Message:

<p>[QUOTE=&quot;Cloudsweeper99, post: 85561, member: 3011&quot;]Wow!&nbsp; Where to start with this sort of comment.&nbsp; I doubt I can say anything to change your mind, but for the benefit of others I have to respond, because this sort of thing tends to frequently pass unchallenged as the ultimate truth, which it is not.</p><p><br /></p><p>First of all, an economy can operate just fine on a hard currency; some would say better.&nbsp; Prior to World War I, trade flourished substituting self-liquidating bills of exchange for fiat currency, cleared internationally through London.&nbsp; This system, which was dismantled after the war, worked so well that the volume of international trade from the years just prior to World War I was not exceeded again until the 1990s.&nbsp; Amazing but true.&nbsp; You can look it up.</p><p><br /></p><p>Regarding the runs on the banks.&nbsp; This is only possible when banks are operated fraudulently, mismatching asset and liability duration.&nbsp; It has nothing to do with using silver and gold as currency.&nbsp; Regarding banking insurance, of course it is necessary in a fiat system, because the money has no intrinsic value.&nbsp; Just print what is needed, like Argentina. It isn&#039;t quite correct to say the government guarantees the value of money.&nbsp; They guarantee to replace the face amount.&nbsp; In actuality, each newly printed dollar decreases the value of all dollars that preceed it by a small amount.&nbsp; So FDIC insurance doesn&#039;t prevent loss, it socializes the loss among everyone.&nbsp; Not quite the same thing as you suggested.</p><p><br /></p><p>Regarding the need to back every loan with silver, this is quite easy to accomplish.&nbsp; Economist Antal Fekete has explained how such a system operates on a very small base of gold and silver to support a very large amount of economic activity.&nbsp; I think what you meant to say is that such a system no longer operates, not that it can&#039;t operate.&nbsp; Since banks operated successfully for hundreds of years under hard currency systems, and systemic crises tended only to occur when paper was substituted as money, it is foolish to say such a system is impossible.&nbsp; It&#039;s already been done.</p><p><br /></p><p>I tend to agree with you that someone with an &quot;education in economics&quot; probably will insist that hard money systems don&#039;t work.&nbsp; That&#039;s the same position I started from, but fortunately managed to overcome.&nbsp; However, I disagree that those people believing in hard money are idiots.&nbsp; The point is that since this sort of thing isn&#039;t taught anymore, or is taught with an anti-gold/silver agenda, the typical economics student couldn&#039;t be expected to understand it.&nbsp; Their loss.&nbsp; The principles behind the operation of a hard currency system are almost becoming lost knowledge.&nbsp; Too bad.</p><p><br /></p><p>And just to show that there are more ideas under the sun than people commonly think about, the present central bank fiat currency system and the hard money gold and/or silver system are only two of the three possible ways to operate a currency system [and no, barter isn&#039;t the third].&nbsp; That will give you something to research, but is way too much to post here.&nbsp; Don&#039;t be so sure that you know all the answers.&nbsp; Every time I believe that, I find out I&#039;m wrong and that the field of economics contains more amazing concepts than most people imagine.&nbsp; </p><p><br /></p><p>When someone tells you something is impossible in economics, it usually means they stand to profit from the alternative they present as the only way things could possibly be.&nbsp; But in ecnomics, perhaps more than most other fields, it pays to be skeptical of such assertions and dig a little deeper.[/QUOTE]</p><p><br /></p>

Your name or email address:

Do you already have an account?

• No, create an account now.
• Yes, my password is:
• Forgot your password?

Stay logged in