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I don't really care if you agree or not. Just saying what I think.

Thursday, November 20, 2008

Response to Merilee's Politics

Posted by L S. "Spencer" Olsen at 4:12 PM

Yikes.  Well done, for starters.  I didn't listen to Glenn today.  Just didn't have it in me to fear for the end of the world.   

You asked about our currency.  It used to be based on gold.  Coins were originally valued based on their make and weight.  If you had a gold dollar, as the price of gold went up, your dollar had more purchasing power.  As the price went down, your dollar had less purchasing power.  With me so far?
Somewhere along the line, bank notes began to appear.  What this meant was that you gave your gold or silver to the bank and they would issue you a promissory note.  Basically, one paper dollar was worth one dollar of gold.  Gold goes up or down, so does the value of your dollar.  The note was to be redeemable on demand for gold, silver, or whatever was the standard.
Then, the Federal Reserve was created by Woodrow Wilson in 1913 and the rest is history.  Eventually our money has become fiat 0r in other words it has no intrinsic valie; it cannot be redeemed for gold or other currency.  Fiat means that we have to use it and we cannot use things like gold or silver.  As a result, our money's value changes based primarily on exchange rates at international banks to other currencies.
So what happens if you disable all of the currencies of a continent for a single currency?  You have to have a flat exchange rate across the board.  This usually means that all currencies should potentially meet in the middle.  That would be a nightmare for the US as a major international market contender.  Europe was able to get away with it because none of the EU participating nations had currency that was worth spit to begin with.
You are now so cool, you have your own section.

 

1 Comment:

  1. Merilee said...
    November 22, 2008 at 1:46 PM  
    Yeah, I totally get all that. I know about the evolution of our currency and about the gold standard and switching from it in what? 1973? I just don't know what we are going to DO about this horrible global currency thing.

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