When will the people of this world once again have a stable system of currency?

Silverbull

The IMF was unable to stem the tide of competitive currency devaluations over the weekend. As a result, governments and central banks around the world still have the green light to continue with their money printing orgy. Some of the citizens of these various regions and countries have recently been acting as their own central banks by purchasing gold as insurance against the currency wars. As fears escalate, the question now becomes, when will the people of this world once again have a stable system of currency?

Here is a new piece exclusively for the King World News blog from Ben Davies, CEO of Hinde Capital which sums up the situation nicely:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/10_IMF_Fails,_Gold_Shines_as_Currency_Wars_to_Continue.html

martindow

Has there ever been a golden age where all currencies have been stable?

Silverbull

martindow wrote: »

Has there ever been a golden age where all currencies have been stable?

For the past 6000 of known human history gold and silver have been the only stable currencies.

The problem comes when entities (banks) say we will hold on to your metal and give you paper. They always issue more paper than they hold on to metals.

That`s one reason why we are in the crisis the world is in now.

Cleaver

Silverbull wrote: »

For the past 6000 of known human history gold and silver have been the only stable currencies.

The problem comes when entities (banks) say we will hold on to your metal and give you paper. They always issue more paper than they hold on to metals.

That`s why we are in the crisis the world is in now.

I'm no expert, but aren't there a whole host of multiple and complex reasons why the world is in the crisis it's in now?

Degenerate

martindow wrote: »

Has there ever been a golden age where all currencies have been stable?

If by "Golden Age" you mean era of decade long economic depressions due to the inability of competing economies to adjust relative to each other without grinding, destructive deflation, then yes, there has been.

antrobus

Silverbull wrote: »

For the past 6000 of known human history gold and silver have been the only stable currencies.

This sentence could only have been written by someone with no knowledge whatsoever of the past 6,000 years of human history.

Pennywise

At the end of the day, a country's "wealth" is simply the sum of its assets - an amalgam of its workers and their abilities, natural assets such as minerals, precious metals, oil, etc, geographical location such as trading routes, etc. What changes is the relative importance of these assets compared to the needs of others.

"Paper" money isn't real - never has been and never will be. It's only a representation of the underlying assets. Long ago, "paper" money had to be represented by physical assets, i.e. gold bars. When that link was broken, that's what's made paper money just an illusion. We're now in make-believe land. That's the problem and the solution/future doesn't look good. Sooner or later, the link back to underlying "assets" other than paper money will have to be restored and that's when we'll all see a massive redistribution of "wealth" back towards those countries and people who possess "assets" that are wanted by others. If you own a shedfull of pound notes, then you're stuffed but if you own a field on which crops can be grown or minerals can be extracted, then you're a winner. Sounds apocalyptic but I believe that we're closer than we think to getting back to basics.

Degenerate

Pennywise wrote: »

At the end of the day, a country's "wealth" is simply the sum of its assets - an amalgam of its workers and their abilities, natural assets such as minerals, precious metals, oil, etc, geographical location such as trading routes, etc. What changes is the relative importance of these assets compared to the needs of others.

"Paper" money isn't real - never has been and never will be. It's only a representation of the underlying assets.

Up to this part you are absolutely correct.

Long ago, "paper" money had to be represented by physical assets, i.e. gold bars.

The gold bars were just tokens representative of wealth in exactly the same way as the paper money. The value of gold to mankind as a usable asset is fairly low.

When that link was broken, that's what's made paper money just an illusion.

What the breaking of the link actually did was to take control of the money supply out of the hands of mining companies and the random luck of gold deposits, and place it into the hands of governments who could at least try to manage money supply to foster economic growth for the benefit of the people.

We're now in make-believe land. That's the problem and the solution/future doesn't look good. Sooner or later, the link back to underlying "assets" other than paper money will have to be restored and that's when we'll all see a massive redistribution of "wealth" back towards those countries and people who possess "assets" that are wanted by others.

There is no "massive redistribution" due, because this adjustment happens continually via currency trading and floating exchange rates. It's actually fixed exchange systems, such as the gold standard, that allow big imbalances to build up.

If you own a shedfull of pound notes, then you're stuffed but if you own a field on which crops can be grown or minerals can be extracted, then you're a winner. Sounds apocalyptic but I believe that we're closer than we think to getting back to basics.

Well, I'll agree that agricultural land and minerals will always have value to mankind. You can't eat gold bars though.

antrobus

What that man Degenrate said.

I'd only add the comment that arguing about what we should use for physical money seems rather irrelevant, given that 99% of the time it's nothing more than a series of 1s and 0s anyway.