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UncleNasty -> RE: if it gets really bad -promisory notes? (10/7/2008 11:08:01 AM)
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What you're suggesting Lady Ellen is honest money. We haven't had that since 1913 here in the US. Our model of central banking was based on the Bank of England, and other european central banks, and they were in operation long before the Federal Reserve System. Mind you I'm not apportioning blame, just stating historical fact.
Our fiat currency is based on nothing, and represents nothing. It isn't possible for "nothing" to support "something." As the "nothing" is revealed and crumbles the systems and structures that are built on top of and around "nothing" eventually crumble. It isn't possible to build truth or reality on top of lies and deceptions. That is the root of the problem we are dealing with now.
We have 2 primary choices. 1) Continue to prop up the house of cards with more and more worthless pieces of paper in futile attempts at shoring up the unreal foundations, or 2) Let it all collapse and hit the reset button. Option 1 simply delays an inevitable, and the longer it is delayed typically the worse it becomes. From previous "shoring up" we're looking at something potentially catostrophic now. Option 2 presents some good opportunities to return to honest money that is based in reality, that has real value.
Whether the current efforts at propping up the house of cards fails or succeeds is yet to be seen. A failure could play out rather swiftly and could be very extensive. Success is different. The web of deception is so interwoven and intricate that success will potentially take a lot of time. Each strand in the web is dependent on so many others to maintain its illusion of integrity. Likely some will hold and others fail. How each of those strands of failure is dealt with, what new props will be put in place, will make success a more difficult standard to determine.
And what is the mark of success? Is it simply that the current system continues? Clearly the current system is a "rigged game." Some are allowed to print pieces of paper with no intrinsic value, use them as a medium of exchange to secure real goods and services, and by governmental fiat force them on others as having value. Those not allowed to merely print paper have to trade something of value in order to get them. Usually their time, energy, knowledge and skills. The differences between making money and earning money are pretty stark.
Certainly the "bailout" package is geared towards continuing this "rigged game." There are 2 questions I am asking, and would like for others to be asking, 1) Why did our representatives pass the legislation when clearly their constituents were not in favor of such? and 2) Who benefits?
A direct response to your original questions, "...the official currency became worthless or unobtainable, the financial system in general broke down..." goes something more like this. If the financial system break down, commerce breaks down. When that happens transportation also breaks down. People rarely keep more than a few days worth of supplies and stores on hand, grocery stores are the same, as are their warehouses. Hunger and desparation could set in rather quickly. Promissory notes will have little effect on someone that is hungry. When you're hungry which would you rather have, a picture and a written promise of food at some future date, or real food?
The economic troubles of the 30's had different impact. The US at that point was 80% rural, and they were fairly independent and self sufficient. They could at least feed themselves. Now we have a population that is 80% urban and most people have no real idea how to provide food for themselves. There are people that don't even go to the trouble of opening cans and heating up the contents, much less know how to bake bread, cook, can or preserve, etc.
I do appreciate your line of thinking but I believe we'll either get business as usual or it will be really bad and ugly.
Uncle Nasty
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