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How would you change our governance if you could?

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Fiat money. It's more stable, it doesn't tie up useful resources, and it allows us to use monetary policy to keep the economy from falling apart every few years.

Do you have historic data regarding the instability of the gold specie standard in the absence of central banks? Lots of people have bullion today, "tying up useful resources". What is wrong with that? What does the economy "falling apart" mean? Why would it happen?

 

And why does that make it more suitable to being used as money? Which of the three roles does that improve? Again, be specific.

It makes it more suitable because the person on the receiving end of money/currency doesn't lose out and so wealth is not leeched away.

 

Actually, fiat money is suitable as a store of value. I know that my money will be worth approximately 2-3% less in one years time. That stability allows me to plan my investments according to my risk and liquidity preferences. Using gold, with its volatile price, would add an extra level of risk to this. It would still work, but not as well as well as fiat money.

 

How does having a central bank keeping the money supply stable make you less free than having the money supply be determined by Gina Rinehart?

 

As for why depressions would happen, it would be because:

1) We would be unable to use monetary policy to deal with shocks

2) Changes in the gold supply (such as a new seam being discovered) would create additional shocks

3) We know from history that they did. Frequently.

Loss in purchasing power of 1100% between 1966 and 2013 is not what I would call a good store of value. Compare that with gold. In the absence of legal tender legislation if Gina Rinehart had all the gold I'm sure people would use something other than gold and there would be no problem. How is monetary policy used well "to deal with shocks" and what does that mean? Can you elaborate on point 2? Can you provide the historical data for point 3?

 

No, but some of it must be kept out of productive use to be used as money. The only way that no useful resources would be wasted is if no money was ever used. Does that sound even remotely likely?

So you object to people having bullion today? What's the difference? I put it to you that there is enough for money and other practical uses.

 

 

Again, history shows that charity cannot provide sufficient healthcare to a society, and that was before we discovered many new lifesaving but expensive techniques. You may not like it, but having those who can't afford private insurance (ie the poor) die or have their lives ruined by preventable diseases is the natural result of not providing universal healthcare. Charity steps up in some cases, but not nearly enough.

Where did you learn about this "history"? It is better and more democratic to have the people free to vote with their money. If people have the will to help each other out then they will do so whether or not it is enforced by government.

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Fiat money. It's more stable, it doesn't tie up useful resources, and it allows us to use monetary policy to keep the economy from falling apart every few years.

Do you have historic data regarding the instability of the gold specie standard in the absence of central banks? Lots of people have bullion today, "tying up useful resources". What is wrong with that? What does the economy "falling apart" mean? Why would it happen?
Posted Image

Posted Image

Banking Panics in the US: 1873-1933

GOLD, FIAT MONEY, AND PRICE STABILITY

 

And why does that make it more suitable to being used as money? Which of the three roles does that improve? Again, be specific.

It makes it more suitable because the person on the receiving end of money/currency doesn't lose out and so wealth is not leeched away.
The person is receiving a token that they can exchange for goods or services. Exactly the same as if they instead received gold for the sole purpose of subsequently exchanging it for goods or service. In what way is wealth being leeched away? You really need to actually explain how you think things work.

 

 

Actually, fiat money is suitable as a store of value. I know that my money will be worth approximately 2-3% less in one years time. That stability allows me to plan my investments according to my risk and liquidity preferences. Using gold, with its volatile price, would add an extra level of risk to this. It would still work, but not as well as well as fiat money.

 

How does having a central bank keeping the money supply stable make you less free than having the money supply be determined by Gina Rinehart?

 

As for why depressions would happen, it would be because:

1) We would be unable to use monetary policy to deal with shocks

2) Changes in the gold supply (such as a new seam being discovered) would create additional shocks

3) We know from history that they did. Frequently.

Loss in purchasing power of 1100% between 1966 and 2013 is not what I would call a good store of value. Compare that with gold. In the absence of legal tender legislation if Gina Rinehart had all the gold I'm sure people would use something other than gold and there would be no problem. How is monetary policy used well "to deal with shocks" and what does that mean? Can you elaborate on point 2? Can you provide the historical data for point 3?
Average inflation over your stated period was 5.4%, although it did include a period of high inflation in the 1970s. The thing is that the inflation rate did not tend to swing wildly (again, with the exception of the 70s), and so was predictable. Stable inflation can be factored into investment decisions, and so is not a problem. Thus it is a good store of value (as I know roughly what it will be worth, and can make decisions accordingly). Under the gold standard, however, the price level was very unstable and was essentially unpredictable (see the NBER paper linked above).

Here's a good explanation of how monetary policy can deal with crises.

See above for the historical data.

 

No, but some of it must be kept out of productive use to be used as money. The only way that no useful resources would be wasted is if no money was ever used. Does that sound even remotely likely?

So you object to people having bullion today? What's the difference? I put it to you that there is enough for money and other practical uses.
It is being speculated on as a commodity, sure, but that's no reason to incentivise taking more of it away from productive use.

 

 

Again, history shows that charity cannot provide sufficient healthcare to a society, and that was before we discovered many new lifesaving but expensive techniques. You may not like it, but having those who can't afford private insurance (ie the poor) die or have their lives ruined by preventable diseases is the natural result of not providing universal healthcare. Charity steps up in some cases, but not nearly enough.

Where did you learn about this "history"? It is better and more democratic to have the people free to vote with their money. If people have the will to help each other out then they will do so whether or not it is enforced by government.

 

In what way is providing healthcare to people (a policy which is immensely popular) undemocratic? I don't think you understand what that word means.

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Like I said, if you want to try to trade with bits of plastic I don't have a problem with that, but people should not be required by law to do so.

We've been through this!

We ARENT!

 

a few corporations demand it, as per your "should be able to trade in whatever they want" and they choose FIAT.

We've been through it all! Nothing stops 'the people' trading with whatever they want.

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Like I said, if you want to try to trade with bits of plastic I don't have a problem with that, but people should not be required by law to do so.

We've been through this!

We ARENT!

 

Save your breath, man. Not a single syllable has penetrated fajw's cranium in the entire length of the thread. A few words more ain't gonna make a lick of difference.

 

Unlike certain people, who can argue indefatigably and indefinitely but also state a cogent argument, this guy just keeps repeating his initial assertion without modification or embellishment. Talking to him is a waste of time.

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Unlike certain people, who can argue indefatigably and indefinitely but also state a cogent argument, this guy just keeps repeating his initial assertion without modification or embellishment. Talking to him is a waste of time.

Took you long enough! :P

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Unlike certain people, who can argue indefatigably and indefinitely but also state a cogent argument, this guy just keeps repeating his initial assertion without modification or embellishment. Talking to him is a waste of time.

Took you long enough! :P

 

I came to that conclusion a long time ago. I keep hoping I'm wrong.

 

And isn't your name I see just a few posts up thread? ;p

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Unlike certain people, who can argue indefatigably and indefinitely but also state a cogent argument, this guy just keeps repeating his initial assertion without modification or embellishment. Talking to him is a waste of time.

Took you long enough! :P

 

I came to that conclusion a long time ago. I keep hoping I'm wrong.

 

And isn't your name I see just a few posts up thread? ;p

 

'tis.

 

For me it's like a car crash. It's horrible, but I can't look away.

Edited by SquallStrife

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DaCraw,

 

I don't' understand the first picture.

 

What is the point of looking at unemployment rates for such a small period of time? It seems insignificant to me.

 

As for banking panics the problem is fractional reserve banking. They wouldn't happen without it. Do you agree?

 

Regarding the "token" comment: Who's to say what a token is worth? Who has control over the creation of tokens? Why should they? Our fiat currency does not work the same as using something with inherent value. Imagine if legal tender legislation was repealed. Why would anyone use bits of invaluable metal and plastic? If I had a choice between receiving gold or plastic I know what I would choose.

 

It seems to me you don't know what "store of value" means.

 

Like I said: I believe there is enough for money and other practical uses.

 

Maybe "undemocratic" was not the right word. I will try to make my point better. The more wealth is taken and redistributed by force by the government the less control the people have. If you have less taxation and wealth redistribution then people can vote more with their money and so the people have more power and more and direct say.

 

 

MS,

 

You're wrong. Read the bits of the Act I quoted.

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Like I said, if you want to try to trade with bits of plastic I don't have a problem with that, but people should not be required by law to do so.

We've been through this!

We ARENT!

 

Save your breath, man. Not a single syllable has penetrated fajw's cranium in the entire length of the thread. A few words more ain't gonna make a lick of difference.

 

Unlike certain people, who can argue indefatigably and indefinitely but also state a cogent argument, this guy just keeps repeating his initial assertion without modification or embellishment. Talking to him is a waste of time.

 

I'm not really trying to convince fajw. That's a lost cause, as you've pointed out. I'm just trying to make sure that no-one else is mislead by his deluded rants.

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I'm just trying to make sure that no-one else is mislead by his deluded rants.

I think everyone is too smart for that.

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I don't' understand the first picture.

 

What is the point of looking at unemployment rates for such a small period of time? It seems insignificant to me.

The first is a list of banking panics under the gold standard, the second shows the effect that one of those panics had.

 

As for banking panics the problem is fractional reserve banking. They wouldn't happen without it. Do you agree?

Not really, no. The problem is lack of (appropriate) regulation. If you get rid of fractional reserve banking, you pretty much get rid of modern banking entirely - and pretty much all of the benefits of a modern economy along with it. Sustained, stable growth doesn't just happen.

 

Your claims are basically saying "I don't like the fact that pills are bitter. I think we should get rid of medicine, and be free and pure in our bodies. Why don't you like freedom and purity?" It sounds absurd, I know, but really, so does what you're saying.

 

Regarding the "token" comment: Who's to say what a token is worth? Who has control over the creation of tokens? Why should they? Our fiat currency does not work the same as using something with inherent value. Imagine if legal tender legislation was repealed. Why would anyone use bits of invaluable metal and plastic? If I had a choice between receiving gold or plastic I know what I would choose.

In the absence of legal tender, I wouldn't be happy receiving either of them. Here's the thing, apart from a few mechanical differences (resulting from tying your money supply to a basically random process, pegging your exchange rate to a commodity, etc) money - by definition - works the same way. It's basically an abstraction, a token representing wealth that has value because we all agree that it has value. Whether or not the token could be melted down to reclaim the metals it's made from doesn't change that. In either case, I'll accept it as payment because I know that I can exchange it for something else.

 

Of course, that's not what you're arguing for. You're arguing for the abandonment of currency altogether. In which case, no, I wouldn't accept gold either, because I couldn't be sure that I will be able to get what I want with it. I'll take a pizza instead. You don't have a pizza? Hmm, if I trade with that guy for a chicken, then trade the chicken for a bag of dog food, then trade the dog food for some beer, I might be able to use the beer to get a pizza. Wait, how much dog food can I get for a chicken? This isn't going to work. I guess you'll have to do without this medicine.

 

We invented currency for a reason.

 

It seems to me you don't know what "store of value" means.

Store of value refers to the ability to facilitate the intertemporal transfer of wealth. The stability and predictability of the currency factors into this too. It doesn't mean that the money you've stashed under your bed should buy the same amount in 50 years as it does now, it means that you should be able to use that money as a liquid and safe asset (even if it has a slightly negative interest rate due to the liquidity and lack of risk).

 

How much will this $100 bill buy me this time next year? About as much as $97 would now. That's a useful asset. It's not something I would invest in long term, but it's useful in the meantime.

How much will this chunk of shiny metal buy me next year? I dunno. Less useful. I could speculate with it, but that's basically gambling.

 

Like I said: I believe there is enough for money and other practical uses.

But never the less, in order for any to be used as money, some must be diverted from it's current use. That's a waste by definition.

 

Maybe "undemocratic" was not the right word. I will try to make my point better. The more wealth is taken and redistributed by force by the government the less control the people have. If you have less taxation and wealth redistribution then people can vote more with their money and so the people have more power and more and direct say.

Here's the thing, history has shown us that in the absence of regulation, power tends to concentrate in the hands of a few. Progressive, redistributive taxation wasn't invented until revolutionary America*. Name any period before then, and look at how 'free' the median person was. They were basically slaves, either explicitly or implicitly (slaves to poverty). We live in some of the most prosperous and free times in all of human history, in part because we've designed ways to curtail the freedom to oppress. There are legitimate threats to this, but universal healthcare is not one of them.

 

*Interestingly, modern progressive taxation was invented to protect freedom. The Americans were afraid that left unchecked, wealth would concentrate into what was essentially an aristocracy, just like in Europe. So yeah, taxation was designed to make us more free.

Edited by DaCraw

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Ohh politics. Hilarious.

 

1. Maintain or slightly increase to disability/aged care pensions. These people struggle enough as it is.

2. Remove tax breaks for tge 'job creators'. Bullshit your creating jobs, your just greedy.

3. Simplify tax system and remove offshore loopholes. If you make $8.7b in profit, yet only pay $0.5m in tax, thats bullshit. Its a cost of doing business in a 1st world country. Deal with it.

4. Reinstate the FTTP nbn. In todays technological climate, we need as much net connectivity as plausable, for now and the future.

5. Legalise gay marrige. You found the love of your life? Awesome! Go adopt some babys into your loving home.

6. Increase infrastructure projects in a way that encourages big businesses to place new hubs into country areas and out of the allready clogged citys.helps spread the population, brings jobs to high unemployment areas. Same with gov call centers.

7. Talking about call centers, some type of inititive to encourage big corp call centers back onshore. Moving jobs to lower costs is a bitch to the hundreds of employees then left lining up at centerlink.

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The first is a list of banking panics under the gold standard, the second shows the effect that one of those panics had.

How do you know that the unemployment level was caused by a panic?

 

Not really, no. The problem is lack of (appropriate) regulation. If you get rid of fractional reserve banking, you pretty much get rid of modern banking entirely - and pretty much all of the benefits of a modern economy along with it. Sustained, stable growth doesn't just happen.

 

Your claims are basically saying "I don't like the fact that pills are bitter. I think we should get rid of medicine, and be free and pure in our bodies. Why don't you like freedom and purity?" It sounds absurd, I know, but really, so does what you're saying.

Are you seriously contesting that banking panics would not occur in the absence of fractional reserve banking? What regulation?

 

We invented currency for a reason.

Yeah: to assist in trade, not to force everyone to use worthless fiat currency that the central bank has a monopoly on creating and manipulating.

 

But never the less, in order for any to be used as money, some must be diverted from it's current use. That's a waste by definition.

I disagree that it is a waste. If it is being used as money instead of sitting in a vault doing nothing then what is the problem with that? One might even say that it is being very useful in serving as money.

 

Here's the thing, history has shown us that in the absence of regulation, power tends to concentrate in the hands of a few.

Can you back that up?

 

Tell me, are you aware much of the history of fiat currency? Can you tell us how long the most successful fiat currency has survived? When I say "fiat currency" I mean what is not backed by anything valuable.

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The first is a list of banking panics under the gold standard, the second shows the effect that one of those panics had.

How do you know that the unemployment level was caused by a panic?
That would be covered by the impact on output noted in the first image, and the first link.

 

Not really, no. The problem is lack of (appropriate) regulation. If you get rid of fractional reserve banking, you pretty much get rid of modern banking entirely - and pretty much all of the benefits of a modern economy along with it. Sustained, stable growth doesn't just happen.

 

Your claims are basically saying "I don't like the fact that pills are bitter. I think we should get rid of medicine, and be free and pure in our bodies. Why don't you like freedom and purity?" It sounds absurd, I know, but really, so does what you're saying.

Are you seriously contesting that banking panics would not occur in the absence of fractional reserve banking? What regulation?
I'm arguing that without fractional reserve banking, pretty much everything that we rely on in a modern economy goes up in smoke. There are problems with it, but they can be corrected with suitable regulation, such as requiring banks have deposit insurance, and having the central bank act as a lender of last resort. Bank panics are a solved problem in the modern economy, but getting rid of the reserve bank would undo that.

 

We invented currency for a reason.

Yeah: to assist in trade, not to force everyone to use worthless fiat currency that the central bank has a monopoly on creating and manipulating.
Well, it turns out that fiat currencies are very useful for trade, and that careful control helps to promote economic growth and stability - which are also massively beneficial.

 

But never the less, in order for any to be used as money, some must be diverted from it's current use. That's a waste by definition.

I disagree that it is a waste. If it is being used as money instead of sitting in a vault doing nothing then what is the problem with that? One might even say that it is being very useful in serving as money.
But fiat money can do the same job without tying up resources. Using resources when you have a perfectly good way of getting the same job done without them is wasteful.

 

Here's the thing, history has shown us that in the absence of regulation, power tends to concentrate in the hands of a few.

Can you back that up?
Look at pretty much the entire history of western civilisation.

 

Tell me, are you aware much of the history of fiat currency? Can you tell us how long the most successful fiat currency has survived? When I say "fiat currency" I mean what is not backed by anything valuable.

I'm not as familiar with non-European history, but China used a fiat system throughout a couple of its dynasties. That would put it at 4-500 years. Do you have a point? Edited by DaCraw

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Can you back that up?

Why should he? You rarely back up anything you say, and when you do, it's with a hollow trope like "because its freedom and freedom = better".

 

Absolutes are dangerous.

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Are you absolutely sure about that?

 

If you want me to back up something then tell me what. I have tried to answer the reasonable questions asked me and I find it frustrating when people don't answer my questions.

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No; it is valuable whether or not it is used as a medium of exchange.

This is all we're asking you to explain; so outside jewelery (which i maintain is impulse and would be unworn if jewelery directly = money) and electrical, what makes it valuable?

 

You can find the Wikipedia article as well as I can.

 

 

 

 

Why don't you backup what you've said here, rather than saying "find it yourself"

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So, after having thought about it, here are the things I'd like to bring in:

 

1) Immediate revocation of all post-term perks and pensions for MPs. Once you're out of office, you're a private citizen again. Let's be honest, once you're an MP you're not going to have any problems ever finding a job again so you really don't need it.

 

2) Commissioning a study into the *reasons* behind why certain migrant cultures clash with the host culture, and research into ways to mitigate this and help all parties come together.

 

3) Universal ban on smoking in public places - effectively the same rules for alcohol. Proceeds from tobacco tax to be used to subsidise and supply nicotine patches and other methods to get people off the cancer sticks for good.

 

4) Legalisation of marijuana, with licensing and regulation.

 

5) Full across-the-board legalisation of prostitution, with licensing and regulation. Right now there are three different rules for various states - let's make it unified. Mandatory medical and psychological evaluations for sex workers. Zero tolerance for working outside the government framework.

 

6) Any religious, corporate or non-government association on any MP's behalf to be heavily scrutinised by an independent body. Gaming the system in favour of any of these to be grounds for immediate termination and criminal proceedings will begin.

 

7) Immediate improvement of conditions for the Manus Island concentration camp and any like it. Immediate termination of all contracts with private entities for these facilities, and the appointment of accountable government employees to take over. An apology to be issued to asylum seekers who are unjustly treated, and co-operation to be given to any international bodies seeking to investigate the people responsible for this.

 

8) Unconditional rejection of the Trans-Pacific Partnership.

 

9) Section 18C of the Racial Discrimination Act is left as is. Penalties for vilifying others to veer away from prison and more towards hefty fines and community service.

 

10) Medicare to be left as is.

 

11) Current industrial relations laws to be left as is.

 

12) Abolition of the Knights and Dames system and revocation of all items bestowed.

 

13) Mining and Carbon taxes to be left as is.

 

14) Reinstatement of the Science ministry.

 

15) Proceeds from current alcohol taxes to be used towards addressing the 'drink till you pass out' culture.

 

16) Equal marriage rights across genders.

 

17) Gina Rinehart to be explicitly told, in an official statement by the Prime Minister, to either do business in a social democracy or get lost.

 

18) Reinstatement of Fibre To The Premises.

 

19) Termination of all funding of tax-exempt status or subsidies for religious bodies and private schools.

 

A lot of this will require a pretty huge amount of money, and will be trading in some liberties in favour of a general 'don't be a dick' rule. It probably wouldn't all work in the real world.

Edited by aquilus

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I'm arguing that without fractional reserve banking, pretty much everything that we rely on in a modern economy goes up in smoke.

I reckon that is complete BS.

 

There are problems with it, but they can be corrected with suitable regulation, such as requiring banks have deposit insurance, and having the central bank act as a lender of last resort. Bank panics are a solved problem in the modern economy, but getting rid of the reserve bank would undo that.

If you have a lender of last resort then the banks don't have to be prudent/careful/wise. It is better if banks are able to fail.

 

Well, it turns out that fiat currencies are very useful for trade, and that careful control helps to promote economic growth and stability - which are also massively beneficial.

It turns out you are full of shit. No one deserves or should have such controlling power as central banks do.

 

But fiat money can do the same job without tying up resources. Using resources when you have a perfectly good way of getting the same job done without them is wasteful.

Fiat currency with no intrinsic value is not "perfectly good"; it is far from it.

 

Look at pretty much the entire history of western civilisation.

So you can't back it up. Okay.

 

I'm not as familiar with non-European history, but China used a fiat system throughout a couple of its dynasties. That would put it at 4-500 years. Do you have a point?

Yes: that fiat currencies fail. How do you know that about China? Where can I read up on it?

 

 

Are you absolutely sure about that?

Does a bear shit in the woods?

 

Yes. Is your absolute that absolutes are dangerous not dangerous?

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DaCraw,

 

"But fiat money can do the same job without tying up resources. Using resources when you have a perfectly good way of getting the same job done without them is wasteful."

 

Sure that's true IF the level of fiat is constrained or as you said 'regulated', when fiat is unregulated (basically, as the banks seem to be writing the laws) as it has been for a LONG time then it's simply disaster waiting to happen. Every fiat currency (and there have been plenty of them) in history has collapsed at some point and the process has always been the same. The dilution of the value of fiat followed by unregulated printing followed by collapse. The yanks are printing so much useless fiat these days they're having trouble finding places to hide it. The current rate is around 85 BILLION dollars per month. This is also the rate that the money supply is being diluted (devalued), wonder you keep paying more and more for the same products?

 

Here's some info for you:

 

http://usawatchdog.com/true-scale-of-dolla...rby/#more-12025

 

Financial expert Rob Kirby says global central bank fraud is propping up the economy. Kirby contends, “The amount of fiat money that has to be created on a go forward basis rises exponentially over time. So much, much money is being created whether the Fed says they are ‘tapering’ or the Fed says they’re not ‘tapering’ is irrelevant to what is really happening. The money is being created, and they have to find places to hide it. What else has happened? Internationally, we see the likes of Russia and China basically setting up to trade in other than dollars because they know what’s going on with the dollars, and they know too many dollars are being created. They know this story of too many dollars being created ends very badly. . . . Fiat money by its very nature is designed to fail. Fiat money by its nature needs to be increased. Fiat money at the beginning has a very shallow incline, and then you hit an inflection point where the amount of fiat money being produced literally has to go vertical. We are into the vertical part of that curve now.”

contd at link.

 

 

 

A quick history lesson.

 

http://dailyreckoning.com/fiat-currency/

 

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

 

Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.

 

Fiat Money -Rome — The Denarius

 

Although Rome didn’t actually have paper money, it provided one of the first examples of true debasement of a currency.....

... /contd at link.

 

 

 

And what 'money' has become.

 

 

 

So in short, most of what you say is probably true, but ONLY if money is under the control of the right people, obviously that isn't the case. :)

Edited by Director

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If you have a lender of last resort then the banks don't have to be prudent/careful/wise. It is better if banks are able to fail.

Yes, I'm sure it is, tell that to all the Americans who lost their home or savings.

 

 

ps. I doubt it means anything, but its odd that the 2 very religious people on our forum are on the same train of thought. Probably a coincidence, but it popped at me, lol.

Edited by Master_Scythe

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So you think it's better for the banks to take huge unlimited risks and then when that doesn't work out the people are forced to pay (via the government) for the banks to stay in business?

 

edit: perhaps not necessarily via the government, but via the central bank whose money creation is effectively a tax anyway.

Edited by fajw

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So you think it's better for the banks to take huge unlimited risks and then when that doesn't work out the people are forced to pay (via the government) for the banks to stay in business?

Not for the banks to stay in business, thats a side effect; to stop the thousands of people invested in it from losing their homes.

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