What is it that preserves the monetary and market system we have now? If our fiat currency is really worthless , why do people still accept it in trade for goods and services as if it had real value? Why is it, given the fact that the fiat currency is worthless , not backed by anything real other than the threat of government to punish those who will not accept it , that people still accept it in exchange and take the risk that when everyone wakes up to the reality that the currency has nothing but psychological value at that moment no further exchange will be possible. Those who have given up a good or service in exchange for the currency will be left with worthless paper in their hands while those who have obtained the good will have given up nothing of real value in exchange and still retain the benefit of the good or service received. Isn't this the exact thing which was actually , in reality , experienced in the American Colonies and pre-Constitution States and which led to the Constitutional Convention participants' criticism and repudiation of paper currency , unattached to gold or silver and which resulted in devaluation of the currency , which in their view amounted to theft?
Today , even though Bernanke announced that economic growth is likely to decrease while unemployment is likely to increase , the market went up. It seems that people just refuse to get it , to accept what is right before their eyes. Fiat currency , devaluation , inflation , the rise of other currencies against the Dollar , subprime lending woes , massive debt...yet , the markets go up! Can the mere psychology of denial , not accepting things for what they really are , on its own indefinitely sustain a failing economy and a currency? What event will finally wake people from their state of psychologically imposed denial to a stark reality of things as they really are?
Ed D.:Can the mere psychology of denial , not accepting things for what they really are , on its own indefinitely sustain a failing economy and a currency?
Ed D.:What event will finally wake people from their state of psychologically imposed denial to a stark reality of things as they really are?
Ed D.:What is it that preserves the monetary and market system we have now? If our fiat currency is really worthless , why do people still accept it in trade for goods and services as if it had real value?
I suspect that this may have been a rhetorical question...but just in case, I will add:
Mises. Theory of Money and Credit. Regression Theorem.
Same ancient sins that kept people from bettering their lives for as long as human kind exist. Stupidity, Greed, Gullibility, Laziness, etc.
This will never change. We may restore gold standard or gold currency, but not forever. Unless you can figure out way to keep most people smart and good forever.
I am sorry about this, but this is true. You can't have both the diversity (in a wider meaning than racial talk), and uniformity.
"..and they shall pay for their sins..."