The United States – along with the rest of the world, has a fiat money system. That is currency which is backed by nothing other than the good faith of the government. When you get into it, and think about a dollar. It might seem weird how we can buy real stuff with it, what makes it valuable?
The answer is much more confusing -NOTHING – its intrinsic value is ZERO and eventually “all fiat money reverts to its intrinsic value – ZERO”
When will this happen? No one knows for sure but it will happen, its amazing how long it has worked so far. In the last hundred years there have been hundreds of currency failures. Most of which led to hyper-inflation. Just because we are the United States doesn’t mean we are immune to the same laws of economics. Our debt is growing out of control and total debt (national debt+unfunded liabilities) is roughly 121,000,000,000,000 that’s 121 trillion!
Here is a great article with much more information, visit the full site for more information.
Why Our Monetary System WILL FAIL:
Fiat Money -Toilet Paper Money
The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.
Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.
Fiat Money –Rome — The Denarius
Although Rome didn’t actually have paper money, it provided one of the first examples of true debasement of a currency. The denarius, Rome’s coinage of the time, was, essentially, pure silver at the beginning of the first century A.D. By A.D. 54, Emperor Nero had entered the scene, and the denarius was approximately 94% silver. By around A.D.100, the denarius’ silver content was down to 85%.
Emperors that succeeded Nero liked the idea of devaluing their currency in order to pay the bills and increase their own wealth. By 218, the denarius was down to 43% silver, and in 244, Emperor Philip the Arab had the silver content dropped to 0.05%. Around the time of Rome’s collapse, the denarius contained only 0.02% silver and virtually nobody accepted it as a medium of exchange or a store of value.
Weimar Germany — Mark
Post-World War I Weimar Germany was one of the greatest periods of hyperinflation that ever existed. The Treaty of Versailles was essentially a financial punishment placed on Germany to make reparations.
The sums of money to be paid by Germany were enormous, and the only way it could make repayment was by running the printing press. (Huge unpayable debt — that sounds familiar. I wonder what the solution in the U.S. will be.)
Inflation got so bad in this period that German citizens were literally using stacks of marks to heat their furnaces. Here is a brief timeline of the marks per one U.S. dollar exchange rate:
April 1919: 12 marks
November 1921: 263 marks
January 1923: 17,000 marks
August 1923: 4.621 million marks
October 1923: 25.26 billion marks
December 1923: 4.2 trillion marks.
I dont want to be fearmongering or sound nutso but we must come to terms with our economic situation. There is no way we can pay off our debt – just like there is no chance the fed will raise interest rates. The interest on our debt will cause the facade to end abruptly. It’s time to prepare now for what seems inevitable.
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