Bitcoin Forum

Italy is now borrowing at 7%. The 3rd largest economy in Europe seems to be done. Outside of a very few such as Germany and France, the euro zone seems to be in dire straits, and at the brink of collapsing. Minister run desperately to avoid what in my opinion is the unavoidable:

http://www.usatoday.com/money/world/story/2011-11-29/euro-finance-ministers-meet/51458492/1

Seems fiat money cannot hold for much longer as it is. Some radical things will need to happen for the "real" world economy to reactivate, such as seriously redistributing the world's wealth from the rich back to the ever thinning middle class, not to mention the poor.

I would hold on to your coins, and your gold if I were you :)


Roberto

Italy's problems are due to its lack of fiat money.  It gave up its own currency and is now paying the price.  To understand it, try to imagine if the US gave up the Dollar and adopted the Japanese Yen and had zero influence on Japanese monetary policy. 

We don't need to redistribute wealth. We need to create wealth by lifting limits off of innovation. Pillaging the wealthy will only destroy incentive to produce. The fact is the median wealth for the average person only still continues to rise.

Again, it's not a zero-sum game.

The UK hasn't got the Euro and they have got pretty the same problem:
http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

The former currency of Austria was: "Schilling".
It was connected to the "Deutsche Mark" for decades. Nobody was able to change the exchange rate 1:7.
And nobody complained. Why? Because it secured the exchange rate to a very important partner and it kept the economy fit. It was one of the keys to a quite stable and successful economy.

Just printing money, doesn't make sense. It's really easy for the government to get rid of the debts. The tax-payers and the companies are getting the bill.

If you tax something, you get less of it. That's the idea behind those moralizing "sin" taxes. I guess being productive is a sin.

Having your own currency gives you an easy way out: print the money, and steal from everyone who holds it. Italy can't do it, because they have to face reality now instead of kicking the can down the road.

US will always be able to pay it's debt, the question is what will you be able to do with the money when you get it back.

Tell me, what is the difference between defaulting and not paying your creditors and paying your creditors in monopoly money?

The UK national debt is only 62% and people pay to lend money to the UK.  For every £100 lent to the UK government for 1 year, you get £97 back as the inflation rate is way higher than the interest rate.

Your point about Austria is correct.  However, the same logic does not apply to places like Greece and Spain as they are not important partners of Germany.  

The 62%  are a nice number, the important line is the red one at
http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/ under "Debt including Financial sector intervention"

This is the amount, the government has to finance, and to cope with it. The banks with a huge profit can pay back the money. But these (most of them) banks are taking huge risks. So they are the "bank run"-candidates.

The really important partners are euro-zone-partners. It's the same.
The problem is, that the EU-money didn't cause changes in the economic structure.

Total UK debt is about 500% of GDP but most of that is working capital for banks and earns profits.  In fact, its the last big export industry here and the government depends on it for tax revenues.