Trust and Confidence

Posted by: Bigdad06

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Bigdad06

Trust and confidence are the two most important attributes for a fiat currency and markets that rely on them for trade. Currently the dollar still has the trust of the markets and people, but confidence is beginning to erode quickly. When we look at the definition of trust we find that it is a noun and the definition is

reliance on the integrity, strength, ability, surety, etc., of a person or thing; confidence.
Then we look at the definition of confidence which is also a noun,
full trust; belief in the powers, trustworthiness, or reliability of a person or thing: We have every confidence in their ability to succeed.
As we can see from the definitions, if you have trust then you have confidence. If you have one then you have the other. However it also works the other way in that if you lose one you also lose the other. As we see more and more companies go bankrupt overnight as in the case of Knight Capital, M.F. Global, P.F.G, Lehman, etc. it begins to have a profound effect on trust and confidence in the markets, government, and ultimately the world’s reserve currency, the dollar. How much longer can the markets and fiat currencies of the world operate before people lose confidence in them totally? That is a great question and one I and others here have yet to figure out. The world has been on a pure experimental floating fiat currency standard for the last 41 years now. What I do know is that once it happens, it will happen fast, as in 24 hours or less. We have seen this many times now in the last few years with all the flash crashes that the markets have had. As we saw last week with Knight Capital, it is happening more frequently to bigger and bigger companies. It won’t be long before it begins to happen on the country level. When it does then things will move at lightning speed and markets and computers will be shut down. You will not have time to move your money out of banks or brokerages. Let me remind you that Knight Capital is what is referred to as a market maker. A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. Trust and confidence were shaken to the core in this market maker as brokerages around the world stopped routing orders through Knight. The same thing will happen to the dollar. At some point countries, companies, and people will stop using it for transactions. Where will you be when that hour strikes? Will you have a hard currency to conduct vital transactions with? Time is getting short. Trust and confidence in the dollar are being vaporized just like the money at M.F.Global was. After 5000 years gold and silver still instill trust and confidence with which to conduct free market transactions. Got physical?
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