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/biz/ - Business & Finance

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180054 No.180054 [Reply] [Original]

Could some nigger please explain how the fuck fiat currencies work outside of intrinsic value.

>Every currency in the world was backed by USD
>USD was backed by gold
>USD is no longer backed by gold
>No currency is backed by anything

Am I wrong in saying that we are all just waiting for a shit storm to turn all our intrinsically valued paper and plastic into useless paper and plastic?

>> No.180102

That's how citizens see it. The governments sees it differently. Money is used to regulate/control the economy. The gov has a legitimate reason to value money, and will use their vast resources to ensure it's value. They'll do things like let you pay taxes with it, and this gives you a reason to value it.

>> No.180112

>>180054

dollar has more value because US forces OPEC to trade oil with it

>> No.180135

>>180112
>>180102
So money has value based on the country's assets but can't necessarily be traded for a backed commodity?

>> No.180182

>>180102
The tax code also buffalos people in to using US dollars.

The good news is that there are ways around this - buying and holding does not beget a taxable event. Black markets can also transact in things besides paper dollars; silver is surprisingly welcome in informal transactions.

>> No.180219
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180219

what I'm more concerned about is how most of this money is virtual
if everyone went out and withdrew all the money in their accounts (bank run), there wouldn't be enough paper money to back this up. all the trillions of dollars are assets (land, buildings, factories, equipment, etc) plus, more concerning, work hours over the past decades (which were earned, then spent back into those huge banks' accounts). normally consumable goods lose their worth over time, but the part of the money that represents the work hours doesn't have that kind of expiration. it keeps piling up and piling up and piling up, and dissolving the value of the currency.

frankly it feels like a stack of cards that's reached the 200th floor and is on the verge of collapsing from the slightest breeze

>> No.180311

>>180219
Wouldn't you devalue the central bank to keep the money from inflating as you print more?

>> No.180476

>>180219

Cash and coin isn't really used very much anymore, which is why it's such a small portion of the money supply. The Fed buys securities to increase the money supply and the Fed sells securities to decrease the money supply. They print out cash and coin to sell to banks based on demand.

>there wouldn't be enough paper money to back this up.
At least they'd finally get rid of all those $1 coins.

>> No.180497

>>180219

Yeah it's real likely that everybody is going to suddenly decide to liquidate trillions of dollars of assets at once. I'll gladly give them a couple hundred in bills for their factory. Oh you want more? I guess the currency works. Tard.

>> No.180518

>>180054
>Jews running the economy
>Going off the gold standard was a huge scam
>Fiat currency is a huge scam
>Bankers out to get everyone
>Federal Reserve, Bilderberg etc is a cabal
>all of the rich and successful people in the world are either taken in by or part of the scam.

No currency has any more worth than what people assign to it, and in this world a great amount of worth is assigned to US Dollars (and by extension treasury bills and bonds) because of the stability of the United States economy and society. Might we lose this? Yes of course, and our dollar might be pegged to another currency.

But what I dont understand about this is the underlying conspiratorial fears. If there is a shitstorm to the magnitude that the USD becomes like the confederate dollar, than your holdings in Gold will matter less than your holdings in guns and food and land. Alternately, if you are deeply invested in equities and bonds, you will be able to ride out any downturn since the market is cyclical (equities did well even during german hyperinflation since by nature they keep ahead of inflation). So OP, yes, cash is trash. But a diverse investment portfolio that covers bonds, equities, foreign and domestic, even if in US Dollars, is still the best that you and THE best (investment banks and institutional investors) can do.

>> No.180829

In really simple terms, it's just a method of keeping score of how much I owe you and how much you owe me. Whether it be credits, tobacco leaves, gold coins, it doesn't really matter. Even gold and silver don't have much intrinsic value.

The big push for a currency usually involves that a government will only make payments in or accept payments of that currency. The fact the government is the single biggest transactor in an economy, they more or less get to say what piece of paper is used for keeping score.

Sure, if shit hits the fan, your money is worthless, but you should probably be more worried about the nukes flying.

>> No.180847

The USD is fine as long as the US is fine, which I think it is, for the most part. If you were to order every country on earth by risk of collapse, from greatest to least, I find it hard to imagine the US wouldn't be in the bottom 25% at least.
Right now our greatest threats are SS and Medicare/Medicaid, which can ultimately be dissolved if they become too much of a burden.

>> No.180877

>>180054
it is backed by whatever you can exchange it for

>> No.180925

>>180219

This was a concern during the 2008 crisis and the safeguards worked. The stack already took the hardest hit it will take in the next few decades and the house is still standing. The system works and will be just fine.

>> No.181434

>>180829
>The fact the government is the single biggest transactor in an economy

Ugh. They fucking shouldn't be, though.

>> No.181722

>>181434
Even is minarchist societies, the government would still foot the bill for the Judicial system, military, and infrastructure. That still puts it in the running for biggest transactor.

>> No.182029

>>180476
>At least they'd finally get rid of all those $1 coins.
Speaking of which. Does anyone know of a place where you can buy them in bulk anymore? I heard that they used to ship them to you free form the mint, but people abused that to get free reward points and bring the coins back to the bank, so they stopped. Banks tell me they don't even get them anymore.

>> No.182159

>>182029

Well you CAN still get them from the mint, but they cost over face value. I dunno where you'd be able to get them from unless you can order through a bank or walk into a federal reserve where they store them.

>> No.182175

>>181434
After government, it's banks. Does that make you feel better?

>> No.182179

>>182175
To be fair, the entire purpose of banks is to build up capital to invest.

>> No.182195

>intrinsic

the value is now backed by the demand of the market. you assume gold stores value.

>> No.182246

>>180102
ok, but then wouldnt the governments treasury need to issue money? not an independent institution?

>> No.182276

>>182179
Do you really think it's a better idea to put the power of the printing press in the hands of the banks? I mean, they're a for profit venture. At least the government has some
sense of neutrality.

>> No.182282

>>182246

The Federal Reserve is kept independent (more or less) to insulate it from political whims.

>> No.182283

>>182246
>>182276
It's probably better to have a central institution controlling the monetary supply, but there are those who make the argument for private currency:
>http://www.youtube.com/watch?v=lVK-kgSQMPs

>> No.182348

>>182283

It should probably be noted that this guy also seems to advocate a return to the gold standard. Keep that in mind.

>> No.182383

>Every currency in the world was backed by USD

wut, i don't get how this works?

>> No.182391

>>182383
fk didn't mean to post with a trip.

>> No.182405

>>182383

Well USD is used as the standard currency in international markets and it's the global reserve currency. Some countries even back their currency with USD the way USD used to be backed by gold.

>> No.182423

>>182246
The treasury does issue money.

>The Treasury prints and mints all paper currency and coins in circulation through the Bureau of Engraving and Printing and the United States Mint. The Department also collects all federal taxes through the Internal Revenue Service, and manages U.S. government debt instruments.

>> No.182440

>>182423

The Treasury doesn't issue money, it prints it. Federal Reserve banks buy money from the Treasury and issue it to banks.

>> No.182468

>>182440
So how is that... different from what I said? The Fed is just a proxy that's free of government intervention (more or less).

>> No.182560

>>182468

Because the Fed is the one that places the order. The Treasury doesn't tell the Fed how much cash to take, the Fed tells the Treasury how much cash to print (paper money is paid for at cost while coins are paid for at face). It might seem subtle but it's an important distinction.

>> No.182587
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182587

Obligatory

>> No.182673

Time is the only thing that's really worth anything. Currency is a way of assigning value to a man's time spent acquiring/creating goods and providing services.

>> No.182683

>>182348

Well, there's a difference between "All currency should be issued by the government, and that currency should be backed with gold" and "currency should be issued on the free market and most issuers would back theirs with gold."

>> No.182718

USD is backed by the US government, US Treasury and Federal Reserve. It boils down to the Federal government having police power to confiscate your shit if you don't pay taxes in USD.

>> No.182758

>>180054

OP the US economy is backed by oil

>> No.182801

I believe the value is somewhat tied to the state of the economy.