On Jan 29, 2009, at 9:16 PM, Sabri Oncu wrote:
Gold money is fiat money too, because gold is infinitely divisible at
the continuum level, not at the quantum level. But who cares about the
quantum level? You can create as much money as you like by
re-numerating any currency based on gold...
But it is gold (or silver or copper) that *is* money whenever debts
are denominated in units of a precious metal. In 1933 the US currency
became fiat money not because the dollar was devalued from .05 troyes
ounces of gold to .284 oz. but because FDR arbitrarily canceled the
gold clause in all *domestic* contracts while forbidding the private
ownership of monetary gold (except for collectors). However, money
internationally remained gold--uncleared international debts still
had to be settled in gold until Nixon tore up the Bretton Woods
settlement with all the effects we're ever more strongly suffering.
And this can only be done by
fiat.
Historically, governments have "created money" by clipping coins or by
fraudulently mislabeling the amount of money-metal in each coin. Not
until the French and American Revolutions did a government "finance"
itself by issuing inconvertible paper and trying to make it money.
Never in history was the resulting inflation ultimately (or, in the
French/American cases even immediately) controllable. So people
everywhere have a deep fear of fiat money, having learned by the
universal experience of mankind that resort to fiat money always
leaves a hangover far more painful than the troubles it had seemed to
drown.
Aren't all moneys fiat moneys?
If all moneys were fiat moneys no government that owned a printing
press or a foundry would have ever gone into debt, and Zimbabwe would
today be the richest country in the world.
Shane Mage
This cosmos did none of gods or men make, but it
always was and is and shall be: an everlasting fire,
kindling in measures and going out in measures."
Herakleitos of Ephesos
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