Quoted:


Anyone have any recommendations for any books that go into detail about what/how it happens? What happens to outstanding bank loans? Precious metals confiscations? Price fixings..etc etc.  Thanks for the help guys!

Quoted:







Read history...



This topic draws out the fruits & nuts like no other, as there is a specific reactionary faction who's beliefs DEMAND a position of 'all modern currency is evil/false/counterfiet, and MUST collapse because it is evil'...



So if you see someone telling you to listen to 'Dr Wrong' (Pete Schiff) or read a nutter-butter book condemning the banking system (Creature from Jekyl Island, written by an anti-corporate socialist)... Ignore them... They're flat out off in left field.



THE FACT OF THE MATTER IS....



Currency collapse, in EITHER form (there are 2: Inflationary and Deflationary) ONLY happens when the government takes an action SO ABSURD that it essentially destroys economic activity in a country OR when the government itself collapses.



Examples would include 'Losing a war, during the course of which you made such a mess of things that the victors want punitive revenge' (That would be Weimar Germany), or 'Seizing the only productive businesses in your country, expelling the owners, and then handing them out to your political supporters who have NO CLUE how to run a business' (Zimbabwe)...



It doesn't happen because of 'printing money', 'too much debt', or 'too much spending'... So long as the market is still operating, it can generally deal with these...



So, let's look at the two types of currency collapse:



TYPE A: DEFLATIONARY



In a deflationary collapse, there is an incurable shortage of money. While this theoretically CAN happen in a free-floating currency like the USD (the term 'fiat' is a misnomer, since a gold-peg is far more 'value by government fiat' than modern money), THIS IS THE END-STATE OF ALL VALUE-PEGGED (ESP 'PRECIOUS METAL' BASED) CURRENCIES. PERIOD. UNAVOIDABLE!



The result? Plenty of goods, but NO ONE can afford to buy them... Because there is no money... Which means no credit... It's a self-unwinding spiral that completely destroys an economy, unless interrupted... If no one can afford to buy, than no one can make a profit selling, no one can pay their suppliers, and everything just goes SPLAT!



The number one reason to HAVE a deflationary collapse, was being dumb enough (in retrospect) to use a value-peg. And the obvious solution, is to dump the PM peg before you get to the point where it's an issue... Which is what the ENTIRE WORLD has done WRT metals, and what most countries are now learning to do with substitutes (Pegging your 3rd-world currency to the US Dollar is just as dumb as pegging your currency to gold).



NOT dumping said peg, is the ONLY situation where you will EVER see 'Precious Metals Confiscation' - and that's what FDR was doing by confiscating gold in the 30s - trying to prevent a DEFLATIONARY COLLAPSE of the gold-pegged Dollar.



Why? Because the only way to break deflation is to increase the money supply, and the only way to increase the money supply in a gold-pegged economy, is for the government to obtain more gold...



The obvious solution to avoid this? DO NOT USE PEGGED-VALUE MONEY!... Fortunately, as noted above, most of the world doesn't use pegged money anymore...



With that said, deflationary collapse is ALSO possible with a free-floating currency like the USD - but ONLY if the government is stupid enough to meddle with credit and banking markets and force such widespread insolvency in the finance industry, that the supply of credit (And thus the entire money supply) threatens to dry up...



The only cure? Government bailouts of the firms damaged by said government action... Which is a hazard in and of itself, as done 'wrong' it can lead back to the whole 'The only thing that EVER causes a currency collpase, is extreme economy-crushing government stupidity' situation....



So, keep your politicians fingers out of the money supply (no gold standard, no price-pegging currency) and the credit markets (no forced lending, no over-regulation) and you will never have to worry about a deflationary collapse



TYPE B: INFLATIONARY



This is what everyone thinks of when they say 'Currency Collapse'.



Now, the fruits & nuts will say that this can happen due to 'printing too much money', but that's simply bullshit. No modern economy regulates their money supply by 'printing more' - they use the banking system to multiply a relatively fixed amount. Which means that if the supply for money ever exceeds demand, the money supply will just STOP GROWING, because people will stop buying 'new money' from the banks. Ain't the market great?



So collapse due simply to 'printing' is a wacked-out fantasy-land view...



The REALITY of why you get an inflationary collapse is simple: You crush your economy so completely, that it no longer generates any value - and thus your currency becomes worthless because you have killed demand for it (a/o a type 'A' collapse, where the supply is destroyed but the demand remains)...



Examples include MOST currency collapses throughout history....



When your country loses a war and suddenly finds it's entire economy being dismantled to pay 'reparations'... It's currency WILL become worthless no matter how much or little is 'printed'...



When your country decides to 'redistribute' farmland to your political supporters, and kick out the only people who actually know commercial farming (despite commercial farming being your ONLY industry)... Your currency WILL become worthless, again the amount you 'print' having no impact...



When your government just ceases to exist (say, because you were a bunch of tyrannical Communist assholes, who were driven bankrupt by a superpower rival (Soviets)... Or you were an insolent little prick who poked the 'sleeping tiger' with a stick one too many times (Saddam), resulting in the overthrow of the regime, and your own execution.... Yeah, the money will become worthless, that's pretty much for sure...



So... What does a 'normal citizen' DO in these situations?



Pretty simple - just remember supply & demand:



Deflationary Collapse:

HAVE MONEY... Paper money... Remember: Things are collapsing because there is too little money... The value of 'stuff' is dropping compared to that of 'money', so everyone with gold/silver, land, and other physical property is getting hammered... Because there's lots of that to go around, but almost no money...



In a deflationary collapse, SECURED BORROWERS (mortgage and car loans, for most people) are screwed, because there is not enough money for them to pay, and the lenders will end up owning their collateral.



UNSECURED LENDERS are similarly screwed, because there is no money to pay them, and no collateral for them to sieze.





This is also the only place where 'gold confiscation' might happen - but ONLY if the economy is gold-standard, which none are these days...



HOWEVER, gold will take a shit along with all other things that are not money (value of money goes up, value of everything else in money terms WILL go down) in a deflationary collapse...



Inflationary Collapse:



HAVE STUFF... Doesn't matter if it's gold, land, working vehicles, stocks of companies that are in decent shape... STUFF gains value in an inflationary collapse, because there's lots of money to go around (that's what inflation is - too much money for demand) but way, way too little STUFF in comparison....



In an inflationary collapse, fixed-rate LENDERS take it up the shorts, because the loans they made were in 'pre-inflation' currency, and the 'inflation premium' factored into that fixed-rate is too low to compensate....



Variable-rate BORROWERS are also screwed, because the rising inflation premium will constantly raise the rates on their debt.

Quoted:









Soooo....which one would it be when the payables are greater than the receivables, and no one wants to loan you money as they see the payables not being a good investment at any promise of return?  A deflationary failure where printing unending amounts of money which is borrowed from yourself causes the money supply to dwindle to nothing?

Quoted:


Read history...

This topic draws out the fruits & nuts like no other, as there is a specific reactionary faction who's beliefs DEMAND a position of 'all modern currency is evil/false/counterfiet, and MUST collapse because it is evil'...

So if you see someone telling you to listen to 'Dr Wrong' (Pete Schiff) or read a nutter-butter book condemning the banking system (Creature from Jekyl Island, written by an anti-corporate socialist)... Ignore them... They're flat out off in left field.

THE FACT OF THE MATTER IS....

Currency collapse, in EITHER form (there are 2: Inflationary and Deflationary) ONLY happens when the government takes an action SO ABSURD that it essentially destroys economic activity in a country OR when the government itself collapses.

Examples would include 'Losing a war, during the course of which you made such a mess of things that the victors want punitive revenge' (That would be Weimar Germany), or 'Seizing the only productive businesses in your country, expelling the owners, and then handing them out to your political supporters who have NO CLUE how to run a business' (Zimbabwe)...

It doesn't happen because of 'printing money', 'too much debt', or 'too much spending'... So long as the market is still operating, it can generally deal with these...

So, let's look at the two types of currency collapse:

TYPE A: DEFLATIONARY

In a deflationary collapse, there is an incurable shortage of money. While this theoretically CAN happen in a free-floating currency like the USD (the term 'fiat' is a misnomer, since a gold-peg is far more 'value by government fiat' than modern money), THIS IS THE END-STATE OF ALL VALUE-PEGGED (ESP 'PRECIOUS METAL' BASED) CURRENCIES. PERIOD. UNAVOIDABLE!

The result? Plenty of goods, but NO ONE can afford to buy them... Because there is no money... Which means no credit... It's a self-unwinding spiral that completely destroys an economy, unless interrupted... If no one can afford to buy, than no one can make a profit selling, no one can pay their suppliers, and everything just goes SPLAT!

The number one reason to HAVE a deflationary collapse, was being dumb enough (in retrospect) to use a value-peg. And the obvious solution, is to dump the PM peg before you get to the point where it's an issue... Which is what the ENTIRE WORLD has done WRT metals, and what most countries are now learning to do with substitutes (Pegging your 3rd-world currency to the US Dollar is just as dumb as pegging your currency to gold).

NOT dumping said peg, is the ONLY situation where you will EVER see 'Precious Metals Confiscation' - and that's what FDR was doing by confiscating gold in the 30s - trying to prevent a DEFLATIONARY COLLAPSE of the gold-pegged Dollar.

Why? Because the only way to break deflation is to increase the money supply, and the only way to increase the money supply in a gold-pegged economy, is for the government to obtain more gold...

The obvious solution to avoid this? DO NOT USE PEGGED-VALUE MONEY!... Fortunately, as noted above, most of the world doesn't use pegged money anymore...

With that said, deflationary collapse is ALSO possible with a free-floating currency like the USD - but ONLY if the government is stupid enough to meddle with credit and banking markets and force such widespread insolvency in the finance industry, that the supply of credit (And thus the entire money supply) threatens to dry up...

The only cure? Government bailouts of the firms damaged by said government action... Which is a hazard in and of itself, as done 'wrong' it can lead back to the whole 'The only thing that EVER causes a currency collpase, is extreme economy-crushing government stupidity' situation....

So, keep your politicians fingers out of the money supply (no gold standard, no price-pegging currency) and the credit markets (no forced lending, no over-regulation) and you will never have to worry about a deflationary collapse

TYPE B: INFLATIONARY

This is what everyone thinks of when they say 'Currency Collapse'.

Now, the fruits & nuts will say that this can happen due to 'printing too much money', but that's simply bullshit. No modern economy regulates their money supply by 'printing more' - they use the banking system to multiply a relatively fixed amount. Which means that if the supply for money ever exceeds demand, the money supply will just STOP GROWING, because people will stop buying 'new money' from the banks. Ain't the market great?

So collapse due simply to 'printing' is a wacked-out fantasy-land view...

The REALITY of why you get an inflationary collapse is simple: You crush your economy so completely, that it no longer generates any value - and thus your currency becomes worthless because you have killed demand for it (a/o a type 'A' collapse, where the supply is destroyed but the demand remains)...

Examples include MOST currency collapses throughout history....

When your country loses a war and suddenly finds it's entire economy being dismantled to pay 'reparations'... It's currency WILL become worthless no matter how much or little is 'printed'...

When your country decides to 'redistribute' farmland to your political supporters, and kick out the only people who actually know commercial farming (despite commercial farming being your ONLY industry)... Your currency WILL become worthless, again the amount you 'print' having no impact...

When your government just ceases to exist (say, because you were a bunch of tyrannical Communist assholes, who were driven bankrupt by a superpower rival (Soviets)... Or you were an insolent little prick who poked the 'sleeping tiger' with a stick one too many times (Saddam), resulting in the overthrow of the regime, and your own execution.... Yeah, the money will become worthless, that's pretty much for sure...

So... What does a 'normal citizen' DO in these situations?

Pretty simple - just remember supply & demand:

Deflationary Collapse:
HAVE MONEY... Paper money... Remember: Things are collapsing because there is too little money... The value of 'stuff' is dropping compared to that of 'money', so everyone with gold/silver, land, and other physical property is getting hammered... Because there's lots of that to go around, but almost no money...

In a deflationary collapse, SECURED BORROWERS (mortgage and car loans, for most people) are screwed, because there is not enough money for them to pay, and the lenders will end up owning their collateral.

UNSECURED LENDERS are similarly screwed, because there is no money to pay them, and no collateral for them to sieze.


This is also the only place where 'gold confiscation' might happen - but ONLY if the economy is gold-standard, which none are these days...

HOWEVER, gold will take a shit along with all other things that are not money (value of money goes up, value of everything else in money terms WILL go down) in a deflationary collapse...

Inflationary Collapse:

HAVE STUFF... Doesn't matter if it's gold, land, working vehicles, stocks of companies that are in decent shape... STUFF gains value in an inflationary collapse, because there's lots of money to go around (that's what inflation is - too much money for demand) but way, way too little STUFF in comparison....

In an inflationary collapse, fixed-rate LENDERS take it up the shorts, because the loans they made were in 'pre-inflation' currency, and the 'inflation premium' factored into that fixed-rate is too low to compensate....

Variable-rate BORROWERS are also screwed, because the rising inflation premium will constantly raise the rates on their debt.



 

Quoted:
I think the type of information you are looking for can be found at mises.org.  They are of the Austrian School of economics and they are biased towards this view, but they do have a large selection of older economics books in pdf format.

Try searching through: http://mises.org/literature.aspx

Quoted:


Thanks for the link!