Fiat Currency Always Fails

[chennan]

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....

Exactly... I'm so tired of being told by friends and family members saying that cryptocurrencies are obviously some sort of scam and will eventually be "hacked" or something else stupid like that when not understanding the fundamental properities of Bitcoin or "blockchain" in general.  Yet, they are so quick to defend the system that we are currently using when not even knowing why or better yet how the federal reserve works the way it does, because no one really does...

I mean, it's literally like 10-12 old white people in suits single handedly controlling the nations money supply... what could go wrong?

[bixbem90]

Have a lot of factors affect to Fiat Currency, not at all case fiat fail, but if your country economics not strong - your currency will cope up with flation, so everybody think they fails, they only talk about hyperinflation - don't talk what the reason make this situation. As for me currency is number which present for how asset we own .

[nur rochid]

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.

but it seem to fiat currency printing should have a basis, and can not print as desired, because eventually there will be inflation. but for the long term i think fiat money making prices are not appropriate

[Baoo]

Very interesting informative ( Article ) and for me, the era of FIAT will end and disappear after a  few years, As well,  with the  presence of bitcoin, it has led to a decrease in  the value of FIAT ( Euro , Dollars ..) and however, due to the decline in the value of gold/silver  , there have been some  economic losses.
On the other hand, the financial transaction ( crypto)  through the internet and it  has become a great value in this period, and has many advantages like (Some facilities,  low fees..) , that's why  many people are using digital currency instead of FIAT .
 

[Mpamaegbu]

There was global financial meltdown in 2008. The US was severely hit and the company I worked for then collapsed as management couldn't raise enough dollar to pay its staff back home in Africa. That experience makes me always laugh whenever I read fear and panic into people's posts here once there is a dip in bitcoin price level. I have come to realise (within my few years on earth) that anything used as means of payment once in a while gets to crash and lose value. The dollar, euro or bitcoin isn't exempted from this.

[amishmanish]

The Central banks made a laughing stock of themselves post the 2008 meltdown. Revelations regarding the nexus between mortgage companies, insurers, investment banks and the regulator should be enough for anyone to never dare to trust them anymore.

What the article says may very well be true. Their is a resurgent China which is making things difficult for US and other Western countries. The US/ West cannot cut down on their expenses without risking the scenario of a Russia/ China dominance or being seen as weak in the wake of of Jihadist terrorism. This brings us to a situation where they need to print more and spend more. This is very similar to the examples given in the article.

If this does happen, it'll be a painful and long process. In today's connected world, we don't want this to happen. If a decision has to be taken on replacing the reserve currency, can it be taken without hurting world stability? I don't think it's possible for such a thing to happen in a non-violent, prudent decision kind of way.

[mu_enrico]

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.

Imo it's just the natural progression of humanity sir.
In the past we still can use gold/silver or paper money backed by gold because the money can still keep up with the demand (or mainly because population).
And when money cannot keep up, it became fiat to make sure people still can get enough money even when its intrinsic value decreased.
This is to prevent chaos and ensure order.
Surely fiat currency will eventually fail, but i don't see any solution for that issue.. maybe cryptocurrency?

[gantez]

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.

The advantage of electronic money is the major reason that bitcoin and digital currency have not been dismissed or jettison. The usage of electronic money helps in the understanding, usage and near adoption of cryptocurrency. It would have been a total failure if there was nothing like electronic money in the first place. This is why we still hear of bitcoin and altcoins, otherwise, it would have been long forgotten to the anals of history.

[MAJICOIN]

It is also important in our country that now the economy is moving through fiat money and the paper money is available all the time and it is true that fiat will not always but just like currencies market some time a great pressure arise from some forces due to which the prices become down and fiat is normally going on and for us the bitcoin is the crypto investment opportunity and hope full that future will more shine than now.

[chennan]

The Central banks made a laughing stock of themselves post the 2008 meltdown. Revelations regarding the nexus between mortgage companies, insurers, investment banks and the regulator should be enough for anyone to never dare to trust them anymore.

What the article says may very well be true. Their is a resurgent China which is making things difficult for US and other Western countries. The US/ West cannot cut down on their expenses without risking the scenario of a Russia/ China dominance or being seen as weak in the wake of of Jihadist terrorism. This brings us to a situation where they need to print more and spend more. This is very similar to the examples given in the article.

If this does happen, it'll be a painful and long process. In today's connected world, we don't want this to happen. If a decision has to be taken on replacing the reserve currency, can it be taken without hurting world stability? I don't think it's possible for such a thing to happen in a non-violent, prudent decision kind of way.

The Central Banks never necessarily caused the housing market crisis, but rather it was the "too big to fail" banks that did.  They lended out money like crazy in "subprime mortgages" that were pretty much guaranteed to fail, but the banks wanted to sell as many as they could and irresponsibly make people enclosed in debt with no end in sight.

Sure, Central Banks do other irresponsible stuff, but that has to do more with the money supply, not necessarily loans to everyday normal people.

What was the embarrassing part was the reaction the government had and bailed out the greedy CEO fucks at the "too big to fail" banks because they deemed them too crucial to the economy to let them fail... "free markets" my ass.

[chennan]

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.

The advantage of electronic money is the major reason that bitcoin and digital currency have not been dismissed or jettison. The usage of electronic money helps in the understanding, usage and near adoption of cryptocurrency. It would have been a total failure if there was nothing like electronic money in the first place. This is why we still hear of bitcoin and altcoins, otherwise, it would have been long forgotten to the anals of history.

You using your debit card and transferring money for beer to a friend using Venmo isn't the same the same as "digital cash" though..  For one thing you have to trust a third party to be able to verify your funds.  Using cash you can verify someone paid you and that you have the money by looking down in your hand and seeing that you are physically holding cash. 

The great part about Bitcoin is that it has both the benefits of being digital and also having no third party needed to verify that you are holding cash in your "wallet".

[amishmanish]

The Central banks made a laughing stock of themselves post the 2008 meltdown. Revelations regarding the nexus between mortgage companies, insurers, investment banks and the regulator should be enough for anyone to never dare to trust them anymore.

What the article says may very well be true. Their is a resurgent China which is making things difficult for US and other Western countries. The US/ West cannot cut down on their expenses without risking the scenario of a Russia/ China dominance or being seen as weak in the wake of of Jihadist terrorism. This brings us to a situation where they need to print more and spend more. This is very similar to the examples given in the article.

If this does happen, it'll be a painful and long process. In today's connected world, we don't want this to happen. If a decision has to be taken on replacing the reserve currency, can it be taken without hurting world stability? I don't think it's possible for such a thing to happen in a non-violent, prudent decision kind of way.

The Central Banks never necessarily caused the housing market crisis, but rather it was the "too big to fail" banks that did.  They lended out money like crazy in "subprime mortgages" that were pretty much guaranteed to fail, but the banks wanted to sell as many as they could and irresponsibly make people enclosed in debt with no end in sight.

Sure, Central Banks do other irresponsible stuff, but that has to do more with the money supply, not necessarily loans to everyday normal people.

What was the embarrassing part was the reaction the government had and bailed out the greedy CEO fucks at the "too big to fail" banks because they deemed them too crucial to the economy to let them fail... "free markets" my ass.

You're right about the "too big to fail" banks. I feel the central bank was complicit in this because they are supposed to be the regulator right?

The bubble that was forming due to all those mortgage derivative bonds couldn't have escaped the attention of the regulator/ watchdogs. They just chose to look the other way while credit rating agencies stamped them as AAA. Though most reports absolve them of all blame, pointing on the lack of focussed oversight, it still is hard/ naive to believe that the officials involved were completely clueless. There is a good documentary by Michael Moore on this.

And absolutely yes, the bail-outs for all these millionaire CEOs and the increase in their payouts was just a "Fuck You" to the common people I guess.

[magneto]

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.

We're living in weird times indeed. Probably the first time in history that the entire world is completely off the gold or silver standard or any form of "real money" and fiat currency is the norm everywhere.

Fiat currency has never survived, because it is issued by some central entity. If that central entity decides to abuse its powers to finance something by inflating the monetary supply, or if that central entity just completely collapses, the paper would be completely worthless. Intrinsically, it's worth nothing.

You'd be naive to think that this stability stemming from a debt based fiat system can last long. That's the main reason why I invest in bitcoin as well, as a hedge against fiat currencies. People don't realise it now because they think fiat holds intrinsic value, but in reality, fiat always loses value in the long run, and goes to 0. Even promissory notes that promise to pay you something can be abused through fractional reserve, unless bitcoin, which cannot.

[carter34]

I believe there are highs and lows for most things , human and currency inclusive. Currencies of the world falls from time. So when cryptocurrency or bitcoin falls in price, I don't panic, I just know it is going to regain.

[TYPEcoin]

I think that a long as fiat still serves of exchange it will be usual need to people today and therefore it will have functions as an asset to all of us.

[chennan]

The Central banks made a laughing stock of themselves post the 2008 meltdown. Revelations regarding the nexus between mortgage companies, insurers, investment banks and the regulator should be enough for anyone to never dare to trust them anymore.

What the article says may very well be true. Their is a resurgent China which is making things difficult for US and other Western countries. The US/ West cannot cut down on their expenses without risking the scenario of a Russia/ China dominance or being seen as weak in the wake of of Jihadist terrorism. This brings us to a situation where they need to print more and spend more. This is very similar to the examples given in the article.

If this does happen, it'll be a painful and long process. In today's connected world, we don't want this to happen. If a decision has to be taken on replacing the reserve currency, can it be taken without hurting world stability? I don't think it's possible for such a thing to happen in a non-violent, prudent decision kind of way.

The Central Banks never necessarily caused the housing market crisis, but rather it was the "too big to fail" banks that did.  They lended out money like crazy in "subprime mortgages" that were pretty much guaranteed to fail, but the banks wanted to sell as many as they could and irresponsibly make people enclosed in debt with no end in sight.

Sure, Central Banks do other irresponsible stuff, but that has to do more with the money supply, not necessarily loans to everyday normal people.

What was the embarrassing part was the reaction the government had and bailed out the greedy CEO fucks at the "too big to fail" banks because they deemed them too crucial to the economy to let them fail... "free markets" my ass.

You're right about the "too big to fail" banks. I feel the central bank was complicit in this because they are supposed to be the regulator right?

The bubble that was forming due to all those mortgage derivative bonds couldn't have escaped the attention of the regulator/ watchdogs. They just chose to look the other way while credit rating agencies stamped them as AAA. Though most reports absolve them of all blame, pointing on the lack of focussed oversight, it still is hard/ naive to believe that the officials involved were completely clueless. There is a good documentary by Michael Moore on this.

And absolutely yes, the bail-outs for all these millionaire CEOs and the increase in their payouts was just a "Fuck You" to the common people I guess.

Oh yeah, I'm pretty sure there are ways you can pass the blame around to all banking and even governmental entities about what happened during 2008, but it just kills me that the actual people who decided to make those terrible business decisions, whether it was morally right or wrong, wasn't allowed to fail as a business due to those bad decisions.  I can't stand when we boast that we are a free capitalistic society that allows freedom to achieve whatever we want when we don't allow businesses who bad deals are allowed to be saved and the same CEO's remain on top for the "good of the people".

[Harper6]

I think that a long as fiat still serves of exchange it will be usual need to people today and therefore it will have functions as an asset to all of us.

Fiat currency does not always fail. I disagree with you in this regard. Fiat currency is actually the backbone of the current market system and every country around the world has printed a huge amount of fiat currency or paper money backed by gold. Only the inflation in general and hyperinflation in particular in Venezuela in the last years pose a threat to the demand of the paper currency.

[kamilah147]

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 name of the times change is always changing. because the leadership of a country is also changing, and they have their own thinking.

[BobK71]

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.

To be honest, I don't predict hyperinflation...  That tends to happen to countries that have been pushed to the brink by the global imperial elites, because the elites want to make an example of a rebelling government, in the case of today's Venezuela, or because they wanted to suppress a non-friendly rising power, in the case of 1920s Germany.

What tends to happen in the West, when the system fails, is a more orderly surrender to reality by the elites.  There's usually a (de-facto) devaluation of state-issued money against non-state money like gold (and now probably Bitcoin as well.)  Some inflation will be part of the mix, but nowhere near the craziness of hyperinflation.

The elites have to make the retreat orderly, in order to maintain what remains of trust in their money system.

Either way, everyone should hold a portion of their savings in non-state money.

[Bitcoinjheta]

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.

To be honest, I don't predict hyperinflation...  That tends to happen to countries that have been pushed to the brink by the global imperial elites, because the elites want to make an example of a rebelling government, in the case of today's Venezuela, or because they wanted to suppress a non-friendly rising power, in the case of 1920s Germany.

What tends to happen in the West, when the system fails, is a more orderly surrender to reality by the elites.  There's usually a (de-facto) devaluation of state-issued money against non-state money like gold (and now probably Bitcoin as well.)  Some inflation will be part of the mix, but nowhere near the craziness of hyperinflation.

The elites have to make the retreat orderly, in order to maintain what remains of trust in their money system.

Either way, everyone should hold a portion of their savings in non-state money.

In my country fiat does not always fail infact it is the backbone of our survival though it is not always at its highest value all the time and will not pump up as high as bitcoin which double or triple or more in a short span of time. Digital money is now very common especially to elite people but to us ordinary citizens fiat is our main currency. However, having cryptocurrency like bitcoin helped us surpassed from being ordinary.