Friday, August 5, 2011

All fiat currency collapse eventually

Theoretically, fiat currency works better than gold standard, according to the works by Irving Fisher and Milton Friedman. Unfortunately, to trust the paper currency is equivalent to have faith in the scumbags of the central banks, including the MAS. We are taught that communism does not work because of human weaknesses, that is the same with all fiat monies.

Singapore dollar itself is fiat. It is also derivative of a basket of currency because it is mainly backed by the US and Euro, the world's two main reserve currency, in addition to investments of GIC. Now US and Euro are competing in a race to the bottom beauty contest, we will see SGD losing value in real terms accelerate further. Unfortunately, MAS will never do the right thing to buy gold.

Right now, everyone is being screwed everyday by MAS, but sadly, no academics and journalist are raising any red flag to warn us.


Anonymous said...

i suppose, you're back from your hols. if that's the case, welcome back!

on a side note, thank you for your posts. it's a great learning opportunity for econ noobs, me.

happy 46th national day (weekend)!

Anonymous said...

S Korea recently changed tact and bought gold, following Brazil Indian China. GIC has a commodities allocation but that is probably for trading. The people are overpaid and led by ex-civil servants and folks laid off from each investment banking merger. They rely too much on inputs from investment bankers and "advisors" like squids and JPM (hey LKY is still on their international advisory board) out to promote their own causes. Gold if held as reserves, generate no fee income for these advisors and IBs so a dumb reserve management team 60% to 70% allocated to euities+real estae+hedge funds will never be advised to buy gold. And they have not agreed to announce their returns in Sing dollar terms nor in gold terms. The result would be shocking.

Veritas said...


GIC investment according to my calculation, loses plenty of money if priced in gold.

The whole problem of Singapore is the diabolical LKY. After he perceives that he brought Singapore to success (though that is due to hard work of Singaporean), he tries better himself one up against wall street.

The hedge fund-like GIC and temasek is created for him, to bet like a mad man. In those two funds you see lots of moron ex-civil servant and worse former SAF that has no financial background.

I will blog about it later.

Anonymous said...

hi veritas, what is your advise to the man on the street who has most of his savings in Sing dollars? put it somewhere else?

Veritas said...

Re August 6, 2011 10:50 PM

In the current period of endemic fraud and collapse of world order, it would be wise to own physical gold coins, of 99.9%.

The cheapest place to get one is HK which is absence of the corrupt 7% GST. In Singapore UOB sells gold bullion as well.

Anonymous said...

HK I heard has ATM gold dispensers, no GST. But are these 99.9%? I read on zerohedge that tungsten "gold" shipment quietly returned by HK or Shanghai to originator. This is sickening, I thought all fakes originate from China!

Veritas said...

There is certainly a risk of fake bullion. The risk is lessor if you buy coins instead of bars.

We are now in uncharter waters of uncertainty. And economics is really about making painful choices.

Anonymous said...

hi...there are talks about creating EUROZONE bond which i think its the same as US treasuries. Wht is your view about this and implications to precious metal?

Veritas said...

ECB buys the eurozone bond. And the monies from ECB is definitely printed out of thin air.

Eventually all these printed monies will shows up in prices of precious metal.

Anonymous said...

Ya agree with you that the bond and treasuries will push gold price higher. Lets accumulate gold now. Then by 2012, when gold hit USD2500/OZ, we will be laughing all the way to bank. I'll treat you nice dinner.

Please continue to keep posting your views and opinions on world economies.

Anonymous said...

Hi veritas,
Thanks for posting this. I thought I was the only one who knew. Didnt know so many people already know about fiat currencies. Now I dont feel alone. When will the sing dollar collapse?

Veritas said...

SGD is back by

1) USD reserve
2) GIC and Temasek asset

Anyone of these 2 collapse will cause SGD to collapse.

USD is going through slow motion depreciation now. MAS can only allow SGD to hold its value against USD to a certain level.

However its hard to predict when USD will collapse.

Also we really do not know how is GIC and Temasek doing. If GIC and Temasek is doing well, no problem with our currency. If they are bankrupt, SGD will tumble.

Without any hard data, its hard to comment.