ive noticed a trend, ever since countries went off the gold standard and start basing there currency on there countries GDP they started facing inflation, debt and other economic problems. hell even the US is facing a major debt crisis.
Sadly the going off the gold standard isn't the reason everyone has financial woes. It certantly could have prevented it as it would have limited spending.
The main reason everyone is having problems is poor fiscal policy. (IE Spending money you don't have)
The economies of the major countries are purely based on belief. The more people believe in your currency the more your currency is worth. What happened in these cases, because money is an abstract idea there are many methods to take advantage of peoples conviction in the power of their currency. So its easy to make a fortune out of thin air.
However while in small amounts these techniques don't have a wide spread effect, it became standard policy at many financial institutions.
So naturally eventually someone questioned what was being done in the financial market. And since it was a standard practice most of the people performing the action didn't really understand what they were doing. Once they did figure it out there was a bit of a O crap moment.
And poof people's conviction in the market and world currencies plummeted and now many places are facing economic collapse.
This is a nice video that sums it all up pretty well
The Crisis of Credit Visualized - HD
