There are quite a few people who believe US is going to fall into a hyper inflation trap because it is no longer on the gold standard, so printing paper money beyond what the money is worth.
First, why does linking the money to gold actually substantiates the money's worth?
I know the answer to this, but the real answer is simply gold is valuable because people like the it and that it is rare metal, thus people can be sure its value will not drop from too much supply. Unlike diamonds which is not very rare and has its value artificially inflated by a diamond cartel DeBeer.
Second, if money is tied to gold, then it just means US cannot print too much. If money is scarce, but productivity is high and goods are plentiful, what actually will happen? Deflation will occur?
Third, how do you combat hyper inflation?
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THE US Economy (merged)
Printing paper money bad for economy?
by nth » Wed 08 Jun 2005, 18:15:34
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by ubercrap » Wed 08 Jun 2005, 19:04:02
I don't know, but from what I understand, hyper-inflation in the past may have been done on at least partially on purpose? What is worrisome is the amount of dollars the rest of the world is holding- both governments as well as foreign banking. If everyone started dumping dollars for some reason, I'm thinking that alone would be enough to create incredible inflation. As for the ultimate logic of fiat currency, I'm not sure. Seems in the long run it must fail at some point.
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by ubercrap » Wed 08 Jun 2005, 19:37:00
$this->bbcode_second_pass_quote('nth', 'h')rm... US can issue new currency... forcing all those foreign holders to cash in. By restricting buying power of USD, inflation can be mitigated, but comes with significant costs.
You mean like printing/creating and entirely new precious metals backed currency ahead of time and basically invalidating the dollar? Interesting.
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by aldente » Wed 08 Jun 2005, 22:17:36
I posted these excerps in the past and do so again now since they fit perfectly in this thread:
By May 1971 the drain of U.S. Federal Reserve gold had become alarming, and even the Bank of England joined the French in demanding U.S. gold for their dollars. That was the point where rather than risk a collapse of the gold reserves of the United States, the Nixon Administration opted to abandon gold entirely, going to a system of floating currencies in August 1971. The break with gold opened the door to an entirely new phase of the American Century. In this new phase, control over monetary policy was, in effect, privatized, with large international banks such as Citibank, Chase Manhattan or Barclays Bank assuming the role that central banks had in a gold system, but entirely without gold. ‘Market forces’ now could determine the dollar. And they did with a vengeance.
Beginning the mid-1970’s the American Century system of global economic dominance underwent a dramatic change. An Anglo-American oil shock suddenly created enormous demand for the floating dollar. Oil importing countries from Germany to Argentina to Japan, all were faced with how to export in dollars to pay their expensive new oil import bills. OPEC oil countries were flooded with new oil dollars. A major share of these oil dollars came to London and New York banks where a new process was instituted. Henry Kissinger termed it, ‘recycling petrodollars’. The recycling strategy was discussed already in May 1971 at the Bilderberger meeting in Saltsjoebaden, Sweden. It was presented by American members of Bilderberg, as detailed in the book "A Century of War.
Here the full article:
William Engdahl
And here the book which I can highly recommend:
A Century of War
By May 1971 the drain of U.S. Federal Reserve gold had become alarming, and even the Bank of England joined the French in demanding U.S. gold for their dollars. That was the point where rather than risk a collapse of the gold reserves of the United States, the Nixon Administration opted to abandon gold entirely, going to a system of floating currencies in August 1971. The break with gold opened the door to an entirely new phase of the American Century. In this new phase, control over monetary policy was, in effect, privatized, with large international banks such as Citibank, Chase Manhattan or Barclays Bank assuming the role that central banks had in a gold system, but entirely without gold. ‘Market forces’ now could determine the dollar. And they did with a vengeance.
Beginning the mid-1970’s the American Century system of global economic dominance underwent a dramatic change. An Anglo-American oil shock suddenly created enormous demand for the floating dollar. Oil importing countries from Germany to Argentina to Japan, all were faced with how to export in dollars to pay their expensive new oil import bills. OPEC oil countries were flooded with new oil dollars. A major share of these oil dollars came to London and New York banks where a new process was instituted. Henry Kissinger termed it, ‘recycling petrodollars’. The recycling strategy was discussed already in May 1971 at the Bilderberger meeting in Saltsjoebaden, Sweden. It was presented by American members of Bilderberg, as detailed in the book "A Century of War.
Here the full article:
William Engdahl
And here the book which I can highly recommend:
A Century of War
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by nth » Thu 09 Jun 2005, 13:14:55
$this->bbcode_second_pass_quote('ubercrap', '')$this->bbcode_second_pass_quote('nth', 'h')rm... US can issue new currency... forcing all those foreign holders to cash in. By restricting buying power of USD, inflation can be mitigated, but comes with significant costs.
You mean like printing/creating and entirely new precious metals backed currency ahead of time and basically invalidating the dollar? Interesting.
That has been done in the 20th century when currencies went into hyper inflation.
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by ubercrap » Thu 09 Jun 2005, 16:35:52
$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('ubercrap', '')$this->bbcode_second_pass_quote('nth', 'h')rm... US can issue new currency... forcing all those foreign holders to cash in. By restricting buying power of USD, inflation can be mitigated, but comes with significant costs.
You mean like printing/creating and entirely new precious metals backed currency ahead of time and basically invalidating the dollar? Interesting.
That has been done in the 20th century when currencies went into hyper inflation.
I thought they created a new currency after hyperinflation.
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