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How does fiat money work?

 
in terms of global trading...
User ID: 137772
China
08/05/2007 09:45 AM
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How does fiat money work?
How do financial markets decide how much one country's worthless fiat currency is worth v. another country's worthless fiat currency?

To me, it's like this: I sign my name on a piece of paper and you sign your name on a piece of paper. How can one person's signature be worth than another person's?

Please explain! hf
Sol Invictus
User ID: 274817
Denmark
08/05/2007 10:13 AM
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Re: How does fiat money work?
Pure supply and demand is the obvious answer.

Outside the big currencies like Dollars, Euros, British Pounds, Yen, Swiss Francs etc which are usually accepted anywhere, the only thing you can use a ... say, South African rand for is buying South African goods and services.

If you have South African rand and want to buy something from Kuwait, you have to sell the Rand on the open market and buy Kuwaiti Dinars (?). This will have a tiny negative effect on the value of the Rand and a tiny positive effect on the value of the dinar, all other things being equal.

The second aspect is psychological.

If a country like Argentina, which was once one of the richest in South America suddenly finds that it has taken on too much debt as happened a couple of years ago, then the market will expect the value of the Argentinian peso to fall. Everyone will start selling Pesos on the world exchanges, both big investment banks and private traders, and of course, this will lead to the currency losing value.

The third aspect is one of economic necessity.

Dollars and Euros are always good to have, because you need dollars and Euros to buy oil. Any country outside the EU or US which wants to buy oil has to convert their currency on the open market, which means that the value of the Dollar and Euro stay "artificially" high.

It also means that to get oil, a country has to keep friendly trading relations with either the West, or a friendly oil-producing nation. Usually it's the case that 3rd world countries export to the West to get "hard currency", ie, dollars, pounds, yen, euros, etc which they then use to buy oil which keeps their economy going. For the vast majority of non-oil producing nations, this is an "export or die" fact of life. Cuba gets oil from Venezuela, of course, but that's more like one of the few exception that proves the rule.

The fourth, I suppose, is one of open manipulation.

Countries like Japan and China have hundreds of billions of dollars in their central bank reserves. It's not in their interest yet to sell all this, nor to see the dollar fall too much, because then obviously of the trillion dollars they might have now, when they sell... they'll be left with maybe the "buying power" equivalent of half that number if not even less.

So when the dollar is under threat, Central Banks around the world might coordinate to buy dollars, thereby artificially raising the price and to softening the effect of negative "market sentiment" based on key economic data.

This might not be the whole story, and I'm sure someone else could explain it in more technical terms, but it's the basic gist of it. The end result is the both Western currencies and oil-producing currencies are kept substantially more valuable than relatively isolated 3rd world nations who have no big central banks to back them up, nor do they have 200 years of economic growth behind them to keep up market confidence in the value of their fiat currency.

So yeah, it's supply & demand, psychology, and manipulation / power politics.

The power politics angle comes in from the perspective of Western nations for example not minding terribly losing a few hundred billion dollars to keep the currency of the US (for example) from collapsing - because they still benefit after all from a US military presence and it's also the US which keeps the whole "Western-Centric" world trade system intact, more or less, by stepping in when trade disputes go from push to shove...
Anonymous Coward
User ID: 270862
United States
08/05/2007 10:29 AM
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Re: How does fiat money work?
The ultimate way that it works is the smart ones buy up the gold, silver, land or any any other liquid form of wealth with paper. A silver dollar used to be a weeks wage. Now it's about an average hours wage. 40:1
Fiat = fail.
WW RAUPP

User ID: 260308
Netherlands
08/05/2007 10:56 AM
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Re: How does fiat money work?
The ultimate way that it works is the smart ones buy up the gold, silver, land or any any other liquid form of wealth with paper. A silver dollar used to be a weeks wage. Now it's about an average hours wage. 40:1 Fiat = fail.
 Quoting: Anonymous Coward 270862


One dollar was a days wage, not a week. Find out some information before making a claim, dickhead.
To shape the world is to become immortal
Anonymous Coward
User ID: 277827
United States
08/05/2007 10:58 AM
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Re: How does fiat money work?
How do financial markets decide how much one country's worthless fiat currency is worth v. another country's worthless fiat currency?

To me, it's like this: I sign my name on a piece of paper and you sign your name on a piece of paper. How can one person's signature be worth than another person's?

Please explain! hf
 Quoting: in terms of global trading... 137772

That's a good question.
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 11:29 AM
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Re: How does fiat money work?
Pure supply and demand is the obvious answer.

Outside the big currencies like Dollars, Euros, British Pounds, Yen, Swiss Francs etc which are usually accepted anywhere, the only thing you can use a ... say, South African rand for is buying South African goods and services.

If you have South African rand and want to buy something from Kuwait, you have to sell the Rand on the open market and buy Kuwaiti Dinars (?). This will have a tiny negative effect on the value of the Rand and a tiny positive effect on the value of the dinar, all other things being equal.

The second aspect is psychological.

If a country like Argentina, which was once one of the richest in South America suddenly finds that it has taken on too much debt as happened a couple of years ago, then the market will expect the value of the Argentinian peso to fall. Everyone will start selling Pesos on the world exchanges, both big investment banks and private traders, and of course, this will lead to the currency losing value.

The third aspect is one of economic necessity.

Dollars and Euros are always good to have, because you need dollars and Euros to buy oil. Any country outside the EU or US which wants to buy oil has to convert their currency on the open market, which means that the value of the Dollar and Euro stay "artificially" high.

It also means that to get oil, a country has to keep friendly trading relations with either the West, or a friendly oil-producing nation. Usually it's the case that 3rd world countries export to the West to get "hard currency", ie, dollars, pounds, yen, euros, etc which they then use to buy oil which keeps their economy going. For the vast majority of non-oil producing nations, this is an "export or die" fact of life. Cuba gets oil from Venezuela, of course, but that's more like one of the few exception that proves the rule.

The fourth, I suppose, is one of open manipulation.

Countries like Japan and China have hundreds of billions of dollars in their central bank reserves. It's not in their interest yet to sell all this, nor to see the dollar fall too much, because then obviously of the trillion dollars they might have now, when they sell... they'll be left with maybe the "buying power" equivalent of half that number if not even less.

So when the dollar is under threat, Central Banks around the world might coordinate to buy dollars, thereby artificially raising the price and to softening the effect of negative "market sentiment" based on key economic data.

This might not be the whole story, and I'm sure someone else could explain it in more technical terms, but it's the basic gist of it. The end result is the both Western currencies and oil-producing currencies are kept substantially more valuable than relatively isolated 3rd world nations who have no big central banks to back them up, nor do they have 200 years of economic growth behind them to keep up market confidence in the value of their fiat currency.

So yeah, it's supply & demand, psychology, and manipulation / power politics.

The power politics angle comes in from the perspective of Western nations for example not minding terribly losing a few hundred billion dollars to keep the currency of the US (for example) from collapsing - because they still benefit after all from a US military presence and it's also the US which keeps the whole "Western-Centric" world trade system intact, more or less, by stepping in when trade disputes go from push to shove...
 Quoting: Sol Invictus 274817


Amazing answer, thank you. How did you learn that, BTW?
Sol Invictus
User ID: 274817
Denmark
08/05/2007 01:19 PM
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Re: How does fiat money work?
Amazing answer, thank you. How did you learn that, BTW?
 Quoting: Anonymous Coward 137772


Thanks, I wrote it half for myself though, haha, just wanted to see if I still remembered it... as you no doubt can imagine, this topic doesn't come up very much in real life :P

As for where I learned it, well I've got a business degree and have taken my fair share of economics classes, but the whole "big picture" angle I learned on GLP and many other sites. I think most of people who've been here long enough would be able to give you a similar answer, assuming of course they read the economics/politics thread that come up.

Oh, but the second I hit "post" I realized I should have written another answer that there's a much better response to "How does fiat money work?"

That response is that it doesn't really work, of course.

All fiat currencies throughout human history have reverted to their natural value over time, which is... Zero :)
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 01:52 PM
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Re: How does fiat money work?
Amazing answer, thank you. How did you learn that, BTW?


Thanks, I wrote it half for myself though, haha, just wanted to see if I still remembered it... as you no doubt can imagine, this topic doesn't come up very much in real life :P

As for where I learned it, well I've got a business degree and have taken my fair share of economics classes, but the whole "big picture" angle I learned on GLP and many other sites. I think most of people who've been here long enough would be able to give you a similar answer, assuming of course they read the economics/politics thread that come up.

Oh, but the second I hit "post" I realized I should have written another answer that there's a much better response to "How does fiat money work?"

That response is that it doesn't really work, of course.

All fiat currencies throughout human history have reverted to their natural value over time, which is... Zero :)
 Quoting: Sol Invictus 274817


Thanks for the answer, again. That last sentence is what confuses me a lot. If everyone knows that the house of cards is gonna crumble eventually, how can they put so much faith in it? It's astounding and I've come to understand that society is based on nothing but make believe...

If you haven't read "No Treason: The Constitution of No Authority", it's a classic and really eye opening. The mp3 is two hours and it's almost the complete book on mp3:

[link to www.lysanderspooner.org]

"No Treason" MP3: [link to www.megaupload.com]
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 02:03 PM
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Re: How does fiat money work?
Amazing answer, thank you. How did you learn that, BTW?


Thanks, I wrote it half for myself though, haha, just wanted to see if I still remembered it... as you no doubt can imagine, this topic doesn't come up very much in real life :P

As for where I learned it, well I've got a business degree and have taken my fair share of economics classes, but the whole "big picture" angle I learned on GLP and many other sites. I think most of people who've been here long enough would be able to give you a similar answer, assuming of course they read the economics/politics thread that come up.

Oh, but the second I hit "post" I realized I should have written another answer that there's a much better response to "How does fiat money work?"

That response is that it doesn't really work, of course.

All fiat currencies throughout human history have reverted to their natural value over time, which is... Zero :)


Thanks for the answer, again. That last sentence is what confuses me a lot. If everyone knows that the house of cards is gonna crumble eventually, how can they put so much faith in it? It's astounding and I've come to understand that society is based on nothing but make believe...

If you haven't read "No Treason: The Constitution of No Authority", it's a classic and really eye opening. The mp3 is two hours and it's almost the complete book on mp3:

[link to www.lysanderspooner.org]

"No Treason" MP3: [link to www.megaupload.com]
 Quoting: Anonymous Coward 137772


The link to the book is here: [link to www.lysanderspooner.org]

About the book, it was published in 1867 so the mp3 is ok to download. hf
Anonymous Coward
User ID: 239210
Canada
08/05/2007 02:04 PM
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Re: How does fiat money work?
How do financial markets decide how much one country's worthless fiat currency is worth v. another country's worthless fiat currency?

To me, it's like this: I sign my name on a piece of paper and you sign your name on a piece of paper. How can one person's signature be worth than another person's?

Please explain! hf
 Quoting: in terms of global trading... 137772


It doesn't.
Sol Invictus
User ID: 274817
Denmark
08/05/2007 02:12 PM
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Re: How does fiat money work?
\\\\
Thanks for the answer, again. That last sentence is what confuses me a lot. If everyone knows that the house of cards is gonna crumble eventually, how can they put so much faith in it? It's astounding and I've come to understand that society is based on nothing but make believe...
\\\\

Well not everyone believes fiat currencies will collapse... but I agree with you on the make believe part! The positive side of that coin however is that we're all going to learn a very valuable lesson about wishful thinking ;)

Re: the economics aspect

IIRC, fiat literally means "by decree", ie - "The full faith and credit" of the Government of the United States is behind the value of the dollar. For a lot of people, that still means something. For it not to mean anything, they would have to venture into the traditional domains of the "lunatic fringe", like GLP :P

Most people, I imagine, also still think that Fort Knox is full of thousands of tonnes of gold, and that if nothing else, the dollar has value because of that. I'm not an American so I don't know for sure, but I doubt that many people know that as of 1972 (?) Nixon officially closed the "gold window" and since then the dollar has been pure fiat like everything else.

Basically I think that most people just can't imagine a circumstance in which the dollar no longer has value. Sure, inflation is a fact of life, but as long as wages and investments keep ahead of inflation, it's not a problem.

That's incidentally why "they" changed the way inflation is calculated. Again, IIRC, it used to be that inflation was growth of M3, ie, the growth of the total monetary supply including money sitting simply as a number in a bank account. M3 was the sum (and growth) of all the money in existance, and it makes sense to me to use that as an indicator of inflation...

Not too long ago, however, they made inflation simply whatever the CPI (Consumer Price Index) changed by, and they stopped reporting M3 completely! So we really have no idea if the amount of dollars in circulation has increased by 100% in the last decade or so, we only know that a narrow selection of consumer goods has not doubled in price.

The fact of the matter is that Central Banks are, according to conventional theories, charged with keeping the value of the currency intact. If you were trained as an investment banker or stock broker, you wouldn't hear about the "conspiracy" side of fiat currency unless you actually did the research on your own time. I certainly don't remember ever learning about it, even if it was considered a plus if I managed to include it in an essay (meaning that the PhD professors were aware of it, they just didn't teach it to the class).

Conspiracy? Well, economics isn't an exact science, so no one really knows what is what. It's all about backing up whatever you say with real life examples, and as far as I know, there's no precedent for the kind of global economy in which pure fiat currency and cheap credit has become the driving force of economic growth. So technically, the jury is still out on what the effect may be, even though I personally don't have many doubts as to what the outcome will be :P

As for the book, no, I haven't heard of it. Thanks for the link!
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 02:31 PM
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Re: How does fiat money work?
\\
Thanks for the answer, again. That last sentence is what confuses me a lot. If everyone knows that the house of cards is gonna crumble eventually, how can they put so much faith in it? It's astounding and I've come to understand that society is based on nothing but make believe...
\\

Well not everyone believes fiat currencies will collapse... but I agree with you on the make believe part! The positive side of that coin however is that we're all going to learn a very valuable lesson about wishful thinking ;)

Re: the economics aspect

IIRC, fiat literally means "by decree", ie - "The full faith and credit" of the Government of the United States is behind the value of the dollar. For a lot of people, that still means something. For it not to mean anything, they would have to venture into the traditional domains of the "lunatic fringe", like GLP :P

Most people, I imagine, also still think that Fort Knox is full of thousands of tonnes of gold, and that if nothing else, the dollar has value because of that. I'm not an American so I don't know for sure, but I doubt that many people know that as of 1972 (?) Nixon officially closed the "gold window" and since then the dollar has been pure fiat like everything else.

Basically I think that most people just can't imagine a circumstance in which the dollar no longer has value. Sure, inflation is a fact of life, but as long as wages and investments keep ahead of inflation, it's not a problem.

That's incidentally why "they" changed the way inflation is calculated. Again, IIRC, it used to be that inflation was growth of M3, ie, the growth of the total monetary supply including money sitting simply as a number in a bank account. M3 was the sum (and growth) of all the money in existance, and it makes sense to me to use that as an indicator of inflation...

Not too long ago, however, they made inflation simply whatever the CPI (Consumer Price Index) changed by, and they stopped reporting M3 completely! So we really have no idea if the amount of dollars in circulation has increased by 100% in the last decade or so, we only know that a narrow selection of consumer goods has not doubled in price.

The fact of the matter is that Central Banks are, according to conventional theories, charged with keeping the value of the currency intact. If you were trained as an investment banker or stock broker, you wouldn't hear about the "conspiracy" side of fiat currency unless you actually did the research on your own time. I certainly don't remember ever learning about it, even if it was considered a plus if I managed to include it in an essay (meaning that the PhD professors were aware of it, they just didn't teach it to the class).

Conspiracy? Well, economics isn't an exact science, so no one really knows what is what. It's all about backing up whatever you say with real life examples, and as far as I know, there's no precedent for the kind of global economy in which pure fiat currency and cheap credit has become the driving force of economic growth. So technically, the jury is still out on what the effect may be, even though I personally don't have many doubts as to what the outcome will be :P

As for the book, no, I haven't heard of it. Thanks for the link!
 Quoting: Sol Invictus 274817


This is an excellent analysis and we're all lucky to be able to read it. Some of the things that are going on in this fiat system have experienced economists scratching their heads.

This is one that gets me and I've read economists say that it confuses them too: how is that China takes the dollars they get for their goods and turn around and buy T-Bills with that money? They are trading goods for paper, there's no other way to look at it. I've read economists say that it's a goods for paper transaction where the benefit is almost completely on the US's side. The only thing that I can think of is the fact that the T-bills are backed up by property that is owned by the USA government. So, if the US goes bankrupt, China will end up owning a chunk of the US and the minerals, oil, etc. that's on that land. However, if the US goes bankrupt, does anyone really think that they'll just give that land away or will there end up being a war over it? I tend to think the warmongering US would fight before giving a chunk of its land away but that's just my gut feeling. All of this is really intriguing. I would love to hear your comments if you want. Thanks for everything!

Again, here's the correct link for the book: [link to www.lysanderspooner.org]
Anonymous Coward
User ID: 274817
Denmark
08/05/2007 02:59 PM
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Re: How does fiat money work?
This is an excellent analysis and we're all lucky to be able to read it. Some of the things that are going on in this fiat system have experienced economists scratching their heads.

This is one that gets me and I've read economists say that it confuses them too: how is that China takes the dollars they get for their goods and turn around and buy T-Bills with that money? They are trading goods for paper, there's no other way to look at it. I've read economists say that it's a goods for paper transaction where the benefit is almost completely on the US's side. The only thing that I can think of is the fact that the T-bills are backed up by property that is owned by the USA government. So, if the US goes bankrupt, China will end up owning a chunk of the US and the minerals, oil, etc. that's on that land. However, if the US goes bankrupt, does anyone really think that they'll just give that land away or will there end up being a war over it? I tend to think the warmongering US would fight before giving a chunk of its land away but that's just my gut feeling. All of this is really intriguing. I would love to hear your comments if you want. Thanks for everything!

Again, here's the correct link for the book: [link to www.lysanderspooner.org]
 Quoting: Anonymous Coward 137772


Well don't invest any money on my advice, lol. It's just theory, and the last time I tried making money on short-term market predictions I ended up losing it all... should have followed the advice of my highschool economics teacher, whose comments after one assignment still echo in my head... " 'Sol', stay away from stocks!" after I was the only in class who managed to lose half my "virtual" portfolio. Though to be fair, I was trading at 200-1 leverage at the time, and that's always risky :P

Anyways, regarding China, it's not quite as crazy as it sounds. By supporting the unashamedly pro-Western economic system, they do get some benefits, even though they're not part of the "in crowd" at global trade talks.

Think of China as a country run by an evil overlord who has a plan for world domination. It helps me visualize that at times, anyways, when looking at politics... China is 50 years behind the West in most respects, and again, all other things being equal, it would take at least 50 years for them to catch up.

But... what if they, in the words of Lenin I think it was, believe that the capitalists will gladly sell you the rope you are going to hang them with?

All the *money* going in and out of China may at the moment benefit the West by keeping our corporations profitable and the CPI in check, but it's not just money going in. It's infrastructure being built, factories going up all over the place, and critical 21st century technology which is being adapted. And who pays for all this? Well, the West does, in a manner of speaking. China's economic boom is a result of opening up their economy to Western investment.

Even if the US dollar collapsed tomorrow and the EU and Japan were unable to maintain the present financial system on their own (mostly because we don't have a credible global military presence) then how would China do in such a scenario?

Sure, the trillion dollars in their central banks would be worthless "paper", but all the roads, railroads, airports would remain... as would the 21st century factories, and of course, so would the elements of a 21st century army they have been quietly upgrading.

I think that China will keep trying to prop up the US in particular and the West in general financially until the "opportune moment" comes... at which point they'll dump their dollars and nationalize all the Western-owned factories. From a power-politics perspective, it's quite a nice move.

If it works out, of course.

The downside is that China may be unable to *operate* those factories since they lack any real natural resources of their own. And who keeps the global trade system intact, the same system which they rely on to get goods from Australia, Canada, Middle East, Africa, etc?

The West does.

So if there's any way of making it possible, China should continue to peacefully build up and delay the collapse of world trade until they're a lot more developed than they are now. If a global collapse happened tomorrow, I think the West would still come out on top, because for all our faults and weaknesses we still have the infrastructure and an educated population to rebuild from scratch. Outside of the West, only Russia has anything to compare with that.

So *if* they were really following an evil overlord script of world domination, China would do well to delay that collapse by any means necessary.

Of course, in my opinion, China really is just a "paper tiger" in the long run. Their economy is showing very clear signs of overheating, and their entire banking system may be just as broken as the Western one is when all is said and done.

Now granted I'm biased as a Westerner myself, but we were making plans of world domination long before China even realized there *was* a world to dominate... my bet is on the West getting the "last laugh" in our competition with China, even if it's a bitter one.

My opinion, etc :P
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 03:17 PM
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Re: How does fiat money work?
This is an excellent analysis and we're all lucky to be able to read it. Some of the things that are going on in this fiat system have experienced economists scratching their heads.

This is one that gets me and I've read economists say that it confuses them too: how is that China takes the dollars they get for their goods and turn around and buy T-Bills with that money? They are trading goods for paper, there's no other way to look at it. I've read economists say that it's a goods for paper transaction where the benefit is almost completely on the US's side. The only thing that I can think of is the fact that the T-bills are backed up by property that is owned by the USA government. So, if the US goes bankrupt, China will end up owning a chunk of the US and the minerals, oil, etc. that's on that land. However, if the US goes bankrupt, does anyone really think that they'll just give that land away or will there end up being a war over it? I tend to think the warmongering US would fight before giving a chunk of its land away but that's just my gut feeling. All of this is really intriguing. I would love to hear your comments if you want. Thanks for everything!

Again, here's the correct link for the book: [link to www.lysanderspooner.org]


Well don't invest any money on my advice, lol. It's just theory, and the last time I tried making money on short-term market predictions I ended up losing it all... should have followed the advice of my highschool economics teacher, whose comments after one assignment still echo in my head... " 'Sol', stay away from stocks!" after I was the only in class who managed to lose half my "virtual" portfolio. Though to be fair, I was trading at 200-1 leverage at the time, and that's always risky :P

Anyways, regarding China, it's not quite as crazy as it sounds. By supporting the unashamedly pro-Western economic system, they do get some benefits, even though they're not part of the "in crowd" at global trade talks.

Think of China as a country run by an evil overlord who has a plan for world domination. It helps me visualize that at times, anyways, when looking at politics... China is 50 years behind the West in most respects, and again, all other things being equal, it would take at least 50 years for them to catch up.

But... what if they, in the words of Lenin I think it was, believe that the capitalists will gladly sell you the rope you are going to hang them with?

All the *money* going in and out of China may at the moment benefit the West by keeping our corporations profitable and the CPI in check, but it's not just money going in. It's infrastructure being built, factories going up all over the place, and critical 21st century technology which is being adapted. And who pays for all this? Well, the West does, in a manner of speaking. China's economic boom is a result of opening up their economy to Western investment.

Even if the US dollar collapsed tomorrow and the EU and Japan were unable to maintain the present financial system on their own (mostly because we don't have a credible global military presence) then how would China do in such a scenario?

Sure, the trillion dollars in their central banks would be worthless "paper", but all the roads, railroads, airports would remain... as would the 21st century factories, and of course, so would the elements of a 21st century army they have been quietly upgrading.

I think that China will keep trying to prop up the US in particular and the West in general financially until the "opportune moment" comes... at which point they'll dump their dollars and nationalize all the Western-owned factories. From a power-politics perspective, it's quite a nice move.

If it works out, of course.

The downside is that China may be unable to *operate* those factories since they lack any real natural resources of their own. And who keeps the global trade system intact, the same system which they rely on to get goods from Australia, Canada, Middle East, Africa, etc?

The West does.

So if there's any way of making it possible, China should continue to peacefully build up and delay the collapse of world trade until they're a lot more developed than they are now. If a global collapse happened tomorrow, I think the West would still come out on top, because for all our faults and weaknesses we still have the infrastructure and an educated population to rebuild from scratch. Outside of the West, only Russia has anything to compare with that.

So *if* they were really following an evil overlord script of world domination, China would do well to delay that collapse by any means necessary.

Of course, in my opinion, China really is just a "paper tiger" in the long run. Their economy is showing very clear signs of overheating, and their entire banking system may be just as broken as the Western one is when all is said and done.

Now granted I'm biased as a Westerner myself, but we were making plans of world domination long before China even realized there *was* a world to dominate... my bet is on the West getting the "last laugh" in our competition with China, even if it's a bitter one.

My opinion, etc :P
 Quoting: Anonymous Coward 274817


Interesting. Fantastic analysis again, thanks. I don't know much about this topic but you wrote makes logical sense and it's major food for thought. I've read that China and Russia are ready to join forces and take on the US if the US gets too far out of hand. Actually, I don't see any signs that anyone actually wants to control the world except for the Bitian/USA partnership. Jordan Maxwell claims that there are two groups vying for control of the world, the Bitian/USA partnership and the Vatican/EU countries. I think that's interesting but I haven't seen any evidence that anyone wants to dominate the world except for the Bitian/USA partnership. I certainly haven't seen any evidence that China or Russia does. It just seems to be the NWO lunatics who want to dominate the whole world. But, I'm not an expert and the view you just described makes a lot of sense.
Sol Invictus
User ID: 274817
Denmark
08/05/2007 03:52 PM
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Re: How does fiat money work?
...

I've read that China and Russia are ready to join forces and take on the US if the US gets too far out of hand. Actually, I don't see any signs that anyone actually wants to control the world except for the Bitian/USA partnership. Jordan Maxwell claims that there are two groups vying for control of the world, the Bitian/USA partnership and the Vatican/EU countries. I think that's interesting but I haven't seen any evidence that anyone wants to dominate the world except for the Bitian/USA partnership.

...

 Quoting: Anonymous Coward 137772


Well thanks to you as well, for keeping the discussion going :) It's the best way to keep learning, after all, and that goes for me as well.

As for world domination, well, now I can't remember who it was... some Kagan character I think... just googled it, so here it is:

[link to www.mtholyoke.edu]

Now I don't like the guy, being that I'm a European and he has kind of a low opinion of us, but he does make a good point:

\\
"The psychology of weakness is easy enough to understand. A man armed only with a knife may decide that a bear prowling the forest is a tolerable danger, inasmuch as the alternative — hunting the bear armed only with a knife — is actually riskier than lying low and hoping the bear never attacks. The same man armed with a rifle, however, will likely make a different calculation of what constitutes a tolerable risk. Why should he risk being mauled to death if he doesn’t need to?"
\\

The psychology of power is such that the militarily strong nations (USUK alliance), aka the Anglo-Saxon World, will have a different view of power than the militarily weak nations.

Luxembourg, Norway, Iceland, etc will always argue for a world of general principles and fair dealings, because in such a world they don't need to fear being dominated by the strong. The same goes for China, Iran, Venezeula, etc, to a lesser extent. They won't advocate "might makes right" because they know they'll lose out in such a world!

The "strong" on the other hand, will naturally argue for a world in which they have more freedom to implement their designs by any means necessary.

Now if you ignore his neo-con view of America as a benevelont giant impededed by lilliputian whiny allies, he does actually make some good points.

I know I've got kind of a cynical world view, but given the reality of modern nation-states and dominant political ideologies - of whatever mainstream extraction - I just don't see any "good guys" on the global stage.

I'm pretty sure it was A. Lincoln who said "Most men can stand adversity, but if you want to test a man's character, give him power."

The rest of the world may talk the talk, but I'm still *somewhat* glad that it's the US/UK alliance that's running the world, at least at this point in time... I'll take it over the muslims and Chinese running things anyways, though again - being that I'm European - I think that continental Europe would do a *slightly* better job.

Unless of course power by its very nature is a corrupting influence, and we just end up repeating the cycle!

Anyway, like I said... cynical world view :P
rancelot
User ID: 240916
United States
08/05/2007 04:08 PM
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Re: How does fiat money work?
The Truth About FIAT...

First, you take a loan out at your local S&L

Second, you pick out a brand new FIAT at the dealership

Third, you plunk down a wad of cash for a deposit on a new FIAT

Fourth, you drive home in your brand new FIAT Punto

You will probably only make it half way home before the engine siezes

Then you spend the rest of your life making monthly payments on that worthless FIAT

whitevan
Anonymous Coward (OP)
User ID: 137772
China
08/05/2007 04:11 PM
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Re: How does fiat money work?
...

I've read that China and Russia are ready to join forces and take on the US if the US gets too far out of hand. Actually, I don't see any signs that anyone actually wants to control the world except for the Bitian/USA partnership. Jordan Maxwell claims that there are two groups vying for control of the world, the Bitian/USA partnership and the Vatican/EU countries. I think that's interesting but I haven't seen any evidence that anyone wants to dominate the world except for the Bitian/USA partnership.

...



Well thanks to you as well, for keeping the discussion going :) It's the best way to keep learning, after all, and that goes for me as well.

As for world domination, well, now I can't remember who it was... some Kagan character I think... just googled it, so here it is:

[link to www.mtholyoke.edu]

Now I don't like the guy, being that I'm a European and he has kind of a low opinion of us, but he does make a good point:

\
"The psychology of weakness is easy enough to understand. A man armed only with a knife may decide that a bear prowling the forest is a tolerable danger, inasmuch as the alternative — hunting the bear armed only with a knife — is actually riskier than lying low and hoping the bear never attacks. The same man armed with a rifle, however, will likely make a different calculation of what constitutes a tolerable risk. Why should he risk being mauled to death if he doesn’t need to?"
\

The psychology of power is such that the militarily strong nations (USUK alliance), aka the Anglo-Saxon World, will have a different view of power than the militarily weak nations.

Luxembourg, Norway, Iceland, etc will always argue for a world of general principles and fair dealings, because in such a world they don't need to fear being dominated by the strong. The same goes for China, Iran, Venezeula, etc, to a lesser extent. They won't advocate "might makes right" because they know they'll lose out in such a world!

The "strong" on the other hand, will naturally argue for a world in which they have more freedom to implement their designs by any means necessary.

Now if you ignore his neo-con view of America as a benevelont giant impededed by lilliputian whiny allies, he does actually make some good points.

I know I've got kind of a cynical world view, but given the reality of modern nation-states and dominant political ideologies - of whatever mainstream extraction - I just don't see any "good guys" on the global stage.

I'm pretty sure it was A. Lincoln who said "Most men can stand adversity, but if you want to test a man's character, give him power."

The rest of the world may talk the talk, but I'm still *somewhat* glad that it's the US/UK alliance that's running the world, at least at this point in time... I'll take it over the muslims and Chinese running things anyways, though again - being that I'm European - I think that continental Europe would do a *slightly* better job.

Unless of course power by its very nature is a corrupting influence, and we just end up repeating the cycle!

Anyway, like I said... cynical world view :P
 Quoting: Sol Invictus 274817


You said, "I'm still *somewhat* glad that it's the US/UK alliance that's running the world, at least at this point in time..." I'm certainly not! They have crazy ideas and in my opinion they're downright evil. Below is an example, (Jordan Maxwell speaking). I'm going to bed now but I'll bookmark this thread and check it tomorrow. Thanks again for your posts.

There are two kinds of law on the earth as I've said, one is called Civil Law which is the law of the land and one is Maritime Admiralty which is called the law of water. Maritime Admiralty is Banking Law and the law of the Maritime Admiralty says that you, because you came out of your mothers water are a maritime Admiralty product, this is why the ship is sitting in its birth and is tied to the dock and the captain has to give a certificate of manifest to the port authorities. Because money is changing hands this is why when you were born you have to have a birth certificate. It has to be signed by the doc cause thats where the ship is tied to, so the doc signs your birth certificate. Why? Because you came out of your mothers water, you came down her birth canal you are a maritime Admiralty product. Therefore your birth certificate is signed by your mother and where your mother signed on the birth certificate you will see it does not say parent or mother, it says informant. Your mother was informing the bank that she has just produced another product to be bought and sold. England the British Crown through international banking owns your physical body and thats the law. The bottom line is that your a maritime Admiralty product and therefore the banks own your body. On the back of the social security card will be numbers in RED on the front will be blue or black but on the back they will be in red. The numbers on the back of a the SS card in red designate your body, it is the serial number of your stock. This is why if your wealthy your preferred stock, if your poor your common stock but your a stock on the stock market. Your body is bought and sold through the use of your birth certificate. If you could get your original birth certificate back you would find that on the back of the birth certificate are all banks around the world, all over the world banks have used your birth certificate because you are a stock in a Maritime Admiralty banking scheme where you make money for banks. So consequently the corporation and government and people who want to control you they create a second you and that second you that they control that they created is all in CAPITAL LETTERS. Check it out anytime you get a bill, lawsuit, fine, ticket, utility bill, driving license, social security card, insurance cards, anything period. Anything having to do with business your name will always be in all capital letters because only all capital letters can be dealt with by banks and government anytime you have a name upper and lower case that applys to you, I have no control over you. You sign a contract in which your name is in all capital letters now I can take you to court, now I can take you. As a matter of fact the judge sits on the bench, he rules from the bench. The word bench in latin is a bank, look it up in a latin dictionary. So the judge rules from the bench, right because he ruling for the bank why? Because someones got to pay, its just a game here the queen of england wants her cut of the American blood, she wants her piece so someones got to pay and the moneys going to go where? Into a bank, thats right the judge rules for the bank. So consequently if you work in California making money your then referred to as a franchisee of a foreign corporation. 1849 constitution of California says that NO Californian citizen will ever pay taxs in California State ever. There will never be a state tax in California ever, thats the constitution in California but if you say your a United States citizen your saying you work for a privately owned corporation called the United States therefore your a franchisee of a foreign corporation therefore you must pay the California Franchisee Tax Board not the California State Tax Board. There is no State Tax because your a franchisee of a foreign corporation on the Maritime Banking International Law, you work for the Queen of Engliand. Your butt is owned by the Queen of England in a corporation called the United states whilst a man called Bush is the president of the British corporation. You want to talk treason? You need to wake up and find out how this stuff really works. Once you understand that you do not need to submit yourself as an American to a British commercial venture called Courts your an American you don't need to go to Court. You only go to court cause you agree to go to court. When they send you a summons to court you look at it and say thats not me its in all capital letters thats a corporation, its a corpse, its dead, do I look like im dead to you? Besides I'll go to an American system for justice, I do not need to no British Grand Lodge Masonic system called Courts coming out of England manipulating, lying and exploiting people. Everyone in America thinks they have to go to court, I don't go to anyones court, I'm an American! I don't need to go to court. Thats the difference between being free and being a slave.

Originally posted here: [link to z13.invisionfree.com]

THE system - the federal government acting on behalf of King's Commerce, intended to gradually divest Americans of their natural born rights and Common Law through luring them into the fictitious and corrupt world of the Federal Government and it's notion of fair laws, such as the 14th Amendment -state citizen, reliance on state-sponsored social welfare, hidden contracts with compelled performance, and at the end of the day state-granted privileges in exchange for God-given rights. A few more significant trappings you did not mention: marriage license; FED Reserve; currency backed by substance-less green ink on white paper; IRS; alphabet soup of "security" services FBI/CIA/NSA/FEMA and the most recent abomination - Homeland Security; UN; OBE; CODEX; ACT 21 ("sustainable development").

Many people today have been conditioned to believe that all these trappings are essential necessities of life which they otherewise could not survive without (without ever having tried), so the real danger is and has been for decades that the government ultimately has what they want - a populous who has been conditioned to believe that without uncle sam to rely on, they will all shrivel up and die.

Meanwhile, has anyone ever actually taken a moment to contemplate any of these trappings in the first place, such as - why does the government need to sanction a marriage, and what was forfeited (the fine print) by the wedded when they signed the license? With these kinds of hidden contracts, for which we have our system of lawyers to thank (the very type the original Constitution forbade from holding public office) there are ALWAYS things given up in exchange for government privilege, it's the way they do business, but one has to first be congizant enough in the first place to even contemplate these things to see them for what they are. For a lot of people, they have yet to notice, feel or experience first hand the force of the heavy hand of our federal government, they are still quite content to go through life comfortably numbed by what the TV and the media tells them to be satisfied with, so it's naturally easier for them to continue living the illusion; but there is an increasing crowd of Americans who've had the unfortunate experience of going into the King's court of law (essentially lawless) for various reasons, and those who came out the other side did so confused, wondering what happened to the notion of their Constitutional protections. It's hard for people to first realize, but eventually they do acknowledge and admit that somewhere along the line, they unwittingly (tacitly) waived them in exchange for government-sponsored handouts. The silver lining in this dark cloud is that for those people who have experienced the hand of the government, which is happening with far greater frequency these days thanks to modern enhancements such as Patriot Acts I and II, for those who survive it serves as a rude but necessary wakeup call to shake them from their state-sponsored PJ slumbers.
Anonymous Coward
User ID: 270862
United States
08/05/2007 04:49 PM
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Re: How does fiat money work?
The ultimate way that it works is the smart ones buy up the gold, silver, land or any any other liquid form of wealth with paper. A silver dollar used to be a weeks wage. Now it's about an average hours wage. 40:1 Fiat = fail.

One dollar was a days wage, not a week. Find out some information before making a claim, dickhead.
 Quoting: WW RAUPP


Fuck you you arrogant prick.


[link to silverstockreport.com]

...........a day's wage, in silver, for skilled labor, about 100 years ago, ranged from being a silver dime as one man reported, a silver quarter during the great depression in the 1930's, or as much as a silver dollar. Henry Ford paid his workers, what was considered a very excessive $5.00 a day. In silver, at .72 oz. per silver dollar, that was 3.6 oz. of silver per day. But remember, that was an extremely high and very unusual wage. It was made possible by the very high productivity of the assembly line, and little government regulations or taxes. If silver returns to historic norms, it will be an ounce of silver, or less, for a day's wage. Due to scarcity of silver, it may well be more like less than a 1/10th of an ounce of silver per day. Or perhaps, a silver dime for two weeks of labor!
Sol Invictus
User ID: 274817
Denmark
08/05/2007 05:00 PM
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Re: How does fiat money work?
Well 137772, now you're putting me in the awkard position of "defending" a system which I too despise :P

I don't dispute what's in your last post, and yes, by all objective standards the system is "evil".

It's just that I've lived in some 8 countries and visited 50+ others. Having had that experience, and knowing what I do know of "conspiracy theories" to use the mainstream term, I'd still prefer living in the Western world. Yes, my first choice is Scandinavia, but I'd still take England and the US over countries like China, Middle East, Russia, etc, and even Venezuela with all their talk of global justice and peace-on-earth.

It's a global problem, oppressive governments, it's not limited to the US or UK.

The only difference is that in the West, and the US in particular, we have the "illusion of freedom".

Now that's as far as I'll go in defending "the system"...

Personally I too hope that it'll collapse and that something better will arise from the ashes :P

But yeah, thanks for the discussion, I enjoyed it.

Caveat Emptor!

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