Jump to content
House Price Crash Forum
europbaron

Fiat Collapse - How Can It Be Avoided?

Recommended Posts

I've read a lot on here about how the collapse of the whole system of fiat currency is unavoidable. A lot of the arguments put forth make sense to me. However, deep down, I don't believe it will come to this. I certainly feel that many powerful people with vested interests will do just about all in their power to stop this happening.

So rather than discussing why this collapse is inevitable, can anyone put forward reasonable arguments how economic collapse can be avoided? The only scenario that I can envisage helping restore economic balance is a significant period of inflation. What other ways are there out of the mess?

Share this post


Link to post
Share on other sites
Guest Steve Cook

I've read a lot on here about how the collapse of the whole system of fiat currency is unavoidable. A lot of the arguments put forth make sense to me. However, deep down, I don't believe it will come to this. I certainly feel that many powerful people with vested interests will do just about all in their power to stop this happening.

So rather than discussing why this collapse is inevitable, can anyone put forward reasonable arguments how economic collapse can be avoided? The only scenario that I can envisage helping restore economic balance is a significant period of inflation. What other ways are there out of the mess?

Inflation only "works" if you can look forward to renewed economic growth to give all of the funny money a new home to go to. Otherwise you get Weimar. However, there will be no new growth (See my sig).

Deflation "works" to the extent that it purges the system of the debt. At which point we get to find out how poor we really are and rebuild from that point. The trouble is, the deflationary collapse would be so big as to make the 1930s look like a tea party by comparision.

There is no way, in the end, of sorting this mess out.

Edited by Steve Cook

Share this post


Link to post
Share on other sites

I think they want collapse. Of the current fiat system anyway. So long as confidence remains in it, it is almost as dangerous to them as gold or silver. OK, it can be manipulated and devalued easier than gold or silver, but both became devalued during the 80s and 90s, and government continues to lie and misinform about who has what gold reserves. Who knows what the true buying power of gold should be?

Anyway, the point is physical fiat, notes and coins is still largely untraceable. People can still live and perform business cash in hand. Eliminating all physical money, paper or not, and replacing it with globalised 'credits' all plugged in to a central computer, means no transaction will go unoticed by the evil all seeing eye of the NWO.

Thats why i think they want to destroy our current fiat system.

Share this post


Link to post
Share on other sites

Inflation only "works" if you can look forward to renewed economic growth to give all of the funny money a new home to go to. Otherwise you get Weimar.

There will be no new growth (See my sig).

So, what will they try then, and how will be the short term, medium term and long term effects for the likes of us?

Share this post


Link to post
Share on other sites
Guest Steve Cook

So, what will they try then, and how will be the short term, medium term and long term effects for the likes of us?

They're trying to buy time, that's all.

Meanwhile, the state apparatus of control and supression is being hurriedly put in place around the Western world for when the lights start to go out and we all begin to kick off.

CCTV on every street

Detention without trial

Trial without Jury

DNA database

65 other anti libertarian laws enacted in this country in the last decade

Edited by Steve Cook

Share this post


Link to post
Share on other sites

They're trying to buy time, that's all.

Meanwhile, the state apparatus of control and supression is being hurriedly put in place around the Western world for when the lights start to go out and we all begin to kick off.

CCTV on every street

Detention without charge

Trial without Jury

DNA database

65 other anti libertarian laws enacted in this country the last decade

I take it you have little faith in the proposed repeal bill or the suggested 60,000 reduction in police numbers then?

The argument in your sig is one of those I referred to in the OP, others including index linked pension liabilities and the debt levels. I'm looking for potential ways in which these "inevitable" outcomes can be avoided.

Share this post


Link to post
Share on other sites
Guest UK Debt Slave

They're trying to buy time, that's all.

Meanwhile, the state apparatus of control and supression is being hurriedly put in place around the Western world for when the lights start to go out and we all begin to kick off.

CCTV on every street

Detention without charge

Trial without Jury

DNA database

65 other anti libertarian laws enacted in this country the last decade

Aye

It's all looking very $hitty indeed.

Just glad I never had kids. What an inheritance! :blink:

Even if there is a global mass awakening, I can't see any pain free solution. They control everything already, the systems of credit, the military, the police, the systems of law, food and water distribution, the media. They can literally shut everything down if the sheeple get restless. The majority will always seek the safety of the state because they are so dependent on it for its favours.

Add to that massive overpopulation and finite resources.

It makes being kidnapped by aliens almost appealing

Share this post


Link to post
Share on other sites

.... can anyone put forward reasonable arguments how economic collapse can be avoided? ....

Economic collapse and fiat collapse are two different things. We are already in a form of economic collapse in as much as that the old model of consumption based growth is at its limit to generate further expansion. Neither the economy nor the planet can deliver more of the same. Fiat collapse may occur but like you I doubt it in all honesty - it is a very severe extreme. What lies ahead is a period of significant volatility with an unknown outcome. Stay flexible and open minded IMO.

Share this post


Link to post
Share on other sites
Guest Steve Cook

I take it you have little faith in the proposed repeal bill or the suggested 60,000 reduction in police numbers then?

The argument in your sig is one of those I referred to in the OP, others including index linked pension liabilities and the debt levels. I'm looking for potential ways in which these "inevitable" outcomes can be avoided.

There may be swings in the political weather along the journey. But the political climate is going only one way. So, no, I do not have faith.

I know you are looking for potential ways in which a debt-based collapse can be avoided. I am saying that there aren't any. All that monetary manipulations can do is dicate who pays for those losees.

Share this post


Link to post
Share on other sites

Economic collapse and fiat collapse are two different things. We are already in a form of economic collapse in as much as that the old model of consumption based growth is at its limit to generate further expansion. Neither the economy nor the planet can deliver more of the same. Fiat collapse may occur but like you I doubt it in all honesty - it is a very severe extreme. What lies ahead is a period of significant volatility with an unknown outcome. Stay flexible and open minded IMO.

Yes, I was referring to fiat collapse rather than economic collapse.

Share this post


Link to post
Share on other sites
Guest UK Debt Slave

I take it you have little faith in the proposed repeal bill or the suggested 60,000 reduction in police numbers then?

The argument in your sig is one of those I referred to in the OP, others including index linked pension liabilities and the debt levels. I'm looking for potential ways in which these "inevitable" outcomes can be avoided.

They can't be avoided

If these problems had been properly addressed 100 years ago, things might be different.

Your best bet is to find somewhere where you have a better chance of hanging onto the basic resources you will need to survive and accumulate skills that will help you survive. The options are pretty limited frankly

I think some of the South American countries are the safest bet in the short term

Share this post


Link to post
Share on other sites

Aye

It's all looking very $hitty indeed.

Just glad I never had kids. What an inheritance! :blink:

Even if there is a global mass awakening, I can't see any pain free solution. They control everything already, the systems of credit, the military, the police, the systems of law, food and water distribution, the media. They can literally shut everything down if the sheeple get restless. The majority will always seek the safety of the state because they are so dependent on it for its favours.

Add to that massive overpopulation and finite resources.

It makes being kidnapped by aliens almost appealing

The whole world won't go "kamikaze" at the same time.

Share this post


Link to post
Share on other sites
Guest Steve Cook

In what means of exchange?

What I am trying to get at is that inflating the money supply into an economy that is not going to grow has one of two effects.....

1) If the money is left there, everyone holding cash pays for the losses in the form of a hyperinflationarily debased currency

2) If the money is sucked back out over time from the section of the population whose assets are largely monetary, then they will pay in the form of higher taxes and lowered public services over a period of time.

It's looking more and more like option 2 has become the chosen route with a little bit of 1 left in the system.

One way or another, insofar as is humanly possible, the best bet is to get out of money altogether.

Which of course, as an urban, landless wage-slave, you can't

Edited by Steve Cook

Share this post


Link to post
Share on other sites

I suspect eventually fiat might become redundant.

http://www.bitcoin.com/

http://en.wikipedia.org/wiki/Bitcoin

my thoughts exactly (but what backs a bitcoin?).

in fact fiat is already redundant because the central banks pay interest on fiat bank reserves. This means that the amount of fiat money (M0) is effectively redundant since any amount of fiat reserves can be locked away by just offering sufficient interest on it that it becomes more attractive for banks to lock up their reserves in central bank term deposits than to lend them to the wider economy.

what matters, and the only thing that matters, is what interest rate must be paid to control prices, and whether the tax revenue can be raised to cover those payments.

if the money supply is shrinking, then no interest need be paid at all (although the effective real rate could be high if tax revenues are falling)

Share this post


Link to post
Share on other sites

I suspect eventually fiat might become redundant.

http://www.bitcoin.com/

http://en.wikipedia.org/wiki/Bitcoin

Thanks for the links - it's an interesting concept.

I notice that such a system doesn't support fractional reserve banking, nor central bank control either! ;)

Bitcoin value is unconnected to possible instability caused by fractional reserve banking and poor central bank policy (see Austrian business cycle theory).

The average rate of Bitcoin production is tapered such that over time the total number of Bitcoins will approach 21,000,000. After this point, no further Bitcoin production is possible. In this deflationary environment and in situations where large numbers of Bitcoins are either lost or destroyed, the electronic divisibility of Bitcoins is argued to be conducive to downward price adjustments with no practical limitations in the actual storage or transport of Bitcoin value.[3] Rather than relying on the incentive of newly created Bitcoins to package transactions, nodes in this period will likely depend more heavily on their ability to competitively collect transaction fees to process Bitcoin transactions into blocks.

It's interesting that they aren't following the idea of persistent inflation being a requirement for stability. A fixed supply of money is against what many modern economists would argue for in general too.

It all sounds rather free market, with some of the initial commodity value being given by production costs (CPU cycles/electricity). Beyond that point, the value would probably be given, based on the productiveness of the companies/people trading in them (much like current nationalised currencies). Without some global bank being in control, I can't imagine the establishment being very keen on the idea though!

If it caught on, I don't see why it couldn't work. As long as we're not forced to use it and we can exchange in and out of it easily (as with any other currency), why not?

Edited by Traktion

Share this post


Link to post
Share on other sites

my thoughts exactly (but what backs a bitcoin?).

in fact fiat is already redundant because the central banks pay interest on fiat bank reserves. This means that the amount of fiat money (M0) is effectively redundant since any amount of fiat reserves can be locked away by just offering sufficient interest on it that it becomes more attractive for banks to lock up their reserves in central bank term deposits than to lend them to the wider economy.

what matters, and the only thing that matters, is what interest rate must be paid to control prices, and whether the tax revenue can be raised to cover those payments.

if the money supply is shrinking, then no interest need be paid at all (although the effective real rate could be high if tax revenues are falling)

Fiat = forced.

If you can show me a part of the west where the amount of forced applied to the population is on a downward trend, i'll post you a cookie picture.

The only thing that matter is that the population carries on having no real way to fight back.

Edited by Injin

Share this post


Link to post
Share on other sites

I've read a lot on here about how the collapse of the whole system of fiat currency is unavoidable. A lot of the arguments put forth make sense to me. However, deep down, I don't believe it will come to this. I certainly feel that many powerful people with vested interests will do just about all in their power to stop this happening.

So rather than discussing why this collapse is inevitable, can anyone put forward reasonable arguments how economic collapse can be avoided? The only scenario that I can envisage helping restore economic balance is a significant period of inflation. What other ways are there out of the mess?

People will still have to buy stuff and they are not going to be using bits of metal to do this. In prehistoric communities, maybe..but not today.

The problem with the idea of fiat currency all being debased is the relativity aspect. If all nations decide to devalue their currencies by half status quo will be maintained. If some go it alone it will cause immediate imbalances and cause some fiat to rise and others to fall. The US did this during the "strong dollar" (read: weak dollar) phase under Paulson. It helped the US build exports but in the end it did not work as the lower currency eventually undermined the competition causing their currency to drop (e.g. Euro) which, in turn, pushed the $ back up. The "fiat" shifted according to market forces. There will always be a fiat as it is inseparable from the market which sets it.

It is all to do with the market and value that is ascribed to a particular thing, be it metal , paper, cotton or pork bellies. Everything has a "fiat" or bargaining value and the market determines what that value is. Intrinsicity is a myth as value is a non-constant for all things.

Share this post


Link to post
Share on other sites

my thoughts exactly (but what backs a bitcoin?).

in fact fiat is already redundant because the central banks pay interest on fiat bank reserves. This means that the amount of fiat money (M0) is effectively redundant since any amount of fiat reserves can be locked away by just offering sufficient interest on it that it becomes more attractive for banks to lock up their reserves in central bank term deposits than to lend them to the wider economy.

what matters, and the only thing that matters, is what interest rate must be paid to control prices, and whether the tax revenue can be raised to cover those payments.

if the money supply is shrinking, then no interest need be paid at all (although the effective real rate could be high if tax revenues are falling)

The interest rate would be decided by the free market. Supply and demand for the currency would dictate any interest rates.

If the money supply is constant and the population is growing, then you would have a shrinking money supply, relatively speaking. It would be interesting how this would play out, considering how vocal modern economists have been about the dangers of deflation. IMO, deflation is only a problem when you forced to use a currency and it has uber leverage, as we have in our fractional reserve, state backed system.

It would be interesting to observe how the currency progressed. I really can't imagine modern economists or bankers relishing the idea of it doing well though.

EDIT: BTW, it's interesting to see that one of the places which already accepts the Bitcoins is The F.A. Hayek Institute of Canada. I'm sure he would have approved of payments in such denationalised money (see sig)! :D

You can download a Bitcoin client here too. Thanks for the info Alan - I'll read a bit more up on this, but I like the basic concept. How did you hear about it, BTW?

Edited by Traktion

Share this post


Link to post
Share on other sites
Guest Steve Cook

this is complete ********.

we are constantly expanding the 'things' we make and sell to each other in ways that would have been unthinkable a decade ago let alone a generation back.

lost of people own 'businesses' that have no 'real world' existence (apart from some disk space on a computer somewhere) and these businesses sell nothing but electrons to other people, who use those electrons to generate their own businesses. To generate the kind of profits these little enterprises make, you would have needed millions in capital previously.

Now more and more of the world's "production" is becoming virtual, there's no effective limit to it. After all, 10 years ago, who the hell needed a custom WOW avatar at $15?

you need to wake up and smell the new world coffee, my friend.

You need to go and read some basic economics textbooks my friend.

Primary, Tertiary, Seconday

Where, on the above economic hierarchy, do you suppose that the sale of that WOW avatar lies?

You obviously belong to the Wylie Cyote school of economics. Not to worry, though, you're in good company. Much of the Western world has been running along these lines for the last decade or three .

Which kind of explains the mess we currently find ourselves in.

Edited by Steve Cook

Share this post


Link to post
Share on other sites

Thanks for the links - it's an interesting concept.

I notice that such a system doesn't support fractional reserve banking, nor central bank control either! ;)

It's interesting that they aren't following the idea of persistent inflation being a requirement for stability. A fixed supply of money is against what many modern economists would argue for in general too.

It all sounds rather free market, with some of the initial commodity value being given by production costs (CPU cycles/electricity). Beyond that point, the value would probably be given, based on the productiveness of the companies/people trading in them (much like current nationalised currencies). Without some global bank being in control, I can't imagine the establishment being very keen on the idea though!

If it caught on, I don't see why it couldn't work. As long as we're not forced to use it and we can exchange in and out of it easily (as with any other currency), why not?

Would it surprise you if the "Global Elites" actually cheered on the technology when it worked?

I imagine control of the money supply is really quite a worrisome undertaking given the idiotic nature of people acting in herds.

Of course the socialist won't like it.

Share this post


Link to post
Share on other sites

.....

Now more and more of the world's "production" is becoming virtual, there's no effective limit to it. After all, 10 years ago, who the hell needed a custom WOW avatar at $15?

....

This is true (and a good thing IMO). However, when the oil runs out custom avatars might fall out of favour :D

Share this post


Link to post
Share on other sites

this is complete ********.

we are constantly expanding the 'things' we make and sell to each other in ways that would have been unthinkable a decade ago let alone a generation back.

lost of people own 'businesses' that have no 'real world' existence (apart from some disk space on a computer somewhere) and these businesses sell nothing but electrons to other people, who use those electrons to generate their own businesses. To generate the kind of profits these little enterprises make, you would have needed millions in capital previously.

Now more and more of the world's "production" is becoming virtual, there's no effective limit to it. After all, 10 years ago, who the hell needed a custom WOW avatar at $15?

you need to wake up and smell the new world coffee, my friend.

Sceppy?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 149 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.