Courtesy of Hugo Salinas Price @ Plata:
All the currencies of the world today are derivatives of the dollar, including the Russian Ruble and the Chinese Yuan, and even the miserable currencies of Venezuela and Argentina. As long as they can be used to purchase dollars, either officially or through the black market, they will continue in circulation.
The Mexican Peso circulates and has value, because Mexicans have always been able to purchase dollars with pesos (except for a few days during the “Mexdollar” crisis of the early ‘80s). The price of the dollar in pesos has varied, but at any rate it has (almost) always been possible to obtain dollars in exchange for pesos.
If the new Islamic State “ISIS” should wish to have its own currency, it would have to be possible for its currency to acquire dollars, either directly or through some other currencies. (Just by the way, a 1/10 ounce silver coin would be the equivalent of the dirham, prescribed as money by Islam, and its value would not depend on the dollar or any derivative of the dollar. Maybe someone else will tell “ISIS” about this; I do not want to get mixed up with these people.)
Even in the case of a fiat currency to be used exclusively within national borders, with no plan for commercial purposes outside of its own zone, such a currency would have to be issued with a value that could not be other than an external reference either to the dollar, or to some currency derived from the dollar, which would amount to the same thing. A fiat currency cannot be born out of nothing; it has to have a “parent” and in our times, that parent must be, in the last analysis, the fiat dollar.
The same principle prevails in the case of the dollar.
The existence of fiat currencies depends on their ability to acquire dollars. In the case of the fiat dollar, the dollar will continue to exist as long as dollars can be used to acquire gold. Continue reading