Re: Airelon's Thoughts Regarding the Fiat Currency System

[AirelonTrading]

Great vid response. No worries at all.

When I talk about "those who wish to maintain a certain standard of wealth", it's the danger inherent (I agree) with Central Banking.

They can speak of "increasing liquidity (money supply" to stimulate the economy and the mathematics of their arguments are sound. But Fiat is supposed to be tied to GDP. Therefore, they've abandoned that concept of Fiat. And thus the implementation of the "mathematics" of increasing liquidity? We all see the result ...

[AirelonTrading]

(continued) ... they don't seem to be sticking to the 'mathematics' of their model at all. They seem to be increasing liquidity, if you're on their "A" list, and if you are a small regional bank, well, then "too bad about you"

But then again, there were those problems on the Gold Standard during the entire 19th century. The "trusts" simply found "legal" ways to hoard the money supply from the circulation so that money supply velocity dropped to nill.

[AirelonTrading]

In the end? What I see as going on right now has nothing to do with Fiat currency. Because I see Fiat as tied to GDP, which is a little more accurate than the Gold standard. Thus, the problem becomes those who wish to tie mathematical models, and abandon GDP as the model of an economy for (their arguments here) the sake of fighting deflation.

[AirelonTrading]

In the end, the money supply charts are now completely skewed, because there is no accurate representation of what went to deleveraging and debt spreads. That money is just gone, and can't come back. Other money is still in the system.

But as I said, many of these problems existed on the Gold Standard when they, again, overleveraged themselves past the economies growth, because they didn't have the gold to back up the real economy growth, and began issuing certificates.

:)