Is there an Idiots guide out there explaining "Fiat Money" and why it came to be ?

[UndertheOcean]

In layman terms ...

There is this argument that the government prints money at will and this causes inflation , but I thought that governments are financed by taxes and don't do something stupid nowadays like that , so whats the deal ?

If we go back to gold coins (a finite money supply ) does that spell the end of inflation , is this a good or bad thing.

My head hurts.

[meegbear]

1. Here's the next best thing ...

In economics, fiat currency or fiat money is money backed by government demand for it as legal tender in payment of legal liabilities, such as taxes. It is often associated with paper money because legal liabilities are created and settled by documents which are usually paper. Without government demand for certain kinds of paper as legal tender, such as bank notes, only specie is unlimited legal tender. However this is not universally true, as some currencies, (notably sterling issued by Scottish banks), are not legal tender but are accepted by longstanding confidence.

http://en.wikipedia.org/wiki/Fiat_money

[MADem]

2. Heh. I had a professor in grad school who used to chuckle deviously

when he'd discuss money supplies:

"Strapped? Need more cash? No problem!!! Print MORE!!!!"

He viewed it as a short term solution to scarcity, a way to right the economic boat in extenuating circumstances.

He was a whizkid on the IMF, too--no slouch.

Of course, you go too far, and you end up with DINAR-type toilet paper--cheaper to wipe your ass on Saddam's face than exchange a bag of script for a roll!

[ProfessorGAC]

7. Wish I Knew Him

That's a good field. Actually, though, the U.S. has been scrupulously cautious about printing money. The amount of money in circulation has changed by 200% while the economy has gone from $5 trillion to over $11 trillion. So, the money supply has grown (M1) by less than the nominal GDP.

But, the whole idea of fiat money supply is very interesting and it's impact on the global interchange economy is a field in which one could win a Nobel.
The Professor

[MADem]

12. You've perhaps heard his name--you wouldn't forget it if you did.

Geez, he was a youngster a few decades ago. We found ourselves in the same countries at different times, and it was rather amusing to exchange recollections and compare notes. He had a wicked sense of humour, and was a brilliant conversationalist, too.

One thing is true...we've all aged!!

http://www.ccc.nps.navy.mil/people/looney.asp

[ProfessorGAC]

13. Nope. Don't Know Him

Too bad for me.

I read his bio at the link. Pretty cool.
The Professor

[sinkingfeeling]

3. Try this article....

http://www.hermes-press.com/econ2.htm

[Vilis Veritas]

6. Is a Demonic Cabal another term for Conspiracy?

Peace.

[sinkingfeeling]

10. Yes. And here's another essay on how the advent of the 'banker' has led

to the world's greatest transfer of wealth (upward) and fiat money.
http://www.gold-eagle.com/editorials_02/schicht010902.html

[Vilis Veritas]

15. I was in Hong Kong back during the hand over in 1997...

Gold was at about the same price as today maybe a little higher.

I have read and watched a lot about fiat money...thanks for the links...my question was semi-rhetorical.

On a funny note: I asked my son what he wanted to be...a banker he said...why, I asked...that is where the real money is, he replied...;-) He is 7, I don't want to burst his bubble so soon and I am not so sure that he is wrong...

No Fear...

[UndertheOcean]

11. Thank you , that was helpful

:)

[Freeusfromthechurch]

4. Yes and it's free

Follow the link - cut and paste the link - however you do it.

It will explain everything about the banking system - Fiat money - it will blow your mind. You can rent The Money Masters also
Spread the TRUTH

http://video.google.com/videoplay?docid=-9050474362583451279&q=money+from+debt+duration%3Along&total=129&start=0&num=10&so=0&type=search&plindex=0

ZEITGEIST is another great source for the Central Banking - below is a link

http://video.google.com/videoplay?docid=5547481422995115331&q=ZEITGEIST&total=1721&start=0&num=10&so=0&type=search&plindex=0

Stay Conscious

[Az]

18. Careful with Zeitgeist

It is more interested in conspiracy theory than anything else. It takes a great deal of liberties and makes connections that are not truly present.

[Freeusfromthechurch]

20. It all use to be a conspiracy until it became fact - who knows

[Warpy]

5. Sure, just watch this little number

http://www.youtube.com/watch?v=hfXavRTM4Fg

This is part 2 of a great series.

[Freeusfromthechurch]

8. good choice - LOL

[Vilis Veritas]

9. Paper Money is an illusion. I use turnips.

To a person who is hungry, a turnip has value.

In a fiat money system, the money is not backed by a physical commodity. Instead, the only thing that gives the money value is its relative scarcity, and the fact that people seem to want it. Why people want fiat currency has been the subject of much debate. If you were an alien, visiting the earth for the first time, you would certainly be amazed at how the earthlings seem to prize little pieces of paper with paint on them.

One idea to explain the value of fiat money is debt. If you are in debt, you have no alternative but to try to obtain the pieces of paper in order to repay your debt, and if the paper is scarce, you have to compete for it. Interestingly, indebtedness seem to go hand in hand with fiat money, but that is no conclusive evidence for this theory.

http://www.economymodels.com/money.asp

Peace.

[joshcryer]

14. Because people need money to spend. Fixed currencies, fixed to something tangible...

...limits the ability to spend it. The Gold Standard, for instance, resulted in people horading massive amounts of money because each note was backed by gold or silver.

Money has to be fiat because otherwise it can be easily manipulated by the markets.

[sinkingfeeling]

19. I think we have fiat money because it's easier to manipulate. And when we had a gold

standard, 'horading' money was known as savings.

[Az]

16. Here is a video

Its laid out pretty straight forward. I can't comment on it as I am not an economist. But this thing kinda blew my mind. I am waiting to hear it confirmed by econ types before I start running around screaming.

First of five parts http://www.youtube.com/watch?v=cy-fD78zyvI
The rest of the links can be found after you view the first part.

[Wilber_Stool]

17. Money as Debt

Here's a Google page that will explain all for the dumbest among us. Trust me.

http://www.google.com/search?q=money+as+debt+video&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a