Deflation Watch pt 152

purch

By the way far too much relevance is placed in the United Nations Monetary and Financial Conference of 1944.

Only 40 odd countries were present, and basically it was an agreement to suit the aims of the U.S.A. and U.K. and their favoured friends.

It was also the first real attempt to engineer a World Monetary System as up until then each country/area had their own particular system with many small but significant differences.

It was doomed to fail, mainly because it was not designed to cope with the increased globalisation of the world economy, and I doubt that any workable system could be put in place currently or in the future.

If you desire a return to "sound" money, the only real answer is for a nation to renounce globalisation, renounce trade and retreat within it's own borders and fend for itself.

Otherwise the march towards currency and finally a worldwide means of exchange is remorseless and won't stop.

michaels

Each unit of money is created owning interest...but then each unit of money is also reduced in value by inflation. If you have a period where inflation exceeds interest (like now) then surely there is not a problem making the interest payments?

Generali

purch wrote: »

If you desire a return to "sound" money, the only real answer is for a nation to renounce globalisation, renounce trade and retreat within it's own borders and fend for itself.

The more I look at things, the less I am convinced that there is any such thing as 'sound money'.

Every monetary system, except the current one, has failed for a myriad of different reasons: fads, war, politics and sometimes for no particularly good reason at all.

Take holders of the Ostmark for example, the old currency of 'The Democratic German Republic' (East Germany to the rest of us). They had a perfectly good currency that would buy them stuff right up until the day that it wouldn't any more. It wasn't hyperinflated away but it became useless.

You used to be able to exchange a pound note for a fixed amount of silver, a Silver Standard. Trouble was, the UK and most of the rest of the world set the gold:silver exchange rate differently so you paid for imports with silver and exchanged exports for gold: the UK began to run out of silver and had an excess of gold. The solution? Set up a Gold Standard instead and devalue the remaining silver in the country.

All money is inherently flawed IMO and all attempts to fix it's price are doomed to fail.

Conrad

wotsthat wrote: »

War, famine and disease will wipe out American civilisation - the same as every civilisation that there's ever been. The relative size of economies or whether we see ourselves as modern makes no difference.

Nothing lasts for ever.

Very wrong. Americans would dust themselves off and start over just as they did following WW2, just as Germany and Japan did.

Famine is a total nonsense, when applied to a sophisticated modern society. There are a hundred ways America could massively adapt and boost food production if needs must. The famous late 1960's predictions of the impending and inevitable US famine by the likes of Paul Erlich* (see below), never came to be because PEOPLE ADAPTED, they created the green revolution which saw yields treble in 5 years.

Disease can kill millions from time to time, but even without modern medicine Europe did not come to and end following the buebonic plague.





*"The battle to feed humanity is over. In the 1970s, the world will undergo famines. Hundreds of millions of people are going to starve to death in spite of any crash programs embarked upon now. Population control is the only answer." - Ehrlich in his book, The Population Bomb (1968), predicting widespread famine that never materialized

http://www.nationalcenter.org/dos7111.htm

purch

Of course the Ostländers were given brand spanking new Deutschemarks in exchange for their Ostmarks. An event which nearly pulled the European economy apart.

17 European nations have exchanged their perfectly good currencies for the EUR, at rates set by politicians for no doubt political reasons.

The EUR was initially purely an electronic currency with no physical form in 1999.

A precursor for the introduction of a new Worldwide currency one day :eek:

P.S. There are currently far more EUR in circulation than USD, despite some of the more wild assertions made on here by the loonies.

wotsthat

Conrad wrote: »

Very wrong. Americans would dust themselves off and start over just as they did following WW2, just as Germany and Japan did.

What about the native Americans? What happened to their civilisation?

Roman civilisation fell, so did that of Greece and Egypt. You could argue that they just dusted themselves down and started again because there are still descendants of these civilisations in Rome, Athens & Cairo.

All current civilisations will go the same way. I find it difficult to believe that we've just hit the sweet spot where humankind has now found the correct world order and today's civilisation is the one that's going to endure the test of time.

sabretoothtigger

^^ Change is the only constant

AndyGuil wrote: »

I think we will see more QE. The economy has not improved. There is a major risk now to the AAA rating and more QE may damage this.

Ironically I think QE helps keep the high rating. It maintains high confidence and all bonds are paid and in no danger of otherwise.
Greece couldnt do QE apparently and leaning on others for a similar effect was seen as weakness hence a spiral down

I agree that QE is a degradation but not if the market itself rates the worth of a bond and then in turn I think bond prices help determine currency value to quite a large extent


Its a tightrope they walk and both ends are untied
Will we get to the other side in time ?

Americans would dust themselves off and start over just as they did following WW2, just as Germany and Japan did

They would, they could if substantially changing everything that currently exists in how USA works. Of course, lots of things in the world to be optimistic about but Obama did fail to really change anything imo I dont think he really knows

I more agree with your post then disagree, never underrate people but change is expensive, its both a set back and investment

Bigdeflationfirst

purch wrote: »

P.S. There are currently far more EUR in circulation than USD, despite some of the more wild assertions made on here by the loonies.

Any proof/links for that? How could that be true when the US$ is the worlds reserve currency?

Currency abuse of the Euro hasn't nearly caught up with the debasement/expanding the currency supply of the US$.

I must be one of the loonies but I still believe those who say there are more USD units of currency in the worlds currency supply than any other units.

Masomnia

Bigdeflationfirst wrote: »

Any proof/links for that? How could that be true when the US$ is the worlds reserve currency?

Currency abuse of the Euro hasn't nearly caught up with the debasement/expanding the currency supply of the US$.

I must be one of the loonies but I still believe those who say there are more USD units of currency in the worlds currency supply than any other units.

And the Euro is the world's 2nd reserve currency

sabretoothtigger

How could that be true when the US$ is the worlds reserve currency?

Most money does not exist as cash. Since USA is such a giant debtor, I guess most of it is virtual

In the Roman empire, I think all of the economy was described literally in the coinage or at least the bullion in circulation.
So when they did 'money printing' they had to remove part of the silver or gold from the coins.

Much harder to do but, Krugman and friends apparently believe there is no parallel between physical debasement and what they are doing virtually or any historic parallel in the consequences

Deflation in motion:



http://pricedingold.com/