Originally posted by lasersailor184
Everything is driven by supply and demand, even your Fiat currency system. Hence we have inflation and hence an egg isn't literally worth the exact amount of change as it was 40 years ago.
Well, this is precisely my point. Currency certainly is subject to supply and demand.
However, this is nothing to freak out about. The only way you really lose money is by either keeping it in a stationary (no interest) savings account, or hiding it under your mattress in your house. Pretty much any standard Savings / Bank Account will accrue you more interest then you lose VIA inflation.
The total US national debt is over $34 trillion dollars. The US government until now has convinced counties and banks not to call it in. If any country with a significant amount of US promisary notes (if they be dollars, T-bills what have you) desides to call them in. It won't matter where you have your money stored. Think 1920's Germany, or 1980's Argentina.
One of Greenspan's last acts as Chairman of the Fed was to increase US dollar issue to $50 billion a week. Massive, massive supply of US dollars, and demand is falling.
The real power of the money comes from the power of the country. I.E. Military and World power.
Interesting notion and I agree with it, with some qualifications.
As of right now, the countries with the most power are China, Canada, US and Possibly Britain, though that is debatable.
I was surprised to see Canada up there. But in hindsight, I would agree once again, with qualifications.
I'll go over a few quick concepts just so we will hopefully be on the same page.
There are four ways that generally one actor can influence another.
1. Rational discourse. Convince someone that an action is in their best interest using rational, honest arugements. Say a doctor explaining to someone why the should quit smoking.
2. Manipulative discourse. Lie to them, use rhetoric and bull****. Say a sales man telling a potential customer a product has certain features it doesn't.
3. Sanction (or "Power"). Threaten to or deprive an actor of something they want until they complie with you demands. A boss telling an employee to do their work or they will be fired. A pimp telling a potato to get out on the street or she won't get her crack.
4. Coersion. Literally forcing someone to comply with your demands. Rape, mugging, but also stopping someone that is attacking someone else.
Canada is powerful in some senses. We are economically power, compared to most of the world. Militarily we are not. But we can threaten sanction, against countries that are economically weaker than us. We rarely do so though, because we tend to like the rational discourse way of setting differences, heck we have a pretty good history of it at least from the 1950's on.
But when one threatens sanction, they better have a really good idea about who can sustain the lack of trade better. Even then it doesn't always work, look at Cuba.
Now what if a country tries to use it's military to coerce another country to do something? Well, they better be able to follow through and successfully invade that country, and even then it doesn't always work. But it seems to me that history as shown that sometimes countries that enter into harsh economic crises do indeed end up at war.
Argentina and the Falklands is an example, Japan and WW2. If an economy is collapsing, the last thing a government lets do without is typically it's military. You need it to keep civil unrest to a minimum and keep the politians in power. What's more it might be your last card at possibly avert total economic meltdown. Can't buy the resources your country needs? Invade someone and take them.
But if you look at the strategic objectives, the country with economic crises must take and hold the invaded country to get the resources out. The invaded army merely has to repulse the invader, or make sure the occupation doesn't pay off.
The real problem are countries that do not have any military backing to their Power. I.E. Most of Europe. Right now, most of europe is weak. The moment they are challenged militarily, they will be beaten. And as such the worth of their money will drop like a rock.
Europe can be weak as it wants, who is going to invade them? Britain and France have the nuclear trump card. So far at least, history has shown that nuclear powers do not fight wars with each other. They fight proxy wars.
