Why an economic collapse is likely imminent

seekingalpha.com

12 points·stuffthatmatter··5 comments

Also: Fiat money is based on faith in the country that backs it, and that faith is based in large part on the economic state of the country. It's a tautology.

This is true, but it's also rather inescapable. Say you have a gold standard, for instance. The price of gold would rise based upon faith in the country that backs gold currency. Likewise, the price of gold drops when a country goes off the gold standard.

The economy doesn't lie, even when the government does things like declare legal tender. Declaring something to be legal tender, even fiat currencies, gives them economic value until it doesn't anymore.

I agree that you can't just say gold is "real money" and be done with. But fiat currency does require a faith that gold does not, the faith that country won't print a huge amount of new fiat currency.

The gold standard requires faith there isn't going to be a major unregulated discovery of new gold reserves in the near future.

This was actually a problem with silver in the late 19th century (hence why we are on a gold standard and not bimetallism).

It also requires faith that a government with significant gold reserves won't sell them all off.

Good point, indeed I have heard arguments that there semi-secret stashes of gold which have been used to ward off earlier panic efforts to switch to gold.

Certainly, in our modern world, nothing is terribly certain and I wouldn't argue for gold an answer for those seeking a haven to store their value in.

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