Fiat Currency Always Fails

[Hell-raiser]

most people misjudge the example: in our midst, people mistakenly believe that a country's paper money is issued by the government. whereas paper money, as well as coins that are associated with it - and bytes in the computer he created - are issued by the central bank. Most central banks are private companies, privately owned by a group of bankers. more than that, most of the money circulating in the community is no longer in the form of 'physical money' (currency, paper and coins)

Central banks are no more private that governments themselves. They ARE part of the government, or rather ruling elites and establishment. Indeed, such a government may be foreign to a country of the central bank's residence (read the central bank in question may be de facto governed from abroad), but this doesn't take anything from the fact that both the government and the central bank are an integral part of the establishment. To put it differently, it doesn't make sense to distinguish between them in terms of people and elites who are behind them and have real control over them. These are the same people, bankers or whoever, private or otherwise.

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[Moblie_Legend]

most people misjudge the example: in our midst, people mistakenly believe that a country's paper money is issued by the government. whereas paper money, as well as coins that are associated with it - and bytes in the computer he created - are issued by the central bank. Most central banks are private companies, privately owned by a group of bankers. more than that, most of the money circulating in the community is no longer in the form of 'physical money' (currency, paper and coins)

Central banks are no more private that governments themselves. They ARE part of the government, or rather ruling elites and establishment. Indeed, such a government may be foreign to a country of the central bank's residence (read the central bank in question may be de facto governed from abroad), but this doesn't take anything from the fact that both the government and the central bank are an integral part of the establishment. To put it differently, it doesn't make sense to distinguish between them in terms of people and elites who are behind them and have real control over them. These are the same people, bankers or whoever, private or otherwise.

As a business risk, fiat money cannot be ignored. What matters is how can this money later act as a medium of exchange for an item, even though it does not have an asset guarantee? This problem then invites thought from market brokers around the world. Please note that money is usually used as a medium of exchange when it has a "Exchange Rate Standard" recognized by the market. As with the history of the previous money that made salt as a medium of exchange, it must have exchange rate standards. In addition, money must also have a nominal value that can be guaranteed

[laracastvue]

In my opinion if dollar should fail, I don't think other currencies will follow or the entire world will be in a bad economic state.  Given that the reason will be the fall of dollar only. There are other countries which I think is sufficient enough to stand in their own and might not be affected should it happen. Yet resources and the entire economy should be stable if all countries will work together. 

No, every cryptocurrency are going to fall if bitcoins will drop its value, that is the reason why you should always take advantage of the market invest a huge amount when the market prices are dropping.

[farosa]

I think these are people's own mistake. They talk about money and paper money there, and if there were digital money instead of them, it would be the same result. The using of digital money will not guarantee that economic problems will not happen in the future.

[Hell-raiser]

most people misjudge the example: in our midst, people mistakenly believe that a country's paper money is issued by the government. whereas paper money, as well as coins that are associated with it - and bytes in the computer he created - are issued by the central bank. Most central banks are private companies, privately owned by a group of bankers. more than that, most of the money circulating in the community is no longer in the form of 'physical money' (currency, paper and coins)

Central banks are no more private that governments themselves. They ARE part of the government, or rather ruling elites and establishment. Indeed, such a government may be foreign to a country of the central bank's residence (read the central bank in question may be de facto governed from abroad), but this doesn't take anything from the fact that both the government and the central bank are an integral part of the establishment. To put it differently, it doesn't make sense to distinguish between them in terms of people and elites who are behind them and have real control over them. These are the same people, bankers or whoever, private or otherwise.

As a business risk, fiat money cannot be ignored. What matters is how can this money later act as a medium of exchange for an item, even though it does not have an asset guarantee? This problem then invites thought from market brokers around the world. Please note that money is usually used as a medium of exchange when it has a "Exchange Rate Standard" recognized by the market. As with the history of the previous money that made salt as a medium of exchange, it must have exchange rate standards. In addition, money must also have a nominal value that can be guaranteed

Honestly, I don't quite understand what you want to say in your post. What do you mean by money "having exchange rate standards" and "not having an asset guarantee"? Do you refer to gold or silver backing of a paper currency? It doesn't work simply because gold (silver) doesn't have absolute value or just constant value. The same is equally true in respect to any asset out there. In fact, nothing has absolute (constant) value which would remain the same in any frame of reference (coordinate system) or over any significant amount of time, so the emergence of fiat money which is not backed up by anything is completely justifiable and totally acceptable.

Strictly speaking, money based on or backed up by time makes perfect sense (see In Time movie), but we are far from that.

[fauzan Ichsan]

I think these are people's own mistake. They talk about money and paper money there, and if there were digital money instead of them, it would be the same result. The using of digital money will not guarantee that economic problems will not happen in the future.

i think that both of them have their strengths and weaknesses. of course if later the digital currency is used, it will certainly have its drawbacks. but i think the digital currency has advantages for the modern era

[Tukang Becak]

The presence of bitcoin is a good thing for the future of the currency system, with bitcoin then we can transact faster and easily so I hope bitcoin will soon become an international currency.

[zubrr51]

The Fiat currency is an imperfect financial model, which is already obsolete. You should pay more attention to digital currencies.

[eyesninja21]

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.

Any particular fiat currency can fail, and there is a long track record of failure, but fiat currency as a concept is actually just fine, and in fact the most useful way to sort out trade, because it is simply too inefficient to go back to a pure bartering system. On the other hand, technology is deflationary, the cost of goods and services goes down with respect to the total amount of money in the system.

Countries got out of the depression in the exact order in which they left the gold standard. A growing economy needs an ever growing stock of money for transactions.

[Hell-raiser]

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.

Any particular fiat currency can fail, and there is a long track record of failure, but fiat currency as a concept is actually just fine, and in fact the most useful way to sort out trade, because it is simply too inefficient to go back to a pure bartering system. On the other hand, technology is deflationary, the cost of goods and services goes down with respect to the total amount of money in the system.

Countries got out of the depression in the exact order in which they left the gold standard. A growing economy needs an ever growing stock of money for transactions.

Yes, this is how matters stand with fiat vs. so-called hard currencies backed up by gold, silver, or any other tangible asset. But it is hard for many or even most people to understand that as they see the value of their money being constantly eaten away by inflation. In the majority of countries around the world annual inflation is two digits anyway, and in some like Venezuela it is outright ruinous. But it is not the fault of fiat money conceptually, it is rather the failure of the government that runs that currency. It is like a potent drug which can save your life but it can also lead to devastating consequences if misused or abused.

[SpringfieldM1A]

Some of you guys in this forum are full-time dumbos. So you think that when dollar falls that means that it is over for the whole world and that Bitcoin and other crypto currencies will come and take over ? Sounds like something only a dumb person would say. How can you be thinking that? Whenever dollar falls, the value of Yen and Euro will appreciate. Bitcoin is not a real currency, it’s just like something else made to be on its own and when you’re using it you’re in complete control of your money and not the government being in control.

Well, I agree and disagree with you on that point at the same time, about Bitcoin not being a real currency. I agree that at the moment Bitcoin can hardly be considered a genuine currency on purely practical reasons. You can't buy things with it directly, that means Bitcoin doesn't circulate but this is what the term itself (currency) stands for. On the other hand, there is nothing which would prevent Bitcoin from becoming a currency, there is nothing in it inherently which would not allow it to become one. It may not be a very good currency overall due to its deflationary nature (and a few other issues), but this is a completely different story.

Nothing at all will make bitcoin stop from being a currency as long as its real life usage starts becoming more pronounced.
On the issue of fiat failing, I would not say it totally does, but we all know how much fiat has been weakened several times and still keep getting weak due to all the manipulations and controls by the government,  which at a point, I seriously hope it does not end up imploding. That will be too much to assume anyway but in this case we are not just talking about USD, but fiats in general.

[ylnar123]

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 you shared explains only paper money which is in history was not backed by gold that's why it fails. In recent generation of currencies, Fiat is a strong testament that a countries economy is growing or falling.

[yanesna3]

The presence of bitcoin is a good thing for the future of the currency system, with bitcoin then we can transact faster and easily so I hope bitcoin will soon become an international currency.

I love Bitcoin and I believe that it can become an international currency but I am also sure we will never get rid of fiat. The traditional money is very convenient no Internet is needed.

[patrickj]

The ramifications of the occurrence in the money depreciated state he needs to pay more for items and administrations from abroad, though abroad individuals will be more items and administrations from nations debased in their monetary standards. This is a genuine shamefulness, on account of the failure of the legislature to keep up the estimation of its cash, because of the utilization of fiat cash.

[Impulseboy]

Although I agree that fiat currency always fails, it will still continue to exist. Somehow, fiat is a bit like bitcoin in the sense that the exchange rate goes up and down quite frequently. Plus I do not think that there is and should be a competition between fiat and cryptocurrency, right?

[BTCeminjas]

Fiat currencies are considered far more stable than commodity-backed currencies. That's because the value of a commodity is based on its stability, and its price will tend to fluctuate based on its physical reserves. It has a high risk of eventually becoming devalued and worthless as a result of economical inflation. A fiat currency system comes into existence as a result of excessive debt and the resulting hyperinflation.

[IGP50]

I like both fiat currencies and cryptocurrencies. The rise and fall of either fiat and bitcoin are nothing to go away from. I see it to be a same level currencies though fiat is known to fail. I don't dispute that fact.

[Noelnada]

I think fiat and cryptocurencies have more in common than we generally assume because they both rely exclusively on trust and the law of offer and demand. That said fiat are also indirectly backed by networks of banks and central banks and many other institutions yes. What I like  the most in crypto is the transparency of the rules (codes) and the endless possibilities in the real of smart economies and digital scapes.

[Hana10]

Very nice Smiley

[Hell-raiser]

Some of you guys in this forum are full-time dumbos. So you think that when dollar falls that means that it is over for the whole world and that Bitcoin and other crypto currencies will come and take over ? Sounds like something only a dumb person would say. How can you be thinking that? Whenever dollar falls, the value of Yen and Euro will appreciate. Bitcoin is not a real currency, it’s just like something else made to be on its own and when you’re using it you’re in complete control of your money and not the government being in control.

Well, I agree and disagree with you on that point at the same time, about Bitcoin not being a real currency. I agree that at the moment Bitcoin can hardly be considered a genuine currency on purely practical reasons. You can't buy things with it directly, that means Bitcoin doesn't circulate but this is what the term itself (currency) stands for. On the other hand, there is nothing which would prevent Bitcoin from becoming a currency, there is nothing in it inherently which would not allow it to become one. It may not be a very good currency overall due to its deflationary nature (and a few other issues), but this is a completely different story.

Nothing at all will make bitcoin stop from being a currency as long as its real life usage starts becoming more pronounced.
On the issue of fiat failing, I would not say it totally does, but we all know how much fiat has been weakened several times and still keep getting weak due to all the manipulations and controls by the government,  which at a point, I seriously hope it does not end up imploding. That will be too much to assume anyway but in this case we are not just talking about USD, but fiats in general.

Yes, fiats fail eventually, but their downfalls don't come about entirely on their own. It is the downfall of the state which ultimately leads to the collapse of its money, not the other way round.

Regarding Bitcoin becoming a currency, you just said what can be called a tautology of sorts. Being a currency already means real life usage, by definition. In other words, if Bitcoin is used, it is already a currency. Or to put it differently, being a currency suggests being widely used in real life as a means of exchange. It is just two different descriptions or definitions of the same thing. But whether Bitcoin will actually become used globally (on par with fiat monies) is a different story, though.