Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Fiat Paper Currencies are NOT Gold!

Currencies / Fiat Currency Oct 09, 2013 - 01:59 PM GMT

By: DeviantInvestor

Currencies

Paper currencies seem normal. They seem natural. We are told they are necessary. Paper currencies with no intrinsic value are used everywhere - we pretend they are valuable. If we don't look closely, or remember the world of 60 years ago, they seem like a good idea.

Monopoly money. Euros. Dollars. What is the essential difference? Paper, with no intrinsic value, is accepted only because we have confidence in the issuer of the currency and/or because we have no other choice. Monopoly money can buy hotels on Park Place. Unbacked paper dollars can buy hotels in Manhattan. The hundreds of unbacked paper currencies that have become worthless during the last century can buy NOTHING.


If I am playing Monopoly and I change the rules to allow me, and only me, to add $85,000 to my stack of money, it seems likely I will "win" and own more property. Eventually, no one will want to play with me because I created $85,000 of fraudulent Monopoly money.

If I am a central banker and I create $85,000,000,000 every month to buy bonds, I will own lots of bonds in a few years. People will eventually realize my $85,000,000,000 per month gives me and my friends an unfair advantage and most others will refuse to play with me except when necessary, and they will certainly seek other "games" that are more fair and less slanted toward the player who can create boatloads of currency from nothing.

From Richard Russell: (link)

"For the first time in history, ALL the major central banks are printing money. One of two things will occur. If they continue to print, their respective currencies will lose their purchasing power, and we'll have inflation or even hyper-inflation. If the central banks pull back on their printing, we'll have crashing markets and a world depression."

Should we trust our central bankers? They largely control our financial lives. Inflation, deflation, depression, prosperity, booms, and busts are strongly influenced by banking policies, interest rates, and the availability of currency and credit, all of which are influenced by central banks.

Jim Grant: (link)

"Gold is a legacy monetary asset. It was there before they printed paper.

The price is the reciprocal of the world's faith in central bankers. The world ought to have much less faith in central bankers. As that proper distrust grows, the gold price will appreciate. I think gold is cheap at this price."

The world is overloaded with debt. As Bill Bonner said, "To solve the debt problem they added debt! The genius of this plan was, we admit, not immediately obvious." We think it is progressively more obvious that creating a massive quantity of currency each month - say $85,000,000,000 - is helping few outside the financial community and will eventually cause considerable harm to the economy and the purchasing power of the dollar.

We all know that:

  • There is no free lunch.

  • The piper must be paid.

  • Actions have consequences.

  • The U.S. government has spent more than it collects in taxes for a long time.

  • The U.S. official debt is growing much more rapidly than the underlying economy which must support that debt.

  • The U.S. unfunded liabilities are growing even faster than the official debt.

  • "Printing" dollars, inflating the money supply, extend and pretend, financial repression, and ever-increasing government control will eventually have dire consequences.

What are the "solutions" to our massive and unpayable debt conundrum?

  • Increase taxes and pay off the national debt. This will not happen.

  • The "nuclear" option: Default on much of the debt, force most individuals, businesses, and governments into some form of bankruptcy, and thereby liquidate most of the debt and the related paper assets. Politicians will avoid this option.

  • Create a massive inflation and thereby reduce the debt burden. Descriptive words that come to mind are: ugly, dangerous, social upheaval, food riots, bread lines, suicide, tears, anger, homelessness, denial, repression, martial law, and chaos. This is probably the only choice remaining.

Hugo Salinas Price: (link)

"We have only limited knowledge regarding what massive monetary inflation really means. Those who are going to apply it know only some of the effects, not all of them. ... Thus the hand that will implement massive inflation trembles in doubt. Yet, there is no other recourse.

The world will plunge into the darkness of massive world inflation. There is no other alternative. It must take place, but what will happen then is obscure. We are going into uncharted waters."

"In the coming world-uncertainty and fear, humans will adopt the same measures spontaneously, and a flight into gold and silver will take place."

"The Powers-That-Be" appear to prefer a distracted populace, slowly rising prices, a strong dollar, weak gold prices, and minimal restrictions on their ability to accumulate assets and power. There will be trauma if currencies collapse, gold prices skyrocket, and inflation flies out of control. We can reasonably expect that the governments of the world will "do something" that unfortunately will NOT solve the problems of collapsing currencies and out of control inflation.

Michael Noonan: (link)

"Central banks and governments produce nothing. Governments exist by sucking the financial lifeblood from the same citizens the government is supposed to serve."

"If the prices of gold and silver were allowed to reflect their true worth, it would totally undermine the existence of the "dollar" and topple central bankers and governments. Those banksters in control are not going to go down without a fight, and they will destroy existing western currencies in the process. If the paper "dollar" is how you measure your worth, you have been warned."

When paper assets are overvalued, gold and silver prices are likely to be undervalued. How much are paper assets and unbacked paper currencies truly worth? That is a huge question. Consider:

  • Will "solving" an excessive debt problem by issuing more debt decrease the value of existing paper assets and unbacked paper currencies?

  • Will $1,000 Trillion (more or less) in unregulated paper derivatives decrease the value of paper assets and unbacked paper currencies when the inevitable "accident" occurs?

  • Will creating $85,000,000,000 every month decrease the value of paper assets and the unbacked paper dollar?

  • Will even more aggressive money printing in Japan decrease the value of paper assets and the unbacked paper Yen?

  • Will our current monetary craziness and Quantitative Easing (QE) produce prosperity and a stronger economy or weaker currencies and paper assets of reduced value?

SRSrocco Report: (link)

"The global financial system is floating on a sea of worthless paper assets. Unfortunately, the majority of people still haven't figured out that the end of this fiat monetary system is close at hand."

"The rate at which the dollar is being abandoned by international trade portends the end of the U.S. Dollar as a reserve currency much sooner than later. This is the very reason why the paper prices of gold and silver have been manipulated lower since 2013. The threat of much higher gold and silver prices is an immediate threat to the Dollar."

Will all this economic nonsense - unbacked paper currencies, massive printing (QE) of currencies, gold price manipulation, unregulated derivatives, out-of-control deficit spending, creating more debt to solve an excess debt problem, and so on - work out well for anyone except the financial and political elite?

Jim Grant: (link)

"I think the odds against a painless, peaceful and placid exit from all of this dollar, yen, euro and pound sterling creation, the odds against returning to something like normalcy, are very slight indeed. Therefore one ought to think about assets that will hold their value against money."

So what do we do to prepare - to "prep" for the coming paper currency disaster?

Arabian Money: (link)

"What you want to buy is an insurance policy against this coming catastrophe and preferably one that does not have a third party between you and your money. Gold is the ultimate money in times of chaos."

SO OUR SUGGESTIONS ARE:

  • Realize that holding unbacked paper money is like holding an explosive device with a long burning fuse. Eventually that paper money will explode into worthlessness - it may survive for some time - but history shows clearly that paper money eventually declines to its intrinsic value - near zero.

  • Transition out of paper assets and into something real, such as land, buildings, gold, silver, mines, and farms.

  • Prepare for the worst - an inflationary collapse - that may not occur but seems increasingly likely. You will sleep better if you are prepared, unleveraged, and financially protected via safely stored gold and silver with no counter-party risk.

  • Expect the best: responsible monetary policy, less government, less war, honest money, and a healthy economy.

Read: TANSTAAFL, Butter and Silver
Read: The Reality of Gold and the Nightmare of Paper

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2013 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules