“Fiat vs. Gold Backed Value” – One Who Believes – 11.8.16
Entry Submitted by One Who Believes at 12:49 PM EST on November 8, 2016
Value: Fiat $ Vs. Gold Backed $
The big difference between the values of the Fiat money system and the new Gold backed system is NOT the Rate, it is the Guarantee of Value. This Post mainly applies to the ZIM Value question specifically, even though it applies to all the Currencies of the World.
The Sovereign / Privately Negotiable Rates
First we have to get over the super high rates that have been mentioned lately. They ARE NOT the exchange rates for these currencies. They ARE gifts to Humanity through you by your agreement. That is to say that you will get the super high rates if you agree to use them for the betterment of the World. The EXCHANGE RATE is what the general public will get when they walk in off the street to exchange. So, we are going to throw that super high rate out as far as our discussion of the Value question for Fiat Currencies vs. Gold Backed Currencies.
How The Rates Are Established
With the Fiat money system, there was no reasonable basis of value except what was decided from time to time. When more money was needed, it was just printed. There was no basis for confidence in the money because it’s value relative to other currency had no basis except what someone in charge wanted it to be. That system created great instability for international trade and relations. In the blink of an eye, industries were wiped out because a change in the exchange rate made them unprofitable.
However, with the Gold Backed system, there is a set value based on a country’s assets above and below the ground including other various “values” which all add up to what it takes to back their currency. Notice I said what it takes to back their currency at a certain value. That is because in the new Gold backed system, all currencies are nearly equal in value. That is to say they are on par with each other, where $1 of one currency is equal to $1 of another currency or at least close to it. Currencies being relatively equal with each other is the first main difference between the two money systems.
The Most Important Difference
People get caught up in the idea of whether or not a country has the assets to back the value of their currency, especially for the ones we hold. However, that does NOT matter. Sure the value on paper is based on some calculations of this and that, in ground and above ground, etc. That rationalization is only to justify the value when in actuality the “Value” comes from something completely different and way more important. The Value comes from the Pledge and Guarantee of Value.
The Guarantee of Value
So how did they have enough assets or just the right amount of assets to back their currency at a certain face value close to all other currencies? It was a plan with a target rate/value. But no matter the “Logical” reasoning it took to convince people of the value of their currency, the REAL value is the Pledge and Guarantee of value.
With the Fiat system there was no guarantee. Whatever the powers that be said it was, it was, and no country was safe from manipulation. So whether or not a country has the right value in the ground or above the ground or whatever, doesn’t really matter. What matters is that there is a Guarantee of the value of their currency by the pledge of all they have to back it. They pledge all their assets as the guarantee that their currency has that value. That has never happened before, where every country in the World guarantees their currency value by pledging their assets to back it. So does it matter what the actual assets are? No it does not because there will NEVER come a time when the value drops requiring the sell-off of the assets to cover the currency.
Checks and Balances
The most important understanding is that the exchange rates will always be nearly the same between different currencies because if gold goes up for one currency it goes up for all. They are all tied together and no one country will change their value and upset the World Financial System. When all the currencies are based on the same basic assets, no one person or group can artificially alter the rates.
The Bottom Line
The bottom line is that we will now have a stable value currency system with each country pledging their country’s worth to guarantee their currency’s value. While it seems that some countries age getting some sort of advantage by the HUGE increase in their values, in actually, it is only bringing them up to where they should have been all along. No longer will any one group or country be able to manipulate currency values to their advantage. Now we are all on the same page, at the same relative values, that will be stable from now on, all guaranteed by each countries entire net worth. Now that is a Guarantee!
May You Get Everything You Want and Live The Life Of Your Dreams
Signed: One Who Believes