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@zoomafrika1
"Africa needs a single currency backed by its resources not different currencies backed by the $ Dollar" ~ Muhamal Gaddafi
[Image of Muhamal Gaddafi]
Source: https://x.com/zoomafrika1/status/1820697926123085915
That mofo's name was Muammar al-Gaddafi.
Backing any currency with anything other than the full faith and credit of the countries and people is a stupid idea. If Africa, as a continent, backed currencies with, say, biodiversity, then what happens when climate collapse wipes out their diversity? If they use gold, what happens when the largest gold mine ever is discovered in Canada, and the entire gold market crashes?
There's a reason that everyone went to fiat currencies. The reason that African countries, in general, can't make their fiat currencies work for them is because they've got such deep corruption issues that no one trusts the governments, and by extension the currency.
Just another instances of Gaddafi being an idiot.
Resources meaning diamonds, wood,oil, uranium, lithium, etc. Not biodiversity.
Just another instance if someone not knowing what the fuck ya are talking about
The reason for fiat is so line can go up and the top capitalists can get more power.
If you have finite resources backing your currency inflation goes away...
I was using biodiversity as an example. All of those other resources you list also become devalued if another, better source is discovered elsewhere, which will also cause your currency to crash.
The reason for fiat is so line can go up and the top capitalists can get more power.
Bluntly, you don't understand economics, not even at a high school level.
Inflation is good. You want inflation. You just don't want too much inflation. Inflation is necessary for an economy's growth to keep pace with the population, which--in Africa--is still growing. If the population increases, but the monetary supply does not, then the money you have now becomes more valuable tomorrow. That sounds good, except that means that no one spends money. That is commonly called "deflation", and deflationary periods almost inevitably lead to economic depressions. If an economy is experiencing deflation, that means that borrowing money is really expensive, and most businesses can't expand or make capital improvements without credit. No one borrows money in a deflationary period, and because no one borrows money, no one can invest money. Money just sits there, not being used, because everything past the minimum necessities becomes too expensive. (Expensive as in, the money I spend now will be significantly more valuable in a very short period of time, so I'm "losing" money by spending it.)
The problem with inflation is when wages aren't keeping up with it, or when it's happening so fast that people can mentally track it. E.g. my favorite cereal went from $6 in 2019 to $10 now, about a 65% jump. Even if my wages have gone up 65% in the same time, that feels like I'm paying a lot more, even though it's the same percentage of my income. (And yes, corporate profiteering, starting in 2019, has really been driving inflation. Yes, companies lied to us and just raised prices. Yes, I'm fine with tarring, feathering, and then publicly executing the executives that did that shit.)
But with fiat currency, you have a mechanism to control that: the prime interest rate. If inflation is too high, the central bank (the Federal Reserve in the US) can raise the interest rates that it charges to banks, making it more expensive for banks to borrow money, which gets passed on, and slows down credit and spending, which eventually slows down inflation. If inflation is too low, the Fed can reduce the interest rate--literally printing money--and banks will lend more, and people spend more. With careful management, and a lot of luck--and assuming you have a gov't that is generally trusted--you can keep the currency stable. There's absolutely no guardrails for a currency that's linked to a specific resource though; if more of the resource is exploited, then the value of the currency decreases, regardless of whether or not that's good for the whole country.
Your probably right about the understanding economics, I never took any classes.
But that being said, Italy uses cheese as currency
When your currency is tied to resources "inflation" is solved by producing more which is already needed to sustain that population.
With fiat you get charged $20 for a $5 burger because fucj you, our CEO needs to make $100 mil this year
But that being said, Italy uses cheese as currency
...That's not what's going on. The cheeses are being used as collateral. It literally says that in the very first paragraph. Kinda like when you get a car loan, your car is the collateral; if you default on the loan, they take the car.
When your currency is tied to resources “inflation” is solved by producing more which is already needed to sustain that population.
And when you run out of that resource? What then?
With fiat you get charged $20 for a $5 burger because fucj you, our CEO needs to make $100 mil this year
That happens with a currency tied to a resource as well. What a currency is back by has no direct link to where a company chooses to set it's prices. It's capitalism, regardless of whether it's fiat currency, or a gold/silver standard. Your problem is capital, not fiat currency.
You say pot-eh-to pat-at-to. Same difference ya just called it a different word to suit your narrative.
Africa is 20% of the worlds land mass, they ain't running out of resources.
Oh and ya want to know what happens when your one resource is on the verge of collapse? Same thing that the middle east is doing because of oil being on the verge of collapsing. Find something else worth while to invest in.
Stop with the childish, "what if" bullshit. Shut happens and ya deal with it. What if there was a respiratory virus that is so dangerous that it virtually shut down society as we know it? What do ya do with your fiat? Buy a loaf of bread for $100,000,000?
My problem with FIAT is you can lie about value where as resources are only as good as your work force that produces the resource.
This is such a gish-gallop of irrelevancies.
Africa is 20% of the worlds land mass, they ain’t running out of resources.
...But each country may end up running out of the specific resource that they back their currency with. Of course, you can just declare a new currency with a new resource backing it, which makes the old currency worthless... Which is already being done with hyperinflation in one or two African countries.
The Saudis, et al. aren't using oil as the backing for their currency, even though that's what their economy is based on. Their currency value isn't tied to the value of oil. So when the oil runs out, or the world finally figures out that using oil is killing all of us, their currency isn't going to collapse. Investing in things other than oil is irrelevant to the question.
You don't even understand economics well enough to formulate a coherent argument against fiat currency.
You would like the idiot who got 750k inheritance and the day before Intels earning call bought only Intel stocks now is out 100k.
Saudi money is back by US dollar which is backed by the ability to keep oil flowing...
More stupidity on the smart person side
Stop. Just, stop. You have no idea what you're talking about.
Saudis peg their currency to the dollar, but it's not backed by the dollar.
Fuck sake, just admit you're wrong and move on.
Saudis peg their currency
I always knew the Saudi were gay as fuck
Point stands:
What happens when lab diamonds are literally indistinguishable and cheap?
New gmo lumber grows in a fraction of the time?
New oil reserves found in place xyz? Etc etc
Tying to a resource just puts a bullseye on your whole currency model.
Because a country with 20% of the worlds land mass only has 3 resources...
You are a moron.
I only listed 3 you silly goose. There's no way you thought my few sentence comment was a reflection of my knowledge of all products made in a country or region or continent.
Edit do you not know what etc means???
Edit edit when the US was on the gold standard, do you think I think they just made gold? Holy shit lmao
And I'm silly because I didn't use etc when I listed 5 massive world used resources. Is this where I went so wrong in life?
Why would you or I be limited to a few example resources when discussing currency backing strategies?
Critical thinking makes it obvious the actual subject of the conversation is the differing strategy of fiat vs non fiat currency. From which I focused on the risk of a non fiat currency, if a global market moves unfavorably on whatever you pick.