This is an old video, but this is a guy who got it right.
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Way better presentation of this stuff is the “Crash Course”.
At 2:52 “Every time they have turned money into a currency…the value has gone to zero.” //// I don’t think that is true. An overstatement? Did ancient cultures go to fiat currency? Hah, hah. Yes, those who don’t know their history are doomed to repeat it.
#2 Bobbo, economically and historically ignorant
Historically speaking all fiat have inevitably gone to their intrinsic value. Zero. Nothing. Nada. Not worth a continental.
The current fiat currencies that the world is flooded with will also inevitably hit zero as well, it’s only a matter of time.
Is there a subtext here that Obama is the despot?
So yeah….those who don’t know their history are doomed to repeat it.
WE DIDNT ELECT AN ECONOMIST,
WE ELECTED A PRESIDENT.
Who does the president look to for information on HOW this is run..NOT you or I. NOT to those NOT involved..
Economists only LISTEN to companies/corps/rich.
http://dailyreckoning.com/fiat-currency/
Regarding making fiat coins by reducing the value of silver in them, or reducing their size, etc, I’m gonna bet that eventually even metal money based economies fail too? After all, haven’t ALL economies “failed?”
Yea, its complex, but what is cause and what is effect? Does having a gold standard keep us from sending troops 7000 miles away?
I don’t think so, but I’m not an economist and I’m not an historian==and I don’t believe those who are.
#6–ECA==hey!!! thats about the first or second post of yours I think I understand. Yes, there is bias everywhere. Institutions tend to view the world as institutions, eg, the wealthy. Who are me and thee?
#5–DA==What history I do know suggests we are doomed to repeat it whether we know it or not. Our current credit collapse was experienced within one humans lifetime and regulations were in place to prevent it. Completely forseeable and preventable–like vaccines actually prevent illness. But as a group, our species only react to the hurt if we can feel the scar. Reading is for eggheads and even the eggheads need the scars to keep them oriented.
bobbo, not an english major either. so you believe those that aren’t economists or historians? from most of your posts you just babble off an opposing view for the troll factor then?
#10–DD==what does being an English Major got to do with anything? But yes, as a general premise, there is more to learn in reasonable disagreement than sitting back passively in agreement. Just as you have done. Who is your favorite cavalier poet?
@bobbo
Free market banking can’t fail. The market has always chosen either gold or silver to back the money supply, so unless someone finds a magical machine that can change some other element on the periodic table into gold at a profit…Even if someone found a massive gold supply hidden in the earth thats 10 times the size of all the gold discovered thus far around the world, the resulting calamity from that wouldn’t be as bad as what fiat money has done.
The only way free market banking has ever failed is when the government stepped in the way. Thats not a banking failure, thats a government failure.
For instance, If a bank debases the money of it’s depositors, it could fail, should fail, and inevitably would fail without the government intervening. Also the persons that debased the money of it’s depositors without their consent should be charged with fraud. That should be held as a serious criminal offense. So the banks who don’t debase it’s depositors money would gain a larger market share and more profits. The banks who provide the consumer with the best money will be the most successful bank.
Unfortunately, banks have almost always had a very cozy relationship with government and politicians. I think the reason for this cozy relationship is pretty obvious, so I won’t explain.
#12–DA==well, I don’t want to sound like an English Major but its axiomatic that if “Free Market Banking can’t fail” then THAT is a given and we are left with what this thread is all about, those things that can fail. The interaction of government policy with “money”/currency reality?
I take it that governments don’t fail when they go to fiat money, and so the Banking system should remain sound on such activity. Rather, the government and the fiat system fails as the government ALSO destroys it food base, its manufacturing base, its trade, its military etc. More than just ONE issue is always at play, always interacting.
DA–haven’t all economies failed? Does it matter the sewers still flowed downhill or the money based on intrinsic and limited resources was still valuable?
I don’t think so. The counterfactual analysis: If the USA had stayed on the gold standard in 1971, what difference in our fate would that have mandated?
@bobbo,
You raise a lot of very good questions, I’ll try to address them as quickly as I can because I have work in a few minutes.
“its axiomatic that if “Free Market Banking can’t fail” then THAT is a given and we are left with what this thread is all about, those things that can fail”
It’s also axiomatic that it stops being free market banking the second government intervenes in that market and protects either the profits of the individuals who caused the problem.
“I take it that governments don’t fail when they go to fiat money, and so the Banking system should remain sound on such activity. Rather, the government and the fiat system fails as the government ALSO destroys it food base, its manufacturing base, its trade, its military etc. More than just ONE issue is always at play, always interacting.”
I’d argue that governments fail more when we switch to fiat currency. Depends how you look at it. Sure goverment has been tremendously successful at expanding it’s influence and control since fiat money was adopted. If you’re a politician you may view that as the ultimate success. Giving anyone the power to control money, print money and manipulate the market will always cause problems. As you stated, “more than one issue is always at play, always interacting” and no single person or institution is smart enough to manage, control, manipulate or influence that kind of dynamic with any reasonable or long term success. Although, the illusion of success always crashes.
the following is a relevant and telling quote from Keynes, the man who laid the foundation for the economic policies that are currently in control of our economy.
“Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.” – Keynes
“DA–haven’t all economies failed? Does it matter the sewers still flowed downhill or the money based on intrinsic and limited resources was still valuable?”
I don’t think economies fail so much as the governments fail the economy. If a part of any economy fails it’s because the consumer didn’t want that part of the economy. If the entire economy fails it’s because that consumer doesn’t want that entire economy, and in fact would prefer a different economy. I don’t think any government or individual is smart enough to choose and enforce the way in which an economy should work, thats the trap societies fall into over and over again. You must let the market work. People are smart enough to know what they want or think they need, if they make a mistake it’s on them, they’ll adapt and move on. So, if someone makes mistakes for themselves, then how can any individual possibly be able to know whats good for someone else? How can they know what’s in that person best interest. This has kind of turned into a rant so I’ll stop this idea right here, don’t feel obligated to respond to this point as it’s a fairly broad topic. 😛
“I don’t think so. The counterfactual analysis: If the USA had stayed on the gold standard in 1971, what difference in our fate would that have mandated?”
This kind of analysis is very difficult to do and unlike the physical sciences which can do controlled experiments and make determinations from those results. The best any economists can do is to draw conclusions from various axioms, austrian economists do this, keynesians more or less do not. Keynesians have been in control of the economy and have been wrong, austrian economists have been largely correct, but have been correct in their analysis.
To answer your question though, I’d wager that the value of our dollar wouldn’t have been able to be debased nearly as much, meaning that our dollar would have better maintained it’s purchasing power. It’s also important to note that the “gold standard and Breton woods” that we were on between 1913 to 1970 was not free market banking.
Wow. The real crux of this guys argument is that the money you get paid with is worthless. Remind me to get paid in oil and gold next time.
He also forgets why Nixon did what he did and he avoids discussing that Banks backed by gold and silver have failed in the past.
Ack, I should have proof read my post.
“Keynesians have been in control of the economy and have been wrong, austrian economists have been largely correct, but have been correct in their analysis.”
Should have been,
“Keynesians have been in control of the economy and have been wrong, austrian economists have not been in control of economic policy, but have been largely correct in their analysis.
also,
“protects either the profits of the individuals who caused the problem.”
should have been,
“protects the profits of the individuals who caused the problem.”
Sorry for the double post. 🙁
#14–DA==working on Saturday? Its good to be busy.
Thanks for parsing my post. I like that. Sadly, I don’t get much from your response though. You only skim the surface, barely touching the subject matter.
I thought the surest way to ruin an economy was to give women equal rights? (non-economic joke.)
What I conclude ((so far)) is that history does show that as a few civilizations went into the dust bin, they also had switched to fiat currency. Course, all the other civilizations that did not do this also went into the dust bin. This is seen by gold standard adherents as overwhelming proof that fiat currency should be avoided.
My link shows that Gheghis Khan created his empire by moving to fiat currency. Then he lost it according to Marco Polo by keeping on the fiat currency. Who knows?
I think people who want the gold standard are like those chickens that hypnotized by the center line of a highway. Bright pretty color. Homer drinking Beer. The brain switches off.
MMMMmmmm Gold Standard.
Life ain’t that simple.
In Canada, we’ve fluked out over the last couple of decades. I believe our relative stability is due to a conservative banking system and our petro-dollar. I’d like to think it was smart, but it’s pure luck.
What’s killing us is our close association, mainly through trade, with the US. It’s like being that good looking girl who married a bowler. She keeps thinking “I remember when he had a job”.
I don’t even want to start where this guy is wrong.
Implicitly blaming the fail of ancient civilizations and inflation on the fiat money system. HA! Since we never had any recessions before 1971.
The only thing he stated that was correct was that there are better ways to invest than a savings account.
I could say more, but that means I would have to watch it again.
He got it wrong and not genuine in many ways.
1. A minimum amount of saving is required for basic security.
2. As long as people (rich and poor alike) are setting up business, providing services, earning up-do-date ‘current’ money, their value is always ensured by the supply and demand relationship.
3. When the government messes around with the majority (poor people), the masses never fail to reset their government–sometimes violently [side effect]. Karl Marx is accurate on this point, among many of his fantasies.
4. The currency system steals from the extremely rich, who have gathered sufficient wealth for tens of generation if their money value remains, e.g. colonial powers. Most small businesses and proletarian should not have enough wealth to be seriously affected by this.
5. His video does not help the middle class and below. In fact, it tricks/entice them into risking their hard earned money. The rich already knew what he was going on about, and perhaps know more than him.
Whatever it takes to help himself (book sales).
Question: What is Devorak’s opinion on this?
I like the financial advice that goes: don’t just invest in a single commodity but spread your portfolio out over several commodities. Not just silver or gold, but platinum, copper, and aluminum should also be considered.
Hah, hah. Yea.
#20 & 21==thanks.
Alfie—the usual.
absolutely gross misinformation too bad
Gold is not intrinsically valuable, outside of some manufacturing uses. Gold has a longer historical track record of being recognized as valuable than specific currencies, that’s all.
The point of money is to make it unnecessary to barter with people. If we all used gold we would have to use little bitty pieces because there isn’t enough gold to be used in such a practical way.
I think the fed is complicit in decreasing the value of money, but not entirely responsible. Regular banks make credit in many forms, and all of these forms act like money too. This wouldn’t be a huge problem if the amount of credit(like money) and actual money had a sticky relationship with the amount of stuff we produce.
The reality is that the combination of money and credit became completely detached from the underlying stuff that it was supposed to buy.
I enjoy his “I’m not betting” idiocy. If you’ve taken a position that is opposite someone else’s, picking a result you expect to happen in the future, that’s pretty much the definition of a bet.
He also likes to gloss over history and pretend that only money (or pretty paper) has impact. Not the fact that people DO and MAKE things irrespective of what the currency is. If the “currency” becomes useless as a peg to value, then barter economies start (hence a good bit of Russia’s problems in the 90’s.)
The guy over simplifies, and then attempts to blame the old rich guys — ignoring the absolute fact that without those old rich guys we would have no economy NOR innovation. Without that impetus to make “more” or “better”, people have no reason to “bet” on you to make a new product. Governments can’t do that betting very well at all, largely because they don’t CARE who “wins”.
However, investors (even the small ones like us) DO care who they are betting on. We are all betting that we will get a return on our money, or our time, or our items whenever we start talking about the future.
John “bets” that people will give him money in the future if he writes and posts somewhat interesting things. Other people “bet” that his blog and columns will allow them to sell advertising or other things. Still others “bet” that John will pay his house payment or buy gas for his car regularly.
The only time this betting structure fails is when everyone on all sides of the table decide they cannot trust each other. Which is exactly what happened with the AIG and banking failures. NO ONE COULD TRUST ANYONE. As a consequence, the government had no choice but to become an ultimate TRUST reservoir.
He may want to hedge all he wants… but he still has to trust someone at some point in the process. But that doesn’t matter to me, as I don’t trust him at all.
Gold has zero value.
If you believe otherwise, you have been hoodwinked.
Only food and energy has any value.
I will show how gold has zero value with a simple example.
The economy has completely collapased and everyone you see is starving.
You are lucky enough to have found a field of gold, and a field of potatos, that no one knows about.
The potatos are a special variety that require 2 hours to dig out each. The gold is on the surface, and can be picked up easily.
Which commodity are you going to gather? Hint: everyone around you is starving, and you are starving too.
Now, suppose all the starving people around you have 10 pounds of gold each.
Do you want their gold? I personally would rather have some sour cream.
So-called “fiat currency” does not represent phisical value any more than gold does.
Money-like instruments are coupons for hours worked rated by the market value of a profession.
When money-like instruments are exchanged, people are transacting in a way similar to the following: Dr. Jones agrees to spend his .25 hour x “professional value of doctors” coupons for farmer Brown’s 8 hours x “professional value of farmers” coupons, or visa versa. It doesn’t matter if the coupons take the form of gold or paper.
Labor is the economy, and the economy is labor.
A jobless recovery is the biggest fucking lie the government can tell at the moment.
#28- Perfect. I’ve been thinking hard on this for a while. In the end all goods are obtained through personal work, barter or physical imposition of one’s will.
The things with real “intrinsic” value are the tools that get you your next meal. Or next 10 meals. Therefore, invest in your “tools,” whether they be hoes, books, or intellectual property.
A little steel and lead don’t hurt either.
The “Rich Dad” books are complete fiction that the author admits to. Look it up on the web.
You have GOT to be kidding me. Robert Kiosake? The schmuck who was selling expensive seminars in order to teach idiots to “invest” in overpriced residential real estate during the height of the bubble?