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    • I find it hard to take seriously anyone who claims that money is fake if it's not tied to the gold standard. That's not to say that a big crash isn't a possibility, of course. Buying gold might help an individual weather the storm--or it might be a foolish lost opportunity with some other investment. Or maybe cash under the mattress is the best bet till the market bottoms out.

      J. K. Galbraith said "The only function of economic forecasting is to make astrology look respectable."

    • I too think there is a crash coming but not for complicated reasons that require advanced economic theory.

      I think the explanation is so much simpler: we collectively lose our minds. During the dot com crash, it wasn't that Internet companies were awful like we thought they were when we panicked. It's that we collectively lost our minds during the gold rush for anything with dot com in the name as a get rich quick scheme.

      Same with 2008. We thought real estate mortgages were a get rich scheme and panicked when we found out that we collectively lost our minds and put millions of people in houses who couldn't afford them yet. Only a few people like Warren Buffet seem to be able to keep a level head and neither panic nor go nuts over easy money.

      One reason I think a crash is coming is because of articles like this one that help create the fear that after a boom there must be a bust for some fuzzy reason that isn't elaborated in the article. Another is the never-ending search for a get rich quick scheme, something easy and we'll all prosper. A tax cut. That will do it.

      Lifting ourselves out of a crash like 2008 takes years of hard work, just like building a real dot com company or earning enough income to buy a house does.

    • How can you trust a currency that is not backed by a gold standard? If a currency isn't backed by a precious metal, then that lets the institution responsible for currency creation print as much as they want. Then you get Zimbabwe. In my opinion, that is were the US is going if they don't get their debt and spending under control.

      I am one of those people who think the US dollar is fake money, because; what is controlling its value? Nothing really, just a big game that the majority are playing along, and I'm one of them unfortunately.

    • If you really believe that US currency is fake, you shouldn't mind sending me all of yours. But, of course, you're not about to do that, are you? Neither would Ron Paul.

      In a sense, money itself (whether backed by gold or not) is a game that requires all of the players to agree that it has value. As long as central banks act responsibly, there's little reason to fear fiat currencies and market driven exchange rates. Manipulation of the money supply is one of the two mechanisms governments have to moderate the cyclical swings of capitalist economies (deficit spending is the other). Countries (including the US) that were on the gold standard took longer to recover from the Great Depression than countries that were not in part because the latter had a better toolset to address the problem.

      It's true that the gold standard effectively prevents hyperinflation from occurring, but sound monetary policy does so as well. Germany doesn't need to be on the gold standard to avoid a repeat of the Weimar disaster; a solid knowledge of economic history is sufficient. In the meantime, there is a broad consensus among economists that a return to the gold standard would not favor the average citizen.

    • There was a fascinating argument in the book Sapiens, I think I remember, about how much human culture depends on us collectively believing certain fictions. One example was money. Almost all of us have agreed on a fiction that the paper bills are worth a basket full of groceries, a car, or a home. And the fact that we can believe it is what makes it work so well.