Why do people think countries need centrally planned money?

The dollars didn't represent anything. They actually had value so people were willing to accept them.

 

but when you inflate you decrease the wealth of the middleclass and if you inflate enough you can actually wipe out the savings of the middle class!

 

Keyword... "IF"

 

Sure they do... they represent what you can get with them.

 

How do they represent that?

 

Why does anyone accept dollars?

 

Because they are valuable.

 

There's nothing valuable about a dollar. It's what that dollar can purchase that make people want it.

Just like gold!

 

but the dollar is a perceived value....its all based on trust!

 

No it isn't, it's based on wants. People don't acquire dollars because they "trust" it, they acquire dollars because they can get what they want with them. Plain and simple. The system works because people simply want stuff and if dollars is the only way to get what you want then you will work and do what you can to get as many dollars as you can so you can get as much stuff as you want.

 

how can you say that? Its all based on trust....people have faith that the dollar won't dissappear tomorrow and so they hold it and spend it.....if on the otherhand people thought that the dollar would buy less tomorrow than it does today then they would spend it as soon as they got it....and this btw is how hyper-inflation is born.....people lose confidence in the money and so the velocity of money mushrooms out of control as has happened in many a nation over the years!

 

Dollars are valuable because they allow indirect trade which enables widespread division of labor.

 

All money must have some degree of trust. You would not accept them if you didn't expect people to accept them in the future.

 

and that is my point......I truly believe that the trust in the dollar is slowly fading and soon.......very soon the US will learn just how fiat the dollar really is

 

Indeed. One thing that can erode confidence in a currency is debasement. That is a major advantage of gold- it is much harder to debase.

 

All you said is they allow people to get what they want... which is what I said.

 

That's why I hope for a gold standard; for one reason above all else - to stop the near-TOTAL macro-economic ignoramuses at the FED from being able to 'print' any more money.

 

No they don't. 99% of American's do not know or care about how dollars are created or if they are going to disappear. All they care about is getting dollars so they can get things that they want.

Even if people didn't have trust in the dollar, they would then scramble to get as many dollars as they can and get as much stuff as they want, actually helping out the dollar even more.

The only way people will start not trusting the USD is when either they can not attain it or they can not get what they want for it.

You actually help out the dollar greatly because you work for dollars and get rid of them as fast as you can because of your paranoia. That is awesome!! Thanks for helping out America.

 

You guys have an irrational fear of the FED. The FED or a central bank (pick a name) will exist even under a gold standard. The Fed does not "create" our money, they are simply the bankers bank and regulate their ability to borrow and lend money. They would provide the same function under the gold standard.

If you are worried about the quantity of money in existence than your blame should squarely be on the Government. They determine how much money is created and how much money the Fed can use to let the banks leverage.

 

Then perhaps you can show me the government legislation for the Fed doing the following: the $1.6 trillion QE 1, the $700 billion QE2, the $70+ billion purchase of AIG, the $13+ trillion 'loans' to various financial institutions over the last few years?

You are aware that the Fed can lend virtually ANY amount of money to virtually anyone without government approval?

What do you think H.R. 1207 (the Bill to audit the Fed) was for? To find out what kind of coffee they drink?

http://en.m.wikipedia.org/wiki/Federal_Reserve_Transparency_Act

 

Well you can trade dollars for things you want because dollars are valuable.

 

That's saying the same thing. If people didn't trust that other people would accept them for the things they want, they wouldn't accept them themselves.

A fact which has happened to many other fiat currencies in history.

The trust in the faith and credit of the US is the only thing driving the dollar, and that faith and trust has taken a hit: hence the credit downgrade.

The FED is more than happy to allow the Government to write massive budgets; they profit more as Governments do this.

 

I don't think that's why people accept dollars. People accept dollars because they were money yesterday and they think dollars will still be money in the future. I don't trust the federal govt or their credit, but I see that dollars are money and expect they will continue to be.

 

Fiat money systems ALWAYS fail, the US dollar will as well.

 

I'm amazed that people think we need government money.