The Humble Libertarian

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Tuesday, April 24, 2012

What Happens When All the Money Vanishes Into Thin Air?

A very important article that explains what happens when fiat paper monetary systems simply fail.
Issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth. I could have written "if all the money vanishes," but that would be misleading, for all unbacked money will most certainly vanish into thin air....I wait patiently for people to come to the understanding that the only way for everyone to get their money would be to destroy its value completely, meaning that a loaf of bread would be a million dollars....As the exponential debt curve moves closer to the pure vertical, the rate at which debts come due will approach infinity. Of course, while this is the ultimate mathematical outcome, the reality is that the system will collapse before this point is reached. But don't think governments will throw in the towel. If history holds true the rise of a totalitarian government is just over the horizon....How many more food items be made smaller and sold at the same price? In effect this is a slow starvation of those at the margin. The 46 million American souls on food stamps will soon find their food stamps to be worthless....Even if the Fed stopped printing money, I fail to see the difference between too much money that is worth nothing, and no money at all. It's not going to matter to a starving man that a loaf of bread is $1 million and he is a dollar short, or if it's $1 and he is a dollar short....This is why Greek towns are reportedly reverting to barter, the exchange of real goods for other real goods. We can anticipate that silver and gold will soon enter the barter as means of exchange that can't be counterfeited or printed by wise-guys (central bankers).
Read the rest here
Of Two Minds, Charles Hugh Smith

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