Fiat Money
A friend of mine sent me an email about gov'ts latest step in trying straighten-out the economy:
U.S. Details $800 Billion Loan Plans
"The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system..."
Did I read that right?
"...Until the economy begins to turn around, Fed officials have made it clear they are prepared to print as much money as needed to jump-start lending, consumer spending, home buying and investment..."
There it is again...
Now, I'm no economist, but with my Bx public school education I do remember learning about something called fiat money (one of the few things I do remember)...
Fiat money - "Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value."
(http://www.investopedia.com/terms/f/fiatmoney.asp)
"Hyperinflations are caused by extremely rapid growth in the supply of"paper" money."
(http://www.econlib.org/library/Enc/Hyperinflation.html)
I'm not trying to say we're on the verge of a total collapse or anything, but It is frightening to hear these things.
Other instances of hyperinflation: http://www.chinadaily.com.cn/world/2008-11/14/content_7205990.htm
"...In post Second World War Hungary monthly inflation reached 12,950,000,000,000,000 percent, with prices doubling every 15.6 hours - Zimbabwean prices are currently doubling every 1.3 days. (as of 11/14/2008)
The most famous hyperinflation, Weimar Germany in 1923, is in a distant fourth place, at 29,525 percent a month with prices doubling every 3.7 days."...
U.S. Details $800 Billion Loan Plans
"The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system..."
Did I read that right?
"...Until the economy begins to turn around, Fed officials have made it clear they are prepared to print as much money as needed to jump-start lending, consumer spending, home buying and investment..."
There it is again...
Now, I'm no economist, but with my Bx public school education I do remember learning about something called fiat money (one of the few things I do remember)...
Fiat money - "Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value."
(http://www.investopedia.com/terms/f/fiatmoney.asp)
"Hyperinflations are caused by extremely rapid growth in the supply of"paper" money."
(http://www.econlib.org/library/Enc/Hyperinflation.html)
I'm not trying to say we're on the verge of a total collapse or anything, but It is frightening to hear these things.
Other instances of hyperinflation: http://www.chinadaily.com.cn/world/2008-11/14/content_7205990.htm
"...In post Second World War Hungary monthly inflation reached 12,950,000,000,000,000 percent, with prices doubling every 15.6 hours - Zimbabwean prices are currently doubling every 1.3 days. (as of 11/14/2008)
The most famous hyperinflation, Weimar Germany in 1923, is in a distant fourth place, at 29,525 percent a month with prices doubling every 3.7 days."...
posted by VoxInfo at 6:32 PM
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