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I do not even how you can call paper dollar a currency. You cannot use something as a currency if: - it can be manufactured easily - it can change value from one day to another - it is not dense in physical space (i.e. you do not need to carry buckets of it to buy something).

The paper money clearly does not respect ANY of these principles nowadays. The FED can print (and does) as much as they want to buy back toxic assets (remember the Krugman clown advising after the Net bubble in 2001 that we should create a housing bubble to stimulate the economy ? That really worked well for everyone, did it not?). The US Dollar is constantly losing value versus Gold since its parity was dropped for good in the 70s, and now you have such a galoping inflation than looking at movies 30 years ago make you feel old: then the bad guys were asking for "a million dollars" as something highly valuable/desirable, while nowadays if you do not cross the billion mark it is not considered as much anymore (Austin Powers made this very good point in a clever way).

Why do you think China is buying all the Gold it can currently to replace its stinky dollars?




> I do not even how you can call paper dollar a currency. You cannot use something as a currency if [...]

Currency is based entirely on concensus. Anything (ivory, sheep, even bits of paper) could be currency; the only requirement is that there are people willing to use it as a basis for trade. In other words, it doesn't really matter if you don't believe in paper currency as long as everyone else does.

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Well, currency is based on consensus, certainly, but that is not enough to create value. A paper has not value intrinsically speaking. Gold and other metals have always had value for various reasons (either because of their physical/chemical properties or because of their rarity). So, the day the Dollar loses its consensus, you are left with worthless paper and you might as well use them in the toilet. The day Gold, Silver and other lose all actual value is not in sight. Net, you are safer saving some of your assets in those.

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Another instance of Poe's Law...

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