Funnily enough, by handing over a lot of production to China the US may have postponed any potential confrontation with that power. Now both countries have too much to lose in an economic version of M.A.D. The EU is a monolithic and slow moving entity with Russia going its own way, but keeping out of the limelight (and how much international news from those ex-soviet republics?). Color me cynical.

-LS

whoa GothicBfly, very indepth but basicly what i was on about, that when the goverment takes money to give to the people (or use it) they put themselves into debt. we really need to ditch the current monotary system and go for a resource based economy, i'm not sure what it entails becuase i can't rememvber what it entails but i do remember it working better then what he have now.

what he have now is basicly musical chairs becuase some one is left out to dry (in otherwords defulting is apart of the system).

Which is exactly what I said.

This is a discussion, and one of the key features of such a discussion is to provide arguement and counter-arguement. Not agreeing does not mean I am not listening, and it's rather insulting to have it implied as any such thing.

You say "none of the rest of us give a shit about Nixon or when he was in office". You do realize that he INTRODUCED Fractional Reserve Banking, right? That prior to him, that we didn't HAVE it? That's why I say that there's only been one serious crash since it's come in. That's why I say we don't have a pattern here, yet. This is why I say that potentially, the doom-and-gloom view of things is reactionary. We've had our system less than forty years, and we still haven't fully seen it stress-tested; one crash is not indicative.

Now, talking about the system itself? Yes, there is a LOT of debt involved. It's how money moves, and has been how money moves since almost as long as we've had money. But to imply that all of it is debt is just, well... Incorrect. For it to all be debt, each and every country would have to start with negative value. Am I denying that the U.S has international debt? No. Am I denying that it has domestic debt? No. What I am saying is that money itself is not ALL debt.

Yes, the U.S has borrowed money in order to pay for things, and then pay that back with it's earnings. But the U.S also HAS it's own money. Of course, the problem is that the government doesn't own it, so it doesn't look like it has money. But, funnily enough, the money it pays it's loans back with IS it's own. The issue is that the people own the money. And whilst you can say to a man "Your money is worthless, because you will inevitably pay it to the government, who will pay it to another country." you will not be correct. It's like telling a man that he has no food, because he will inevitably eat it, and then it will be gone. Just because there is a train of debt, does not mean you do not claim value for money along the way.

Even to liken it to companies, as GothicBfly did, you have to realize that whilst their stocks ARE debt (essentially) there was still a base to that business. There was still something there for people to decide they wanted a piece of. There was still capital. And that's the crux of things; no matter how tangled debt gets, there's still capital. Even with rampant inflation, market crashes and more, money can NEVER reach zero or negative worth without the loss of capital. Which, as most capital has been converted to resources such as property, would likely require invasion.

Considering that under that system, we had the Great Depression, I think we still haven't quite hit the point where we should turn back.

POASY - I recall that Nixon completely ended the gold standard (after Roosevelt started the process), but I can't find any evidence that Nixon "introduced" the fractional reserve system.

I admit that economics isn't my area, but could you connect the dots for those of us just reading?

EDIT: Just to clarify my question - I had understood that the gold standard means that paper money is backed by gold in some sort of equatable value. And that fractional reserve just meant that banks only kept so much cash on hand, which is why I don't see the connection between Nixon and the Fractional Reserve system.

I do wonder though, if it will go the other way and some countries will find themselves in the position of Germany before WWII. National debt was spiraling wildly out of control, largely due to "creative" financing and as early as 1936 Hitler admitted that only territorial expansion (i.e. plundering) would solve Germany's economic woes.

Nixon did not introduce the fractional reserve system, it was in before for that., what he did was abolish the gold standard which effectivly put the dollar on the float. Any way, you want more proof that money is debt, go look at some paper money, it will say (if in america) "federal reserve note" and a "note," according to The Dictionary of Banking Terms, 4th Edition, by Thomas P. Fitch, is "legal evidence of a debt or obligation." in otherwords the currency is debt. And a resource based system is now what was in before and cuased the first depresion, i'm thinking of somthing else, go watch zeitgeist addendum, that will explain a lot.