Arjay; No I don't think it is a scam. It is a desperation move.
The US Govt debt limit has almost been reached.
It will happen sometime this month it appears.
The republicans are still saying they will not increase the limit.
If the government reaches the limit they will not be able to honour
bonds that reach maturity and will have to stop paying pensions and
government salaries etc.

I just would not know how bad it would be on the world finance but I
cannot see us getting off scot free.
Interest rates would probably rise as borrowing by US govt and companies would be more risky.

http://politicalticker.blogs.cnn.com/2011/04/03/next-battle-in-congress-heats-up/

Bazz this is not happening because of post peak oil world.The Fed is perverting the money supply.The money they created from nothing went to their mates and the derivative market.When that market collapses and everyone tries to get out of US $,the real economy will be flooded with US $ and hyper-inflation begins.

So what we have now is an under supply of currency,and this is why some states look like defaulting.The US Federal Reserve has knocked their economy completely out of kilter.It could eventually mean stagflation,with rising inflation and rising unemployment on a shrinking economy.

Pericles,do you know how much exposure our super funds have to the US bond market?

Interesting theory, Arjay.

>>That's why I'm suggesting using copper and a mixture of other metals because the worker won't have access to that money<<

But it doesn't change the nature of the problem.

Without a fixed exchange rate between [insert metal of your choice here] and the market, all money-substitutes will fail the task that you have set them.

The reason is simple. Neither you nor I, nor the vast majority of folks on this planet, have access to the raw materials. We will always therefore be required to purchase our currency at the exchange price, where we have absolutely no control over the "value" of our money.

And even if you were somehow able to establish a fixed price for gold, silver, copper, tin, pig iron or whatever within your economy, you would instantly be held to ransom by countries who operated a more flexible system.

Think that one through for a moment. If in Australia you only accept metal as legitimate currency, how would we sell our minerals overseas? Say for instance you issued a 10c copper coin weighing around 11grams - that's about the size of our current 20c coin - which reflects the current price of copper at around $4/lb.

But the price of copper has doubled in the last year due to demand. It could easily i) double again or ii) halve in value to its point this time last year.

In the first instance, overseas buyers would buy up every coin in the country and export it themselves, making 100% profit in the process.

The only way around the second circumstance is to completely ignore the intrinsic value of the coin itself, and work only on its "face value".

In which case, guess what?

You have just created another fiat currency.

And as I pointed out before, if you alternatively allow its value to fluctuate with the underlying price of the metal, you are simply another commodities trader.

Which is not the primary job of money in any economy.

Arjay said;
Bazz this is not happening because of post peak oil world.The Fed is perverting the money supply.

Well indirectly it is peak oil because in trying to get the economy
running they have been pumping money into it flat out.
However they are not getting much action as growth has effectively stopped.
There is some growth in some areas and countries, but it is at the
cost of growth in other areas.
If the US congress refuses supply then there will be no Qualitative
Easing 3 known as pixel money.
I think many of the theories put forward by us mortals are probably
all correct and we are facing a very difficult time ahead.
There are probably multiple tensions developing and sooner or not
much later they will all set each other off with a mighty twang !
It will be interesting to see who is most right.

Pericles,Utah may as well create another fiat currency since the present currency is stuffed.Ron Paul said that competing currencies have worked in the past.Our economies are working so much faster now with electronic transactions.Hard currencies like metals will slow it down and thus there will be productivity losses.To me a new fiat currency issued by the Govt would be the best solution.

What the Bank of International Settlements,US Fed,IMF and the UN want,is a Global Fiat Currency which they will own,thus making them a defacto unelected World Govt.This is not on.

You might like to explain this with a little more clarity, Arjay.

>>Utah may as well create another fiat currency since the present currency is stuffed<<

In what manner is it "stuffed"?

Does a dollar not still buy a dollar's worth of soda? I think you may be confusing the currency with the economy - which, by the way, is not stuffed either. Not vibrant, you understand. But not stuffed.

>>Ron Paul said that competing currencies have worked in the past<<

Sure they have. It's called the exchange rate, and is commonly used in transactions between many different currencies.

But why would Ron Paul be advocating State-based competitive currencies? Seems a little odd.