Topic: Fiat Currency Always Fails - page 12. (Read 2101 times)

We all know that whatever happen people would prefer to convert their Bitcoin into Fiat currency, but the problem is, if we talk about the advantages of Fiat vs Bitcoin,  Bitcoin is more ahead than Fiat why? Bitcoin could use in many transaction we're in you can make several transaction without limitation and also it is good in trading cause you can make high profit in just a couple of months, that's are the factor why Fiat currency failed to go on top of the market nowadays.

The problem with fiat money is always printed by central bank and they reason is they want to boost growth. They dont care about inflation and peoples assets always reducing because that inflation, and thats why always crisis on our global economic

what exactly the author means by saying falling of fiat money? as i read the article it just simply changing the component of the physical money from 85%silver to iron and now paper money, but i dont not see any decrease of its value or purchasing power.. fiat money whatever its form is only have one important role in the economy and that is use to exchange goods and services...

if the author is worried about too much printing of physical money.. it could not happen because too much physical money  could hurt the economy and the country in general. it will only result to inflation...

read this article below.

https://www.americanbullion.com/what-actually-happens-when-a-government-prints-money/

If there are recorded histories that paper money failed a country before but i think these are only few compared to the present day in which these countries that have mentioned are now one of the most powerful economies of today and these was they used money too. Germany, France, China and USA are now belongs to the most powerful nation in talking of military and economy therefore i will not be convince that these are failed countries because they just rely on money.

It might slightly differ per country, but the general picture is still the same. It's nothing more than a system that's based on debt and continuous creation of more fiat that's overflowing the economy with long term consequences.

The fluctuations of fiat currencies might not be as severe when you compare them in a direct face to face manner, but if you look further, fiat currencies experience crazy volatility as well, but no one talks about it.

I remember when I was buying stuff from the US (not crypto related) €1 was worth almost $1.40 per conversion, where last year, when purchasing Bitcoin, €1 bought me significantly less than $1.10 worth for a short while.

If these aren't insane fluctuations, then I don't know what is. Bitcoin goes through insane fluctuations in a quick fashion, while fiat does it over longer periods of time, which means that fundamentally, there is no real difference.

I think fiat money value differ in every state since economic stability and government protocol differs as well including cultural values which is also another factor that affects economy. In my country fiat money does not always fails but like cryptocurrency it does increases and sometimes decreases too. However, the flactuation rate is not as high as bitcoin.

Indeed, we shouldn't exclude from consideration the cases when a government is made up of criminals who just use their power (this is to the question of the value of power) to steal the nation's wealth. I remember a few years ago some African ruler ran away with the treasury of his country, something like 9 million dollars all in all, if I'm not mistaken. Obviously, I didn't mention these cases as they seem to be self-evident. I'm talking specifically about the cases when government doesn't want to kill their money unless they have no other choice left, like in a war or revolution.

Agree but still, it has grown at a level where I don't see that people leaving it at least in next 100 years. There will be the people who will keep using fiat currency irrespective of the advantages of other payment systems including blockchain based currencies. The biggest problem with fiat currencies is that there is a centralized power that controls it and it doesn't have any sense of freedom, to be honest. On the other hand, the banking system is soaking all the benefits of the real value of money.

The difference between fiat and natural money, as I see it, is like the difference between natural and artificial medication.

It has come out that the US government knew 20 years ago that marijuana (as a natural pain killer) is harmless, but it's only now that it's forced to slowly legalize it.  The powers-that-be prefer us to use artificial drugs (or money,) because there's no way to profit much from the natural.

If there are side effects and addictions due to the artificial stuff, it benefits the elites who can then put their power to good use by allowing this and regulating that.  One way or another, their power will become valuable and they can profit from it.

Looking at economic history one can see that different societies from different parts of the world during different times has been swinging from quality money (gold, silver) to paper money. Today we have Bitcoin and other crypto currencies that one can choose from.

As an Austrian I would like to make the proposition of free money, that is let the market (in other words us) decide what we want to use. If someone want to use Bitcoin that is great, gold, silver - be my guest. If someone want to use paper why not? But don't force anyone... with that said Fiat always fail!  :

Btw Very interesting thread and great opinions.

A fiat currency system comes into existence as a result of excessive debt and the resulting hyperinflation.When the government is unable to repay all its debt in a physical form gold or silver then the idea arises to remove the physical backing.This is when the fiat money system is implemented and is one in which the value of money is based on confidence.

IMO money must primarily be a store of value.  It is a means of exchange only because it is a good store of value, as no one would take a money in exchange for goods if that money isn't perceived to keep value.

Bitcoin can't be a good means of exchange because the blockchain architecture, by its trust-free nature, has too much overhead to be used in everyday transactions.  But it's this very trust-free nature that enables it to be a store of value.  A world one can envision is where savers hold most of their wealth in Bitcoin, but continuously convert a small portion to/from state currencies for spending.

This is not essentially different from the (wise) strategy of holding most of your coins in a private wallet, but keeping a small portion on an exchange for trading.  The exchange requires you to trust a central authority, but is more convenient.

BTW, by distinguished posters, do you mean all the top economists who used to praise the gold standard when the elites were in favor of it?  I would agree that the economy would implode if we somehow, magically transition quickly to a hard money.  But this is only because prices and production levels have been distorted by the modern fiat money inflationary system.  Thus, keeping this system going, because we're afraid of the pain of stopping, fits a classic definition of addiction.

I might have to re-read that article, but the relationship between the state and its money seems more of a  chick-and-egg (in both directions) than a horse-and-cart case.

Confidence in state money depends on confidence in its state, true.  But confidence in the state also depends on confidence in its money.  The British Empire (and the Dutch and Spanish before it) were brought down by the incentives for the elites to issue too much paper money (even though this 'money' was technically debt payable in gold or silver.)  Savers and investors moved money to the rising US after World War I, and Britain lost the empire and endured economic pain over decades of the 20th century.  (The war was only the last straw that broke the camel's back -- since Britain had only 3% of the gold required to redeem its total issue of paper sterling under an official gold standard, we have to view paper sterling as a bubble that was simply not possible to sustain long-term, with or without a war.)

The French Revolution issued the Assignot, and the American Revolution issued the Continental, both of which collapsed due to their paper nature, not to the failure of the revolutionary governments.  Even Weimar Germany held together well after the hyperinflation.  With a new land-backed currency, the money system and the state were back in health in a few months.

I would agree that in many cases, failing states and/or bad policies lead to hyperinflation and collapse of the currency.  But these aren't the only examples of paper money.  The most recently strongest paper money is the dollar.  Yet its purchasing power today is on the order of 1% of what it was at the founding of the Federal Reserve in 1913.  If it has 'not collapsed' yet, it is because of bubble dynamics alone.

As we have seen with the Spanish, Dutch, British, and now American money bubbles, state supported bubbles might last a long time (and maybe much longer than outfits like ZeroHedge predict!) but the nature of bubbles is to burst -- no exceptions.

I don't think the system has the problem here, because if you have to look on the manipulations of the elites really helped to make the operation stable. Fiat currency is going to survive for more 100 years and people really have to recognize it as a sustainable currency. Unlike with crypto currency, the assurance is nothing to prove for due to its volatile movement and crashing always happened. Moreover we should understand that fiat currency money doesn't gain huge interests, but still the stability always in parallel to the regulations of a certain country.

IMO the problem is with incentives.  The fiat money system has incentives for the elites to destabilize their own system, by issuing more money and debt to benefit themselves.  This eventually destroys the value of, and trust in, their issuance.

'Capitalism' is usually taken to mean unfettered, free markets.  But the state issuance of money is the height of state control.  Money can't find its value in the marketplace because the elites carefully manipulate money's price to operate and ensure the survival of a system that primarily benefits them.

That is the story told time and again by mainstream economists.  Remember these are the same people who told us the gold standard was good economics, until the elites in all countries were forced to default on gold, and then they told us gold was bad.

It's not that money must be 'flexible-supply' to keep up with growing economies.  It's the other way round.  A growing economy (from modern technological advance, etc.) enables the elites to skim off the cream of production by manipulating money.  No wonder, the economists tell us money must be flexible!

The deflationary fear is only justified by the bad experience of deflationary pain (e.g. the Great Depression, etc.)  But all such bad deflation in history has been preceded by a financial bust, which has been caused by elite-driven financial inflation and state-supported over-valuation of assets, anyway.

There can't be honesty in a system where voters don't understand enough (about money and finance) to hold the elites accountable.  It's not possible that central bankers and economists actually use policies for the good of society, because of this asymmetry of information.  If the elites didn't use the money system to receive unearned wealth and power, they'd be short-changing themselves, in a totally objective, morality-free sense.

No doubt and once people realize the system is no good, they switch over to a new "fairer" system. It all ends up being the same anyhow, this is the first time in 500 years+ we have seen a real shift to another type of currency. I don't know what lay ahead, but I am excited to find out and be on the forefront of history.

In my view, Bitcoin can exist along with fiat but it can't exist instead of fiat. Such a question has been raised numerous times here, and many distinguished posters, with whom I certainly agree, pointed out that if Bitcoin were to substitute fiat, if purely hypothetically, the economy would quickly come to a halt and then implode. To sun it up, Bitcoin as well as other cryptocurrencies is a bad means of exchange, but this is what makes money into money. 

I am absolutely agree, whole stuff of paper money is complicated since there is can be printed unlimited paper money in the world..

We know that flat will fall in the end but that is how the world works now, government start to print more paper money everywhere and issue long term bond which create more debt in order to survive or try to develop to a bigger country. The economic recession already crashed a few times and its not that government can't stop it but because there is no alternative to do it.