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0 pointsarrosenberg5y ago0 comments

Not sure what OP was specifically referring to, but the argument is true in the sense that pre-1971, gold was money and currency was backed by gold. Now money is whatever the Fed says it is, and currency is backed by faith.

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boh5y ago

Otherwise known as credit, which has been the prevailing valuation since the Stone Age.

arrosenbergOP5y ago

The difference between relying on credit backed by a physical item (gold bricks) versus credit backed by "the Full Faith and Credit" clause of the Constitution is what happens in the event of default by the issuer of the credit. If the wheels stop turning at some point, there is no recoverable asset.

throwaway_kufu5y ago

> credit backed by "the Full Faith and Credit" clause of the Constitution

Can you or someone explain why “the full faith and credit clause” of the Constitution is commonly associated with “financial credit”?

The full faith and credit clause has to do with the states generally honoring court judgements, public licenses, etc... from the other States.

What does that have to do with a default by an issuer of credit?

boh5y ago

You're confusing macro-economics with micro-economics. There is "no recoverable asset" with currencies and currencies aren't debts that demand payments.

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boh5y ago

Otherwise known as credit, which has been the prevailing valuation since the Stone Age.

arrosenbergOP5y ago

throwaway_kufu5y ago

> credit backed by "the Full Faith and Credit" clause of the Constitution

Can you or someone explain why “the full faith and credit clause” of the Constitution is commonly associated with “financial credit”?

The full faith and credit clause has to do with the states generally honoring court judgements, public licenses, etc... from the other States.

What does that have to do with a default by an issuer of credit?

boh5y ago

You're confusing macro-economics with micro-economics. There is "no recoverable asset" with currencies and currencies aren't debts that demand payments.

1 more reply

j / k navigate · click thread line to collapse