SnowDog wrote:
> Hello!
> > > Almost all of the world uses non backed fiat currency. The
> > > world has never seen this before Brenton Woods in 1971. Fiat
> > > currencies are fraud and theft.
> >
> > I've heard statements like this quite a few times now, and it all sounds a
> > bit like hot air to me. It doesn't quite make sense. Would you care to
> > explain why you think fiat currencies are inherently and completely bad,
> as
> > opposed to non-fiat currencies? Such as gold-based ones, I presume?
> I've heard fiat currencies called 'fraud' and 'theft' for a long time, too,
> and while I can't say for sure that they have these attributes, they do seem
> to have some similarities. Let's say that I create a new currency called
> 'Igits', and I loan you 100 'Igits' with an agreement that you repay me the
> 100 igits at the end of a year, along with an extra 5 igits in interest.
> Without an underlying commodity backing the igits, then how can the borrower
> repay the loan, with interest. The borrower must rely on the issuer
> distributing other igits to other people, and the borrower hopes to acquire
> these new igits in exchange for services he provides. It has the essence of
> a con because the issuer must continue to expand the monetary base to keep
> his loans from defaulting, and this is exactly what the Federal Reserve,
> which issues US dollars, does.

If the borrower expects to produce more than 5% more from capital he
uses, he can use these extra goods to exchange for the newly issued
currency to repay his loan. Thus the purchasing power of the currency
can remain the same, production and the money supply increase and money
has performed its function. What is there to complain about?

David Hillary

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