Fiat Currency Always Fails

[BobK71]

See:

There Is No Escaping History.  Fiat Currency Eventually Fails.

Notice that this is a critique of fiat money -- not a critique of state-issued money under a gold/silver or other standard.  Fiat money is a rare occurrence in modern history.  (We live in strange times!)  As we can see, the examples found by the author are a small number of short periods here and there.

I have my own critique of gold/silver standards, but that's another issue.

[Barbarian]

See:

There Is No Escaping History.  Fiat Currency Eventually Fails.

Notice that this is a critique of fiat money -- not a critique of state-issued money under a gold/silver or other standard.  Fiat money is a rare occurrence in modern history.  (We live in strange times!)  As we can see, the examples found by the author are a small number of short periods here and there.

I have my own critique of gold/silver standards, but that's another issue.

The problem is that now all the money issued by countries is fiat after the United States went out of the gold standard in 1971 which means that if the main fiat currency around the world the dollar were to collapse that could in theory collapse the entire economy of the world.

[aoluain]

Very interesting article and by the sounds of things we may be heading for
some trouble id the US keeps the printing presses moving.

I dont know enough of economics but these recent 'trade war' rumours
could have an effect on the world economy.

What will be the result of over printing the $ and a trade war be?

[MoonIsBlue]

Very interesting article and by the sounds of things we may be heading for
some trouble id the US keeps the printing presses moving.

I dont know enough of economics but these recent 'trade war' rumours
could have an effect on the world economy.

What will be the result of over printing the $ and a trade war be?

Hyperinflation, you'd get a venezualian situation or post WW1 Germany. Its food stamps and no jobs when that happens. But in context of Bitcoin, will likely do very fucking well.

[marinomario]

In my opinion As long as fiat money still serves as a medium of exchange, it will always be needed by the people of today and therefore it will always have a function as an asset to all of us. although the best value-keeping asset is gold but even though gold is quite liquid, it is no longer money that serves as an intermediary.

[MakeMoneyBtc]

I agree that this whole stuff withis paper money is complicated since there can be printed unlimited paper's of money and eventually it will become worthless same as the articles shows what happened with silver and iron coins. I think something digital is going to replace paper money and that is going to happen very soon from my opinion, probably in until 2050 paper money should be replaced. It is going toto be a very complicated process since there are so much paper money in the whole world but I think slowly people are going to get used with it because that is the future. Everything progresses in time, cars,technology,medicine and the same thing will happen with paper money, at a certain moment they will disappear

[leonair]

"Paper money eventually returns to its intrinsic value: zero" -Voltaire

Maybe Voltaire was right in a sense, but as I see if we relate it with the Cryptocurrencies itself that currently backed by a dollar market capitalization it's hard to believe that it would return to nothing nonetheless something we don't expect will occur in the future that will make it useless. IMO this eventually may happen if there would be an another World War as the modern technologies will surely wipe out the existence of mankind and when that time comes those survivors will all be nature dependent and the value of each FIAT money will be 'zero'.

[Hydrogen]

That is a great read. Exactly the type of publicity and information crypto currencies need publicized in order to justify their value. I hope that piece counts as zerohedge publishing a pro crypto article, as their reputation for being anti-crypto has always appeared most undeserved to me. I've always liked ZH as one of the few financial and economics commentaries with something resembling an independent and reliable slant to its content.

Great history lesson there. I never realized the history of fiat currencies was so shady. I knew about zimbabwe and germany's hyperinflationary issues but had no clue there was a history and strong precedent for printed money being prone towards that end result. There is an error there about the federal reserve being "government controlled" it is in fact owned and controlled by the private sector, probably by bankers.

Other than that, it is possible that everything in that article should be standard curriculum taught in classrooms but is being repressed or censored to some degree. Its difficult to prevent history from repeating itself, when people remain unaware of historical precedents.

[Markyway88]

See:

There Is No Escaping History.  Fiat Currency Eventually Fails.

Notice that this is a critique of fiat money -- not a critique of state-issued money under a gold/silver or other standard.  Fiat money is a rare occurrence in modern history.  (We live in strange times!)  As we can see, the examples found by the author are a small number of short periods here and there.

I have my own critique of gold/silver standards, but that's another issue.

The article stated that fiat currency always decrease everytime. Maybe in a couple of decades or in a century. The value of money depends upon the gold and it is a fact that countries all over the world is backed up by dollar in order for their currency to have value. Since we have a scarce resources in gold, paper money will also lessen its value time by time.
I don't what will be the next if fiat currency will totally lose its value and weaken the economy but probably, it will lead im hyperinflation where the value of fiat becomes null.

[vit05]

Bitcoin is not competing with paper money. But with money controlled by central banks. This is the main discussion that can end Bitcoin or make it the main means of store of value or for monetary exchanges. Governments may decide to end paper money, but keep as the only accepted currency in a country for government negotiations, tax and fines payments, digital money. Bitcoin is more them any kind of digital money.

[Kumic]

I mean let's face it, it's easier to handle money electronically than with papers in the hand. And if we compare fiat on the bank account and the blockchain money guesses who have the advantage...well not quite yet, but the potential for the blockchain is huge.

[BobK71]

The problem is that now all the money issued by countries is fiat after the United States went out of the gold standard in 1971 which means that if the main fiat currency around the world the dollar were to collapse that could in theory collapse the entire economy of the world.

Yes, most currencies are explicitly, softly, and/or unofficially pegged to the dollar.  This is because the world system ensures (in effect) that every financial system is weaker than the US system.  (And yes, that includes the euro!)  The pegging is done by by non-US elites because it helps create confidence in the currencies they issue.

But, when the dollar is in real trouble, there is no inherent reason why these currencies can't stand on their own, if their countries can keep inflation in check.

Another thing to remember is that currency collapse is not the same as economic collapse.  The 1923 Weimar hyperinflation completely destroyed the German currency, but the economy was back to normal as soon as a new stable currency was issued before 1924.  Yes, there were big winners and losers, and it was not good, especially to those who kept believing in the paper money and kept most of their savings in it, and were too old to work after the stabilization, but it was not the end of the world for the economy or the country as a whole.  (Hitler's rise came only later, after 1931, during the Great Depression, which was a deflationary problem.)

[Qahay]

The Fiat dollar has little inflation, only a couple of percent per year. Cryptocurrency for the year may show inflation 50-90%. Because they're not secured by anything other than the dollar.

[vaughn125]

See:

There Is No Escaping History.  Fiat Currency Eventually Fails.

Notice that this is a critique of fiat money -- not a critique of state-issued money under a gold/silver or other standard.  Fiat money is a rare occurrence in modern history.  (We live in strange times!)  As we can see, the examples found by the author are a small number of short periods here and there.

I have my own critique of gold/silver standards, but that's another issue.

Hmm.. Pretty interesting article you have here man, would be hard to admit for some but what this article says is somewhat true in a sense. Clearly, the past has already spoken a lot about fiat and how it can become through the years. Honestly, this has happened so many times that it is actually pretty scary. But still, we humans have the greatest power in the world which is to learn and improve, and in this case, after all the same mistakes, I think by now there would be enough knowledge to prevent this from happening again. If not, then I really think that we should find other ways.

[waqasniaz007]

At one time, our money was backed by the tangible value of gold or other precious metals, legal tender for anything of equal value.That is not the case any longer. The value of a dollar bill these days is what the government says it is. This arbitrary value is dependent on the whim of the government. And the government can print money like a copy machine run amok. There are no limits to how much money can be put into circulation. That is because this money isn’t backed by any real value

[BobK71]

Very interesting article and by the sounds of things we may be heading for
What will be the result of over printing the $ and a trade war be?

We're speaking of long-term issues here, so the trade war, or even the Fed's 'quantitative easing' are uncertain as to their effects.

The main long-term issue is that, all the incentives are for the elites to maximize the printing of money, and it eventually destroys or at least devalues their money.

[NeuroticFish]

At one time, our money was backed by the tangible value of gold or other precious metals, legal tender for anything of equal value.That is not the case any longer. The value of a dollar bill these days is what the government says it is. This arbitrary value is dependent on the whim of the government. And the government can print money like a copy machine run amok. There are no limits to how much money can be put into circulation. That is because this money isn’t backed by any real value

And even having inflationary national currencies, even having the central banks printing money with not much background, we still "need" a crash now and then to equalize the markets. And this is the system that is considered good, working and established, while they call crypto a scam and a bubble.
Yep, the world is upside down....

[breathlessz]

In my opinion As long as fiat money still serves as a medium of exchange, it will always be needed by the people of today and therefore it will always have a function as an asset to all of us. although the best value-keeping asset is gold but even though gold is quite liquid, it is no longer money that serves as an intermediary.

if the fiat currency better for transaction tool, while gold is better for investment and not suitable for transactions. fiat currency the longer the inflation value the higher so it is only suitable for transact meet the needs of everyday life

[beej]

The Fiat dollar has little inflation, only a couple of percent per year. Cryptocurrency for the year may show inflation 50-90%. Because they're not secured by anything other than the dollar.

I don't know that much but this thread does have some solid ground. Fiat does have an impending
tendency to fail and deflate and all commodities suffer because of it. It's different in crypto, deflation
is quite expected since dips do open up opportunities in an unlikely manner. In some nations when
dollars increase it's greatly affects the products locally and internationally. It's complicated indeed
and when you try to find answers, you will be buried with stacks of rhetorical words and terms. The
US dollar is quite influential in some nations, as well as with crypto. Fiat may be failing in many ways
but it is still a necessity in the economy. If it's falling, we are in a world of trouble after all.

[chennan]

Very interesting article and by the sounds of things we may be heading for
some trouble id the US keeps the printing presses moving.

I dont know enough of economics but these recent 'trade war' rumours
could have an effect on the world economy.

What will be the result of over printing the $ and a trade war be?

Hyperinflation, you'd get a venezualian situation or post WW1 Germany. Its food stamps and no jobs when that happens. But in context of Bitcoin, will likely do very fucking well.

I understand about the result of hyperinflation with the overprinting of money, but how would a trade war spur hyperinflation too?  Is it because of the fact that you have more goods staying in the nation and not enough goods being sold on top of the over printing of money?  Is there something else that I'm not really thinking of here?