Why is fiat currency bad? Do you know what it is?

[OddBeMe]

Fiat money is good

Fiat money is bad! Back to gold!

Updates

+1 y

75% of you want to cut our economy in half.

[exitseven]

Printed money has value because the government says it has value. Gold has value because of pretty much the same reason. Everybody thinks it is valuable. Gold is subject to the same economics as the dollar. If you could make Gold from lead like the ancient alchemists tried then after a while Gold would not be very valuable.
We now have the technology to make diamonds that are better than the ones they dig out of the ground. The price of diamonds is falling by the day

[OddBeMe]

And that proves fiat currency is bad how?

[exitseven]

I did not vote that it was bad. It maybe not good either. It just is a form of currency. People use it because of its portability.

[OddBeMe]

True, granted. It’s an economic tool to use and regulate. I just get sick from hearing “gold standard” when they don’t understand what that would mean.

[exitseven]

I can remember when the US was on the gold standard. Gold was 33 dollars an ounce for years. Now itvis over 3000 dollars an ounce.

[Sevenpointfive]

damn! 33 an ounce? fuck prospecting

[exitseven]

@Sevenpointfive I was working for a company that made trophies. We mad trophies for the local pro hockey team. They were plaques with regulation size pucks made of gold attached to it. Fast forward and I hear this former pro hokey player on sports radio and he said he really needs to get a safe deposit box because he has a trophy that is probably worth a couplehundred thousand dollars.

[Sevenpointfive]

i could probably learn to skate for that

[exitseven]

@Sevenpointfive yes,

[ProbablyClueless]

I'm not a fan of fiat currencies! Although, I guess they're good if you're a government material manufacturer or deficit spender.

They make everyone else infinitely poorer though

[OddBeMe]

How?

[ProbablyClueless]

Fiat currency values are based on market activity and demand. The economic theory is essentially that you stop basing the currency's value on a finite resource so that your economy can grow large enough for everyone who wants to participate in it, to participate in it. In order to accommodate that growth, the market participants need to be creating more value every year because there's theoretically a proportionally greater demand for their service.

The problem for most people is that most people aren't producing a proportionately greater value every year. It's just a function of their job; a cashier generally doesn't have the ability to do 4% more cashiering every year because they aren't adding infrastructure to process more transactions. They get poorer because they continue to do the same amount of cashiering in an economy where they aren't doing anything more to meet demand for their service.

Does that make sense?

[OddBeMe]

It does, well said. The problem is it’s worked since 1934. And produced the greatest wealth the world has ever seen. So…where’s your evidence that fiat currency is dangerous?

[Drewtate]

"The problem is it’s worked since 1934. And produced the greatest wealth the world has ever seen. So…where’s your evidence that fiat currency is dangerous?"

Pretty sure the profits of two world wars and exploitation of the 3rd world did that.

[goaded]

The fact that most of that created wealth is possessed by a handful of families?

[OddBeMe]

@goaded @drewtate Not sure where or by whom…. we had a great middle class before Reaganomics. But again…no evidence fiat currency is bad.

You want to decrease rich families? All aboard. I think there should auto tax to keep people from being billionaires.

[ProbablyClueless]

@OddBeMe what kind of evidence would you need to see to convince you that fiat currency is bad? Because the stuff we all just listed is compelling evidence that even if fiat currency isn't "bad," it certainly isn't great.

[OddBeMe]

I would say evidence of an economic downturn. Take 2007. It was the variable interest rates on mortgages handed out with morning donuts that all went bust at once. And the interconnectedness of “tranched” stocks tumbled the jenga tower (great scene from Big Short).

If fiat currency was the issue, it’d be outrageous inflation. But it’s always been single digits caused by external factors. Like this inflation currently…. economists say, is caused by Covid fucking up our workflow and global trade.

If you had evidence that printing money was bad (like Weimar in the 20s) that’d be something.

[ProbablyClueless]

I would say that we pretty unquestionably have that happening now. Those economists are partially right, but it's tough to say that the stimulus is less of a factor than the supply chain issues. The government printed $7T of stimulus money and we didn't have any increase in productivity.

[OddBeMe]

It’s absolutely external factors causing inflation. Yes the govt spent vookoo money in stimulus which kept the economy spending. And we are jailing fraudsters of the PPP. But again, no evidence printing money is bad when done smartly.

I do worry about that our populace won’t be educated enough for the service economy. We are still. expecting labor jobs to pay our way. And when there’s no consumers that’s when inflation erupts.

[ProbablyClueless]

Printing money isn't a problem when done smartly, I don't think anyone would dispute that. The ability to print more money is not what makes fiat currency a problem. The problem is that your money isn't a real store of value with a fiat currency.

[dustybiker2]

This was an interesting afternoon read. Needed to refresh my own memory of its details. I'd say it's easy to abuse, especially when giving banks any power.


https://www.investopedia.com/terms/f/fiatmoney.asp

[OddBeMe]

True, but it’s more the govt bank printing it and regulating inflation which so far they’ve done well. Now holding real banks accountable for the 2007 crash, that’s a different story.

[Chazmatazz269]

It doesn’t have to be gold. Any real goods or resources are suitable backing for representative currency. We’ll never go back because it would bankrupt the US. Not only do we not have enough real goods and resources to back our currency, we can’t produce enough to cover the difference. What little is left of our manufacturing base is too heavily dependent upon foreign markets for raw materials and cheap labor. We make almost nothing here from start to finish out of resources found only here.
Brush up on your Chinese, people!
Ell oh ell!

[Dargil]

Is that money to buy an Italian car built by Stellantis with?

[OddBeMe]

Never understand car guys.

[Anonymous]

Because it's guaranteed to be worthless in the end, gold has been valuable for millennia

[OddBeMe]

1934, 1935, 1936….2023, 2024…when’s it worthless?

[Opinion Owner]

Look to hyperinflated nations for notes i. e. Turkey, the Weimer Republic, Zimbabwe and Venezuela for a start

Before 1970/71 the dollar was tied to gold and if you count the 40% half dollar circulation included silver up until 1969

[RedInnocent69]

It’s not. If it were a lot of countries would be nationalizing their gold production.

[TheSpectre]

Never heard of it.

[OddBeMe]

That’s bad.

[OddBeMe]

Basically FDR disconnected the dollar from gold in 1934 and the economy skyrocketed.