Death of fiat money - Not what you think

No I’m not talking about crypto currencies, but there are some things going down that will very much play a role in what happens to crypto currencies.
James Rickards have written a book ( in this book he argues that the world sooner or later have to be bailed out. No sovereign country will have the money to do so, so IMF will step in and create SDRs. SDR’s can be printed at will, because there is nothing backing it up (same with USD etc). These SDR’s will be printed and used to bail out the world financial system. Ordinary people will not be the first to receive this new kind of money. Actually they will never be able to get it. Those that receives money last, gets least of the benefit that fresh printed money has.

Did that make sense? I guess not, so I suggest you read the book or listen to an interview with him. This is an old one but still valid:

This one is longer but the best one. Listen to this!

How will this affect Peercoin? What do you think?

well i have the impression that cryptos came at the right moment to save the day!
i think that goverments are starting to see this and slowly they will begin to merge cryptos with fiat if not
replace fiat alltogether.
sometimes i have also the impression that btc project started by goverment (USA?) in order to solve fiat crysis :wink:

Federal Reserve will announce that 1 USD will have 1 Satoshi back up.

This is a speculative text. Don’t hold me to it :-*

Accordingly to J.R. the path is pretty much staked out for us. But before IMF bails us out, out governments will try their best to kick the can down the road. Draghi of the ECB has promised that they will do “what ever it takes” and it seems as though he is delivering on his promise by taking rates negative. The FED are doing their QE and by now its very clear that what we have now is financial repression. Financial repression is the only way to get bring down the mountain of debt, to more sustainable levels. This is done by printing money and lot’s of it. By doing so, GDP can rise in nominal terms, the gov. can therefor take in more taxes and thanks to low rates the gov. can borrow cheap and doesn’t have to pay as much in return. Basically its the same old story, where money is credit and to much bad debt is delt with by means of inflation. Inflation is always the gov. best friend, because most the average guy on the street doesn’t get it and the wealthy elite can protect their purchasing power by being able to afford and take the risk on the stock market. Basically the debt problem is simple printed away, nobody understands it and those that do benefit from it. The question is, will it work? What could go wrong? Well to begin with, everyone in the world has to much debt and there is no-one that can bail out the system, cheapening the money is something that everyone can do so what we get is currency wars. That means that when the USD crashes, it doesn’t really crash against EUR because the EUR is also cheaper. So what is fiat crashing against? Its crashing against the safe havens of choice. The central banks of the world can control rates (to some extent), they can print money - but they can not control where it goes. Well… actually they are kind of, they are giving it to banks and other centralized system - but how the money trickles down into the economy they can not control. This can cause havoc in the system, hot money might flow into gas, food, etc, worsening the condition for the middle class and poor people of the world. This can cause riots, revolts and well, its how wars can get started. One thing is for sure, those that gets the newly printed money last, gets less then what its worth. That means that people that can not afford to save, those that are un-banked, middle class etc, those loose money due to the inflation. Sooner or later people will revolt against this system right? Well, if people get whats happening and tries to escape, the scam won’t work, so what the gov. does is to close the escape route; its called capital controls. Capital controls is what it is called when you can not transfer money outside the border of your country and things like that. Can they stop you from owning gold (traditionally used to hedge against inflation and protection in a downward spiraling economy, where third-party risk increases)? Well, they can tax the h3ll out of you, using something called windfall taxes. Yes, the misery just goes on and on. The really smart people in the room, argues that this will not create a flourishing new economy. People that have already taken on to much debt, can’t afford to take on new debt and as J.R. puts it, the fundamental issue is not actually about the money, its all structural. Since its structural, the politicians have to “make the hard choices” and do things that people don’t want them to do. People that feel that they have already been screwed over by to big to fail and what not, will probably not be voting for politicians who says that they will make it difficult. It could happen, but its unlikely. So the charade just goes on and the downward spiral continues. Accordingly to J.R. what happens then, is that the balance cheat of the worlds nations will be so bad that nobody will be able to trust anyone else any longer - it will in a sense be to obvious. What we have then is a crisis. Just as in 2008, the financial system might come to a stand still and a systemic collapse. It could be due to OTC derivatives imploding uncontrollably, financial warfare or just a failed bond auction, leading to systemic collapse. And in a crisis, you can do stuff you couldn’t do normally. J.R. argues that IMF will step in and print SDR’s. They will be the world central bank of the central banks. We will step into a new paradigm and using this new money, more inflation can be unleashed onto the world. People generally don’t get inflation and this time it will be even more difficult to grasp. Then there will be some kind of paradise in the end - like this Star Trek world where everything just… works.

Important concepts
So there are some keywords here: inflation, financial repression, currency wars, capital controls, inflation, black swan events (such as systemic collapse) and disbelief in the existing financial system.

The future
I agree to some extent, with the notion of gold being a barbarous relic, because it lacks all the benefits of being digital and a digitized world. Sure it has its place, but which would you rather: cross the border with pockets full of gold bars or peercoins stored in your head using a brainwallet with good password!? Yes that was a rhetorical question.

I don’t think that I even have to spell it out. Peercoin along with the whole crypto finance space, can protect people from all of those key words that I mentioned above. Peercoin has controlled inflation, you can buy it from a random person on the street and send it abroad; capital control wont work. The currency wars might create havoc in the financial system, create a systemic collapse where the liquidity in the market just freezes up; ATM’s that wont work. But you will still be able to send peersoins while they fix their mess. And when SDR’s are being printed to paper over all of the problems, then you will just sail into the sunset in a yacht that costed you 0.1 PPC.

Or something like that :slight_smile:

Anyway. I think that “old people” think that the new paradigm after the USD hegemony is SDR’s, gold backed stuff and global cross-border institutions extending centralized control over capital markets. I guess the idea is that if centralized control doesn’t work locally, it will work globally ??? No actually, they don’t know what to do else and yes perhaps there are even some drooling already over the power and the influence they will get when all of this transpire.

Idealistic evangelism
But the “new people”, the grass-root people, I think they know have another option. Let’s say I want to use my peercoins, to buy Peershares in this tea stand this woman in Tibet is planing on opening. Yes, I could do that with the click of a button. I’m sure that the elite will try the IMF SDR route thing or at least something similar, but the real change and the real paradigm, I think will come from below and from within.


EDIT: I don’t think 1 PPC will cost less then 1 USD in the future.

[quote=“pillow, post:4, topic:2620”]And when SDR’s are being printed to paper over all of the problems, then you will just sail into the sunset in a yacht that costed you 0.1 PPC.

Or something like that :slight_smile:

they don’t know what to do else and yes perhaps there are even some drooling already over the power and the influence they will get when all of this transpire.

I’m sure that the elite will try the IMF SDR route thing or at least something similar, but the real change and the real paradigm, I think will come from below and from within.[/quote]

Hi Pillow,

It’s always enjoyable to read your writing. Even though I buy his books and listen to his interviews, I don’t believe so much in Jim Richards. He presents himself well, but I don’t think he is so smart. Rickards thinks all the United State’s gold is still in Fort Knox and the NY Fed vault, but much more likely it has been leased out to manipulate world gold prices. All the US gold is likely now rather than physical gold; It is a lot of gold IOUs. The Fed even changed its accounting some years ago from two lines to one: Gold and Gold Receivables. An accounting irregularity that any corporate CFO would go to jail for. Also Rickards description of SDRs and IMF bailouts is unbelieveable. The IMF is mostly funded by the US and has nowhere near the necessary funds to bail out the US. Printing of SDR Special Drawing Rights is easy, but getting nations in economic conflict with each other to accept this created-from-nothing “Right” as overarching international value between them is increasingly not likely. With the world-wide economic crisis, economic cooperation between nations is declining not increasing, so international acceptance of SDRs as international money value will not happen.