About Me 0060: How to Making Money

Since the textbook definition of "fiat money" is often quoted as being in direct contrast to physical commodities (gold, copper, oil...), the issue is what do I mean by "effectively". It was an attempt, which judging by the responses unsuccessful, to highlight that many of the reasons for viewing "gold" as being a superior repository of value are tied to its being a "superior fiat currency". In the end, value of "gold" is dependent, much like a "fiat currency" on confidence of the commodity or currency holders. The value of any single "fiat currency" can drop dramatically (as it happens with some regularity), as one's trust in the issuing entity declines. Similar drop has been observed for gold (e.g. 1980-1999). In the modern, global, electronic society, the value of gold is determined by its convertibility into a fiat currency (or some equivalent global note-issuing organization), rather than a direct medium of exchange. Thus, there has to be a consensus (market-driven) exchange value for gold into a particular currency. However, if that is the "true" value of gold, than it is no different from a system of floating currencies, with gold being one of the currencies. Let me try to illustrate this by example. Lets assume that the current crisis leads to formation of a global government agency that will print universally accepted currency notes, with initial supply of notes roughly equal to 10% of global money stock. It will also print new notes at a rate of that can never exceed 0.3% to 1.0% of existing stock. This new "fiat currency" (intrinsically worthless and reliant on gov't agency for credibility) could be used in any country via conversion into local currency and would have a function that is largely equivalent to gold. Its value in any given currency would rise or drop depending on investors confidence.

I suspect that you take issue with use of "gold as a fiat currency" in part due to fact that gold supply is not controlled by any single government and has an intrinsically low rate of growth. Thus, is not government edict, collective wisdom that drives valuation. My use of the word "effectively" is an attempt to point out that in practical terms you still need to convert gold into some exchange medium to realize its value and that exchange medium will mostly likely be a fiat currency.

All the best, Vadim

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Khloe Kardashian: Is She Making A Play As the No. 1 Kardashian?

As Lamar Odom and his wife, Khloe Kardashian, get set to begin filming their reality show, Khloe & Lamar, one cannot help but realize how much screen time Khloe has.

With her third E! show on tap, and a publicized marriage with a World Champion basketball star in Lamar, is Khloe becoming the No.1 Kardashian the right way?

Whether you know her or not, you have all heard of sister Kim, for one reason or another, but sister Khloe seems to be giving her a run for her money nowadays.

Kim was romantically linked to Saints Super Bowl Champion Reggie Bush, but unfortunately, things did not work out.

While Kim is now reportedly linked to Kris Humphries of the New Jersey Nets, he holds nothing on Lamar.

The Kardashians continue to creep onto your television screen and it seems it will not stop.

With Khloe & Lamar due out around the NBA Playoffs, Khloe may take the reins as the top Kardashian with the help of the Lakers' forward.

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Monday 10 January 2011

How to Making Money

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