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This may be true, but the government also has the power to control inflation, which limits the purchasing power of those dollars. See: Venezuela, Zimbabwe, Ger
by trendia 8y ago
This may be true, but the government also has the power to control inflation, which limits the purchasing power of those dollars.
See: Venezuela, Zimbabwe, Germany ~1920
- Spooky23 8y agoDebt instruments are based on faith and credit. Those events are indicative of scenarios where the market lost confidence in the faith and credit of those nations. When you can't sell bonds anymore, you implicitly borrow by devaluing the money. That's where the derogatory treatment of "fiat" money by goldbugs and cryptocurrency advocates falls down. A government can declare that something is worth a dollar, but the market determines what a dollar is worth.
- pluto9 8y ago> A government can declare that something is worth a dollar, but the market determines what a dollar is worth. So what happens when the government declares that a candy bar is worth a dollar, but the market determines that a dollar is worth half a candy bar?