Money is trust. It doesn’t matter what you back it with, it will still be about trust. You have to believe that all the money in the system accurately reflects the value of all the capital and goods and services.
People lost confidence when the mortgage loan crisis occurred. That’s because the mortgage companies were misrepresenting the value of the properties underlying their mortgages. This crisis in confidence led to many businesses pulling back because they had no confidence that money was worth what we thought it was worth.
So there we are with all kinds of excess capacity that is unused. If we could stimulate the economy by pumping enough money into it, then people would spend enough to make it worth reopening those factories. Did we do that? No. People believe the axiom that when the Fed prints money it leads to inflation. People believe this because they don’t know what money is.
Since they don’t know what money is, they come up with all kinds of other stupid ideas like going back to the gold standard, which we have discussed ad nauseum here. They come up with ideas that I truly hope are just provocative, such as the dollar is doomed. Nothing could be further from the truth. The dollar is still the gold standard (irony intended) currency of the world. Even if we default, it will be. Remember, the amount defaulted on will be small compared to the amount of debt out there.
But the Republicidiots along with the Flea Party are making such a huge fuss about it, that their idiocy reigns supreme over an accurate understanding of how the economy works. Everyone knows that you spend your way out of a recession, and you cut taxes and spending in order to keep the economy down. When the economy is down, then rich people like the Republicidiots can make more money. Too many workers chasing too few jobs means lower labor costs. The Republicidiots don’t want to come out of recession. They are making too much money. Never mind that they would make more if the recession were gone.
The dollar is fine. The debt load is fine. The Congress is fucked. It’s ass is jammed with a butt plug. It thinks as if its ass was blocked up that way. Congress needs a laxative, I think. Boehner especially. If they ate the paper legislation was printed on, and blew it out their asses, we’d get better legislation then they come up with on their own.
Well. Can’t really blame them. Got to blame the idiots that put them in office. That would be you….. and even me!