Saving the Economy From the Collapse

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My hope is many countries come out with value backed currencies. They would be backed by gold, oil, coal, rubber or anything or a combination of valuable things. This keeps the books (issuing country printed value) honest.

But Jim!

The purchasing power of money should be stable. Unfortunately, valuable things like gold, oil, coal, and rubber can't be stable since their values fluctuate with changing supply and demand.

That's why Nobel prize winning Yale economist Robert Shiller wants to introduce an indexed unit of account into the economy to eliminate inflation.

Using an indexed unit of account, called the Unidad de Fomento, the Central Bank of Chile has successfully maintained low inflation rates since 1998.

That ain't bad.
 
Question: Why must a business owner grow his business 3% every year or he would be considered a failure?
To rephrase that question, why must a business owner, who has a successful business model running now,
Jim, I have pondered that question too.
If a business is successful, with a good product and good quality control, solid customer base, good employee relations, and well managed, it should even be able to shrink and still be a successful business.

I have worked for two such companies that had to cut back in bad economic times (one in the 1980 recession and another in the 2008 recession), yet remained profitable and successful when other companies were biting the dust left and right. Unfortunately, the second one later succumbed to poor decisions and one key mistake (which was a whopper) which led to a death spiral.
 
But Jim!

The purchasing power of money should be stable. Unfortunately, valuable things like gold, oil, coal, and rubber can't be stable since their values fluctuate with changing supply and demand.

That's why Nobel prize winning Yale economist Robert Shiller wants to introduce an indexed unit of account into the economy to eliminate inflation.

Using an indexed unit of account, called the Unidad de Fomento, the Central Bank of Chile has successfully maintained low inflation rates since 1998.

That ain't bad.

The value of gold does not fluctuate. The currencies is what fluctuates in trade value.
 
The value of gold does not fluctuate. The currencies is what fluctuates in trade value.

Gold is valuable because it is rare. If a super ginormous deposit of gold is discovered tomorrow, gold would become less rare and therefore less valuable.

The California Gold Rush expanded the money supply and caused inflation. Soaring gold output from the California gold rush is linked with a thirty percent increase in wholesale prices between 1850 and 1855.
California Gold Rush
 
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Gold is valuable because it is rare. If a super ginormous deposit of gold is discovered tomorrow, gold would become less rare and therefore less valuable.

The California Gold Rush expanded the money supply and caused inflation. Soaring gold output from the California gold rush is linked with a thirty percent increase in wholesale prices between 1850 and 1855.
California Gold Rush
That is a natural cycle which over time, corrects itself naturally. Yes, there is some pain. It sucks. That's life.
It's when governments try to monkey with the natural cycles to have short term "fixes" that we get long lasting economic disasters.
 
Inflation is in effect a "poor tax" because it saps the wealth of low income people to a disproportionate degree.

It's true the savings of low income people decreases in value because of the increase in money supply, but low income people also tend to be in debt and inflation is good for debtors. Inflation makes their debt worth less. That can be good for people with car payments, mortgages, student loans etc. because it makes paying off the debt easier.

What seemed like a large amount of money to borrow twenty years ago isn't such a big deal for you now.

That is, higher than expected inflation benefits debtors since interest rates usually already take normal inflation into account.
 
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Rhian: What you say is somewhat correct in some situations. However, we are playing a game in which the common man does not have a clue of what the rules of the game are.

And the rule is the rulers control the rules of the game; the common man loses every time.
 
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It's true the savings of low income people decreases in value because of the increase in money supply, but low income people also tend to be in debt and inflation is good for debtors. Inflation makes their debt worth less. That can be good for people with car payments, mortgages, student loans etc. because it makes paying off the debt easier.
Only if their income increases to match the inflation, which often is not the case, especially when they have to retire while still in debt. Fortunately I paid off my house before I was forced into retirement and had no other debts.
With the interest rates on savings so far below the inflation rate, and retirements accounts being severely mismanaged, any savings people had in the bank and in mismanaged retirement accounts gets worth less and less.
 
Most nations have one currency, but Chile has two: the Chilean peso and the Unidad de Fomento (UF). Like most currencies, the peso is issued by the central bank. Local banks offer peso-denominated checking and savings accounts and Chileans use pesos to pay their bills, rent, and to buy food.

The Unidad de Fomento (UF) is a non-circulating currency used in Chile. It is a shadow currency. There are no UF coins or notes circulating in the Chilean economy.
The UF exists as a purely abstract unit-of-account, totally divorced from any medium-of-exchange.

The exchange rate between the UF and the Chilean peso is constantly adjusted for inflation so that the value of the Unidad de Fomento remains almost constant on a daily basis during inflation.

The UF is defined as the amount of pesos necessary for Chileans to buy a representative basket of consumer goods. The peso-to-UF exchange rate is calculated daily and published on the central bank's website.

Former Republican Speaker of the House and sound money advocate Paul Ryan proposed a similar plan to tie the US dollar to a commodities basket. Ryan
believes the best way to guarantee sound money is to use an explicit, market-based price guide, such as a basket of commodities, in setting monetary policy.

Robert Shiller also recommends the US introduce a new currency unit tied to inflation as measured by the Consumer Price Index. Adopting this new currency unit, called a ‘basket’, would be essentially cost-free. It would be a way of nudging people to protect the value of savings and investments that would otherwise be eroded by inflation.

Like the Unidad de Fomento used in Chile, the 'basket' is a non-circulating shadow currency. Americans can keep using US dollars to make all their transactions if they like.
 
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I guess I am stupid. I don't see a benefit.

It reminds me of why I quit shopping at one grocery chain several years ago.
They allowed you to be a free member and carry a card. Two prices were on items: Member and non-member.
To me they were saying they would screw you if you didn't complain.

I am seeing the same in Chile. Why not just stop all the raping and play fair for all?
Cut out the double talk.

Several centuries back the Catholic Church had a similar dilemma.
Lords on a daily basis sent their knights out to rape and pillage the neighboring Lord's lands.
It got so bad that peasants were fearful of going to church on Sundays.

So the Vatican, in it's wisdom, damned all raping and pillaging on Sundays. Why didn't they ban it entirely if they had the power to do so?
To me the answer is obvious. They were in a powerful position and wanted to remain there. The hell with being Christ-like.

The same is true with a dual currency system. The government gets to remain in power and cheat all it wants (except on Sundays).
 
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Doesn't the Bible prophesy a one-world currency?

Isn't there some sort of mark that will be required in order to buy and sell?

Financial technology like that could establish a universal system of control very easily.

Think about it.

Some politician comes along and tempts the people to go to a cashless society by promising a new kind of digital currency that will end inflation. All you have to do is vote for it.

It's either that or be unable to buy or sell because of inflation.

I know who I'd vote for.
 
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Rhian: I don't know you and therefore, I do not know what side of the coin you are coming from. You seem to be playing both sides of the coin.

You said: "Financial technology like that could establish a universal system of control very easily."
Question: Control of who or what?

You said: "Isn't there some sort of mark that will be required in order to buy and sell?"
Question:
That is the problem. That is what the grocery store was testing for. Could they eventually charge membership fees? So my question is What did you mean by that and why did you put that statement there?

You said "Doesn't the Bible prophesy a one-world currency?"
Question: The bible never foresaw "Currency", only money. I feel that gold and silver is fairly close to the primary money in use historically, more so than wampum, beads, etc. Although we are trained to no longer see gold/silver as money, it still is the most prevalent money.

So my question regarding the bible is "So?"

What is it you stand for; want; preferred system we use?

 
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Doesn't the Bible prophesy a one-world currency?

Isn't there some sort of mark that will be required in order to buy and sell?
There was already a one-world currency at that time, silver and gold, so no it wasn't predicting what already existed.
It says nothing about currency, just that without the mark you can't buy or sell. The exact nature of the mark has been endlessly debated.
 
There was already a one-world currency at that time, silver and gold, so no it wasn't predicting what already existed.

Wait, is silver and gold money or currency? I thought gold was money and the stuff the government prints is currency.
 
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