The Crippling Implications of a Fiat Currency

Our already instable government is hanging in the balance of a valueless currency (we will refer to this as a fiat currency) of which has always proven to collapse not only the currency itself – but the economy that housed it. So, the question is: why? Why are we not able to simply learn from our predecessors of this ‘fiat’ currency? Furthermore, why have we not already learned from our own past? That’s right; we as a country have already had several failed attempts at this idea.

First things first, what is a fiat currency? A fiat currency is a money system in which the money itself has no intrinsic value, or the intrinsic value is significantly lower than the face value, and is declared to be legal tender by a government. This is where we get the ‘fiat’ part, fiat means: arbitrary order. Also, it is not convertible by law to any other thing such as gold or silver.

This sounds like loose concept at best, so why would any government issue something like this? Why were we taken off the gold standard? Well this happened back in 1971 by order of President Richard Nixon. During this time the unemployment rate was at 6.1% and the inflation rate was at 5.84%. So, as means to combat this, Nixon made it so the U.S. dollar was no longer convertible to gold. Now all of a sudden the government is paying its bills while increasing its wealth and the potential increase in inflation has stopped right? Sounds good on paper… until you realize that the paper is worth more than the paper it was bought with.

So why does the fiat currency fail each time? Here is why: taxpayers are fed up with the amount of taxes that they are already paying and if they were asked to pay more than they would only get even angrier and nothing good could come out of tha...

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...s over $680 billion. Yet… the stock market is at an all-time high… how can the stock market of an indebted, bankrupt nation be at an all-time high? Well what do you expect when trillions of dollars are pumped into an economy?

Overall, our surfeit printing and spending of paper money will be a large contributing factor to the irreversible destruction of a once strong economy by an ill-conceived government. This really goes to show that history does in fact repeat itself and that – sadly – we are at a place where it would be close to impossible to stop.

Works Cited

“Gold and silver are the emissions of nature: paper is the emission of art. The value of gold and silver is ascertained by the quantity which nature has made in the earth. We cannot make that quantity more or less than it is, and therefore the value being dependent upon the quantity, depends not on man…”