Fiat Money and other ramblings
Been a while ... =)
Anyways here is a link to fiat money.
I think it is interesting, if a little sensational and doomsaying.
Still take into account our current system is no older than a century or two and given the short livespans and relative "inexperience" of experts such as buffet greenspan etc...
Hey.. all I am saying is that it is YOUR money and you should take responsibility. Because when it all crashes...
All the expert/oracle will tell you is "sorry"
Oh yah, that already happened with Greenspan. BTW Green span and many others actually said the propert crash is not likely or impossible to happen.
So be responsible for your money and if you must coat tail, do it with great awareness and agility.
Thats what this game is about ;)
Anyways...
FIAT Money.
From my understanding, the basic concept is when a government issues money that it can no longer back.
Now I find this rather intriguing, because not too long ago i asked myself. Where does money come from?
Yes people earn them. I earn it from my parent org. My parent org gets it from the govenment. Where does the government get the moeny.
Yeah sure taxes.
but thats jumping the cycle by a step.
Somewhere the government must have printed money.
Sure by the power and authority vested in them, is that enough?
historically no. =)
Oh this is so amusing, but I just recalled that i watch this show about pirates on Octo??? or channel5 ??? i cannot remember.
Being a horny healthy male, i was attracted by the relatively attractive female narrater/showhost who was acting all air headish....
But still the show was about pirates, their rise, their fall, and their eventually weeding out (oh recently pirates were in the news some somali things .. amazing (or perhaps not) that this still happens today ;))
Did you know that pirates were commision by governments???
Except that their official title was Privateer =)
To their government, Privateers were military seamen, sent to gather loot for the government, all privateers of other nations were pirates!!!
Spain/Britain was one of the largest nations actively having pirates.. oops privateers. =)
Oh but more to the point of this post.
What was the loot in those days????
Spice
Silk
Porcelain
GOLD!!
In short things of actual value!
No where in history had paper EVER had value
except to REPRESENT something of value!
a dollar note is legally, legal tender. A promise of a certain value.
Most people do not even know what the value is!
I know I don't!
Upon investigation, all I could find was that the Singapore Dollar is pegged to a basket of currency.
What this means is that it is a promise of the govenment, based on promises by other governments.
Stay with me and think of recursion if you are a programmer.
At the very end of the recursion, there must be a return value.
I am not too sure, but an example of the return value is the US dollar. The value is currently (I think), 1/35th of an ounce of GOLD
So thats it. GOLD is the item of absolute value.
Or so we think.
The point is GOLD could one day become valueless. Just as the value of the dollar was arbitarily pegged to the GOLD as 1/35th of an ounce. The value of GOLD is hugely determine by people.
So one could argue that the system is ultimately not workable.
My guess is that, for the system to work it must be pegged to the most stable item of value. At this moment, very likely GOLD.
I think overall the system is workable.
That is until the US dollar cannot deliver its value or put another way is no longer really worth the 1/35th of an ounce of GOLD
For the local Singaporeans, remember banana money. That is fiat money. Money based purely on the promises of a government.
Note: the pegging of the USD to gold is a promised backed by gold. Not purely the government. There is a BIG difference.
There is another interesting concept : Petroleum Dollars . It sounds really sensationalistic. But economically speaking, it is scarily plausible.
But I think the takeaway here are the concepts. both of fiat money and petroleum money (which I did'nt really elaborate but you could google you know ;)).
My personal belief is that the systems are so large that it would take time for them to crash, possibly not in our lifetimes (which was probably what Greenspan was hoping). And you! puny investor must protect yourself from the vagarities of the economic climate. Because, the big boys are not going to take care of you. Just as the relationship between a Whale and plankton, or more controversially between a pastor and his church, the reigning idea is that plankton or one's tithe is miniscule. Oh you are important. But when things fall apart, don't expect to be protected by those who depended on you. You are, in a word, expendable.
Go on weep ;)
To your success!
Anyways here is a link to fiat money.
I think it is interesting, if a little sensational and doomsaying.
Still take into account our current system is no older than a century or two and given the short livespans and relative "inexperience" of experts such as buffet greenspan etc...
Hey.. all I am saying is that it is YOUR money and you should take responsibility. Because when it all crashes...
All the expert/oracle will tell you is "sorry"
Oh yah, that already happened with Greenspan. BTW Green span and many others actually said the propert crash is not likely or impossible to happen.
So be responsible for your money and if you must coat tail, do it with great awareness and agility.
Thats what this game is about ;)
Anyways...
FIAT Money.
From my understanding, the basic concept is when a government issues money that it can no longer back.
Now I find this rather intriguing, because not too long ago i asked myself. Where does money come from?
Yes people earn them. I earn it from my parent org. My parent org gets it from the govenment. Where does the government get the moeny.
Yeah sure taxes.
but thats jumping the cycle by a step.
Somewhere the government must have printed money.
Sure by the power and authority vested in them, is that enough?
historically no. =)
Oh this is so amusing, but I just recalled that i watch this show about pirates on Octo??? or channel5 ??? i cannot remember.
Being a horny healthy male, i was attracted by the relatively attractive female narrater/showhost who was acting all air headish....
But still the show was about pirates, their rise, their fall, and their eventually weeding out (oh recently pirates were in the news some somali things .. amazing (or perhaps not) that this still happens today ;))
Did you know that pirates were commision by governments???
Except that their official title was Privateer =)
To their government, Privateers were military seamen, sent to gather loot for the government, all privateers of other nations were pirates!!!
Spain/Britain was one of the largest nations actively having pirates.. oops privateers. =)
Oh but more to the point of this post.
What was the loot in those days????
Spice
Silk
Porcelain
GOLD!!
In short things of actual value!
No where in history had paper EVER had value
except to REPRESENT something of value!
a dollar note is legally, legal tender. A promise of a certain value.
Most people do not even know what the value is!
I know I don't!
Upon investigation, all I could find was that the Singapore Dollar is pegged to a basket of currency.
What this means is that it is a promise of the govenment, based on promises by other governments.
Stay with me and think of recursion if you are a programmer.
At the very end of the recursion, there must be a return value.
I am not too sure, but an example of the return value is the US dollar. The value is currently (I think), 1/35th of an ounce of GOLD
So thats it. GOLD is the item of absolute value.
Or so we think.
The point is GOLD could one day become valueless. Just as the value of the dollar was arbitarily pegged to the GOLD as 1/35th of an ounce. The value of GOLD is hugely determine by people.
So one could argue that the system is ultimately not workable.
My guess is that, for the system to work it must be pegged to the most stable item of value. At this moment, very likely GOLD.
I think overall the system is workable.
That is until the US dollar cannot deliver its value or put another way is no longer really worth the 1/35th of an ounce of GOLD
For the local Singaporeans, remember banana money. That is fiat money. Money based purely on the promises of a government.
Note: the pegging of the USD to gold is a promised backed by gold. Not purely the government. There is a BIG difference.
There is another interesting concept : Petroleum Dollars . It sounds really sensationalistic. But economically speaking, it is scarily plausible.
But I think the takeaway here are the concepts. both of fiat money and petroleum money (which I did'nt really elaborate but you could google you know ;)).
My personal belief is that the systems are so large that it would take time for them to crash, possibly not in our lifetimes (which was probably what Greenspan was hoping). And you! puny investor must protect yourself from the vagarities of the economic climate. Because, the big boys are not going to take care of you. Just as the relationship between a Whale and plankton, or more controversially between a pastor and his church, the reigning idea is that plankton or one's tithe is miniscule. Oh you are important. But when things fall apart, don't expect to be protected by those who depended on you. You are, in a word, expendable.
Go on weep ;)
To your success!
Labels: currency, economics, FIAT Money, petroleum money
posted by god_is_good478 at 9:08 PM
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