Tuesday, January 1, 2008

Paper Money?

"Paper money eventually returns to its intrinsic value --- zero."

Voltaire (1694-1778)

Throughout history every time a fiat currency is introduced, inflation soon follows. It has happened over and over and over again. Yet we never learn as we continue to deficit spend our way to prosperity.

So what really is the Dollar worth? Exactly what someone is willing to exchange it for. A fiat currency can best be described as faithed backed currency. You need to have faith that the government (printing the currency) can maintain credibility, balance budget, and a control of money flow. Once faith and confidence is lost the value spirals down and usually out of control.

No nation in the history of civilization has devalued themselves to prosperity.

Recommend Reading: The Vandal's Crown

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