The World's Biggest Debtor Nations

af_thefragile

oscarBravo wrote: »

I closed the thread because it didn't comply with the forum rules. You might want to consider reading those rules now, particularly the one about discussion of moderation.

You told me to PM you and i PMed you explaining to you what the video was about.
Also i think the thread title was clear enough to give people and idea of what it was all about.

Last time I brought a bunch of Euros to a shop, I was able to exchange them for goods. That sort of gives the lie to the idea of them being worthless.

Next time save up those Euros and see what you can buy with it after 5 years and then don't tell me you were disappointed!

oscarBravo

mac_iomhair wrote: »

your being very close minded here, also this is not a conspiracy theory.

It never is...

af_thefragile wrote: »

You told me to PM you and i PMed you explaining to you what the video was about.
Also i think the thread title was clear enough to give people and idea of what it was all about.

oscarBravo wrote: »

You might want to consider reading those rules now, particularly the one about discussion of moderation.

...

af_thefragile wrote: »

Next time save up those Euros and see what you can buy with it after 5 years and then don't tell me you were disappointed!

If I can buy anything with them, by definition they are not worthless.

asdasd

by definition they are not worthless.

Just worth less.

hahahahahaaha


see what I did there?

mac_iomhair

Paper money has to have worth something, if the paper is not backed by the same value in gold or silver then you are exchanging paper for goods and services. This is the principle on which the creation of money is based and if it is not being adhered to then were asking for trouble. I suggest you watch "fiat empire" without being cynical. Im not into conpiracy theories but when its right there staring you in the face you have to recognise that men who profit from your debt and ultimately a countries debt control the country, whether you want to realise that or not, its plain to see.

asdasd

why does money have to be backed by anything? As long as people believe it has value, as a medium of exchange, it works.

af_thefragile

mac_iomhair wrote: »

Paper money has to have worth something, if the paper is not backed by the same value in gold or silver then you are exchanging paper for goods and services. This is the principle on which the creation of money is based and if it is not being adhered to then were asking for trouble. I suggest you watch "fiat empire" without being cynical. Im not into conpiracy theories but when its right there staring you in the face you have to recognise that men who profit from your debt and ultimately a countries debt control the country, whether you want to realise that or not, its plain to see.

Exactly what the "money as debt" film shows too. How the monetary system was manipulated over time and was still controlled until sound money was abolished with the abolition of Bretton Woods system and then everything went haywire. The banks were now free to create as much money as they liked spiraling people and countries into perpetual debt.

I think the fact that our money is backed by word of a greedy banker has a little more significance than our ability to still use the money to buy commodities.

Its because we live in the "west" where the bankers live, we can still buy things with our money although what we can buy is becoming more and more limited by the day and we don't complain much. But you'ld really be contemplating the modern monetary system if you lived in Zimbabwe (and very soon even in America) where you can barely even buy a loaf of bread with all of your life savings!

asdasd

It would take far too long to explain why all of that is rubbish.

mac_iomhair

asdasd wrote: »

It would take far too long to explain why all of that is rubbish.

why do you think it is rubbish? ive only seen one side of the argument and would like to know why not backing money by gold would be a good thing?

O'Coonassa

asdasd wrote: »

It would take far too long to explain why all of that is rubbish.

Please have a quick pop at it? It seems the system can just make up money on top of a fraction of money that exists and then lend it out and charge interest. Leaving aside the apparent immorality of usury the system still seems basically crazy.

oscarBravo

O'Coonassa wrote: »

Leaving aside the apparent immorality of usury...

Just so we're clear: you're opposed to the idea of charging interest on lent money?

If lenders can't charge interest, what incentive is there to lend? Are you suggesting that lending shouldn't happen at all?

mac_iomhair

i would think that the state should control the creation of money and therefore not have to pay interest on it at all. therefore not creating debt straight from the word go.

when it comes to banks lending money privately they of course should be charging interest as its a business.

asdasd

Please have a quick pop at it?

Ok, but later.

Nody

mac_iomhair wrote: »

why do you think it is rubbish? ive only seen one side of the argument and would like to know why not backing money by gold would be a good thing?

Because money is worth nothing. Gold is worth nothing. Nothing has a value except what people are willing to pay for it. Hence backing up papers with gold is the same as backing it up with coal or thin air.

There is no value in gold except that people now think it is valuable because it is rare but say we find a new planet tomorrow which gives us access to unlimited amounts of gold; suddenly gold now has no value and the back up of money is meaningless. You might also remember the same thing happening with Tulip speculation as well a few centuaries ago.

Now say that Europe had exactly 100 ton of gold which was worth 1 million Euro; this also represents the total circulation. Now gold drops in value to only be worth half of that; do you expect the state to withdraw half the cash in rotation? Of course not. But you will say that money had a fixed amount in gold and that is very true but this goes back to the original point; gold only has a value as long as gold equals or exceeds that value in what people are willing to pay. If suddenly gold doubled in value everyone would run to the state and exchange in their money for gold, sell the gold and be twice as rich!

Hence the whole idea that gold backed currency some how is a magical fix is a utopia at best and ignorance at worst.

mac_iomhair

Nody wrote: »

Because money is worth nothing. Gold is worth nothing. Nothing has a value except what people are willing to pay for it. Hence backing up papers with gold is the same as backing it up with coal or thin air.

There is no value in gold except that people now think it is valuable because it is rare but say we find a new planet tomorrow which gives us access to unlimited amounts of gold; suddenly gold now has no value and the back up of money is meaningless. You might also remember the same thing happening with Tulip speculation as well a few centuaries ago.

Now say that Europe had exactly 100 ton of gold which was worth 1 million Euro; this also represents the total circulation. Now gold drops in value to only be worth half of that; do you expect the state to withdraw half the cash in rotation? Of course not. But you will say that money had a fixed amount in gold and that is very true but this goes back to the original point; gold only has a value as long as gold equals or exceeds that value in what people are willing to pay. If suddenly gold doubled in value everyone would run to the state and exchange in their money for gold, sell the gold and be twice as rich!

Hence the whole idea that gold backed currency some how is a magical fix is a utopia at best and ignorance at worst.

good points. so its all down to peoples willingness to accept this paper in exchange for goods and services. what about private banks lending to the government at interest, why doesnt the government do this itself? its one complicated and twisted system this banking game, wish I hadnt started looking into it! ignorance is bliss.

O'Coonassa

oscarBravo wrote: »

Just so we're clear: you're opposed to the idea of charging interest on lent money?

If lenders can't charge interest, what incentive is there to lend? Are you suggesting that lending shouldn't happen at all?

Well I kind of see the economic system as an abstraction of the food supply and the environment. When agriculture and pastoralism created the first surpluses tokens of representative value were agreed as money. There seems therefore to be something basically wrong with the notion that this abstraction can create more of itself. Seems like that is just asking for trouble.

All the major religions of the world, or rather their ancient scriptures are opposed to usury. I can't help but think that it is somewhat wrong but recognise that lending is necessary for development. Perhaps people could lend in return for a cut of the capital that is subsequently generated from what they have lent once it becomes a concrete reality.

However this is kind of a side issue to me really what stands out as obviously wrong is the fractional reserve system. How can they lend money that does not exist?

af_thefragile

@Nody: You're missing the point.

You can't create gold out of thin air. You have to work hard to mine and refine gold into its pure bullion form. That is the worth of gold. Not what someone decided to give it for the sake of giving it some worth.

But in the case of fiat money, if say the government wants to build a few nuke, it needs 10billion dollars, it asks the federal/central reserve for 10 billion dollars. The Fed just prints up 10 billion dollars worth of paper money and viola! the government has 10 billion dollars to build a nuke or whatever it wants!

Don't you think this is giving the Fed some unfair advantage? It first created money out of thin air with zero effort (as opposed to working hard to obtain the gold, silver etc.) and then further more it charges interest on that money it created out of thin air. The "actual/absolute wealth" of the country hasn't gone up in any way as it hasn't worked any harder to increase its wealth. Instead it now owes the money it has borrowed + the interest on it to the Fed and there is no way the country can pay the interest cuz all the wealth the country has in the first place is the principle sum it borrowed. It doesn't have the wealth to pay back the interest. So what does the country do? It takes another loan on interest again to pay off the previous loan and the cycle perpetually continues, while the ratio of the circulating money in the country to the "imaginary" interest it owes to the reserve bank keeps decreasing all the time spiraling the country into perpetual debt. Or in the case of a country like China, exploit its natural resources and sell it to other countries to earn the additional money to pay off the interest.

Your money keeps getting more and more worthless. While your pays remain the same (or in cases even they get reduced) and now you've got to work harder to make a living as your actual wealth is going down. You might be a millionaire but that money will barely get you though the year.

And according to the law of nature, whenever someone is losing, someone else is gaining.

Over here the people are clearly losing (but they never notice it cuz its a slow process and they just accept it as a part of life). Although they're making more and more money, their wealth is decreasing cuz everything is getting more and more expensive. There is a lag between inflation and pay rise (or it could even get worse like now we've got inflation + pay cuts!) and during that lad the person loses his wealth cuz he's making the same amount of money but he's gotta pay more for the things he had to before so he's spending more now.

And so who's winning here?
Yes, the ones who created this whole system. The bankers!
First they're getting paid an interest on money they created out of nothing with zero effort. Then as everything is getting more and more expensive, people are taking more and more loans now. Everytime a person takes a loan, the money for the loan is created out of thin air which the person works hard to repay and also then work hard to pay off the interest on it. The people are doing all the hard work here while all the bankers are doing is creating the money to lend the people and also getting paid for lending that money they created out of thin air.


Brings me to this story Peter Schiff said of an american, a chinese, an african and a jamaican who once got stranded on an island.
Everyone was assigned a particular job. The african was assigned the job to hunt for the food. The jamaican was assigned the job to prepare for the fire. The chinese was assigned the job to cook the food. While the american was assigned the job to eat the food. The american would rest all day and then just eat enough for himself to leave for everyone else to get a decent meal.
Now an economist would say, the american is doing a great job in there, he's giving everyone employment, without him the others wouldn't have a job and all.
But any other person would say kick out the american off the island as without him the others would be much better off as they wouldn't have to work as hard to feed the american and could take some time to rest too.

asdasd

af_thefragile wrote: »

@Nody: You're missing the point.

You can't create gold out of thin air. You have to work hard to mine and refine gold into its pure bullion form. That is the worth of gold. Not what someone decided to give it for the sake of giving it some worth.

Is that the labour theory of gold? If gold merely represented it's labour it wouldn't ever change value.

But in the case of fiat money, if say the government wants to build a few nuke, it needs 10billion dollars, it asks the federal/central reserve for 10 billion dollars. The Fed just prints up 10 billion dollars worth of paper money and viola! the government has 10 billion dollars to build a nuke or whatever it wants!

No it doesn't. In fact it borrows it, or receives it in revenue. Wasn't that the problem people in this thread have already. Banks borrow from the Fed, but governments borrow from the bond market.

Your money keeps getting more and more worthless. While your pays remain the same (or in cases even they get reduced) and now you've got to work harder to make a living as your actual wealth is going down. You might be a millionaire but that money will barely get you though the year.

The evidence of this is that we are all poorer than, say, a feudalistic system.

And according to the law of nature, whenever someone is losing, someone else is gaining.

That's also a fallacy. Creation of wealth is a non-zero sum game. When someone is winning, someone is winning.

Over here the people are clearly losing (but they never notice it cuz its a slow process and they just accept it as a part of life). Although they're making more and more money, their wealth is decreasing cuz everything is getting more and more expensive. There is a lag between inflation and pay rise (or it could even get worse like now we've got inflation + pay cuts!) and during that lad the person loses his wealth cuz he's making the same amount of money but he's gotta pay more for the things he had to before so he's spending more now.

We have deflation and pay cuts. Wages generally outstip inflation, in fact the only proper measure of personal income growth is real wages.

silverharp

Nody wrote: »

Because money is worth nothing. Gold is worth nothing. Nothing has a value except what people are willing to pay for it. Hence backing up papers with gold is the same as backing it up with coal or thin air.

There is no value in gold except that people now think it is valuable because it is rare but say we find a new planet tomorrow which gives us access to unlimited amounts of gold; suddenly gold now has no value and the back up of money is meaningless. You might also remember the same thing happening with Tulip speculation as well a few centuaries ago.

Now say that Europe had exactly 100 ton of gold which was worth 1 million Euro; this also represents the total circulation. Now gold drops in value to only be worth half of that; do you expect the state to withdraw half the cash in rotation? Of course not. But you will say that money had a fixed amount in gold and that is very true but this goes back to the original point; gold only has a value as long as gold equals or exceeds that value in what people are willing to pay. If suddenly gold doubled in value everyone would run to the state and exchange in their money for gold, sell the gold and be twice as rich!

Hence the whole idea that gold backed currency some how is a magical fix is a utopia at best and ignorance at worst.

To be fair there is nothing magical about gold, we live in an electronic age where an algorithm could replicate the qualities of gold, the point is money is just there to make barter of surpluses more efficient and as a store of value, nothing more nothing less. The problem seems to occur when gov. and central banks decide that they want to print or borrow more money into the system then there are goods to back it up, this creates inflation , destroys savings and encourages speculation.

af_thefragile

asdasd wrote: »

Is that the labour theory of gold? If gold merely represented it's labour it wouldn't ever change value.

It is the fact of gold. And gold hasn't changed it value. 500 years ago with one gold coin you could buy a certain amount of things. Today if you have a gold coin and convert it into paper money, you'll still be able to buy the same amount of things with the paper money you were able to exchange for the coin.
Only thing that has changed over the years is how much paper you can exchange for the gold and how much that paper is supposedly worth.

No it doesn't. In fact it borrows it, or receives it in revenue. Wasn't that the problem people in this thread have already. Banks borrow from the Fed, but governments borrow from the bond market.

I think i explained how it works and you decided to skip it completely. The only money available is the principle sum that the Fed has pumped out into the economy. The government has to borrow money to pay off the interest on that principle sum.

The evidence of this is that we are all poorer than, say, a feudalistic system.

I don't know about you but right now i'm having quite a trouble finding a job and i buy as many things as i used to with my money anymore. I thought this country was making progress... guess it is, just in the wrong direction!

That's also a fallacy. Creation of wealth is a non-zero sum game. When someone is winning, someone is winning.

No, where did you come to that conclusion to? When one is wining, someone is always losing. At first we raped the planet of its natural resources. Now that we're close to exhausting it, we're just going into spirals of debt. Losing jobs, losing pay, losing quality of life.

We have deflation and pay cuts. Wages generally outstip inflation, in fact the only proper measure of personal income growth is real wages.

And what would you define as real wages?
Inflation is not the increasing of prices but its the increase in the amount of money in the system lowering the value of the money which in turn results in increased prices of commodities.
I think the more accurate representation of what we have now is redundancies and pay cuts!

weiss

For those that think gold is worth nothing.

How long would it take you to do some research and see its wide variety of uses apart from in jewelry?

Nody

weiss wrote: »

For those that think gold is worth nothing.

How long would it take you to do some research and see its wide variety of uses apart from in jewelry?

Talk about missing the point.

Gold has only the value someone wish to pay for it, if we tomorrow can invent a new metal combination which looked liked gold, had twice the durability etc. and cost 1/10th to produce what would the value on gold be? Same as today or in the region of 1/10th?

We can exchange the word gold for anything you want, oil, coal, titanium, uranium, water, fresh air, podge stickers. In the end it does not matter because we all put a virtual value on the item and say to me this item is worth X. We then try to trade it for something else we want on the market. To make things easier for us we now have cash, cash works as an intermediate to accommodate the transaction and not having us argue over if a pogo sticker stack should equal a chocolate bar or a chocolate bar and a coke.

The whole point of currency though is that you trust in that the value the piece of paper represents will get you something you think it should reasonably cover. If you start to lose faith in that the paper money has any value you will refuse to accept that in trade for your items/services and instead insist on something else (for example podge stickers). Once that process starts to ramp up you get Zimbabwe economy of 200 Billion dollar bills because there is no trust in the currency and hence no one accepts it and everyone tries to trade their currency away.

mac_iomhair

im interested in hearing more about these podge stickers, they sound valuable!:D

af_thefragile

Nody wrote: »

Talk about missing the point.

Gold has only the value someone wish to pay for it, if we tomorrow can invent a new metal combination which looked liked gold, had twice the durability etc. and cost 1/10th to produce what would the value on gold be? Same as today or in the region of 1/10th?

We can exchange the word gold for anything you want, oil, coal, titanium, uranium, water, fresh air, podge stickers. In the end it does not matter because we all put a virtual value on the item and say to me this item is worth X. We then try to trade it for something else we want on the market. To make things easier for us we now have cash, cash works as an intermediate to accommodate the transaction and not having us argue over if a pogo sticker stack should equal a chocolate bar or a chocolate bar and a coke.

The whole point of currency though is that you trust in that the value the piece of paper represents will get you something you think it should reasonably cover. If you start to lose faith in that the paper money has any value you will refuse to accept that in trade for your items/services and instead insist on something else (for example podge stickers). Once that process starts to ramp up you get Zimbabwe economy of 200 Billion dollar bills because there is no trust in the currency and hence no one accepts it and everyone tries to trade their currency away.

You're still not getting the point.

Gold has been used as the monetary standard throughout history not because people just decided to use it but instead because gold was a "precious metal" because it was rare and desirable.
No matter where you go on this planet, you can always exchange gold for some other commodity of equal value.

Pogo stickers don't have much of an intrinsic value in themselves. They take little effort to produce and the raw materials to produce them is pretty much in unlimited supply.

Gold needs to be mined out of the earth and refined which takes a lot of work. No one can set up a little shop round the corner of his street where he decides to create and sell gold. To get gold he'ld have to travel to a gold mine, set up a refinery and then cast it into the bullion form. All of this takes great time, energy and work. This is what gives gold its value. And no matter where you go or how long you hold onto it, its purchasing power will not reduce or increase.

Now if you say someone comes up with another metal which looked good, had great uses and was cheap to make, like say carbon fiber? it wouldn't be a suitable material to used used as a monetary standard. Or even if we'ld find a planet of gold and the world would be so full of gold that no one would have to work hard to attain gold neither would anyone want to attain gold, we'ld have to switch to something else like platinum maybe.

Why?
Because the key words there are "cheap" and "intrinsic" value. We can't have something thats cheap to make and with very little intrinsic value as a money standard. Cuz if we had that then it'ld be a lot more easier and cheaper to produce than the value one might give to it.

This is exactly the problem with podge stickers and paper money.
It takes exactly the same amount of effort (which is very little) and same amount of resources (very little again) to create a €5 note and a €100 note.
The notes have no intrinsic value. Its just face value.

Whereas 100gms of gold would have 20 times more intrinsic value than 5gms of gold. Also it takes "x" amount of money to produce "y" amount of gold and so "y" amount of gold is given a value of "x" in paper money.
In this way the intrinsic value of a €100 cheque payable in gold would be 20 times more than the value of a €5 cheque payable in gold. And this would never change.
The value of money stays constant and it can't be created out of thin air at the will of the Fed!

This is why money backed by a commodity of some intrinsic value is sound money that won't lose its value over the years neither can it be manipulated and created at the will of some banker!

And if money was still backed by gold or another commodity, all the life savings of the people in Zimbabwe wouldn't have had evaporated into just pieces of paper!

asdasd

im interested in hearing more about these podge stickers, they sound valuable!

currency can be anything, that is the point. If people accepted podge stickers, they would be a medium of exchange.

af_thefragile

asdasd wrote: »

currency can be anything, that is the point. If people accepted podge stickers, they would be a medium of exchange.

And then i could create a million pogo stickers in my basement and buy myself a huge beach house!
Oh and if i happen to be the ruler of a nation then no one could question me and everyone would have to accept my podge stickers as a "medium of exchange" and i would become super rich by just printing out podge stickers in my basement!

Then maybe i could get smart and start lending out these stickers to the people who need it and then i'ld charge interest on it. And then i'ld manipulate the system further in a way that every single person in my nation would be in debt trying to pay off an interest which doesn't exist. They'ld have to work for free on no pay for me for 4 months out of a year so that they can pay off their interest. But then i could bribe them with more loans so that they could buy a bigger house and a new car. I could keep printing up podge stickers and giving them out as loans to my people making sure they remain in debt working 4 months a year just to pay off the interest on the loan i gave out to them. I would have created my fascist empire full of people working for me like slaves just out of a sticker printing machine in my basement!!

No use of force or ammunition. Just creating stickers and lending them out to people at an interest.

asdasd

tinfoil hat time.

af_thefragile

asdasd wrote: »

tinfoil hat time.

People said that to Peter Schiff too when he predicted the economic bubble was gonna burst big bringing this economic collapse back in 2006.
Guess some people will never learn!

weiss

asdasd wrote:

tinfoil hat time.

Good arguement.

O'Coonassa

asdasd wrote: »

currency can be anything, that is the point. If people accepted podge stickers, they would be a medium of exchange.

Indeed but the podge stickers are not representative of a real commodity as in the time of the gold and sterling standards. They are only of value because government demands payment of it's taxes in podge stickers. They are not like shells, feathers, coral, coaco beans or gold. Seems like funny money.

Nody

af_thefragile wrote: »

You're still not getting the point.

No, you simply don't understand simple economics appearantly.

Gold has been used as the monetary standard throughout history not because people just decided to use it but instead because gold was a "precious metal" because it was rare and desirable.

They said the same about Tulips.

No matter where you go on this planet, you can always exchange gold for some other commodity of equal value.

And what is this so called equal value? And lets not forget that if I take gold into the middle of Amazon tribe with no human contact compared to say NY exchange the value I'd get would be greatly different in terms of what I get, do you agree? We can take it even closer to home, a pawn shop will not offer me the same value as the NY exchange would either, do you disagree?

Pogo stickers don't have much of an intrinsic value in themselves. They take little effort to produce and the raw materials to produce them is pretty much in unlimited supply.

Agreed.

Gold needs to be mined out of the earth and refined which takes a lot of work. No one can set up a little shop round the corner of his street where he decides to create and sell gold. To get gold he'ld have to travel to a gold mine, set up a refinery and then cast it into the bullion form. All of this takes great time, energy and work. This is what gives gold its value. And no matter where you go or how long you hold onto it, its purchasing power will not reduce or increase.

Wrong. The value of gold is constantly going up and down depending on the global market's valuation of it and hence in value.



Lets take another item that fits your bill, diamonds. Diamonds are rare, they are located in a very limited area, require a lot of work to dig up (in general), require a lot of work to polish etc. and have been known to be used as direct trading material recently (blood diamonds). Does that make diamonds having a constant value on the market?

Because the key words there are "cheap" and "intrinsic" value. We can't have something thats cheap to make and with very little intrinsic value as a money standard. Cuz if we had that then it'ld be a lot more easier and cheaper to produce than the value one might give to it.

And yet you still have not resolved the issue with a constantly varying price on the item you're pinning your currency to.

Lets say for argument that everyone in the world pin their currency to gold. Every currency is listed as having a X/Y ratio so say 100 Euro equals 1 gram of gold, 125 USD equals 1 gram of gold etc. Here are the problems you need to resolve:

1) Exchange rates, every exchange rate in the world is now fixed as we all got an agreed fixed rate of currency to gold (this is it's own barrel of issues).
2) How do you know when to press up new money (for the bills destroyed)?
3) What is to stop a country from farming up the gold of other countries by selling products on a non pegged currency and then horde gold backed currency and keep on demanding gold back for it? You could create a very impressive economical terror this way...

I could go on but the point is gold back currency raises all kinds of issues you need to resolve.

This is exactly the problem with podge stickers and paper money.
It takes exactly the same amount of effort (which is very little) and same amount of resources (very little again) to create a €5 note and a €100 note.
The notes have no intrinsic value. Its just face value.

Yes, that was exactly the point. It is only the face value and the belief in that the issuer (usually the state but as seen with other local currencies not required) will honor the debt.

Whereas 100gms of gold would have 20 times more intrinsic value than 5gms of gold. Also it takes "x" amount of money to produce "y" amount of gold and so "y" amount of gold is given a value of "x" in paper money.
In this way the intrinsic value of a €100 cheque payable in gold would be 20 times more than the value of a €5 cheque payable in gold. And this would never change.
The value of money stays constant and it can't be created out of thin air at the will of the Fed!

It only stays the same in terms of it's intrinsic value to it self; here's the kicker though, 100 EUR bill is also 20 times as valuable as a 5 EUR bill even if the value of the EUR drops through the floor down to the warm pits of hell. Your backing of gold has not solved the value in it self, all you've created is a limit in terms of how much the state can pump out in terms of cash nothing else.

This is why money backed by a commodity of some intrinsic value is sound money that won't lose its value over the years neither can it be manipulated and created at the will of some banker!

ROFL; you've just said that gold in itself do not have a value yet you turn around and claim that it is sound money? And yes, the money will lose value over time for the simple reason that we're going to constantly dig up more gold which means a constant increase of money which means constant pressing of new bills. Why? Because you're not going to accept to keep on working for the same salary for your full career. The prices in the store are going to go be going up, the bills you pay for power will go up etc. as this is standard fluctuations of any commdity; so now you're going to ask for a salary increase. Once you ask this you're creating a demand for the system to have more cash available (since people are living longer the pensions have to be paid longer so the input/output flow of cash to new vs. people dying is constantly meaning more cash needs to be in the system or everyone takes a constant pay cut), inflation require more cash which drives also the fact we're digging up more gold to print it.

Suddenly your gold backed currency is not buying as much because an ever increasing supply of gold is now worth less due to inflation.

And if money was still backed by gold or another commodity, all the life savings of the people in Zimbabwe wouldn't have had evaporated into just pieces of paper!

Zimbabwe's currency became monopoly money because people did not trust the state to honor their bills. The same rush happened on Iceland and the same thing may happen to USD as well eventually. The thing is though no matter what they would have pinned as back up would save them because if that underpinning material becomes worthless (planet of gold) they only have their good word to stand for them. Zimbabwe has lots of diamonds for example they could have used to back up their currency with; or land, it is after all prime land for farmers yet no one believed the state would do what was required. Hence once the faith in the currency was lost the value of it as a trading tool diminished we get today's situation.