http://www.foxnews.com/opinion/2012/08/23/why-are-on-brink-greatest-depression-all-time/

Started Oct 21, 2012 | Discussions thread
Biggs23
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Re: http://www.foxnews.com/opinion/2012/08/23/why-are-on-brink-greatest-depression-all-time/
In reply to MPrince, Oct 22, 2012

MPrince wrote:

PenguinPhotoCo wrote:


The US currency isn't backed by gold so it isn't finite at all.

You're a fool if you believe that.  Money is a medium of exchange.  It cannot be infinite because the goods and services for which money serves as the medium of exchange cannot be infinite.  Economic resources, no matter how abundant, are not infinite, they are scarce.

As a medium of exchange, there are essentially 4 types of money:

1. Commodity money.

2. Receipt money.

3. Fiat money.

4. Fractional money.

Without going into detail, and simplifying things for the sake of brevity, commodity money is anything which has intrinsic value (useful for purposes other than for money), such as gold. (Gold has intrinsic value primarily because it is scarce, malleable, non-perishable, easily measurable in terms of weight and purity, and relatively easy to carry and transport).

Receipt money is paper that is fully backed by commodity money.

Fractional money is paper that is partially backed by commodity money, and fiat money is backed by nothing. There is no real difference between fiat money and counterfeit money, by the way.  That is why governments so diligently fight counterfeiters (they don't like the competition).

All fractional money supplies eventually become fiat money supplies, (because government greed knows no bounds) and all fiat money supplies are intrinsically worthless, and sooner or later cease being accepted as money, becoming actually worthless.  When (not if) that happens, the economy collapses.


A great response, thank you.

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