Let's now imagine that in our allegory of the start-up country, the currencies of all western civilization were pegged to the $, based on their faith that the Founders currency had integrity, and was pegged to gold.
Once the gold standard was broken and the reserve currency of western civilization lost its integrity and came unmoored, this would cause all currencies of the world to come unmoored and float away.
This is our present era of **free floating fiat currencies.
As the printing press of the reserve currency whirred and monetary levels were arbitrarily expanded and contracted, the entire pricing system of the world would detach from reality, as collaborating and competing central banks around the world competed and colluded for dominance, and rich people and countries fabricated money to buy things from poor people and countries.
The poor and the poor countries would be forced to accept the dominant reserve currencies to pay for oil and debt, while if the poor and poor countries attempted to run their own printing presses, they would be laughed off into hyperinflation and default, and have their assets seized.
Profligate, arrogant, and rich countries would begin imposing "austerity" upon the poor countries, fueling rising discontent from resentful citizens who did not consent to economic slavery, or agree to play the corrupted game.
Forward to 2.23 Hard Default and Soft Default
Back to 2.21 The Government Printing Press
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