Confidence in paper currencies

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Joined: Mon 28. Feb 2011, 11:17
PostPosted: Mon 23. May 2011, 19:13
Confidence in paper currencies

The confidence in paper money was originally that it could be exchanged by anyone in coins.
If even gold currencies can be manipulated, this is certainly the case of paper currencies. Paper currency known as Fiat currency, from the Latin word fiat = it will. On the one-dollar bill says "In God We Trust 'The motto of the paper currency but should really be called. Let there be money. Paper currencies are (almost) always state currencies that are backed by nothing more than state value proposition. Behind former currencies were gold or silver, behind modern currencies are literally only nationaldepts.As long as economic accepted the paper money is everything all right. No one gets the idea to exchange money at the central bank for gold. Notes and bank deposits are passed in the economic cycle and thus fulfill the functions of money. The state is well out-he can produce by cranking the printing press, almost without cost money.
An essential prerequisite is the confidence of economic agents. To maintain the trust money must be reasonably stable in value. This stability is not given, the money loses its functions. It sounds will be on money and will return to paper. An example is the German hyperinflation was transported 1923/24 than the money in wheelbarrows through the streets. There was only one way out of currency reform.Wird seriously shaken the confidence, then paper money no longer accepted. Replacement assets are turned into money, even draconian restrictions or penalties may be so now there's nothing to change.How is money created? In a modern central bank that is quite simple: Most of the capital comes from the paper (bank notes), which brings the bank in circulation and deposit liabilities of commercial banks at the central bank. A source to make money are circulating, such as government bonds. The state issues a bond, the central bank takes over parts of it on their books and transfers to the state the money. The state can now make it his home. If in doubt, the money is backed only by the promise of the state to operate in the future its bonds. Shall be made from money debts. This process is called monetization of public debt 2004, the U.S. Fed-American in this way after all, some 800 billion dollars of U.S. government debt and foreign central banks turn American national debt in the value of 1980 billion dollars. Together, the nearly 1 / 3 of U.S. national product. The gold reserves were meager compared to only 12 billion dollars the sind1, 8% of total assets. After cranking the printing presses to the real estate crash and the ensuing consequences and the increased public debt, this percentage is further decreased.
At the time of the Reichsmark on all bills of note was noted that the value is requested, to surrender in gold. On the notes of the D-Mark was the only notice, is it a means of payment. On the bills of € is nothing on it. Not even a mention that this is a negotiable instrument.
Many hedge funds maintain bonds. Money from the pension funds are positioned there because they hope to revenue. Bonds are also happy to be awarded to the citizens as a pension protection. In reality they are not worth the paper confirms the value of the alleged ist.So be deceived citizens to their property. The money is still there, but it now belongs to someone else.

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