It seems like a new banking system backed by something tangible again like how it was in the 1800's and prior would be a good move but would those of us in debt still be in debt to the banks? If not, how would our debts magically be absolved?
Example, say you owe money on your car and you have a ton of outstanding debt to a bank or credit lender. How exactly does implementing a new system of banking nullify this? Can't the bank still say "Since the USD is defunct, now you owe us the "New US Treasury Certificate" equivalent of that amount"?
I just can't quite put 2 and 2 together how the new currency would be debt free without older debts being absolved first.
Well typically the contract signed with the lender is pretty crystal clear and can be used in a court of law, but I don't know how detailed it is or if there's a "Customer only agreed to pay back loan in USD, but we didn't account for the USD going defunct" type of loophole that lets the customer off the hook. But then that would screw over the bank.
OK the old money would be practically worthless so with one doller of new money you could buy 10k of the old money, or something like that.
Problem solved.
If they come out with a new currency, you can bet your ass, they have a plan.
Ahh okay, that clears things up. Hopefully this happens but I won't get my hopes up.
It looks to be the easiest way to handle it.
Another way to explain it is the bank borrowed the money from the fed on the first place. So if the dollar is wiped out and your debt is wiped out, then the banks debt it the fed is wiped out to. The bank doesn’t get to collect anything because they no longer have a debt the needs collecting.
But if the source of the money was fraudulent then fraud vitiates a contract?
This is one of those areas where lawyers like to come in and muddy the waters. Here is the basic principle. Someone was buying a house. They had to take out a loan from a bank to afford it. The seller agrees to the amount of money. The bank gives them the money, you agree to pay the bank. It doesn't matter what was exchanged, dollars, seashells, glass marbles. You and the seller agreed to an exchange. The medium of exchange was provided by the bank. There is no fraud. If anything, the seller is the one victimized, not the buyer. You have a house. What does the seller have? They have what the bank gave them (which the seller agreed to). There is no fraud, not effectively. If you sign a contract, you have to fulfill the contract. If the dollar goes to crap in value, you can pay off the debt on the bank loan in the worthless dollars. That satisfies the contract. If we need wheelbarrows of USD to buy a loaf of bread, then you can take that same wheelbarrow down to the bank and pay off your loan. This has actually happened in other countries. I think it has happened to Mexico, three times in my own lifetime.