Mike Krieger Explains Why Fiat Money is Immoral

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Thu, 01/20/2011 - 14:49 | 890580 doomandbloom
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if the end goal of our life is 'economics'...then does it matter if the money is gold, fiat or any other material?we will have the same problem over and over again...



Thu, 01/20/2011 - 15:01 | 890618 SheepDog-One
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BTW Narihman Bahrivesh...FUCK YOU very much! Why dont you go back to India, nothing to worry about right?

Thu, 01/20/2011 - 15:04 | 890631 Sudden Debt
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You do realise that by insulting a guy from India that:


1. You might never be able to catch a cab IN YOUR LIFETIME

2. NO more Tech support if you have troubles with your PC


And that are 2 basics in life man...

Thu, 01/20/2011 - 15:26 | 890700 RockyRacoon
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I'd shy away from curry dishes in restaurants as well.

Sun, 01/23/2011 - 06:11 | 896885 Hephasteus
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Dollar's looking about a hour past ugly.

Thu, 01/20/2011 - 18:55 | 891610 Ignatius
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Wrong, Mike.

Gold is money.  Gold is a wealth reserve.  Far more valuable than a currency.

Currency -- fiat -- is a unit of account and medium of exchange that is highly efficient and that's why we use it.  "Book your trade balance in dollars, but pocket your profits in gold."

Failure of a gold backed -- exchangeable -- currency is a given in history due to an age-old human habit of cheating.  The US government defaulted on the American people in '33 and the world in '71.

I would support our currency being issued as an asset by our government and run centrally as a utility, but I ain't holding my breath.

Thu, 01/20/2011 - 15:49 | 890790 Eureka Springs
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I've been reading here and elsewhere trying to understand the big ponzi... and you, sir, seem to have hit the nail sqarely upon its head as anyone.

The questions in re currency and damn near everything else is... do we all play by the same rules. And, to what end...are we doing or promoting anything.

Criminals are in charge of our country... switching ponzi fiats wont fix a thing.

Thu, 01/20/2011 - 16:02 | 890853 faustian bargain
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Which is why currencies should be sound, and selected by the marketplace, not by fiat.

Thu, 01/20/2011 - 16:57 | 891160 Sean7k
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Thu, 01/20/2011 - 17:25 | 891161 Sean7k
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Thu, 01/20/2011 - 17:14 | 891263 michael.suede
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Thu, 01/20/2011 - 18:43 | 891581 asdasmos
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+1 Trillion Bernanke US$ Note

Thu, 01/20/2011 - 16:03 | 890860 faustian bargain
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It doesn't seem like you read the article.

Thu, 01/20/2011 - 14:52 | 890596 Sudden Debt
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I had to look up that word. I sounds so negative...

Thu, 01/20/2011 - 14:59 | 890600 SheepDog-One
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'Immoral'? Well what does THAT matter, long as stocks go up! Fabric of the nation destroyed, countless businesses and families destroyed...WHATEVER who cares! Stock congo line starts to the right behind Harry and RainbowTrader!

Thu, 01/20/2011 - 15:02 | 890621 Sudden Debt
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Thu, 01/20/2011 - 15:15 | 890669 Trundle
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Only 10%?- wait a few hours until they metabolize the Guinness.

Thu, 01/20/2011 - 15:03 | 890627 something fishy
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IMO until this society regains some semblance of moral authority it doesn't deserve to remain politically or economically dominant. 

Thu, 01/20/2011 - 15:05 | 890604 Mudflap
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"A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly..."

From a speech by The Bernank in 2002...


Thu, 01/20/2011 - 15:06 | 890637 Bastiat
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"Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost."

At which point Bennie woke up and had to clean himself up.

Thu, 01/20/2011 - 15:23 | 890690 Mudflap
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Bernie 'the modern alchemist' saves the day!

Thu, 01/20/2011 - 15:26 | 890695 SheepDog-One
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If it was possible to produce as much gold as anyone wanted at no cost, then wouldnt gold become worth nothing? Hmmm and basically its what Bernank is already doing, creating as much money as he feels like for nothing, making it worthless.

Thu, 01/20/2011 - 15:29 | 890710 RockyRacoon
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Oh!  I get it.  You mean like dollars?  Well, that would depend upon the level of financial education amongst the masses, would it not?

Thu, 01/20/2011 - 15:32 | 890722 Mudflap
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According to him it's all about staving off the dreaded deflation.  He believes that there will never ever be deflation again - just induce spending through the printing press - problem solved by forced inflation - at any cost.  All it takes is a 'determined government' (i.e., him).  It's his religion.

Thu, 01/20/2011 - 18:18 | 891500 naughtius maximus
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"Of course, the U.S. government is not going to print money and distribute it willy-nilly..."

I wouldn't bet on that with people like Bernie Sanders in congress.

Thu, 01/20/2011 - 14:58 | 890609 Misean
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The exchange of nothing for something is always immoral...it's called stealing.

Thu, 01/20/2011 - 15:19 | 890682 Trundle
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Or God's work- depending on perspective.

Thu, 01/20/2011 - 17:27 | 891328 Sean7k
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absent police power, there is nothing immoral about it. The whole purpose of exchange is to get a better deal. :)

Thu, 01/20/2011 - 18:19 | 891503 naughtius maximus
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So by extention, in total anarchy, rape is as moral as apple pie?

Thu, 01/20/2011 - 18:37 | 891559 Sean7k
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That is not an exchange- it is theft, kind of like government. If you add Anarchy + Private property law, now were talking the ultimate in individual sovereignty and elite impotence. 

Thu, 01/20/2011 - 14:59 | 890611 haskelslocal
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Market going green! So much for healthy retreats! All together now, "Here we go PoMo here we go!" (Clap clap)

Thu, 01/20/2011 - 15:10 | 890652 Sudden Debt
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Tomorrow BAC will report prémarket.

Staying in is pretty risky.

So drop before end or aftermarket.


The rise could also be there because a lot are setting up for a crash and buying puts.

Option expiration day tomorrow while there are so many longs, is also a reason to worry.

Thu, 01/20/2011 - 15:14 | 890666 Boonie
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here, here

Thu, 01/20/2011 - 16:17 | 890634 P Rankmug
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All that is needed is to link currency to gold and maintain its value through currency supply.  It is not necessary to back it with gold or have it convertible to gold.  If it has the same value why would you convert it?  It would be like exchanging 5 nickels for a quarter.  It is not necessary for gold to be hoarded or stored, though some could be held to make people feel better.

The problem now is to determine the proper price to link the dollar to gold so creditors and debtors are in balance.  Even if there is error it would be far better than the current system of fiat currency linked solely to Bernanke's feeble mind. 


Thu, 01/20/2011 - 15:09 | 890646 chinaboy
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Thank you zerohedge for reminding us of the issue of right and wrong with regards to the money printing press

Thu, 01/20/2011 - 15:09 | 890648 mule65
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Did ya buy that dip?  Great buying opportunity of a lifetime!





Thu, 01/20/2011 - 15:13 | 890664 Arch Duke Ferdinand
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World War coming very very soon.

...Over food shortages...

Billions of people, especially in Asia, icluding Oil rich countries will begin revolts.

The only safe quadrant in the World are the....Western Canadian Provinces.

A plethora of food and natural resources w/ only 12.5 million people.

...Led by it's Gateway City of Vancouver BC....North America's Geneva of Switzerland.


Thu, 01/20/2011 - 17:38 | 891370 SWRichmond
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A plethora of food and natural resources w/ only 12.5 million people.

Sounds like a target to me.  How will you muster enough adults to defend it?  Ukraine, anyone?  Not sure I'd be so anxious to brag about it.

Thu, 01/20/2011 - 19:08 | 891630 High Frequency ...
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I doubt it Canada has a serious peacenik attitude and some draconian gun laws. Michigan, on the other hand put 700,000 rifle-armed citizens in the feild last deer season, and aside from the Detroit area is also loaded with foor and natural resources (heck, we even have a small oil field of our own).

Thu, 01/20/2011 - 15:18 | 890675 tgatliff
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The money supply must correspond to the growth rate of individuals.. That is not possible in the current world which is why the Gold Standard will never happen again. 

Actually if you think about it... You have two side of the coin.  One side is the Gold Standard which is ideal for creating future generations that provide zero productive capacity, but own all of the wealth.   On the other side you have a Fiat currency which will always end in implosion because it is too temping to play with the money supply...  In the future, hopefully there will be a middle ground found.


Thu, 01/20/2011 - 15:45 | 890771 TheDavidRicardo
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I believe your right regarding the whole Gold Standard and population growth issue. 

And even if you did figure out a way to have it implemented, they would just fudge the population numbers.

Thu, 01/20/2011 - 15:53 | 890807 Pants McPants
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The money supply must correspond to the growth rate of individuals.. That is not possible in the current world which is why the Gold Standard will never happen again.

Not true.  Prices and exchange rates can fluctuate to accommodate an increase or decrease in population and/or gold.  A gold standard protects and preserves wealth for present as well as future generations.

Aristotle's five characteristics of money - durable, portable, divisible, intrinsic value.  Gold IS money, regardless of how many people use it.


Thu, 01/20/2011 - 16:29 | 890981 JLee2027
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+1 McPants

Thu, 01/20/2011 - 23:12 | 892246 Milestones
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Pants 1) durable 2)portable 3)divisible 4) intrinsic value 5)?????????????     Milestones

Thu, 01/20/2011 - 17:12 | 891249 Peace is the x-axis
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"...because it is too temp(t)ing to play with the money supply..."

Herein lies the challenge, and the opportunity. To find a way to have the beneficial effects of fiat currency, while eliminating the risk.

Recommend reading Ragnarok's link to FOFOA above. Also worth studying is Silvio Gesell's 'Natural Economic Order' and concept of 'Freigeld' (free money), along with the instances where this has been tried successfully (eg, "the Miracle of Worgl", Austria in Great Depression) until shut down by the C-Bster money elite (and ask yourself WHY the banksters always shut this down).

"The money supply must correspond to the growth rate of individuals..."

There is a way to achieve this. Decentralise central banking. How?  Developing alternate / Complementary Currencies, that work better, and thus over time can outcompete the (likely collapsing) existing currency system/s.

As food for thought, see by way of less-than-perfect example The Ripple Project:


Think about what is possible through (eg) peer-to-peer technology, and encrypted systems.  Is it not possible to develop a system where every individual effectively becomes their own Central Banker, creating their own "demurrage" currency credits, subject to pre-programmed cap limitations?

If We The People do not employ our creative genius to develop something better, from the grass roots, then I fear we will forever remain enslaved to 'money' (and those claiming the exclusive 'right' to issue currency) ... rather than money being a slave to us.




Thu, 01/20/2011 - 17:31 | 891342 Sean7k
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Easiest way- eliminate legal tender laws.

Thu, 01/20/2011 - 17:36 | 891364 Peace is the x-axis
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Not so easy when those who claim exclusive rights on currency issuance also control those who pass the laws. I see Congress took no notice of the Will of the People viz. TARP. 'Nuff said.

Thu, 01/20/2011 - 18:39 | 891569 Sean7k
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If they won't, create black markets and trade in alternative currencies without reporting to the government. Force the issue.

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