Comments on: Two Types of Monetary Standards Explained

By: Jeff

Jeff — Wed, 22 Jun 2011 00:47:27 +0000

I'm wondering when we will ditch money altogether. It is already happening in many countries that money has gone digital. We use credit/debit cards, our paychecks are cashed through direct deposit. I have a few friends who don't carry money around with them at all. Even at my university the parking meters take credit cards. Are we giving too much confidence in the government, or is this a natural extension of "fiat" money?

By: barry econ

barry econ — Thu, 28 Oct 2010 16:46:51 +0000

Taxation isn't the only reason to hold money. The government makes cash through other means like bonds.

By: Evan

Evan — Sat, 23 Oct 2010 19:47:42 +0000

I think the description of "money as a creature of the state" needs at least another point added. That is, the government creates the desire to hold it's money through taxes. If the governmnet did not tax the public then it could be that no one would use the fiat issued by the government. But since we know with certainty that the fiat is useful for an expense that we have to pay, then there is good reason for us to use it.

By: WebVirtual

WebVirtual — Tue, 03 Aug 2010 12:40:03 +0000

This is a fascinating subject and I'm glad you started this topic. I have been so naive all my life regarding Fiat Money that because so many concepts reletad to economy are disguised under fancy terminology that I never really knew how much of the money value depends on just people's trust, confidence or belief, rather than on any kind of material backup. For example I learned just last year that a banking license is not a permit to open an institution which can guard people's money in a vault, instead is an institution with the right to invent money out of nothing. This nothing concept diguised under the term "Leverage". In other words, I thought when I went to a bank with let's say 1 million in assets and I asked them for a 1000 loan, when they handed me the loan the bank would have 1 million minus the 1000 which they gave me, until I repay it along with interes. But I was apalled to find out that this is not the case. When I am granted the loan and I have their money in my hands the bank automatically enters in their books that now they have 1 million plus my 1000 plus the interest I will pay. They can invent or add to their assets 9 dollars out of the blue, from each dollar they have in their balance. What supports the 90 % of the money held by banks... ?? nothing. So with this nothing value thin air back up fiat money they get a chance to leggaly take over our homes when we don't repay.. and of course they dont care if the repossed house sells for 10 % of the money own since that is the only money they actually gave you. Next time you get a loan just tell them you want the money in e-gold. Tell them to buy the equivalent of the moeny they will give you in a gold certificate where the gold is certified to be safe in a vault... and see what happens.