. Life's a party...

...society is as distorted and fake as the money it is built upon...

...until it becomes unsustainable. Inevitably, this system collapses into it's own footprint, a McMansion built on a foundation of sand... Instead of the steady, realistic home build well and over time on a good, solid foundation, government and the banks which fund it have destroyed society with their loose money.

A is A. You may not like it; that doesn't change the fact that A is A.

Discuss.

[Cyclone Ranger]

Lol, fiat currency is in no way a "weapon."

You right sing brain simply can't something as abstract as money that isn't backed by something dug out of the ground, so you assume it must be a bad thing.

[Malcolm Wright]

I wasn't aware Pints was right wing. Anyway it is somewhat irrelevant.

Pints, I agree our economic model needs a radical overhaul. I approach it with a different emphasis but the point ends up being virtually identical.
Natural resources, biodiversity and the lives and experiences of non human life forms, are either undervalued or hold no value in our economic system. It is a fatal flaw, and an indefensible one, and yet we continue chugging along with it.

As for fiat currency, I tend to agree with Pints. I'm no expert, but from where I stand I cannot see a valid reason to go 'virtual' with currency. Cyclone, can you weigh in on the benefits of fiat currency so we can compare them to the dangers and abuses?

M.

[garyd]

That would be what is known as a gross over simplification CR. But then again what you are responding to is basically a gross over simplification at length.

As I've said before the problem isn't what you print your money on or with what you back it. The problem is bad public policy, and while CR and I disagree about what exactly constitutes bad public policy, that doesn't change and the truth of the initial statement.

The problem with such tratises as the OP is that they don't understand the relationship between money and wealth. Money isn't wealth it is merely a means to measure wealth. Money ultimately is backed by the industry, innovation, and the willingness of people of that country to take risks.

[Cyclone Ranger]

Fair enough.

[Cyclone Ranger]

Malcom, a commodity-backed cuurency system is so deflationary, it would cause the economy to implode.

What an economy of our vast magnitude requires is growth, which is the opposite of what a commodity-backed currency produces.

[Chachma v'Oz]

Unmanaged willingness to take risks gave us the Great Depression, and the FDIC.

[Cyclone Ranger]

True enough, but the gold standard would do little to repair it.

[86Dùde]

In other words what the old geezer is trying to say is that it's important that scumbags (people without money in his warped mind) continue to wallow their fat asses into Wal-Mart consuming mass quantities of crap housed in plastic containers plus the relentless ensemble of cheap products from our #1 enemy. Products that weren't meant to last but just fill up land fills so the fat scumbags class which the Psycho Ranger despises so much can repeat the trick over, and over again like Pavlovian dogs. It's fucking stupid and the world can't take 50 more years of this senseless tradition.

[garyd]

No, no chach what gaves us the great depression was a world wide trade war among the developed nations of Which smoot hawley is only the best known salvo in the US. That was promptly followed by a decade of Keynesian inspired quick fixes beginning with Roosevelt's predecessor that proved to be neither particularly quick nor terribly effective.

[Pints with Plato]

Lol, fiat currency is in no way a "weapon."

You right sing brain simply can't something as abstract as money that isn't backed by something dug out of the ground, so you assume it must be a bad thing.

I'm in no way shape or form, "right wing". It is a shame that you've bought so wholly in to the false left-right paradigm. You're in desparate need of a paradigm shift.

"Money" is a good, like anything else. We simply use as a medium of exchange for other goods, and it works most effectively if it isn't as susceptible to manipulation by a privileged few as a currency which is little more than imagined into existence is.

[Malcolm Wright]

Malcom, a commodity-backed cuurency system is so deflationary, it would cause the economy to implode.

What an economy of our vast magnitude requires is growth, which is the opposite of what a commodity-backed currency produces.

But isn't 'growth' related to the problem Pints and I are underlining: that a paradigm that relies on growth is unsustainable and flies in the face of the finite nature of our planet?

Hasn't the US returned to a commodity backed currency before? If so, it shows that it is possible. It seems you feel society either has to be booming or busting. The only sustainable way forwards is to devise a society which seeks not to grow, but to maintain and manage resources in a manner that fosters balance for humans and the other life forms.

M.

[Pints with Plato]

Malcom, a commodity-backed cuurency system is so deflationary, it would cause the economy to implode.

What an economy of our vast magnitude requires is growth, which is the opposite of what a commodity-backed currency produces.

It is patently false that a commodity backed currency causes economies to implode. Over 5,000 years of human history laughs in your face.

It is true that an inflationary currency produces astounding growth... it also produces sliding scales, and impossible to manage lifestyles for the poor and mid-to-lower middle class. They also - without fail - return to their intrinsic value: zero.

[garyd]

Sorry pints money is not a good. It is not a commdity. It is but a yardstick with which we measure the relative worth of actual commodities.Sixteenth Century Spain very nearly went bankrupt while floating on a sea of gold because about the only thing they had to export was war.

[Pints with Plato]

That would be what is known as a gross over simplification CR. But then again what you are responding to is basically a gross over simplification at length.

Were you expecting a treatise on a message board?

As I've said before the problem isn't what you print your money on or with what you back it. The problem is bad public policy, and while CR and I disagree about what exactly constitutes bad public policy, that doesn't change and the truth of the initial statement.

The problem with such tratises as the OP is that they don't understand the relationship between money and wealth. Money isn't wealth it is merely a means to measure wealth. Money ultimately is backed by the industry, innovation, and the willingness of people of that country to take risks.

I understand well that money is not wealth. That's kind of the point.

Money must reflect value in and of itself. Does your labor not have value?

[Pints with Plato]

Unmanaged willingness to take risks gave us the Great Depression, and the FDIC.

False. Read outside of the Keynesian box:

http://mises.org/rothbard/agd.pdf

[Pints with Plato]

No, no chach what gaves us the great depression was a world wide trade war among the developed nations of Which smoot hawley is only the best known salvo in the US.

In addition to the easy-credit environment.

That was promptly followed by a decade of Keynesian inspired quick fixes beginning with Roosevelt's predecessor that proved to be neither particularly quick nor terribly effective.

Not only were they not effective, they utterly prolonged the depression to over a decade an a half.

A more precipitous drop was experienced at the start of the '20's than the one which ended it, and it was over in a year:

[Chachma v'Oz]

False. Read outside of the Keynesian box:

http://mises.org/rothbard/agd.pdf

I'm well aware of the Austrian School of economics, it's flaws, and it's cult following. You may entertain others with your devotion, but you end up arguing only about how many angels can dance on the head of a pin. It has no application in today's economies, anywhere in the world.

[garyd]

IN fact there were several depression between the beginning fo the industrial revolution and the Great Depression. None lasted more than 18 months and most lasted less than nine months. The Gold standard does not prevent either inflation or depression. It doesn't matter. And, no, money need have no more value and in fact cannot have more than that given it by the workers, risk takers, innovators of the country that currency represents.

[Pints with Plato]

I see. 40 years of history which is slowly and clearly unravelling before all of our eyes trumps the rest of the history of human civilization?

Keynesianism, and fiat currencies, will be noted by future humans as a sad, tragic quirk.