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Thread: Show me the Money: Hard vs Fiat

  1. #21
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    Quote Originally Posted by BleedingHeadKen View Post
    Currency, like other commodities, goes up or down in value according to market conditions. Like any other commodity, it is subject to the law of supply and demand. Money has all of the properties of a commodity, plus a few others. People don't exchange symbols, they trade title. In a market where government declares paper to be the sole legal tender, the title to money becomes very confused. If money is a symbol, as you state, then the symbol is a commodity.
    Yes, this is a property of FIAT money. It is not tied to a hard asset, & it can fluctuate by decree. Human institutions, corporations, govts.. any of these collective entities can manipulate fiat currency. But a hard currency is not a commodity. We have become so used to the money shuffler's system of dilution we don't see that the inclusion of currency as a 'commodity' is a result of the fiat status.

    For 140 yrs, the american dollar was tied to gold & silver. It was a 'hard' currency. The money shufflers couldn't manipulate it. The pound sterling was a pound of sterling. The spanish 'pieces of eight' were the common currency of the day, & the founders merely recognized it as a valid currency, & matched it with the american 'dollar'. But once the money shufflers got control & began to 'tweak' the system, the hard currency stood in the way. But fiat enabled them to dilute, QE, & plunder the producers.

    The Spanish dollar was the coin upon which the original United States dollar was based, and it remained legal tender in the United States until the Coinage Act of 1857. Because it was widely used in Europe, the Americas, and the Far East, it became the first world currency by the late 18th century. source
    The only currency 'commodity' you can buy & sell for a profit is fiat currency. You buy it with other fiat currencies, & hope to profit from the fluctuations of the market. A hard currency, with stable assets to back it is stable, constant & is not subject to the whims of statist deregulation, or banker crony manipulation. The fluctuations we see in the price of gold is not from the gold, but the fiat currency you buy it with. IOW, gold is not becoming more valuable, the currency used to purchase it is becoming less.

    For example, a trader who buys silver with a hard currency like the pre 1913 american dollar would pay $1/oz. Only a fool would buy up a bunch at that price, then trade it for dollars later for the same exchange rate. If the dollar was indexed to many wealth building assets, like farming, construction, manufacturing, mining, timber, etc.. the variability would be very small, & there would not be a market for currency commodities, with such a dollar. That dollar could be used to buy other fiat currencies, & profits could be made there, but not because of the value of the hard dollar. The fluctuation would be in the fiat currency.

    We are so accustomed to fiat currency & all the issues it brings, like inflation, QEs, interest rate setting, that we can't imagine a hard currency any more, or a world without fiat. But we had it for 140 yrs in this country, & spain & england had it for a while, too. There is almost a perfect correlation between their status as a world hegemony & the change of currency to fiat. If you wonder what the US will be like in a few years, just look at england & spain, & follow their demise as the world hegemony.

    The world is much different, now, & there are many other factors involved in building confidence in a currency. But if the foundation of the currency is built on mandates, lies, & manipulation, it will not last. And a society that is built on lies & manipulation will not either.

    Like it or not, the collective of a society can demand a standard of LAW.. and their currency should be included in that. It is too important to leave to weasels & charlatans to manipulate for their own profit.

    Will it happen? Probably not. There are too many profiteers & money shufflers scamming the producers to go back to a hard currency. But if real production continues to decline, & money shuffling & dependency is esteemed as the preferred method of survival, the nation will have a hard reset to deal with.
    I am used to men who mock and scorn things beyond their comprehension. ~ Johann Wolfgang von Goethe, 1749-1832

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    Quote Originally Posted by DeadEye View Post
    Well, we obviously can not go back to a gold standard at this time. Yet we can start issuing silver certificates interest free to pay government debts. Thereby giving people a choice between federal reserve notes and treasury certificates. At a latter date we could go back onto the gold standard or not. Limit the growth of the money supply by the nations GDP. This action could be taken without the consent of congress and would be a death blow for the FRB and the debt based system of monetary policy.
    The proper course of action would be so detrimental to a large segment of society that it would spark a revolution. The whole system relies on plundering the producers AND borrowing from future producers to support an ever growing entitled class. It is a ponzi scheme, & we are in the middle of it. But the courageous & RIGHT thing to do would be to stop deficit spending, CUT govt, the welfare state, & make all systems solvent. It would cripple the economy for a while, as it will take a long time to get solvent again. That is why all politicians just kick the can down the road, hoping they can get theirs before the house of cards collapses.

    Here are the steps it would take to bring us back to fiscal sanity:

    1. Commit to a hard currency.. stability & consistency for all the nation.
    2. Index the currency to a group of hard assets.. gold, oil, food, construction, whatever.
    3. Provide a formula for the currency that prevents swings in value.
    4. This currency could be constructed concurrently with the existing dollar, as a transition occurs.
    5. Eventually the old fiat dollar would be phased out, like confederate dollars after the civil war, or the weimar marks in germany.
    6. Stick to the plan. Don't let moochers or looters get control of the system, to corrupt it & use it to plunder the treasury.
    7. Pay off all public debts with the old dollars.. should be plenty of them around, & all the creditors can have them.

    In the long run, this is a better system for a society. It rewards thrift, hard work, & minimizes money shuffling as a vocation.
    I am used to men who mock and scorn things beyond their comprehension. ~ Johann Wolfgang von Goethe, 1749-1832

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    Quote Originally Posted by Canadianeye View Post
    Yes, thank you. That's the name of her. Courageous woman. Watched a few things on of all places PBS some time ago about the whole thing.

    That being said, I still think Greenspan was a genius. He just happened to be wrong by holding that the markets, as an absolute will correct themselves.
    @Canadianeye
    The markets under Greenspan were as far from free as possible. They were completely driven by central bank manipulations and advantaged select entities extensively.
    One cannot manipulate a market to this extent and expect that they will self correct, ever. He clearly knows this.
    He was speaking out of both sides of his mouth. Any alluding to free market on his part was NEWSPEAK for letting markets, highly monopolized by select entities, run unrestrained for maximum advantage.
    If an asset that the government can get for nothing capital is essential to producing assets that command prices consumption goods then you would be wise to search for a sleight-of-hand operation.

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    Quote Originally Posted by usfan View Post
    The proper course of action would be so detrimental to a large segment of society that it would spark a revolution. The whole system relies on plundering the producers AND borrowing from future producers to support an ever growing entitled class. It is a ponzi scheme, & we are in the middle of it. But the courageous & RIGHT thing to do would be to stop deficit spending, CUT govt, the welfare state, & make all systems solvent. It would cripple the economy for a while, as it will take a long time to get solvent again. That is why all politicians just kick the can down the road, hoping they can get theirs before the house of cards collapses.
    @usfan
    look back to 2008. The people begged for a central bank/government solution. They will never choose short term pain. Like simple life forms, they practice pain avoidance as a primary mechanism. They want simple sounding solutions that avoid short term pain, and they hope against all hope that everything will magically fix itself before they have to pay the price. They hate their children and don't mind condemning them to long term slavery tomorrow if it means they can avoid pain today.

    The government and bankers know this. They knew this well before 2008, and they know it will happen again, the entire reason they have no intention of fixing it.
    When it finally comes time for the people to pay the piper, the situation will be so grim that they will beg for another simple sounding solution to save them.
    If an asset that the government can get for nothing capital is essential to producing assets that command prices consumption goods then you would be wise to search for a sleight-of-hand operation.

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    Quote Originally Posted by squidward View Post
    Brooksley Borne. Greenspan, Clinton and Rubin extinguished her career. She was the chair of the CTFC.
    I forgot to mention Larry Sumners, then treasury secretary and Recently Obama's chief financial advisor during the "recovery"
    If an asset that the government can get for nothing capital is essential to producing assets that command prices consumption goods then you would be wise to search for a sleight-of-hand operation.

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    @squidward

    I see your point about this. I credit him with genius, when maybe I shouldn't. He is adept at what he does in a rigged game of corporatism gone wild...which isn't genius. I think usfan was trying to tell me this as well.
    The Progressives have become full blown NAZIs, to thwart a Hitler that doesn't exist...since that is the only way they can express, and self justify, their fascism.

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    Quote Originally Posted by Canadianeye View Post
    @squidward

    I see your point about this. I credit him with genius, when maybe I shouldn't. He is adept at what he does in a rigged game of corporatism gone wild...which isn't genius. I think usfan was trying to tell me this as well.
    his genius was that he ran the game with the approval of the very people he was screwing.
    If an asset that the government can get for nothing capital is essential to producing assets that command prices consumption goods then you would be wise to search for a sleight-of-hand operation.

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    Quote Originally Posted by usfan View Post
    Yes, this is a property of FIAT money. It is not tied to a hard asset, & it can fluctuate by decree. Human institutions, corporations, govts.. any of these collective entities can manipulate fiat currency. But a hard currency is not a commodity.
    "Hard" or commodity-based money is also subject to supply and demand. Money itself is a commodity in that one particular unit is no different than any other unit of the same money. It is sought after as a medium of exchange, unlike other commodities, but that does not make it a non-commodity.

    We have become so used to the money shuffler's system of dilution we don't see that the inclusion of currency as a 'commodity' is a result of the fiat status.
    I have no idea what this means. Inclusion by whom? Fiat or commodity-based; precious-metal coin or Federal Reserve Note, money is a commodity. It just has a few unique properties.

    The only currency 'commodity' you can buy & sell for a profit is fiat currency.
    That's simply not true. If someone sells a chicken in one area for $x and takes that money to another area and buys a chicken for $y, then one has a profit or loss of x-y.

    And, in fact, in a free market for money, "hard" money may have different base commodities, each which may fluctuate. They just don't fluctuate a lot, except by government manipulation, such as happened with the Sherman Silver Purchase Act of 1890.

    Like it or not, the collective of a society can demand a standard of LAW.. and their currency should be included in that. It is too important to leave to weasels & charlatans to manipulate for their own profit.
    Let's say that you get your wish, and the government establishes that the sole legal tender, the US dollar, will from now on be based on "production". Somehow, this independent commission resists all efforts to fudge the numbers, or release more cash than is initially authorized by law, etc. Now, what's to stop the Congress from manipulating productive activities?

    Money should not be in the hands of the state. When the market for money is controlled by the government, it inevitably fails. There is no history of success.
    The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.
    -Albert Camus

    Away for a while.

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    Quote Originally Posted by squidward View Post
    The government and bankers know this. They knew this well before 2008, and they know it will happen again, the entire reason they have no intention of fixing it.
    When it finally comes time for the people to pay the piper, the situation will be so grim that they will beg for another simple sounding solution to save them.
    One only need to read the history of the Assignat to get an idea of what those "simple sounding" solutions will be.
    The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.
    -Albert Camus

    Away for a while.

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    Quote Originally Posted by DeadEye View Post
    While I agree with you, we must find a way out of this debt based system we now have. I agree we must coin money but at this time it is impractical to do so with so much debt. That's why I suggest silver certificates issued by the treasury for it can be done so interest free. Let us work toward eliminating the debt by eliminating the interest we have been paying on it. Limit the amount of debt the government can incur and the ability to expand the money supply. Tax the people instead of borrowing the money. We can never get back to where we were before the creation of the FRB until it is abolished. We must protect our markets with tariffs in order to re-industrialize America.
    It's not my debt or your debt. It's the government's debt.

    The system is going to collapse. It's inevitable. Shoving the genie back in the bottle isn't going to happen, either. The question is, what will we do when the government is weakened by a monetary collapse? Will we suffer the hyperinflation and accept the government line that price-fixing, anti-hoarding measures, anti-"gouging" measure, and so on are the cure to the problem that it created, or will we take back what is our right - to determine what is or is not money for ourselves.
    The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.
    -Albert Camus

    Away for a while.

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