

Why an economic collapse is likely imminent - stuffthatmatter
http://seekingalpha.com/instablog/439656-arbitrary-vote/11018-economic-fragility-underestimated-collapse-may-be-imminent

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TrevorJ
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.

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philwelch
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.

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joe_the_user
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.

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philwelch
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.

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joe_the_user
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.

