BullKurtz
Gold Member
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- #321
Derivatives became a money-making venture for financial institutions in an economy that was no longer producing anything in the US.
That's nice, but not relevant to the question I asked.
Selling each other cheeseburgers and insurance policies is what we are. They saw the "housing boom" was simply a massive Ponzi scheme built on the promise of a 25% yearly equity bump. So they decided to package up their junk, talk AIG into insuring it, and off to Europe they went with it.
A wee bit of over-simplification, perhaps?
As to fiat currency, it allows rogue nations like china to keep their currency valuation far below it's actual worth and keep their labor price low. All to squeeze more capital flight from the US.
Perhaps, but how would a gold standard in the USA stop this? In fact, wouldn't it make matters worse?
Japan did it and have done quite well with it. They claim they can't honor our trade agreements with them because they're in a "recession" that's now lasted about 15 years. Countries without gold (or cotton or coal...whatever you attach a fiat currency to) have no obligation to back up their currency with anything but promises. We back our currency with the United States Marine Corps....should that ever not be the case, we'll quickly move into third-world status as our wealth rots on the vine.
A fiat currency in any nation is backed by the full faith and credit of the issuing agency - nothing more. The Marines have nothing to do with it.
You ARE correct that introduction of currency at a rate substantially greater than the introduction of wealth into that economy, will erode the wealth of wage earners, as we are seeing in this nation.
Everything I said is correct. Doesn't have to be gold to back a currency...could be oil or even fresh water inventory to determine a country's true wealth. And don't think for a minute our military might doesn't make us the swingin dick in the world markets....there are several examples of us simply bulldozing competing economies.