me: >>> Why would one not believe in fiat money? is the US government (the >>> issuer of much of the stuff) about to go broke, fall apart in a civil >>> war, and/or be replaced by a congress of workers' soviets?
David B. Shemano wrote: > I know you are a smart guy [thanks!], so I am sure I am at fault for thinking > "what is Devine thinking?" > The issue is not "belief" in fiat money -- fiat money is money. < I'm not the one who said "So the government is no longer practically imposing a fiat currency system on someone who doesn't believe in it." I agree that fiat money is money. > The question is whether one should believe that fiat money will retain its > value compared to commodity based money. I think there is plenty of evidence > for reasonable people to believe that, over time, a dollar of fiat money is > going to lose value (i.e. one dollar today will buy more goods and services > than one dollar in the future), while money linked to a commodity (e.g.. > gold) will not lose its value over time, especially compared to fiat money. > Is that really controversial?< It depends on which fiat money you're talking about. A strong state can maintain a strong fiat money (relative to gold). If it's true that the Bushwa Brigade has irretrievably undermined the moral, economic, and political power of the US state (by concentrating entirely on the brute force aspects of power), it's pretty inevitable that the US$ will slowly (and sometimes rapidly) fall relative to gold. More importantly, however, it's possible that the US$ could lose its status as "paper gold" in international exchanges. This might mean that the US will no longer be able to borrow money denominated in US$. (The Chinese would insist on being paid in Yen or Yuan.) If so, it's quite possible that the international system of fiat currencies centered on the dollar could decline or even collapse, so that non-fiat money could come back as money (rather than just being a speculative commodity as at present). I can imagine that the finance ministers of the big powers would fight that result. Maybe they'll succeed in creating a world central bank (based on the Bank of International Settlements?) and a new kind of world fiat money (based on a version of SDRs). That is, if the dollar is falling, it may not be replaced by gold or silver or tobacco or uranium but instead by a new fiat money. This would fit with the rise of a new world state. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
