Cheyenne,
I am not an expert economist, I didn't even stay at a Holiday Inn Express !!!
I am fortunate to have hooked up with the right advisers way back when, who really know what is going on. I just try to read and digest what they are saying.
The problem with fiat currency, is that the source of it is infinite. Without a backing such as gold, governments can print out as much as they want in the most irresponsible ways. Not just the US, BTW.
This slug of liquidity is constantly looking to be parked somewhere in order to make money. Clinton primed the pump and it showed up as the Nasdaq bubble, which then turned into the real estate bubble, now commodities. Our bud GW is certainly doing his part in keeping the pump running ! Not sure if he had another choice, especially considering what happened on 9/11/01.
The smart money in the world knows what is really going on and also know the fact that fiat currency is getting more and more diluted due to the quantity being created.
While I agree with what you said in principle, that something is only worth as much as someone is willing to pay for it, the problem is that it is taking more and more fiat currency to buy things. I.e the buying power is being reduced.
If you look at the charts of the dollar, other fiat currencies markets, housing vs gold, you will see what I mean. In reality they are all tanking in intrinsic value.
The shift we are seeing into gold and silver is a move to protect wealth and buying power.
Ultimately, you are correct, you need some form of currency to pay for goods and services. By hedging the value of the currency, you can at least maintain your lifestyle and buying power.
Me, I would gladly accept my pay in that shiny metal !! <img src="/ubbthreads/images/graemlins/grin.gif" alt="" />
Good luck,
Tony
