Sunday, September 21, 2008

This guy, head of has been predicting this crisis for decades

Understanding the Crisis

What caused this? It is a simple question, and yet answers are all over the map, as you might expect. Here's mine in two words: fiat money. The word fiat means: out of nothing. Money out of nothing is money that is eventually worth nothing. The possibility of precisely that happening emerged on August 15, 1971. Since Nixon severed the last tie of the dollar to gold, the world's monetary system has not been restrained by anything physical. We've depended on the discretion of central bankers. We can't trust that, and this crisis shows precisely why.

Posted by planning4acrash @ 11:03 AM (704 views)
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2 thoughts on “This guy, head of has been predicting this crisis for decades

  • Fiat money is indeed inherently unstable and unsatisfactory, but why does it have to be gold as the physical restraint? With gold, the value of our money would vary with new gold discoveries and the intensity of mining; we’d be encouraging yet more ecologically destructive activity. We should make the physical backing something that it is sensible to economise on – namely energy, in this time of climate crisis. The case for energy-backed currency units is compellingly made by Richard Douthwaite in ‘The Ecology of Money’ – a current author, unlike Mr Hayek, and not one subject to the libertarian excesses of the former.

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  • planning4acrash says:

    NO!!!! That would be worse that red communism. Oil supplies are not known for sure, numbers manipulated like crazy. In anycase, gold, or any other store of wealth represents the entire supply of all production and commodities in its value, so, energy is always covered. Gold has been a currency for £5000yrs + discoveries will tend to never increase supply by more than 1 or 2% a year, and a lot of new supplies go into industry already. It is already used as a currency, and always will be.

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