Thursday, November 01, 2012

"End of the Road: How Money Became Worthless": the phrase "fiat money" is an oxymoron


The “almost feature length” documentary “End of the Road: How Money Became Worthless” (2008), from 100th Monkey Films and directors (writers) Tim Delmastro and Jason Spencer, has a pretty transparent thread of logic.

It sets us up with a rebroadcast of Richard Nixon’s speech in 1971 when Nixon advanced we would go off the gold standard.  Nixon hardly adhered to conservative principles. 

At that point, we gave up using money.  In fact, no nation today uses money. Instead, we use a fiat currency backed up by nothing, other than government promises (or decrees).   I’ve probably used the terms “fiat” and “currency” myself in my blogs before, and this film makes a clear distinction. The phrase “fiat money” is then an oxymoron.  It’s “fiat currency”. 

A fiat system allows countries to devalue currency in order to sell more goods.  It also tends to set up the triggers for a hyperinflation cycle, such as in Weimar Germany.   Governments then encourage individuals and families to go deeply into debt to maintain their standard of living.  

The film says that the Financial Collapse of 2008 was simply a collapse of a fiat system, when investors suddenly demanded hard money again.  And we “kicked the can down the road” with the economic bailouts.
At this point, I’ll say it gets personal.  A conservative friend of my late mother criticized me for buying a car in 2009, until I reminded her that Ford (I bought a Focus) did not get a bailout from the Obama administration.  I was conscious of that when buying the car.

And Al Gore is always saying, “Nature does not give bailouts”.

The film encourages individuals and families to protect themselves by accumulating gold.  I bought two gold krugerands in Dallas in 1980, but sold them in 1985, in a rather seedy situation.  Then, a conservative coworker, who always talked about “feeding his babies”, praised the virtues of junk silver.

Accumulated “money” has come to be seen as evil on the political Left; it lets individuals out of doing their fair share of society’s dirty work.  But in fact money is supposed to represent (ultimately) the human effort it takes to produce a unit of wealth – that is, a troy ounce of gold. 

A real global catastrophe (like in the NBC show "Revolution") would also make "currency" worthless, and would raise question about the redefinition of "money".  Catastrophe could be the great personal equalizer. 
  
The film also discusses the way governments conspire (through the Gold Anti-Trust Action Committee) to “devalue” gold.

Remember the movie “Goldfinger”?

The official site for the film is here

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