Tuesday, July 26, 2011

An Order of Fiat

After showing you some silver, I figured I'd contrast that with an explanation of Fiat money.
From google:

 fi·at mon·ey
Noun: Inconvertible paper money made legal tender by a government decree.


Sound familiar? That's right, the U.S. Dollar is a Fiat currency.

Inconvertible here simply means that it is worth NOTHING to the government.  Previous to the Fiat system, a dollar bill was valuable because it represented gold or silver. Now, they hand it out to people, people pretend it is real and become productive, then the government uses the actual wealth the people create in order to borrow and print more Fiat money!

What's worse is that the Treasury isn't even the culprit here.  Our monetary system is essentially owned and operated by private banks with offshore owners.

From Infowars.com


Much of the tens of trillions in bailout money and “easy” money from quantitative easing went to foreign banks (and see thisthis and this).Indeed, Ron Paul noted recently that one-third of all fed bailout loans – and essentially 100% of loans from the New York Fed – went to foreign banks.
The New York Fed is the most important Fed bank. As Bloomberg pointed out in 2009:
The New York Fed is one of 12 regional Federal Reserve banks and the one charged with monitoring capital markets. It is also managing $1.7trillion [now up to at least $1.9 trillion] of emergency lending programs [and accepting collateral from the banks in return].
However, the country’s most powerful “agency” – the Federal Reserve – is actually no more federal than Federal Express. The Fed itself admitted (via Bloomberg):
While the Fed’s Washington-based Board of Governors is a federal agency subject to the Freedom of Information Act and other government rules, the New York Fed and other regional banks maintain they are separate institutions, owned by their member banks, and not subject to federal restrictions.
 So basically, a private bank has been supplying the country with irredeemable pieces of paper which only have value because our Government says so.  I'll just side-step the obvious question of "how does something magically gain value just because a group of old men say so?" and instead present a little economics lesson.

This graph illustrates the function of price according to supply and demand.
If the dollar supply is shooting way up due to printing, where do you think the demand will go?


The black lines show a normal economic function.  When aggregate demand oversteps the supply, then the price shoots up.  More people want something that there is less of.
When aggregate demand is surpassed by the supply, the price goes down because less people have a desire to purchase and therefore more must be sold at a lower price to make profit.

How this works with the dollar is a little bit more tricksy, but still simple in its function.  When the Federal Gov't orders the printing of trillions of new dollars and then, as seen above, ships most of it overseas... we don't get to see the supply-side increase here juuust yet. 

However, we do feel the demand for our labor, manufacturing, and services begin to shrink because slowly but surely, the value of the dollar has begun to shrink.  Supply and demand is a cruel teeter-totter.  
  

47 comments:

  1. you should check out the zeitgeist documentaries for more info on how the banks create money from thin air and much more.

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  2. ^^ I was just going to say exactly the same thing. Watching zeitgeist (either the first or the second I can't remember) is when I first realised how f**ked the whole federal reserve system is.

    Loving the blog, keep it up!

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  3. just like that report about the federal reserve handing out 16 trillion in loans to US banks and other other around world, which is completely against the law.

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  4. I'm agree with Papar, the "addendum" part is very clear.

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  5. Didn't america do this with the citizins? Expecting them to spend the money but most people ended up putting it in saving accounts

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  6. yeah i have seen a documentary on how the money banking system does that! thanks for helping to understand it better

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  7. Nice post, also good new layout you got!

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  8. You know what you're talking about! Very detailed post, nice

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  9. Well, they better do something about it really fast!

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  10. Someone already mentioned Zeitgeist...

    awww...

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  11. and that is the reason why, no matter high the dept of such a bank is, the gouverment will help with our money

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  12. Thank you for the great info on this term. It is kind of scary.. Would you be kind enough to come up with any alternate suggestions?

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  13. Thanks for opening my eyes, man! It's good to not be in the dark about this stuff.

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  14. I learned some of this stuff in my Econ class :P

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  15. I am going long in SLV. Silver is poor mans gold for when money becomes useless.

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  16. I honestly didn't think this stuff was US. The USD and Euro has taken a hit, the past few months, I'd be interesting to see if any of this fiat money can legitimately replace Government issued tenders.

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  17. Lets go back to using something for currency that has real value, like precious metals

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  18. thanks for the great post and the info + follow

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  19. It's called inflation. Deal with it.

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  20. Inflation is completely normal, right guys?

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  21. Great info, every citizen needs to have a basic understanding of how monetary economics work, as it has an effect on pretty much everything.

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  22. Wow, I didnt know about this...Just the Economics part.

    Following and thanks for a great blog

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  23. man and in the end the people who didn't know this gets affected too much. Sometimes conspiracies are good things to help you open up to things that the government(or the majority of us) are trying to cover up just to either save face or be rich. I have never seen in my life a ruler who have actually sold his fortune for the people he is ruling. It's sometimes and maybe all the time that they end up being rich instead.

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  24. I also recommend a documentary about the recent economical crisis in Greece, it's called "Debt-o-cracy".

    Anyway, nice blog, following!

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  25. You are right on every point, but the worst part about the whole situation is the fact that we can't really go back. We are now stuck in the system of fiat currency. His much is people like Ron Paul like to say that we need to go back, there really is no way to without completely redesigning global capitalism (alot of which is based on the US dollar).

    I do know that the system will be shaken at some point in our lifetimes, I just don't know to what extent.

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  26. So basically what you are saying is that our entire economy is a mirage, and has been for some time. Well if Bloomberg says my dollar is worth something, I'm sure it is. I mean he wouldn't lie to me, right?
    +followed

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  27. I was going to mention zietgeist..

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  28. monetary economics is terribly depressing! I blame Nixon since he took us off the gold standard back in 71'

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  29. Did I just learn something. Now I am going to have to look this up for myself. Probably look at the zietgeist like everyone else is saying.

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  30. currency is all based on an idea. its amazing what humans can accomplish if they all share one idea

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  31. Interesting! Nice reppin' the supply & demand curve! Yeeeeah!

    Thanks for the post. Feel free to check out my blog -- I have rewarded your kindne$$ in advance, hope you'll return the favor(:

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  32. interesting stuff. that was a great post loaded with great info. thanks for posting

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  33. Great read here about the economy and currency. What do you think is a viable solution?

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  34. Money is a social construct. No need to pay attention to it. Carry on, citizen.

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  35. Money... I will never understand the significance of it. Thanks for the excellent, informative post, though!
    Tech Me

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  36. We never should have left the silver standard. All of the US money is now a hollow ball... just waiting to pop and crumble on itself...

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  37. like always the goverment can make money. thankfully our goverment is not that corrupt. thanks for a great post!

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