Fiat Currency vs. Gold Standard
I’ve had just about enough of this foolishness and people spreading fear throughout the world regarding a currency crash. These conspiracy theorists with the help of the internet are finally having their way. It’s a shame too because most of the people that are listening to these people are already poor or struggling financially.
First off everything written on this blog post is my opinion, you are entitled to voice your opinion I will voice mine.
Returning to the Gold Standard
First let’s get to the heart of the matter Gold. The United States Dollar is not backed by Gold. Why is the United States dollar or any currency for that matter not backed by Gold??? There are two very important reasons why the United states Dollar is not backed by Gold
Golden Reason number 1:
If the dollar US dollar or any currency was backed by gold Countries would have to dig for gold before they could print paper money.
What this would ultimately mean is whoever has gold has the power. Not only that but the person with the gold may decide not sell or trade any of it I mean really think about it why would they???
This is the main reason the Roman Empire and other civilizations failed. Because in times of fear and panic the people with the gold would either get stingy or they would Relocate with their gold which basically means “SYSTEM FAILURE” under that system when the gold is gone the government will have to dig for more gold to stimulate or recreate the economy, that being said the government with all the financial backing gone might cease to exist.
Golden Reason number 2:
The American Dream: President Nixon took the United States of the Gold Standard for a reason. The reason was for times like this. Americans need to realize something; the thing that separates The United States from the rest of the world is United States ability to CONSUME. What these conspiracy theorists are not telling you is how dependent the rest of the world has become on the United States.
The time I am writing this it’s October 09 2010. I have been watching the currency markets I recommend you do the same. What’s happening right now is fear? Many people are buying GOLD which is lowering the Purchasing power of the United States dollar and other fiat currencies.
That being said because FEAR is causing investors to buy gold other countries is rushing to buy U.S dollars thus devaluing their own currency. The United States is the leader of capitalism thus whenever panic grips the public other countries come to the United States for shelter. Again Fiat Currency is backed by nothing.
The only way for fiat currency to be devalued is if people start buying gold. If we go back to the gold standard the rich stay rich and the poor remain poor there will be no middle class and there will be no chance for a middle class. Government and all benefits of government as we know it will cease to exist.
Why are other countries selling off their own currency to purchase United States Currency???
The answer is obvious like I’ve said earlier America leads the world in terms of capitalistic society secondly the entire world is currently DEPENDENT on the United States to keep their countries afloat. Why are they dependent on us because America is a nation of consumers? Even this panic is making Americans to consume. Keeping paper Money in circulation is the purpose of capitalism. Most countries especially in Europe still believe in Socialism and communism. In times like these a socialist or communist government would fall flat on its face.
Do I Have your Attention Yet? Do you at least understand the concept of fiat currency?
If you are not in the business arena you might not understand what I am talking about here. I personally recommend people start their own business at least once in their lifetime, it’s truly the only way you will fully understand how money works. Money is a game it’s not something that is supposed to be just cherished it’s something that is supposed to be spent or invested wisely.
As a business owner I will tell you America is a country that can make all your wildest financial dreams come true in an instant. America can turn a poor man or woman with a genius idea into a millionaire. There are Millions of stories of this happening what other country in the world do you know of that can do that???
I am a part of the Progressive movement I HATE SOCIALISM in my opinion socialism only works in THEORY. Socialism to me is just a more sophisticated form of communism. That being said I think its important people understand the purpose of fiat Currency.
Understanding the Purpose of Fiat Currency
I keep hearing words like Debt and Government spending in the United States. When I hear this I can’t help but say to myself What part of money not back by gold don’t people understand. The easiest way for me to explain this is look at the U.S dollar as a ship, a ship we as Americans are all on together. So when the United States dollar goes down Americans go down with it. Americans need to WAKE UP TO THIS FACT.
America we are Capitalism if America ceases to exist Capitalism ceases to exist.
I know most of you are young and may not understand this but capitalism is still in its early stages. The purpose of Currency is to give everyone a fair shot at wealth, which in reality is the American Dream. I think it’s also important Americans read about the history of fort Knox and the reason it was created. Soon after Fort Knox president Nixon took Americans off the gold standard and turned the United States money into a fiat currency. If you look at your United States money today it says “legal tender”. This is fiat currency
What this means is if America Falls the USD and paper currency mean NOTHING. This is why many people are turning to gold. What you are not being told about gold is that if we return to the gold as the form of trading the entire economy as we know it will COLLAPSE. The game will be over and the rich people will rule over all of us.
Currency is used to give everyone a fair shot. Currency also falls under the same rules as supply and demand. The U.S currency is still one of the most demanded currencies on the market, they created the “Euro” mainly to compete with USD. Countries like Iraq and Iran were and still are asking American companies to buy Oil in Euro’s. They are doing this mainly to devalue the U.S currency; many speculate this was the reason for Bush invading Iraq. On another topic people keep talking about China and China being the next super power. Maybe in the distant future but not in the near future let’s quickly talk about china’s problems.
China has a major population problem over 1 BILLION people, most of the people in China live off one meal a day if that. China has a huge manufacturing base but a small consumer base, Because China has been manipulating their currency China faces some serious inflation related issues in the near future.
You might also want to look at China’s rank in terms of gross domestic product (GDP) at purchasing power parity (PPP) per capita, China ranks on average 90 compared to the rest of the world in these numbers. This stat alone exposes China’s many problems
I’m not saying to say that China can’t come out of this. What I’m saying is that a problem like this can’t be fixed overnight.
China Devaluing their currency
The problem China has is simple China has a HUGE manufacturing base but it also has a tiny consumer base. The Chinese are known for manufacturing goods and selling them to the western world and Europe for cheap. But see this is what is never discussed about China. China needs America to keep their government afloat the Chinese yuan is devalued which means their economy is currently artificial if you look at modern day Japan they’re currently faced with the same problems that I suspect China will face in the near future.
The Japanese Yen is almost at it’s natural value however with this exposure Japan has been fighting like hell to keep their economy afloat. China being that it has a lot more people than Japan has a lot more concerns if their dollar rises. First problem is unlike Japan, Chinese products aren’t known for their high quality, China is known for producing high quantity for cheap prices; if the Yuan rises to where it’s suppose to be China will look very unattractive because paying top dollar for a CHEAPLY made products won’t make sense to consumers or to businesses. In fact a higher dollar would destroy the Chinese economy especially right now. This is why China joining the reserved currency list doesn’t bother anyone.
The Gold Standard I truly hate
I have no problem with Gold, but having our money backed by Gold scares me, if money is backed by gold it reintroduces a host of new problems and the reality is that the world will become very chaotic because a gold backed currency basically means government cannot print money.
What most people still don’t understand about America’s last great depression is that it was cause by “DEFLATION”. Deflation means there was NO GOLD backed currency in circulation. What this means is that nobody was spending money and because the government had no control over gold distribution there was nothing the American or world governments could do.
This basically put the government at the mercy of the rich and powerful, governments inability to print money with gold to back it put them at the mercy of the then Rich and powerful. This is one of the reasons I HATE gold backed currency.
Fiat Currency levels the playing field. Fiat currency doesn’t guarantee America’s success but it prevents the Rich from owning Americans, as it stands now America is its own worst nightmare. America should honestly be focusing its attention on OPEC. OPEC is the real problem we’re having; A few rich people around a desk dictating the price the entire PLANET will pay for Oil is something that should be pissing off Americans.
Yet people are wasting time talking about banks and Gold. Oil is what farmers need to run the machines that make our food, Oil is needed to run your home, Oil is the bloodline of America and anyone talking about anything other than OPEC is detouring you from the serious issue which is OIL.
In conclusion
In conclusion I prefer Fiat Currency over Gold; I’ll choose inflation over deflation any day. In the event a fiat currency flat lines another one can be created, When the Gold backed currency flat lines everything has to be reset which would set the world economy back for years.
Economic crashes happen all the time. But if one happens and a few people have all the gold, the rest of the world will be at the mercy of rich and powerful which will only lead to more wars. Don’t get fooled into believing Gold is any more real than fiat currency, they we’re both made for the same purpose the only difference is one has to be dug up and the other has to be printed.
Whichever way you look at it we the people give them value. Another thing you have to remember with Gold is that you start getting people making fake gold or diluting it (fool’s gold), Gold backed currency introduces a host of new problems way worse than counterfeiting.
I choose Fiat Currency over Gold
Please leave your comments below.
Thanks for reading some other posts you might be interested in reading are listed below:
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- Gold Bullion Coins vs. Numismatic Coins / GoldLine.com Reviewed
- What does a credit rating downgrade mean to America?
- Will the price of Silver go Up in 2012?
- Was Gaddafi killed because of gold dinar currency?
- The best way to get rid of oil and other fossil fuels
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You clearly do not know the history of Fiat Currency.
The American fiat currency will fail in time and it’s coming real soon…
@Das yes Das fiat currency will fall just like Gold has on multiple occasions. Lets go digging for gold all over again lets return to the old world. you speculators are like Judas Goats
Fiat currency is designed to fail. It is inevitable. When the government prints money it is steeling value of the existing currency. Since the inception of the FED and a move to fiat currency our depressions and recessions have been more frequent and more extreme. Gold has never failed. Only the paper tied to it due to fraud. Precious metal will never lose its value. Paper is designed to and currently it is the strategy of our gov to monetize the debt. You claim that if we have a gold standard then only the rich will have the gold. This fails to acknowledge that prior to government confestation the gold was distributed throughout the populace.
Yes Frag and when we had a gold standard the world was perfect?! there we’re no wars, no financial problems and the entire planet was at peace!
Fiat currency allows goverments to fund wars they create. They don’t need the peoples support to fund a war, they just start the war and when they need to pay for it, they print more fiat currency.
Through out time, all great nations have failed, not because they started with real money such as gold, but they eventually moved from gold to a Fiat currency system and debase their money. Look at history. Athens, Rome, they both started with gold as money. They grew big and powerful. Then they collapsed. Why? Not because of gold and the rich as you seem to say. But because they moved away from using only gold as money and started to mint tons and tons of coins made of copper or other useless metals. (Basically a Fiat currency system. which debased their money) Why did they move away from gold? Again, not because of the rich, but because they did not have enough gold to mint the coins needed to fund THEIR wars, welfare programs, and public projects. Goverments is what caused great nations to fail. Goverments are the ones who lose eye sight on what is important, and focus soloy on things like, Wars, welfare programs (to get votes), public projects (to get votes). All these things costs a ton. So what is the solution to the cost? Fiat Currency! Goverments can just print money when they need it. And when you print more currency, you get inflation. This would be fine, if the government then did things that would cause deflation afterwards. BUT! which politician wants to be the one to cause a deflation??? None of them. So all we get is more printing of currency to pay for politicians promises of public welfare programs and or war/security. And this just leads to inflation, a de-trust of the currency and then the collapse of the currency.
Right now we are seeing a rush back to gold and silver. Why? The dollar Bill is reaching a point where the people will be no longer able to trust the value of the dollar, and it will collapse. All government is doing right now is printing and printing and printing and spending. Its not just the people that are losing trust, but other countries in the dollar bill.
You have to research all of history and facts on fiat currency to know that the above article is wrong on multiple accounts.
Gold is a barter system! and the fiat monetary system we know today didn’t exist in Ancient Rome. Gold is a HARD ASSET that in this present day and age would stunt growth. If anything OIL is the new Gold the world can live without Gold the way our world is structured now OIL is what we can’t live without. The problem isn’t money the problem is “US” we the people who allow governments to start wars. We the people we don’t make noise when governments do things we disagree with. We the people who instead of getting involved in politics we sit back and complain, we the people that allow corporations to muscle out small businesses, we the people who allow banks to make bad bets and we don’t go and protest when our government bails them out. GOLD won’t fix LAZINESS and a lack of financial education.