What makes a Fiat worthless?

[Wysi]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

[yoseph]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Every currency is tied to the the economy of that specific country so when factors like employment, inflation, interest rates, banking and other micro economics factors are on the negative side of things it makes the currency fall. This is specifically my opinion of the matter.

[abeecrypto]

Well, all you have mentioned are contributors.

Currencies are forms of value. And currencies increase in value when there is increase in demand of it. What leads to increases in demand of any country’s currency is the products they can offer. When a country ain’t that productive, they have less they can sell. Therefore, potential reduction in the value of their currency.

However, It’s more of a demand and supply thing. The supply of money will have to be balanced with demand for it. The moment there is too much supply of money from the central bank and less demand for it, the money loses its value. And less demand happens when there is less products to buy. They call it Inflation.

This is just my cent on the matter.

[magneto]

The main reason comes down to the fact that fiat is intrinsically worthless.

To put it more strictly, its intrinsic value is simply the piece of paper that it's printed on. Since central banks can simply "print" more of it, or in the modern era, create more bank reserves, it essentially means that there is no cap on the scarcity.

If anything doesn't have a capped supply it's bound to depreciate in the long run, especially when there is uncontrolled money issuance.

[jossiel]

IMHO, Hyper inflation.

That's the cause of why fiat money becomes worthless in some countries like Venezuela. And those what you have mentioned triggers the economic status of that country which results to HI. A war will totally wipe out a lot of resources on that involved area and printing of more cash will also contribute to it.

[alyssa85]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Inflation, it's always inflation.

As to what causes inflation - usually restrictions on trade. So if you can't import say wheat, and your domestic wheat harvest yields are not so good, then prices rise. What you can buy with one unit of currency then drops - and that's how a currency becomes worthless. Usually needs price rises of several hundred percent for it to happen though.

[chaoscoinz]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

I think fiat currency becomes worthless when it becomes too inflated, or when people stop trading it all together and start utilizing another type of currency, usually a stronger foreign fiat. The the U.S uses a fractional reserve system through the federal reserve, so the dollar is no longer backed by a gold standard I think. Money is real complicated, there are many systems that make it work. I honestly don't know the full mechanics of the monetary system. I'm in doubt about crytpo currency ever completely replacing fiat, at least not any time soon, as it is way easier for the modern man to use fiat cash. You can simply exchange physical fiat faster for transactions than having to whip out your smart phone or ledger and scan a QR code and send a transaction, then wait for it to be approved
  In order for cold hard cash to be replaced, you'll have to put a smart phone in every single persons hand, including those who are poverty stricken, in remote areas, etc. Seems like its much easier to deal in physical cash for now. Who know 20 years from now?

[exstasie]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

It boils down to lack of popular confidence in the currency. Free floating (unbacked) currencies only retain value because people believe in them. They aren't like backed currencies that are convertible to the underlying.

In Zimbabwe, runaway currency printing caused hyperinflation. As prices skyrocketed, people could plainly see the currency had no firm basis for value. Anyone holding it naturally lacked confidence that it would hold up. This created a situation where everyone was desperate to get rid of it, and no one was willing to accept it. Confidence was completely broken.

[Google+]

I think that for the time being Fiat is still very valuable and Fiat will really be worthless when it starts when many people use payments and transactions using digital currency because it will reduce the use of paper money, even though everything is digital, there will still be Fiat money only created very little because everything has a gradual process.

[Periodik]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

A combination of all. It hardly falls straight to worthlessness with only a single factor playing. Normally, it will be the interplay of falling GDP, enormous rise of inflation, corruption, economic crises, and some other factors. Over printing of fiat is also enough reason for it to lose its value. Wars, especially huge enough to cover the entire country, could also kill their fiat system.

[Suslived]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

I wouldn't say it's worthless, you can still use the fiat paper bills to wipe your ass.

Kidding aside, I believe it's because fiat is so centralised with government and they have free reign to control what they do with it behind closed doors. How do you know right now that they aren't printing millions for themselves? Too much trust is freely given to untrustworthy people.

[ecnalubma]

Lets go back to the basic law of supply and demand, when a demand for goods increases while supply of goods decreases due to higher production cost in order for certain company to survive they will pass on to consumers their burden thats why prices of common goods rises and purchasing power of fiat weakens. But if a goverment is smart enough to address the issue this type of crisis could be prevented or controlled.

[Wexnident]

Well, its a matter of perspective to be honest. Fiat is still quite useful to us now since its a nationally accepted medium of trade in the world. On the other hand, if you look past its usefulness, for now, it is actually riddled with holes. The fact that the government freely reproduce fiat leads to national debt growing ever so much and we don't actually have the capability to pay it off, leading to a huge negative on the debt. There is also the factor of corruption, wherein the end, the government is at hand. Plus, there is also inflation to think about. I honestly thought money was just money in the past but ever since being part of this community, I've seen a lot of how the background of money works and whoa, I was lied to. By quite a lot not gonna lie.

[CryptoBry]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

I guess all them can be contributing factors why a national fiat currency can be heading to oblivion or being worthless because of the hyperinflation affecting the whole economy. Money is all about value and when that value is constantly degrading itself then people using that specific money can really have a very big problem. We witnessed this phenomenon happened (and still happening) in  Zimbabwe and Venezuela.

By mid-July 2019 inflation had increased to 175% in Zimbabwe sparking concerns that the country was entering a new period of hyperinflation. In April 2019, the International Monetary Fund estimated that inflation would reach 10,000,000% by the end of 2019 in Venezuela.

These two countries have become the most popular poster kids when it comes to hyperinflation. There so many factors that lead to their present predicament. Wrong and misguided economic policies in the past that failed miserably can be the number and mots important contributing factor. Political and economic instability can be the best recipe that can lead the country's fiat money to go on a massive slide.

And this is where Bitcoin can help, somehow.

[meliodas]

Fiat is worthless simply because of the inflation. Inflation eats up the value of a fiat currency which makes it worthless and useless in the future if you will do anything to preserve and grow its value. Investing is one of the things that a person could do in order to counter the inflation and to preserve his wealth.

[blckhawk]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Inflation plays an important role in dictating fiat's value. Although economic and corruption also is a factor on why it happens. If there is an economic slowdown, or the government just prints money out of thin air, it's highly likely that the inflation the is caused by that would make their money useless. Or if some corrupt official not doing his job, cutting national budget for kickbacks, which would slow down progress, would also slowdown the economy, GDP alongside with currency.

[BennyK]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Fiat can be worthless if the governments do not manage well their resources and seek for foreign loans all the time. Also, countries with their importation rate way higher than exportation rate is liable to losing the value of their currency because there will be minimal foreign exchange to the country.

[NathanJB]

I will be spelling out some reasons why I think fiat is ultimately heading toward the state of being worthless. Not necessarily wars and all. There could still be fiat amidst all those man-made catastrophe.

• Fiat will be made worthless because it is not anymore founded upon gold or silver or even arithmetic. It is only founded upon the decisions of a few individuals who made into what they call laws.
• Fiat is going to be worthless because its value is always depreciating. In the long run, this is definitely a foolish design.
• Fiat is going to become obsolete because it contradicts the nature, desire, or preference of men to become free.
• Fiat has a lot of hassles involved, I mean uncountable hassleds. You try to go to the bank and you will realize that very quickly.

[Edraket31]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Fiat can be worthless if the governments do not manage well their resources and seek for foreign loans all the time. Also, countries with their importation rate way higher than exportation rate is liable to losing the value of their currency because there will be minimal foreign exchange to the country.

If the government mismanaged the fund of the country, they will have financial crisis like what happened to Venezuela, and one factor that triggers this financial crisis is their government itself are corrupt, and their even food are imported, so when the price of oil dropped, they cannot afford to buy food and their money became worthless, good thing they are recovering now from this disaster.

[mersal]

We have come across so many national currency becoming worthless and recently we have heard the news of barter system in Zimbabwe due to the fall in the value of national currency but what really makes the Fiat worthless? Is it corruption or war or national economical crisis? Or the National GDP which makes it fall?

Primary reason is inflation which was caused by many things to a country,basically when a country have lot of debts to be paid they will print more which leads to the inflation,if it is under some certain limit then it could be a better country but when something like hyper inflation occurs then this will be fall of their country.