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COMMENTS:
Voted : Yes, it's about to happen
Dr. Ron Paul has been warning us of this for years.
Of course, the media would tell you that John McCain is the only candidate left on the Republican ballot.
Voted : No
Oh not another one of these. :) Yes, okay, you warned us. Despite the fact that there is more than enough liquidity in the market. Okay, run to the bank and pull out your money. Hide it in your bus. :)
Voted : Yes, it's about to happen
As the debt grows, the government prints more money without any material good backing it. It's only a matter of time before runaway hyperinflation kicks in. Our money is going to look like this:
http://upload.wikimedia.org/wikipedia/en/9/97/500000000000_dinars.jpg
R_T_L, what material good backing it? To my understanding, we have not been on the Gold Standard for decades.
Also, can you answer a question that is gnawing at me. If we're just printing money, as you say, then in effect, wouldn't there be no debt? Example: The Budget defecit is when the Federal government spends more of the public money than it budgeted for. If they can, and do, as you say, just print money, then why would there be a budget defecit?
Logically, wouldn't that mean that when they reached they were about to spend more than the budget, they would just print more money?
Also, can you share what the total dollar value is of U.S. curreny in circulation is? I mean that currency (hard cash) held in banks all over the world.
The other thing you can help clear up is why for the amount that is printed, that same value in dollars is destroyed? That's the part I don't get. When the Mint prints lets say a $Billion, why do they destroy old currency at that same dollar value? That seems like a total waste?
And one last question: what material goods does any country have to back up their currency? If the EU has $5 trillion in circulation, do they have that exact amount in Gold to back it up? What other material goods are used to back any curreny? Thanks!
"R_T_L, what material good backing it? To my understanding, we have not been on the Gold Standard for decades."
And that is exactly why we're in the problem we're in today. If we had stayed on the gold standard and if money was backed by gold and silver, money would keep its value and it would be protected from inflation. You don't understand. This bubble we're in today isn't something that happened in the last few years. It's the result of decades of irresponsible spending and a horrible monetary policy.
"If we're just printing money, as you say, then in effect, wouldn't there be no debt? Example: The Budget defecit is when the Federal government spends more of the public money than it budgeted for. If they can, and do, as you say, just print money, then why would there be a budget defecit?"
The fed does have its limits. While it does print money out of thin air and depreciates the value of the dollar, it is impossible for them to print up trillions more dollars. That would result in hyperinflation. To the fed, inflation is okay, but it still looks to limit hyperinflation. Eventually it won't have control of it.
The rest of your questions are purely rhetorical and I don't do rhetorical questions.
"what material goods does any country have to back up their currency?"
Are you advocating the idea that just because everyone else does it that it won't result in an economic catastrophe.
Okay R_T_L, so what countries today are on the Gold Standard? I don't know why you're getting snippy. :) I'm just following through on your very comments.
What countries today are on the Gold Standard? None.
I took your advice and for the purposes of this question, I used Google. Here is the result:
"The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". The gold standard has not been used in any major economy since that time.
What Do We Use Today?
Almost every country, including the United States, is on a system of fiat money, which the glossary defines as "money that is intrinsically useless; is used only as a medium of exchange". We saw in the article "Why Does Money Have Value" that the value of money is set by the supply and demand for money and the supply and demand for other goods and services in the economy.
So in fact, every currency in use today is what is termed a "Fiat currency." In effect, not one single currency is backed up by anything per se.
What one nation has the largest Gold supply in the world? The United States. Why could no country of major industrial standing ever return to the Gold Standard? Because there is not enough Gold in reserve to satisfy the "demand" to give the holder of that currency equal value in Gold.
Not in the scenario you describe.
Voted : No, that would never happen
At least I hope it won't.
I know what currency the world uses.
The advantages of the gold standard outweight the disadvantages. The disadvantages are minor. And should the world run out of gold, you can always back the currency with silver or platinum. Even bimetallism is better than a fiat currency. This issue is a matter of opinion. I would rather have my wealth protected and backed by gold. You on the other hand, don't seem to care as much as I do.
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