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The only way fiat currency fails is if the global economy goes so far down the tubes that gold isn't worth anything either, compared to nonperishable food and b
by jbooth 14y ago
The only way fiat currency fails is if the global economy goes so far down the tubes that gold isn't worth anything either, compared to nonperishable food and bullets.
Take a look at a GDP graph of the 75 years prior to fiat currency and then the 75 years afterwards. It goes from a severe jigsaw into much smaller oscillations. This is because fiat currency allows for counter-cyclical monetary policy, which was universally understood to be a good thing until Obama was inaugurated, and will once again be a universally good thing as soon as we have a different president.
- danenania 14y ago"The only way fiat currency fails is if the global economy goes so far down the tubes that gold isn't worth anything either, compared to nonperishable food and bullets." There are countless examples of fiat currencies collapsing throughout history. It doesn't imply the collapse of civilization, just the collapse of an overburdened government. Governments and banks would like us to believe that civilization will collapse alongside them if we let them fail. It's very convenient for them--they can get away with anything. But civilization has bounced back from much, much worse.
- jbooth 14y agoSorry, I meant US dollars (the default reserve currency of the world), not Argentinian pesos. The occasional collapse of various small government currencies isn't really a statement on fiat currency, it's a statement on those particular small economies. For fiat currency to fail as a concept, the international reserve currency (USD for now) would have to fail.
- bitcartel 14y agoLooks like the USD is on its second iteration. Originally there were the United States Notes (aka Greenback) which were replaced with Federal Reserve Notes. (The Birth of U.S. Fiat Currency - http://www.bloomberg.com/news/2012-04-02/the-birth-of-u-s-fiat-currency.html http://www.bloomberg.com/news/2012-04-02/the-birth-of-u-s-fi...)