Global Collapse of the Fiat Money System

Discussion in 'Economics' started by DrPepper, Sep 5, 2010.

  1. Here is an interesting article that makes some good points. Continued weakening of the real estate market could lead to so many bank failures that the FDIC could not bail them all out. With interest rates near zero, printing money may be the only bullet the Fed has left to help the banks and prevent such a catastrophe. However, if the Fed prints too much money, the rest of the world may lose faith in the US dollar and US treasuries.

    Our government has guaranteed that it will insure these banks, but neither has the ability to do so nor the means to prevent them from failing if real estate values continue to fall and foreclosures accelerate.
  2. Well, apart from the fact that the author doesn't have any of his facts straight and is monumentally confused, the article makes a rather blindingly obvious point. Specifically, if there's a catastrophic loss of confidence in the banking system, we're all royally f*cked. I don't quite see why anyone needs the author to tell them that, though.

    P.S.: I also find it somewhat ironic that the author's recommended way of surviving a bank run is maintaining a "sufficient bank balance".
  3. I think people really do not understand bank runs today. Back in the great depression, the money was backed by gold, so getting cash means you could redeem it for gold. The dollar is backed by nothing but the credit of the government. If i was to do a bank run, I would do it online by purchasing as much gold & silver with my debit card as I could.

    If fiat money is collapsing holding a bunch of paper dollars in your hand isnt going to do anything for you except give you new wallpaper to decorate your house with.
  4. the one thing I dont understand is why gold is so important vs the dollar, which is THE fiat currency that essentially dictates floating relative value of the others.

    I mean, all this talk of a currency "collapse" just doesnt add up for me - goods and services, and their values, arent gpoing to just -poof- disappear. This goods and services remain, and trading in them REQUIRES a medium of exchange. It doesnt matter if that medium is gold, dollars, barrels of oil, seashells (which HAS been a medium), or whatever. The medium is whatever the 2 parties to a transaction agree it is. So how could any currency, particularly the "prime" one, just "collapse"?? I mean, change and adjust its relative value to the other currencies, yes I can see that, but "collapse"? I just dont get it, maybe its just me.

  5. toc


    'However, if the Fed prints too much money, the rest of the world may lose faith in the US dollar and US treasuries.'

    nearly half of the US $11T debt is owned by the Fed Res InterBanking System. China owns only $1Tn and other nations like UK, Japan, EU etc. owe $1.5 to 2T. So maximum ~30% of US debt belongs to other nations.

    It is the US itself to fear from printing too much money.....worrying about Chinese or Japs refusing to own US debt comes later. :D :cool: