The euro is fiat money.

Fiat money systems are designed to fail.

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Originally posted by ogvh5150 The euro is fiat money. Fiat money systems are designed to fail.

Europeans voted on the adoption of the Euro.....its one of the provisions contained in The Maastricht Treaty(named after a city in Holland)and the treaty was passed.......this was 1992 after the fall of the Berlin wall in 1989.....

Read it again:

The euro is fiat money.

Fiat money systems are designed to fail.

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Originally posted by ogvh5150 It is called fiat money. A close cousin would be an I.O.U. or for you more dramatic types; a promissory note. The catch is that this note is borrowed on debt already. The common misconception people have is that the money supply is backed by the gold standard or some other kind of real commodity when it is not. Another misconception is that only the US has this type of central banking system when there are others like Canada and the EU for starters.

Dictionary.com definition of fiat money

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fiat money n. Legal tender, especially paper currency, authorized by a government but not based on or convertible into gold or silver

Wikipedia info on fiat currency

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Fiat money or fiat currency, usually paper money, is a type of currency whose only value is that a government made a fiat (i.e. decreed) that the money is a legal method of exchange. Unlike commodity money or representative money it is not based in another commodity such as gold or silver and is not covered by a special reserve. Fiat money holds its value so long as holders of the currency feel that they can find an exchange partner for it at some later time. Fiat money, by definition, does not have any intrinsic value, nor is it backed by anything other than the confidence holders have in the economy which is covered by the government which decrees it to have value. Its value lies solely in the expectation of later use. As of 2004, most currencies in the world are fiat monies. However, the situation with major currencies, such as the euro, the United States dollar and the Swiss franc is more complex.

Freedictionary.com Encyclopedia definition of fiat money:

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What exactly is a "fiat" currency is a matter of some debate, with a spectrum of opinion that runs from hard money advocates which declare that anything other than a one to one currency basis is "fiat money", to a range of economic theories which hold that market dynamics enforce fiscal discipline. In general, ultra-conservatives define fiat money stringently, and an opposition to fiat money is coupled with an opposition to fractional reserve banking In economics, particularly in financial economics, fractional-reserve banking is the near-universal practice of banks of retaining only a fraction of their deposits to satisfy demands for withdrawals, lending the remainder at interest to obtain income that can be used to pay interest to depositors and provide profits for the banks' owners. Fractional-reserve banking allows for the possibility of a bank run in which the depositors collectively attempt to withdraw more money than is in the possession of the bank, leading to bankruptcy. This is possible because both the borrower and the depositor have a claim to withdraw money deposited at the bank. It also increases the money supply through a mechanism called the ..... Click the link for more information. and governments having a central bank A central bank is an entity responsible for monetary policy of its country (or in the case of the EU, group of member countries). Its primary responsibility as a central bank is for the stability of the national currency and money supply, including interest rates; and acting as a lender of last resort to the banking sector and the national financial system as a whole. It may also have supervisory powers to ensure that banks and other financial institutions do not behave recklessly or fraudulently. ..... Click the link for more information. . Advocates of "debt-free money" argue, in contrast, that money which requires the issuing of central bank debt is a burden on the public. In essence, just as there is a school of thought which opposes any money which is not linked to specific, countable, and measurable reserves, there is a school of thought which denies the value of any encumberance on the government's ability to issue notes at all.

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Last edited by ogvh5150 on Mar-27-2005 at 03:53

quote:

Originally posted by ogvh5150 Fiat money systems are designed to fail.

Designed to fail? The creators of the money put defects in it so it will spontaneously combust and such eh?!

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No. It's not like that.

Money created out of debt is volatile. It also leads to inflation and deflation.

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Originally posted by ogvh5150 Look up fiat money and fractional (reserve) banking. What one of the things the comic book is saying is that money printed is created out of debt. It is also at a higher repayment. Also too much printed money creates inflation. Fiat money has no gold standard or reserves, that's why it's called fiat money. It is only worth what people agree to it being worth. That's where inflation comes in. Also a bank can create money by issuing out loans. You want to borrow 10,000 for XYZ. 1st Nationwide Bank has 100 or even 1,000,000 in it's books. But as far as you know you need 10,000. They cut you a check for 10,000 and you have to repay at 5% over any given timeframe. They now just made 10,500 off of your promissory note on the loan. They can call this loan at anytime.

The beauty there is that if this bank had actually $100 in it's vault it has any amount on it's books. It is relying on what it floated.


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Hmm, didn't all the quotes you post say that dollar and euro are not fiat money?

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1+1=10

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Originally posted by ogvh5150 Fiat money holds its value so long as holders of the currency feel that they can find an exchange partner for it at some later time.

Doesnt that apply to pretty much everything? Gold has no "real" value either, the only thing that makes it valuable is that the supply of gold is low and the demand high, hence keeping the value of it up.

Does anyone think their is enough old to prop up the Pound or Dollar? Most money exist on computers and has absolutely no real incarnation

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if i had a hammer...

If I have 1 gold bullion and go into a wal-mart all I can do is walk out with 1 gold bullion.

but if I go into a wal-mart with a $100 bill I can come out with a watch or TV or microwave or grocerries or a gold watch or...

So in this example $100 is real and gold if fiat.

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quote:

Originally posted by DrUg_Tit0 Hmm, didn't all the quotes you post say that dollar and euro are not fiat money?

Dollars and euros are fiat money.

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Originally posted by St_Andrew Doesnt that apply to pretty much everything? Gold has no "real" value either, the only thing that makes it valuable is that the supply of gold is low and the demand high, hence keeping the value of it up.

You've just answered your own question. Dollars/euros have no intrinsic or specie demand. When (fiat) money is on short supply all that is needed is to print more money. That money is not backed by anything.
With a specie backed note you are guaranteed a redemption into gold or silver. With fiat money you are not guaranteed anything.

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Originally posted by Yoepus If I have 1 gold bullion and go into a wal-mart all I can do is walk out with 1 gold bullion. but if I go into a wal-mart with a $100 bill I can come out with a watch or TV or microwave or grocerries or a gold watch or... So in this example $100 is real and gold if fiat.

Fiat money is legal tender while gold or silver is not. Although your example in the onset is good but it fails to mention in detail what legal tender is.

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Wasn't the purpose of the wall to separate two different nations... This doesn't really make much sense. The wall came down with the fall of communism. Rebuilding the wall would just split up a nation. In the US if there's a ghetto in the inner city we don't just build a fucking wall around it because its a money pit and an eyesore. I think rebuilding the wall would be worse for Germany and the EU than it being torn down. It's been less than 20 years. It takes a long time to settle differences when two nations are suddenly thrown together because one's system of government doesn't work due to human nature. I say just give it time...