When is the currency crisis going to stop-in my lifetime?

It’s worrisome to me that China and India’s economies are slowing – a true global recession will be disastrous.

When governments stop printing money without anything other than their word to back it up.

In terms of the “crises” currently affecting your life, is the, or any, “currency crisis” in the top 10 or even top 5 crises you have to worry about?

@WestRiverrat :: I see this argument all the time and every single time I ask for detials people don’t supply them and say stupid shit like “Ron Paul 2012”.

So what system do you have planned that is better?

I wonder when people are going to realize that we can live just fine without money. With zero money. Not a dollar, not a penny, not a peso or rupee.

If you look at the material things you like: good food? good housing? nice car, motorcycle, public bus, train, boat? property? It all “costs” money, but… money is not an ingredient. Cash is not required as a building material or intrinsic part of anything at all in your life. If all of the money on the planet disappeared (which some days seems more and more likely) we could still do and have all of the things that we currently do and have; we just wouldn’t be exchanging with each other for “cash” or other “money”. I realize that until enough other people have this realization that things are going to stop dead in the water, but if I’ve realized it – and I don’t consider myself much of a visionary – I wonder how many others have, too.

It’s a crisis of perception, for sure. People seem to value money for its own sake.

@CWOTUS The problem with bartering is that it’s cumbersome. You’d have the clothes that I need, but I won’t have the watch that you want in exchange for them. So I’d have to find someone to take some of my old Legos in exchange for a watch that I could give to you for the clothes.

For me the question is how long it is going to take the 99% to realize that they are being taken advantage of. I don’t know about Europe, but in the U.S. the GDP has been rising steadily. It took a slight dip during the recession, but it is now higher than it has ever been. So why do we think there is an economic crisis? The problem is that only the rich are benefiting from the rise in production. Incomes for everyone else are flat or dipping. At some point people are going to catch on. In the long term, the best thing would be for the Republicans to take control of the presidency and Congress. Their policies will make things much worse much more quickly, hastening the time of the great awakening.

The euro won’t go under. There’s a serious situation greatly exaggerated by the media. The dept problem in the US is far worse than that of many of the euro countries. If Greece goes bankrupt we will see something similar to Lehman’s going down. It will be bad, but not catastrophic.

We have a dept crisis far more than a currency crisis. Will the dept crisis stop in your lifetime? Yes, if countries have people willing to pay taxes.

It’s going to stop when the right wing finally figures out that GROWTH and INVESTMENT (yes, even government investment)- not austerity – is what builds economies.

it’s going to stop when people realize that Taxes are NOT evil, but they are a necessary glue for society to operate on behalf of its citizens.

I agree with @mattbrowne. I don’t see any currency crisis. People seem pretty confident in the Euro. In fact, all the Greek people who are worried, are taking their Euros out of Greek banks and storing them in German banks, where they will remain Euros when Greece pulls out of the Euro. It’s hard to tell how smart they are, although I don’t see what difference a Greek Euro makes compared to a German Euro, except that Greek Euros might be forcibly converted into Drachmas.

@CWOTUS Your realization sounds like you ought to lay off the loco weed. How do you expect people to trade without any medium of trade?

@WestRiverrat If countries stop printing money, you will come to believe that you had no clue about the true meaning of currency crisis. We will see deflation like you wouldn’t believe, and the economy would come to a halt.

Both of you fail to understand that what is key in a currency is perception of value and confidence that the amount of paper around equals the amount of stuff (both physical and labor) around. If there is too much paper, that is a problem. If there is too little, that is a problem. One leads to inflation, and the other deflation. The two of you are advocating for very harsh deflationary policies. Not wise.

@elbanditoroso but wasting our Taxes on bull shit is evil,wast not want not!

In a fiat money system, money is not backed by a physical commodity (i.e.: gold). Instead, the only thing that gives the money value is its relative scarcity and the faith placed in it by the people that use it. A good primer on the history of fiat money in the US can be found in a video provided by the Mises.org website.

In a fiat monetary system, there is no restraint on the amount of money that can be created. This allows unlimited credit creation. Initially, a rapid growth in the availability of credit is often mistaken for economic growth, as spending and business profits grow and frequently there is a rapid growth in equity prices. In the long run, however, the economy tends to suffer much more by the following contraction than it gained from the expansion in credit. This expansion in credit can be seen in the Debt/GDP ratio. We track the bubbles created by this expansion of debt at the inflation / deflation page.

In most cases, a fiat monetary system comes into existence as a result of excessive public debt. When the government is unable to repay all its debt in gold or silver, the temptation to remove physical backing rather than to default becomes irresistible. This was the case in 18th century France during the Law scheme, as well as in the 70s in the US, when Nixon removed the last link between the dollar and gold which is still in effect today.

Hyper-inflation is the terminal stage of any fiat currency. In hyper-inflation, money looses most of its value practically overnight. Hyper-inflation is often the result of increasing regular inflation to the point where all confidence in money is lost. In a fiat monetary system, the value of money is based on confidence, and once that confidence is gone, money irreversibly becomes worthless, regardless of its scarcity. Gold has replaced every fiat currency for the past 3000 years.

What would the value of the US dollar be if the US bought back all of its debt overnight with newly printed currency?

@wundayatta before you start calling my ideas crackpot, you should give some thought to what money is. What is the “there” there? We work all our lives for this stuff, some of us guard it and treasure it, some of us think that we’re in ruin when we run out of it… and it only has meaning as long as everyone thinks it does. It’s the ultimate confidence game.

When people lose that confidence – which as @WestRiverrat has noted has always happened at some point with every fiat currency ever issued, then they’ll decide, “That stuff no longer moves my world; what else have you got to trade with me?”, then I guess we’ll find out what’s a better medium of trade. Frankly, I’m surprised that the dollar has lasted as long as it has.

@CWOTUS If I can’t call your ideas crackpot, then whose can I? ;-)

I agree with you. It is the ultimate confidence game. And that is all it ever is. Backing it with gold or something does not change the nature of the game. When confidence dies, the economy tanks, and it doesn’t matter if there is gold there or not.

The trick is to keep the relationship between the numbers in the computer (currency is pretty much passe, now) and the real stuff out there in balance. That is what maintains confidence. Perhaps it is inevitable that people will do things to destroy that relationship. But I hope we have enough checks and balances going on to keep the relationship between the numbers and the stuff fairly well balanced. We are in an interlinked global economy these days, and that helps.

But thinking we could go back to gold, and that if we did go back to gold it would make any difference is a crackpot idea, quite divorced from the nature of reality. I think if you seriously thought about how you would do it and what you would have to do to make it happen, you would realize this. Further, if you really carefully imagined what would happen if you did it, you’d give it up as a pretty bad idea. So plan it out. Step by step. In detail. As if you were building a new business implementation plan. I’m pretty certain the exercise would make you give it up as a bad idea pretty quickly. It is only in the abstract that it could possibly sound at all appetizing and/or doable.

@mattbrowne raising taxes alone will not end the debt crisis. If you are not willing to cut spending you won’t make a dent in the debt even if you taxed 100% of the 1% at 100% of their incomes.

I hate to say this but the answer to your question is most likely never.

This is as good as it gets. So enjoy this while it lasts as the currencies of the world head south. I try the fight this trend by investing in things that retain their value like property, precious metals and lots of guns and ammo.

Good luck

When basic necessities become abundant.

“wasting our Taxes on bull shit”

Why does anyone expect the government to be 100% efficient?
Our lightbulbs are 10% efficient.
The engines in our cars are about 30% efficient.
We tolerate those inefficiencies because they get their intended job done, and that’s what it costs.

I want the government to get the job done. Ideally that engages with the economy in ways that corral resources that we want to spend collectively to have things we need, like the fire department and clean water and a sewerage system, and trash collection and schools.
If that happens then let’s take a look at getting it done right, cheaper.

What’s with expecting there should never be a misspent government dollar?

A billion a week in Iraq is a wast for 10 years $500 for a wrench is a wast fire department and clean water and a sewerage is fine I’m talking out right wast.i can fill this page with wasted spending if you want?

@dabbler do you work for the government?

@fredTOG Oh yeah. He’s [redacted] at the [redacted]. Be careful. Part of his job is to [redacted] on [redacted], and to fetch coffee.

isn’t currency a trust, a faith, a confidence in exchange, If no faith, no currency, hopefully there is still blood pumping. I trust there still is and with optimism. Tonight, I was scorned that I did not accept the notion that optimism, or blind faith is the “wizard of oz “of our currency. And not to believe in it is to your detriment. I guess I learned something.

@fredTOG No I don’t work for the government, and I have no idea what would suggest to you that I do. I’m just a middle-class tax-payer who like the idea of government that gets what we need done and doesn’t expect it to be any more efficient than any other system humans build.

I totally agree about war, however, If we spent a fraction of the amounts that we spend on armaments instead on diplomats and sheer payola we’d have better results than we get from arming ourselves to the teeth and bombing the shit out of everything we can’t control.

If we could get some serious campaign finance reform we’d have less politicians beholden to the military-industrial complex (yes, or energy companies, or big finance.

I wasn’t talking about raising taxes. I was talking about people actually willing to pay taxes. Many Greeks are not and the country doesn’t even have a working bureaucracy to deal with the problem. They have no clue who owns what and who’s behind paying taxes. Americans should actually be thankful that the IRS is pretty efficient. It’s a good sign for a country.

And when I was talking about people willing to pay taxes I was also talking about people running international companies. There’s a global scam going on here where profitable companies manage to pay almost no taxes at all. They benefit from the infrastructure of a countries but giving something back in form of taxes will hurt shareholders. It’s the small honorable companies who pay for the infrastructure. As long as paying taxes is not seen as an honorable thing the debt crisis won’t go away.

There’s some potential in cutting spending, but that’s overrated and often used as an excuse to see paying taxes as a bad thing. Countries must spend money. Greece obviously didn’t spend enough on educating their public administrators who are not qualified enough to manage files and records.

Removed by me

and they pay 25% here-ridiculous, no wonder they run like rats from here.
So the banks, Golden Slacks will get the Parthenon the Colosseum and all the antiquities-modern day warfare, no wonder the people are pissed. I would drop out of the puppet mastery and endure 5 years of hell before I would accept 20 years of a depressed nation.

One more thing on this long topic and especially to the argument of there is no currency problem, which I see as delusional a late comment from one who has called a spade a spade from day one-bless his heart, “With the recent late night announcement from China and Japan as to their plan to bypass the US dollar and trade directly in the yuan and yen, this will bring about significant consequences for the US dollar’s reserve currency status. As usual the socialist media groups are doing their best to keep this out of the public eye due to future toil this could take on the already strained US dollar.
Courtesy of the late Robert Chapman, bless his soul, he died 4 days ago.