{"id":51202,"date":"2014-05-19T20:26:33","date_gmt":"2014-05-20T00:26:33","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=51202"},"modified":"2014-05-19T20:26:33","modified_gmt":"2014-05-20T00:26:33","slug":"ink-paper-doesnt-equal-value-prechter-on-fiat-money","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/05\/19\/ink-paper-doesnt-equal-value-prechter-on-fiat-money\/","title":{"rendered":"Ink + Paper Doesn’t Equal Value: Prechter on Fiat Money"},"content":{"rendered":"

By Elliott Wave International<\/span><\/h3>\n

My dad will turn 84 this year. When he was born, you could walk into a Federal Reserve Bank or the Treasury and redeem your paper money for gold. It actually said you could on every piece of U.S. paper currency:<\/p>\n

“Redeemable in gold on demand at the United States Treasury, or in Gold or lawful money at any Federal Reserve Bank.”<\/em><\/p><\/blockquote>\n

You can’t do that today, which helps explain why my dad is so grumpy.<\/p>\n

But, seriously, I mention my father to make it personal. The move away<\/strong> from the gold standard did<\/strong> happen in the lifetime of some folks who are still around<\/strong>. Is that such a big deal?<\/p>\n

Well, it is a big deal when the government unilaterally changes all economic and financial transactions, from having a basis in something<\/strong>, to …<\/p>\n

… A basis in nothing<\/strong>.<\/p>\n

Now, a discussion of what money is — and how society can have a convenient way to exchange goods and services — gets abstract in a hurry, so I’ll save that for another day.<\/p>\n

I will use one<\/strong> not-so-common word, which is fiat<\/strong>. It sort of means what happened when God said “Let there be light.” Out of nothing<\/strong> comes something<\/strong>.<\/p>\n

But in the story of our currency, what we have is fiat money<\/strong>. As in, the Treasury and Federal Reserve put ink on paper and say, “Let There Be Value!”<\/p>\n

The problem is: You can’t create value from fiat<\/strong>.<\/p>\n

Here’s some context: The Federal Reserve Bank was created in 1913. The idea was to keep the financial system from hurting itself.<\/p>\n

Did it get less pain? Well — less than 20 years later — “hurting itself” only begins to describe the pain of the 1929 crash and Great Depression.<\/p>\n

The depression is why President Franklin Roosevelt and Congress moved away from the gold standard in 1934.<\/p>\n

Was fiat money a real solution? Mind you, the government didn’t make this huge change all at once. In truth it took about 35 years. (When things move slowly, fewer people notice.)<\/p>\n

The real question is: Are we better off with fiat money?<\/p>\n

Bob Prechter just published a full-blown reply to this question. He dedicated his entire March issue of The Elliott Theorist<\/em> to answering it.<\/p>\n

Please know that Bob doesn’t write dry boring history — because he’s not dry & boring. He does<\/strong> connect the dots to today’s<\/strong> banking system and economy. Read the entire issue for yourself — for free — by starting your complimentary Club EWI Membership >><\/a><\/p>\n

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This article was syndicated by Elliott Wave International and was originally published under the headline Ink + Paper Doesn’t Equal Value: Prechter on Fiat Money<\/strong><\/a>. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n

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By Elliott Wave International My dad will turn 84 this year. When he was born, you could walk into a Federal Reserve Bank or the Treasury and redeem your paper money for gold. It actually said you could on every piece of U.S. paper currency: “Redeemable in gold on demand at the United States Treasury, … <\/p>\n

Continue reading “Ink + Paper Doesn’t Equal Value: Prechter on Fiat Money”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-51202","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/51202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=51202"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/51202\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=51202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=51202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=51202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}