Economics question

[Katie Müller]

@bkt Yeah. Seems pretty ironic to buy a worthless hundred trillion dollar note for $200 hahaha. Like two years ago, my brother and I looked up the prices and we both just sank with disappointment. I think they were like $150 back then though. So they're still going up.

I had my dad give me a refresher history / economic lesson about going off the gold standard in 1971. If instead of going off the gold standard we did go bankrupt, so to speak, how bad would it have been back then? We obviously would have lost our position as the world power, but how would that translate to the people? How would it have effected other countries?

Seems like by delaying the inevitable they've made the coming collapse 1000x worse than if they let it go in '71. Maybe, I'm wrong? Please educate me.

 

[bkt]

@bkt Yeah. Seems pretty ironic to buy a worthless hundred trillion dollar note for $200 hahaha. Like two years ago, my brother and I looked up the prices and we both just sank with disappointment. I think they were like $150 back then though. So they're still going up.

I had my dad give me a refresher history / economic lesson about going off the gold standard in 1971. If instead of going off the gold standard we did go bankrupt, so to speak, how bad would it have been back then? We obviously would have lost our position as the world power, but how would that translate to the people? How would it have effected other countries?

Seems like by delaying the inevitable they've made the coming collapse 1000x worse than if they let it go in '71. Maybe, I'm wrong? Please educate me.

It would have affected us and other countries pretty badly, but probably not as badly as what's coming.

The petrodollar was created in 1945 (or thereabouts). In exchange for Saudi Arabia requiring US dollars for oil, we would use our military to help protect the Saudis. The Bretton Woods agreement said that countries could exchange dollars for gold at any time at a fixed rate of $35/ounce. A couple decades after that agreement, nations that had rebounded economically, like France, started dumping bucks for gold. At that time, we were broke from the war, which is why Nixon reneged on the agreement; we needed to retain at least some wealth in the form of gold.

Had we defaulted in 1971, everyone would have dumped the dollar and we would have lost the petrodollar benefit. We would have had outrageous inflation, possibly hyperinflation. How do you keep a military as large as ours running when your currency is worth very little? It's impossible to say what would have happened, but it's certainly possible there would be no Israel today, the Soviet Union might still exist, and we would have a heck of a lot less influence in the world.

Today, the Saudis can shop around for another superpower if they want to...they don't really need us.

 

[hiwall]

This thread should be moot. There should never be inflation. Inflation is 100% caused by fiat currency.
If your silver dime was enough to pay for something last year, it would also pay for it next year. That is way it was in the USA for for over 100 years. The exception was some prices going down.
Fiat makes the rich richer and the poor poorer.

 

[SheepDog]

In hyperinflation things like collectibles, art, jewelry, and land go stale. If nobody has the money to buy "extras" they don't sell. The value is still there but there are no buyers.

 

[Katie Müller]

@bkt Thank you very much for your post. My dad mentioned some of those things, but not all of them. You mentioned it's possible the Soviet Union might still exist (or went on longer) If we had defaulted back then could Germany still be split between east and west (or have taken longer to unify)?

I know pondering what if's aren't really important or beneficial, but I like pondering what if scenario's to get a grasp of why things happened the way the did.

 

[SLADE]

This thread should be moot. There should never be inflation. Inflation is 100% caused by fiat currency.
If your silver dime was enough to pay for something last year, it would also pay for it next year. That is way it was in the USA for for over 100 years. The exception was some prices going down.
Fiat makes the rich richer and the poor poorer.

Nixon said his actions were to fight exactly what you are talking about.
The sad part is I voted for him and I think he told a fib.

 

[Terri9630]

You folks forget about the Jimmy Carter inflation years.

I was 5 when he was elected. I had other priorities.