Thursday, August 11, 2011

"Fiat money"? What the ... ?!?

Aljazeera English has good coverage of news. On the whole, from what I've seen of it, you're more likely to encounter good journalism there than you are on typical American news programs. Or maybe I should say you're more likely to encounter journalism there.

But as the following video illustrates, they sometimes blow it, and fairly seriously. One of their guests discussing the economy is apparently a "goldbug," the clue being his reference to "fiat money." Fiat money is a term used for currency backed only (!) by the full faith and credit of a sovereign government, as opposed to silver or, naturally, gold. And if it seems like an unfamiliar term, it's because it's mostly used by cranks and crackpots. (See, for instance, Chip Berlet's discussion in Alleged Giffords Shooter Shares Currency Plot Obsession with Anti-Abortion Killer Talk to Action 01/08/2011.

The guest is Andrew Schiff of Euro Pacific Capital, who first starts talking at around 4:40. He says that "we've been awash on a sea of printed money" since 1971, when the Bretton Woods system of fixed exchange rates ended and the value of the dollar was no longer connected to the value of gold, an event with the status of Adam eating the forbidden fruit for the goldbugs.

"You cannot base an economy on debt and printed money and borrowing and spending." Why it took from 1971 to 2007 for this supposedly fatally flawed system to produce the current level of depression, he doesn't say. Goldbuggism is largely a matter of pure faith, and is generally not affected by arguments based in real-world occurrences. It's Ron Paul/John Birch Society economics.

One can't help but wonder what an economy would look like that wasn't based "on debt and printed money and borrowing and spending." It's not as though all transactions in the world were done with metal coins prior to 1971!

Schiff also lets it slip around 13:35 that he's an adherent of the far-right producerism notion, referring around to the "people in the productive class, in the range of from $200,000 to $1 million."

In this RT video from 02/28/2011, Schiff joins the view popular among conservatives since I guess forever, the roaring inflation is just around the corner. In this FOX Business report of 06/18/2009, he argues for impending hyperinflation. But if Schiff thinks the proximate cause for the 2007 recession was the end of the Bretton Woods agreement in 1971, maybe he means that hyperinflation is around the corner, set to arrive in 2045.

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