What would happen if the fiat money systems of the world failed? How would the world operate and trade? Currenty their is 1.43 ounces of above ground gold for every person on earth. That's based on the total mined over the last 2000 years. It includes bullion, coins, jewelry and anything containing gold. There is only 3.57 ounces of silver per person above ground. So what will the new moneys of the world be backed by? Partial backing? I'm not sure if any percentage of the value of a bill based on trust, will suceed once trust is negated in currency. Do we all get a shovel and run off to the mines and start digging for more precious metals? The world as we know it, couldn't survive the wait. The answer seems more like a paradox than anything else.
Could be backed by most anything since the backing will be priced in the new currency as well and with the collapse of the fiat currency there is no conversion back and forth. How you work out the exchange between countries might be more difficult.
I imagine the same thing would happen every time any currency fails - life goes on. It's not like it's something new. They create a new currency and start over. There are few countries who have not had their currency fail at some point or another. edit - I moved this because it doesn't really fit in the What's It Worth section.
I agree with Conder in that money will and can be backed by anything. Gold and silver are just as worthless as paper money if nobody accepts them. They're worthless any other way. People will gain faith in something else, or else they'll revert back to trading essentials that don't require the false backing we assume in needed today. Guy
From living from time to time in a place where it has happened twice in the past two decades, life does indeed go on. Human beings have a unique ability to subsist when they need to. Not to say a few people won't just give up and say the sky is falling. But anybody with any gumption has the ability to survive and start all over again. PM's are a form of insurance but really not a guarantee. That said, maybe from family history, where I have lived etc. I am not one to put all the eggs in one basket.
I've lived in South American countries that were experiencing bouts of hyperinflation and, for the most part, life went on as normal. Fiat currencies will always fail. The temptation to over-inflate is just too tempting to politicians seeking the easy way out. As other have pointed out, currency can be backed by things other than PMs.
Money, all money, is just an idea, there is no reason, or need, for it to be backed by anything. It merely needs to be accepted.
US Currency is backed by "The Full Faith and Credit of the United States"...which is essentially US "innovation, productivity, and fiscal responsibility". This is why these are major themes in the upcoming elections. Current policies (left and right) are damaging "The Full Faith and Credit of the United States". No amount of gold or silver can fix that...it's up to us. That's what the "Tea Party" is all about...despite what you read in the press.
Money is simply a store of value. At one point it was shells, beads, tulip bulbs, diamonds, gold, stock certificates and dollar bills. There is always a real value of sorts in things that are needed like land, food, shelter, energy ( oil,gas, wood etc), labor and lifes so-called needs. So what would replace the dollar would likely be as stated another currency but in the long run the same old things have real value. The things that people and countries and civiizations need to survive. Lack
Countries with the most powerful military will control the greatest amount of resources (life's necessities), so it's unlikely ALL world fiat currencies would collapse at once. The currencies of strong countries would increase in value and weak countries currencies would collapse...(imho).
Well, they have to be backed by something that's rare, hard to produce, portable and widely accepted as having value. In my mind, that pretty much narrows it down to gold and silver. But after the initial collapse, they'll come up with another monetary system backed by something ... gold, a basket of commodities, or who knows what, before eventually going back to fiat currencies and repeating the cycle. I've read books on what happened during the Weimar and Argentinian collapses, but what hasn't happened before is the US dollar, the world's reserve currency, collapsing. In 2010, total silver mined was one billion ounces. 50% is used for industrial purposes and is mostly unrecoverable. I read somewhere that there is actually less silver above ground than gold.
Money is not backed by anything, and it does need to be backed by anything - except confidence, an idea. That's all it is, an idea. That's all it ever has been, since the dawn of time, and all it ever will be. That's all it ever can be.
Happy New Year, Doug! I hear what you're saying, but I just think there's more to it than that. I got up this morning with an idea for a peanut butter & pickle sandwich. It seemed like a good idea until I bit into it. In other words, ideas don't just float around in thin air, they're based on experience and results. Why does anyone want a dollar over...say, a peso or ruble? I would say it's the belief in the promise that in 10, 20, 50, etc years the US economy will be strong enough to return something of value for the money it's issued (the idea). I would go on to suggest that it's our proven productivity, innovation, fiscal responsibility, and military might that forms the basis for that idea. Credit Rating agencies form and revise ideas all the time. The US credit rating, a measure of the belief (or idea) that the US will repay its debt, was downgraded this year. Did the Credit Agencies just pull that out of thin air or was there a reasonable basis for their change of "idea"? You say our currency isn't backed by anything but an idea; I would say it's backed by our military, educational system, and sound economy. If we screw up any of those, our money will be worth bupkis. I've reached that thin, invisible line where Coins meets Politics so I'll stop now.
Like I said, and you are saying the same thing - it's confidence. We got the downgrade because people's confidence in the American dollar has been eroded, lessened. And all confidence is, is an idea. It is what we think the likelihood of something happening will be. Money is and always has been a very simple concept. It is so simple that a whole lot of people don't understand it or refuse to accept that it can be that simple. But it is. That's why it doesn't matter what form money is in. For the only thing necessary for anything to be money is the people's confidence that tomorrow that same item (form of money) will be accepted at the same value. Once that confidence is eroded, the value (purchasing power) of that money drops. Provide a reason for that confidence to increase, and the value (purchasing power) of that money will increase.
The idea of backing money with something rare (gold or silver) is to limit the amount of money that a country could produce, and to remove the ability of the ruling powers to inflate away their debts.
Yeah, but they did it anyway. All they had to do was decrease the fineness of the metal, or increase it as the case may be. And of all the coins ever made in the history of the world there have been more of them made from base metals and/or copper than there have been made from gold & silver combined.
Voltaire is a case of using one's knowledge and reputation in an area they are not expert. Voltaire certainly didn't plan well financially. http://books.google.com/books?id=o9...age&q=voltaire's financial condition&f=false
