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#41
10-07-2007, 10:01 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] The value stated; 1$. Money printed by Federal Reserve are legal tender and worth whatever amount they say. Its value compared to goods change day by day. [/ QUOTE ] You said its value comes from their promise to honor its stated value, and that stated value is "whatever we say it is"? So what exactly are they promising to honor? "A dollar will always be worth one dollar" is a tautology, not a promise. [/ QUOTE ] Thats because it IS tautological. A dollar will always buy what a dollar will buy in goods and services. Its value is in its acceptance as legal tender by those involved in commerce. There is no difference between acceptance of the $ as a medium of exchange backed by the goods and services of the economy (ie the ability of the government to tax any future exchanges) and acceptance of the $ because its backed by some metal, such as gold. The latter is still subject to the continued willingness of those involved in commerce to accept gold in exchange for goods and services. Ie nothing has intrinsic value, value is determined by the whatever the market says it is. 
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#42
10-07-2007, 10:18 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] The value stated; 1$. Money printed by Federal Reserve are legal tender and worth whatever amount they say. Its value compared to goods change day by day. [/ QUOTE ] You said its value comes from their promise to honor its stated value, and that stated value is "whatever we say it is"? So what exactly are they promising to honor? "A dollar will always be worth one dollar" is a tautology, not a promise. [/ QUOTE ] The Fed guarantees that the $US will always have intrinsic value: 
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#44
10-09-2007, 05:58 PM
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Re: Why do governments borrow money?
[ QUOTE ]
Ie nothing has intrinsic value, value is determined by the whatever the market says it is. [/ QUOTE ] Fair enough, certainly no one "guarantees" that gold will retain value. But the post that spurred me claimed that the dollar's value was based on faith in a government promise. That's misleading if, as you say, and as I had previously believed, they make no promises regarding its value. If I've misunderstood you, perhaps you can tell me WHAT is the promise?
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#45
10-09-2007, 06:41 PM
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Re: Why do governments borrow money?
[ QUOTE ]
Fair enough, certainly no one "guarantees" that gold will retain value. But the post that spurred me claimed that the dollar's value was based on faith in a government promise. That's misleading if, as you say, and as I had previously believed, they make no promises regarding its value. If I've misunderstood you, perhaps you can tell me WHAT is the promise? [/ QUOTE ] promise that by their central planning that it won't hit the fan. under gold backed if TSHTF you can always have a physical commodity, gold. under paper if contrary to their promise (german 1920's) your money gets you nothing.
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#46
10-09-2007, 06:45 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] Fair enough, certainly no one "guarantees" that gold will retain value. But the post that spurred me claimed that the dollar's value was based on faith in a government promise. That's misleading if, as you say, and as I had previously believed, they make no promises regarding its value. If I've misunderstood you, perhaps you can tell me WHAT is the promise? [/ QUOTE ] promise that by their central planning that it won't hit the fan. under gold backed if TSHTF you can always have a physical commodity, gold. under paper if contrary to their promise (german 1920's) your money gets you nothing. [/ QUOTE ] Exactly, no one can guarantee that a gold-backed currency wil buy you X number of loaves of bread (because no one can guarantee the future value of gold), but it does have SOME promised value in reference to SOMETHING other than the paper it's printed on. The current USD to my knowledge does not.
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#47
10-09-2007, 08:57 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Fair enough, certainly no one "guarantees" that gold will retain value. But the post that spurred me claimed that the dollar's value was based on faith in a government promise. That's misleading if, as you say, and as I had previously believed, they make no promises regarding its value. If I've misunderstood you, perhaps you can tell me WHAT is the promise? [/ QUOTE ] promise that by their central planning that it won't hit the fan. under gold backed if TSHTF you can always have a physical commodity, gold. under paper if contrary to their promise (german 1920's) your money gets you nothing. [/ QUOTE ] Exactly, no one can guarantee that a gold-backed currency wil buy you X number of loaves of bread (because no one can guarantee the future value of gold), but it does have SOME promised value in reference to SOMETHING other than the paper it's printed on. The current USD to my knowledge does not. [/ QUOTE ] The value of gold primarily comes from its scarcity (and it looks nice) and is easily transported, fashioned, and is unreactive. 10oz of gold takes 10x the time, money, and sweat to dig and smelt than 1oz. $1 and $10 Fed notes however, take exactly the same effort to produce. Gold has had intrinsic value for millenia. Fiat currecnies come and go.
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#48
10-09-2007, 09:32 PM
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Re: Why do governments borrow money?
[ QUOTE ]
Why do governments borrow money? [/ QUOTE ] If you could borrow money knowing you'd never pay it off and that some random people you don't care about in the future would have to pay it instead (and assuming you're not, you know, a good person), wouldn't you?
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#49
10-10-2007, 12:21 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] Why do governments borrow money? [/ QUOTE ] If you could borrow money knowing you'd never pay it off and that some random people you don't care about in the future would have to pay it instead (and assuming you're not, you know, a good person), wouldn't you? [/ QUOTE ] This is a silly response. Did you mean it to be? See my second post for those that want a real answer.
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#50
10-10-2007, 12:58 PM
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Re: Why do governments borrow money?
[ QUOTE ]
[ QUOTE ] Why do governments borrow money? [/ QUOTE ] If you could borrow money knowing you'd never pay it off and that some random people you don't care about in the future would have to pay it instead (and assuming you're not, you know, a good person), wouldn't you? [/ QUOTE ] No, because I watched The Twilight Zone so I know it's a trap.
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