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You're right -- the commonwealth countries are in for a rude awakening! Especially considering government debts worldwide have increased A LOT since the 2008 fi

You're right -- the commonwealth countries are in for a rude awakening! Especially considering government debts worldwide have increased A LOT since the 2008 financial crisis [0], they don't have the same ability to inflate their way out of the next crisis that they had after the 2008 crisis. Even though I agree with the spirit of your statement, I don't think that central banks "let this happen" -- on the contrary, fiat currencies and central banks BY DESIGN massively exacerbate (and arguably cause) the boom and bust cycle [1]. Without central banks unilaterally determining the price of borrowing money (AKA interest rates) and propping up bankrupt institutions (e.g. see 2008 bank bailouts), the natural boom and bust cycle would have a much lower amplitude as the market would determine the price of borrowing money rather than disconnected bureaucrats sitting in the room pouring over the latest econometric reports. Price controls don't work for goods and services (see the USSR) and they certainly don't work for money either! [0] Worldwide Government Debt - https://data.worldbank.org/indicator/GC.DOD.TOTL.GD.ZS https://data.worldbank.org/indicator/GC.DOD.TOTL.GD.ZS [1] Austrian Business Cycle Theory - https://en.wikipedia.org/wiki/Austrian_business_cycle_theory https://en.wikipedia.org/wiki/Austrian_business_cycle_theory

mempko 9y ago
Government debt is never the problem considering government has monopoly to create new money. The problem is private debt. In fact if you look at why private debt increases it's usually correlated to a DECREASE of government debt. For example, the Clinton surplus forced private sector into massive debt. If you haven't noticed, the common wealth countries have been going through a huge austerity program. This austerity is the likely reason private debt increased heavily. Also since corporate tax rates were also lowered, corporations kept more of their profits. They used these to invest in assets like stocks, bonds, and real-estate. In other words, austerity plus lower tax rates equals high private debt.
- sbenitoj 9y ago
  "Government debt is never the problem considering government has monopoly to create new money." Not for long they don't! Cryptocurrencies have finally found a way to get around such unethical control of the world's monetary systems. And government controlling the monetary systems does not make government debt irrelevant -- even if they can always print more money, they can't always avoid hyperinflation. And regardless, printing money is stealing from savers, so it's not exactly some noble activity.
omegaworks 9y ago
Is there a viable alternative to fiat currency? The Gold Standard brought about an era of mineral extraction and colonial pillage, and Bitcoin doesn't seem to work all that well at having a stable value or even as a means of exchanging that value (unconfirmed transaction delay).
- sbenitoj 9y ago
  Great question, I suspect we'll find one in the next 100 years! The gold standard over the past 100 years was mostly a government controlled gold standard, where paper money's tenuous link to gold was slowly eroded until it was completely eliminated (Nixon severed the final ties to gold in the US in 1971). If governments had never mettled with money, I suspect the world would already have a well-functioning monetary system (most likely gold). I'm a big cryptocurrency fan, but as you mention Bitcoin has recently had issues with unconfirmed transaction delays. Without going into the details (don't know how familiar you are with the politics of Bitcoin), I think this will ultimately get resolved, and the transaction delay / high transaction costs / full blocks are ultimately what lead to Bitcoin forking into Bitcoin and Bitcoin Cash. As for Bitcoin lacking a stable value, that's also an issue, but if it actually has a shot at replacing fiat currencies worldwide (and I think it does), its value will increase massively but ultimately it will plateau and have a relatively stable value (I suspect this would've happened with gold already if governments hadn't mettled with it)!

mempko 9y ago

Government debt is never the problem considering government has monopoly to create new money. The problem is private debt. In fact if you look at why private debt increases it's usually correlated to a DECREASE of government debt. For example, the Clinton surplus forced private sector into massive debt. If you haven't noticed, the common wealth countries have been going through a huge austerity program. This austerity is the likely reason private debt increased heavily. Also since corporate tax rates were also lowered, corporations kept more of their profits. They used these to invest in assets like stocks, bonds, and real-estate. In other words, austerity plus lower tax rates equals high private debt.

sbenitoj 9y ago
"Government debt is never the problem considering government has monopoly to create new money." Not for long they don't! Cryptocurrencies have finally found a way to get around such unethical control of the world's monetary systems. And government controlling the monetary systems does not make government debt irrelevant -- even if they can always print more money, they can't always avoid hyperinflation. And regardless, printing money is stealing from savers, so it's not exactly some noble activity.

omegaworks 9y ago

Is there a viable alternative to fiat currency? The Gold Standard brought about an era of mineral extraction and colonial pillage, and Bitcoin doesn't seem to work all that well at having a stable value or even as a means of exchanging that value (unconfirmed transaction delay).

sbenitoj 9y ago
Great question, I suspect we'll find one in the next 100 years! The gold standard over the past 100 years was mostly a government controlled gold standard, where paper money's tenuous link to gold was slowly eroded until it was completely eliminated (Nixon severed the final ties to gold in the US in 1971). If governments had never mettled with money, I suspect the world would already have a well-functioning monetary system (most likely gold). I'm a big cryptocurrency fan, but as you mention Bitcoin has recently had issues with unconfirmed transaction delays. Without going into the details (don't know how familiar you are with the politics of Bitcoin), I think this will ultimately get resolved, and the transaction delay / high transaction costs / full blocks are ultimately what lead to Bitcoin forking into Bitcoin and Bitcoin Cash. As for Bitcoin lacking a stable value, that's also an issue, but if it actually has a shot at replacing fiat currencies worldwide (and I think it does), its value will increase massively but ultimately it will plateau and have a relatively stable value (I suspect this would've happened with gold already if governments hadn't mettled with it)!