CNBC asks: Are fiat currencies headed for collapse?

Discussion in 'Economics' started by Grandluxe, Jul 29, 2012.

  1. Are Fiat Currencies Headed for a Collapse?
    Published: Friday, 27 Jul 2012 | 5:27 AM ET Text Size
    By: Lisa Oake
    Anchor, CNBC Asia-Pacific

    As the investment world eagerly awaits more stimulus, a debate on a previously unthinkable topic has started to emerge – can fiat currencies survive round after round of debasement?
    Some heavy hitters say the answer is no.
    A fiat currency derives its worth from the issuing government - it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

    With major central banks all desperate to stimulate their economies, some say currencies have entered a dangerous new phase often described as a race to the bottom.

    Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

    “It's already happening, you're beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we're a strong country,” Mobius told CNBC Asia.

    Mobius has $50 billion under management.

    Yu-Dee Chang, Chief Advisor at ACE Investment Strategists, says repeated stimulus is shortsighted. “If you keep printing money, sooner or later, we're going to get in trouble. QE is good for the economy and for the market but the long-term effect is very much questionable,” said Chang.
  2. Were actually going toward fighting deflation... Not inflation.
  3. contra


    what is that a "buy gold" ad?
  4. currencies collapse, against what? Gold? How much is gold worth? You only measure it in USD.

    When they start quoting how much GC AAPL is worth then that is time for concern

    that one may have gone a little over your head

    the spread is NQ vs GC
  5. Fiat currencies are heaed for a collapse but the time horizon is way out inthe future. The media loves to insit these stories to make the sheeple buy goldand other commodities based assets. The ruling classes of the world have it in thier best interest to keep the fiat game going. Best trade right now in my opinion is RUB/USD it pays well on the weekly PIP's

  6. where do you trade that RUB/USD? I trade with and as far as I know, they don't offer it
  7. ============
    Currencies can trend ,like any market;
    up trend ,
    sideways trend [aka range],
    down trend .[downtrend is not necessarily collapse at all]

    Collapse of USD is the least likely scenerio;
    even if USA was so stupid to elect more socialists.Especially when many now see even what 3.5 years of one socialist can destroy...

    Not sure what'' gold only in USD means''. most any currency can buy gold. I do price it in $,$$$ myself:D

    Even with much more stinking socialists in a friendly nation like Argentina,fertile farmland only dropped to $600 per acre;
    its rebounded much now, even with a stinking scoialist export tax of another 35%, plus the stinking sicialist gov can limit exports which crashed price of grain....
    God bless America and Argentina[vote the socialists/tax raisers out]:cool:
  8. well murray, if USD goes down 50% your gold will go up 50%, but what does that mean? you can now sell your gold and buy twice as many dollars that are worth 50% less.

    Now I will grant you if you want to trade your gold for beans, it may or may not buy more than it would have before the collapse.

    I agree, collapse is a pretty drastic word. But if they are going to all go down together, something else must go up, and most likely that would be gold.

    I don't know how they would measure everything moving together. The pairs would all just be sitting there.

    USD goes down against JPY which goes down against EUR which goes down against GBP and GBP goes down against USD, and we are right back where we started.
  9. zdreg


    the losers are old people with bank savings who cannot comprehend what the government is doing to them.
  10. gold=insurance/hedge

    USD is heading down. Look at the Euro when the EU is such a basket case and 1ED = 1.23USD. What does that tell you?

    It tells you that US is worse than EU. USD will look like Zimbabwe Dollar in our life time.

    [​IMG] [​IMG]
    #10     Aug 3, 2012