SUBSIM Radio Room Forums - View Single Post - Consumer spending picks up, but savings a worry

Skybird · 02-05-13, 02:17 PM

A "covered currency" - different to FIAT money - means that the cnetral bank is allowed to make only as many notesd and coins as there is a coverage in material value: gold being the most obvious, because history teaches us that precious rare items like gold and jewelry in almost every crisis can be traded for other items: food, shelter, medicine, whatever. It makes no sense to take an absolute philosophic view on it, Mookie.

A coin in this system is made of the precious metal covering the money - it has been done like that over centuries. A note still is only a "note of debt", a state bond. A central bank should also only make as many coins and notes as is represented by the real wealth that it administers: goods, possessions, services of that nation.

Where in the medieval kings started to raise the ammount of money beyond the level of silver and gold they owned, by making coins with smaller amounts of silver in them, replacing the difference with cheaper metals, it always was a recipe for galloping financial troubles sooner or later: the system lost its balance.

When Bretton Woods and the gold-coverage was given up to pay for the Vietnam war, this had a similiar effect since then. Since then, money is no longer representative and is no longer covered by real assets and wealth of a nation, but is just printed: no real value anymore, but FIAT money only.

Even worse: money turned from a tool by which the economy could do easy trading, to a trading item itself. Which in other words meant: debts became a trading good, like bread, ore, wood. This helped to accelerate the growing dysbalancing between debts circulating, and real value.

When Herrhausen in I think 2009 said that the international trading of money as a trading good (which means the trading of debts as a trading doo, since it is FIAT money only) surpasses the international trade with real material goods and items by a factor of 25, this was an illustration of how messed up things really are: because debts should not be traded, and currencies should be covered by real wealth.

the money we hzave today, is meaningless more or less, it is a snowball chip handed around. Once anybody asks where the real gold chip is that he plastic chip represents, the system will collapse, inevitably. Because then everybody will suddnely see that there is 25 plastic chips in the snowballing system, but only one gold coin to be exchanged for one plastic chip. The other players will lose everything that is related to the other 24 plastic chips.

That is why nobody wants to ask that question. Nobody dares to see how many gold coins there really are. Because if the snowball stops rolling, there is only just one winner. All others lose.

02-05-13, 02:17 PM	#6
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,604 Downloads: 10 Uploads: 0	A "covered currency" - different to FIAT money - means that the cnetral bank is allowed to make only as many notesd and coins as there is a coverage in material value: gold being the most obvious, because history teaches us that precious rare items like gold and jewelry in almost every crisis can be traded for other items: food, shelter, medicine, whatever. It makes no sense to take an absolute philosophic view on it, Mookie. A coin in this system is made of the precious metal covering the money - it has been done like that over centuries. A note still is only a "note of debt", a state bond. A central bank should also only make as many coins and notes as is represented by the real wealth that it administers: goods, possessions, services of that nation. Where in the medieval kings started to raise the ammount of money beyond the level of silver and gold they owned, by making coins with smaller amounts of silver in them, replacing the difference with cheaper metals, it always was a recipe for galloping financial troubles sooner or later: the system lost its balance. When Bretton Woods and the gold-coverage was given up to pay for the Vietnam war, this had a similiar effect since then. Since then, money is no longer representative and is no longer covered by real assets and wealth of a nation, but is just printed: no real value anymore, but FIAT money only. Even worse: money turned from a tool by which the economy could do easy trading, to a trading item itself. Which in other words meant: debts became a trading good, like bread, ore, wood. This helped to accelerate the growing dysbalancing between debts circulating, and real value. When Herrhausen in I think 2009 said that the international trading of money as a trading good (which means the trading of debts as a trading doo, since it is FIAT money only) surpasses the international trade with real material goods and items by a factor of 25, this was an illustration of how messed up things really are: because debts should not be traded, and currencies should be covered by real wealth. the money we hzave today, is meaningless more or less, it is a snowball chip handed around. Once anybody asks where the real gold chip is that he plastic chip represents, the system will collapse, inevitably. Because then everybody will suddnely see that there is 25 plastic chips in the snowballing system, but only one gold coin to be exchanged for one plastic chip. The other players will lose everything that is related to the other 24 plastic chips. That is why nobody wants to ask that question. Nobody dares to see how many gold coins there really are. Because if the snowball stops rolling, there is only just one winner. All others lose. __________________ If you feel nuts, consult an expert.