The Euro is fucked

[pacman]

(manarak @ Jun. 22 2010,22:20) Pacman:

All fiat currencies fail..... eventually. Check recorded history, there have been no exceptions.

This is a bit irritating, since the above is a statement of the obvious, since all fiat currencies can be put into 2 categories:
1- failed fiat currencies
2- fiat currencies which have not failed yet
This is not up to your usually high level of reasoning!

   I thought we were saying the same thing.

Except I am being irritating & you are being clever...      

[Masahiko]

The Euro has dropped faster against the baht then the dollar! I must admit it though it is easier to carry those 500 Euro bills then all those dollars.

I think its doomed, but it will be interesting to see how fast it will go away.

[pacman]

(Jake_Sully @ Jun. 22 2010,20:10) Edit: for example, Peter Schiff said this recession was coming and fox business anchors laughed at him.

There's a wonderful clip of Peter Schiff covering several of his appearances on Fox & other business programs where he makes statements that are completely at odds with the other panellists & they all turn on him to mock his views.

These are collated over a few years before anyone woke up that the policy of the US Fed was sending the economy headlong into the GFC.

Schiff stood alone as the sane voice speaking out against the stupidity of what was happening & all his detractors are shown for the clowns they were. The clip ends with the line "who's laughing now?"

It is on YouTube but when I looked there were too many clips to go through.

[pacman]

(BlueBallz @ Jun. 22 2010,22:45) But what did The Bilderbergers have to say about all this when they met recently in Spain??

There is a lot of old European money in the Bilderberg group. I doubt they would act to damage their own interests. That is just my opinion.

Who knows who stands to benefit from collapsing the Euro but we will find out after it happens.

[pacman]

(guydesavoy @ Jun. 22 2010,21:54) I wonder what Wagner would think about the current Euro 'crisis'.

Two references to Wagner & I still don't get it. Please put us all out of our misery. What would he think?

[manarak]

ok, and now please define a "successful" fiat currency...

[pacman]

They all start off OK, it's what happens when Governments turn on the printing press to keep their budget in surplus that starts the inflation & the rot sets in from that point.

My original comment was they (fiat currencies) all fail... eventually. I was only stating the obvious. Perhaps we should add a definition of a fiat currency - it is one that lacks any intrinsic value, that isn't backed by gold or anything else. It is legal tender because the Government says so.

History records that all fiat currencies are destroyed by hyperinflation. e.g. the Zimbabwe dollar.

The Euro & the US dollar are both fiat currencies. God help them.

[f0xxee]

(pacman @ Jun. 22 2010,23:44) They all start off OK, it's what happens when Governments turn on the printing press to keep their budget in surplus that starts the inflation & the rot sets in from that point.

My original comment was they (fiat currencies) all fail... eventually. I was only stating the obvious. Perhaps we should add a definition of a fiat currency - it is one that lacks any intrinsic value, that isn't backed by gold or anything else. It is legal tender because the Government says so.

History records that all fiat currencies are destroyed by hyperinflation. e.g. the Zimbabwe dollar.

The Euro & the US dollar are both fiat currencies. God help them.

Paccie,

You have been singing this tune for a while now, and to be honest it grips my shit.
It seems like you won't be happy until you can say "I told you so" and your financial meltdown prophesies are realised.

If you strongly believe that the end is nigh financially for the US Dollar and Euro please explain to me the options.

One of the wonderful things about predicting the end of financial civilization as we know it is its a win/win for you. You either get your "I told you so" moment, or you get to go to LOS and fuck ladyboys because you can afford it.

PS: Name me one currency that is widely accepted for world wide commerce that is still tied to the gold standard.

[manarak]

PS: Name me one currency that is widely accepted for world wide commerce that is still tied to the gold standard.

the answer to this question will not surprise anyone who knows the bad money / good money rule or a bit of classical history of what happened in Athens with the silver owls.

[f0xxee]

(manarak @ Jun. 23 2010,04:51)

PS: Name me one currency that is widely accepted for world wide commerce that is still tied to the gold standard.

the answer to this question will not surprise anyone who knows the bad money / good money rule or a bit of classical history of what happened in Athens with the silver owls.

Hi Manarak,

You are going to have educate this uncouth Aussie about Silver Owls and Athens.

What's the story?

[azza33]

PAC, you alluding to the competitive advantage that a depreciating euro gives Germany is correct - however in the long term this will only drive a wedge deeper into the union. This will, in my opinion, encourage the dismantling of the union as the gap between the haves and have nots will widen. Germany and a few others will go from strength to strength, whilst the bankrupt states are restrained due to an overvalued currency relative to their economies - the only viable solution is for the weak states to  abandon the euro and return to their original currencies - and allow a massive depreciation of the currencies to rebalance their economies. Once equilibrium is restored, a decade or so later, then a return to the European union is feasable.

[azza33]

This discussion about fiat currencies is a toss!!
Why do economies fall apart?? It's government intervention from a fiscal perpective driven by a political desire to stay in office.

When I studied economics there where two broad camps
1) interventionists
2) non interventionists

I believe path 2 is the best.

Economically, what does this mean? Well fiscal spending is limited to what money you have, and no borrowing to tackle the up & downs in an economy. Markets forces are allowed to swing freely to allow natural equilibriums to develop. The government does not intervene to help in the bad times! - hence the politically problematic. Of course government regulaion can help reduce severities of bubbles by putting restrictions on lending ratios to income and terms etc etc
the monetary base is allowed to expand at a fixed low rate of 1-2% p.a

back to interventionists - well their desire to control equilibrium in society and keep themselves in political power is why their currencies and economies implode - it's just borrow and spend over and over until the equilibrium is so far out of balance an implosion is required to restore order!

The debate between the two is heated but when you see the mess that is most of the politically corrupt western world, I'm still firmly entrenched in the second camp.

[guydesavoy]

Re Wagner. It aint over til the fat lady sings.
Like the Beast in Revelation, theories abound as to who that may be. Angela Merkel ? She's more chunky than fat, but who knows

[pacman]

(f0xxee @ Jun. 23 2010,04:49) Paccie,

You have been singing this tune for a while now, and  to be honest it grips my shit.
It seems like you won't be happy until you can say "I told you so" and your financial meltdown prophesies are realised.

Is it what I am saying or the fact it is me saying it that upsets you here? You will find a multitude of references confirming my point about fiat currencies on the web. I am not being original in my prediction but I do plead guilty to being overly-dramatic in my approach. (viz. god help them both)

As for being happy should the worst occur, no, there would be so many consequences to deal with at that time that I will limit my perverse pleasure in making outlandish comments to wind up others. Sorry I caught you in the net.

If you strongly believe that the end is nigh financially for the US Dollar and Euro please explain to me the options.

One of the wonderful things about predicting the end of financial civilization as we know it is its a win/win for you. You either get your "I told you so" moment, or you get to go to LOS and fuck ladyboys because you can afford it.

I did strongly believe in the possibilities of a currency meltdown for a brief while until I came to understand the forces that stand in the way of it happening. If market forces truly prevailed like we are lead to believe, the US dollar would have gone years ago. It won't happen in my lifetime barring some event that we can't imagine.

While the US holds such power over the markets & while there is zero interest from anyone (apart from say Osama Bin Laden) in disrupting the status quo, it won't happen. Add to that the fact that no ratings agency would be willing to downgrade the US dollar & the US military holds the ultimate persuasive power, you can rest assured that your bank account is safe.

And China, Russia & the Middle East oil states have all considered an option to the US dollar as the de facto world currency. Once they did their calculations as to the effect of abandoning the dollar, they came back on board stronger than ever.

PS: Name me one currency that is widely accepted for world wide commerce that is still tied to the gold standard.

None that I am aware of. There are oil-backed currencies that trade in US dollars so they don't count. China is the world's largest holder of silver (this stems from when they tied their currency to silver & the world flooded them with all their silver bullion. China had to abandon their stance around 1948. They still harbour deep resentment against the US for the way they were treated)

The USA allegedly has large gold reserves in Fort Knox but no one has been allowed there in nearly 50 years. There has been no inventory count in that time & it is widely believed the place is empty. Some of those pesky whistleblowers gave rise to this theory but I am not privy to the truth.

[f0xxee]

Hi Mate, yes it's what you are saying. As you know we have discussed this at length offline and know my attitude towards doom-mongering. The fact is that something ,sometime, will fuck up the human race. Mussies with bombs, Jews with atoms, Africans with plagues or Bankers with dodgy hedge funds.

So.... What? Me? Worry? As the great Alfred E Neuman would say. (Thanks Anicon.)

I tend to think a more valid point is made by you a little later: The world needs a currency, and too much is invested in USD to see it turn turtle. Too many lose.


Your final comment is the crux of my biscuit (and it's not the apostrophe): There would not appear to be any currency that still has physical reserves of gold as backing. Therefore ALL curencies are fiat currencies, some more than others.

Strangely enough (and in my humble opinion) what keeps the whole thing afloat is faith and hope: Faith that the legal tender passed to pay debt has a value, and hope that it will stay that way. Intangible but it seems to work.

Sorry if I came down harshly, but doom mongering serves no purpose other than to create un-needed angst.

cheers!

JF