(The Third Blog Post) - How Fiat or Paper
Currencies Will Cause Many To Lose Almost Everything
For world fiat currencies to collapse, all that it takes is for a global participating factor to reveal that fiat currencies are worth nothing more than the paper that they are printed on.
If they are not backed by silver and gold like before 1971 their hyper-inflation qualities are exposed. In 2019 such a participating factor came to light.
Health authorities in China confirmed that dozens of people in Wuhan, China, were being treated for pneumonia from an unknown source. They said that many of those sickened had visited a live animal market in Wuhan, but authorities say there is no evidence of the virus spreading from person to person, however, in reality, this is just what happened.
While there is no way to tell exactly what the economic damage from the global COVID-19 coronavirus pandemic will be in the future, there is widespread agreement among economists that it will have severe negative impacts on every single global economy.
Early estimates predicted that, should the virus become a global pandemic, most major economies will lose at least 2.9 percent of their gross domestic product (GDP) over 2020. These figures are tiny compared to what actually happened.
This forecast was early on projected to a GDP loss of 4.5 percent. To put this number in perspective, global GDP was estimated at around 87.55 trillion U.S. dollars in 2019 – meaning that a 4.5 percent drop in economic growth amounts to almost 3.94 trillion U.S. dollars in lost economic output.
However, this was estimated before events escalated. Something to keep in mind; there are many hidden unseen ticking economic bombshells just waiting to be exposed as timeclocks continue to tick.
People couldn't go to work, kids couldn't go to school, and many retail plus manufacturing businesses either went out of business or were severely crippled economically.
Now utilizing hindsight, if businesses and individuals had placed a portion of their pre-covit19 financial assets into silver or gold, there would be millions of smiling faces today.
A portion of their assets would have been shielded from devaluation and outright total loss because silver gold doesn't lose value regardless of what is happening globally.
Moving on here is a video which details how money, as we know it, became worthless. CLICK HERE
(Actually What Is Fiat Money)
Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.
The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money.
Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.
Fiat money gives central banks greater control over the economy because they can control how much money is printed. One danger of fiat money is that governments will print too much of it, resulting in hyperinflation.
(How Fiat Money Works)
Fiat money only has value because the government maintains that value, or because two parties in a transaction agree on its value.
Historically, governments would mint coins out of a valuable physical commodity, such as gold or silver, or print paper money that could be redeemed for a set amount of a physical commodity.
Fiat money is inconvertible and cannot be redeemed. The word "fiat" comes from Latin and is often translated as the decree "it shall be" or "let it be done."
If people lose faith in a nation's currency, the money will no longer hold value. That differs from currency backed by silver and gold, for example; it has intrinsic value because of the demand for silver and gold in jewelry and decoration as well as the manufacture of electronic devices, computers, and aerospace vehicles.
Earlier in U.S. history, the country's currency was backed by gold (and in some cases, silver). The federal government stopped allowing citizens to exchange currency for government gold with the passage of the Emergency Banking Act of 1933.
The gold standard, which backed U.S. currency with federal gold, ended completely in 1971 when the U.S. also stopped issuing gold to foreign governments in exchange for U.S. currency.
Since that time, U.S. dollars are known to be backed by the "full faith and credit" of the U.S. government, "legal tender for all debts, public and private" but not "redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank," as printing on U.S. dollar bills used to claim.
In this sense, U.S. dollars are now "legal tender," rather than "lawful money," which can be exchanged for gold, silver, or any other commodity.
Most People Are Not Aware of This But The Government & Banks Are About To Confiscate 75% Of Your Money If You Don't Convert It To Silver or Gold. CLICK HERE For The Video.
(Advantages and Disadvantages of Fiat Money)
(First The Advantages)
Fiat money serves as a good currency if it can handle the roles that a nation's economy needs of its monetary unit storing value, providing a numerical account, and facilitating exchange.
It also has excellent seigniorage. Fiat currencies gained prominence in the 20th century in part because governments and central banks sought to insulate their economies from the worst effects of the natural booms and busts of the business cycle.
Since fiat money is not a scarce or fixed resource like gold, central banks have much greater control over its supply, which gives them the power to manage economic variables such as credit supply, liquidity, interest rates, and money velocity. For instance, the U.S. Federal Reserve has the dual mandate to keep unemployment and inflation low.
(Second The Disadvantages)
The mortgage crisis of 2007 and subsequent financial meltdown, however, tempered the belief that central banks could necessarily prevent depressions or serious recessions by regulating the money supply.
A currency tied to gold, for example, is generally more stable than fiat money because of the limited supply of gold. There are more opportunities for the creation of monetary bubbles with fiat money due to its unlimited supply.
(Example of Fiat Money Gone Wrong - Hyperinflation)
The African nation of Zimbabwe provided an example of the worst-case scenario in the early 2000s. In response to serious economic problems, the country's central bank began to print money at a staggering pace.
This action resulted in hyperinflation, which ran between 230 and 500 billion percent in 2008. Prices rose rapidly and consumers were forced to carry bags of money just to purchase basic staples. At the height of the crisis, a 100-trillion Zimbabwean dollar was worth about 40 cents in U.S. currency.
(Now Why Is Fiat Money Valuable)
In contrast to commodity-based money like gold coins or paper bills redeemable for precious metals, fiat money is backed entirely by the full faith and trust in the government that issued it.
One reason this has merit is that governments demand that you pay taxes in the fiat money it issues. Since everybody needs to pay taxes, or else face stiff penalties or prison, people will accept it in exchange (this is known as Chartalism).
Other theories of money, such as the credit theory, suggest that since all money is a credit-debit relation, it does not matter if money is backed by anything to maintain value.
(Why Do Modern Economies Favor Fiat Money)
Prior to the 20th century, most countries utilized some sort of gold standard or backing by a commodity.
As international trade and finance grew in scale and scope, however, the limited amount of gold coming out of mines and in central bank vaults could not keep up with the new value that was being created, causing serious disruptions to global markets and commerce.
Fiat money gives governments greater flexibility to manage their own currency, set monetary policy, and stabilize global markets. It also allows for fractional reserve banking, which lets commercial banks multiply the amount of money on hand to meet demand from borrowers.
(What Are Alternatives To Fiat Money)
Virtually every country today has legal tender that is fiat money. While you can buy and sell silver and gold and silver gold coins, these are rarely used in exchange or for everyday purchases and tend to be more of a collectible or speculative asset.
Cryptocurrencies, such as Bitcoin, have emerged over the past decade as a challenge to the inflationary nature of fiat currencies; but despite increased interest and adoption, these virtual assets do not seem to approach being "money" in the traditional sense.
(In Actuality Doesn't Fiat Money Just Lead To Hyperinflation)
So far, most countries with fiat monies have experienced only moderate bouts of inflation, averaging less than 2% per year over the past several decades.
In fact, having a consistently low level of inflation is seen as a positive driver of economic growth and investment as it encourages people to put their money to work rather than have it sit idle and lose purchasing power over time.
While governments do have the theoretical capacity to print and "infinite" large numbers of fiat currency units, they typically do not.
Having a relatively strong and stable currency is not only a mandate of most modern central banks, but a rapidly devalued currency is harmful to trade and obtaining financing.
Moreover, it is unclear whether or not hyperinflations are caused by "runaway printing" of money.
In fact, hyperinflations have occurred throughout history, even when money was based on precious metals; and all contemporary hyperinflations have begun with a fundamental breakdown in the real production economy and/or political instability in the country.
I hate to say this but a person who is not storing up silver coins right now will be in for culture shock, once the prices start to climb out of your price range and you realize that you missed out on the opportunity of a lifetime.
As time progresses there won't be any silver to sell and retailers will hold onto the small amounts that were slated to be sold by them because they will see a rise in value, unlike numerous times before.
URGENT NEWS: Physical Silver Confiscation (Must Watch!!) CLICK HERE
(Don't Procastrionate)
You must set up an "Amazon Silver and Gold Account" now while you can. Smaller firms are drying up and soon will have nothing to sell, just at the height of the silver demand.
I personally had to drop three of my silver suppliers during the height of COVID 19 because they could not deliver on orders.
However, Amazon has jumped into the void and is now filling every order in a timely manner, both nationally and internationally. CLICK HERE
Comments
Post a Comment