Topic: Fiat Currency Always Fails - page 8. (Read 2101 times)

This and other facts have been stated to prove that fiats will be impeded as technology takes over the future.  Most cryptocurrency experts have said that bitcoin price will increase again. And same for the alcoins too. Bitcoin is the digital gold and will always be on top of the rest.j

yes indeed. that is why all banks aim to pay interest when you put money to your bank account. it promises to protect the value of your fiat currency. (but ofcourse the rates are never enough because of traditional banking system)

Bitcoin and fiat currency made a balance in our society. Bitcoin is a digital currency which guide us towards a advance society. Sometimes fiat currency disappoint us like, Fiat currency is a physical form of currency so many time its duplicate are made by criminal minded which affect our society and our country economy too. Using of fiat currency is not always safe and easy to use. Like i said fiat is not fall always. It is a usefull asset in where no Internet or electricity connection present. 

I think, like most people, you totally misunderstand the gold standard.  GS (as opposed to using physical gold/silver as money) was fundamentally no different from today's 'fiat' money, in the sense that the elites issue money and debt out of thin air and prop them up with state power.  The only difference was that the elites owned enough gold to be able to use it to help prop up their issued paper money.

No wonder, the GS period was full of crises too.  That the GS elites tightened money and worsened the misery after a financial crisis is often blamed on gold by mainstream economists today.  The truth is that this tightening action (and its motivation) was not different in nature from today's.  E.g. the IMF forced SE Asian countries to tighten after the 1997 crisis, and at the other extreme even the US post-2008 didn't inflate the money supply enough to totally undo the pain from the bust.

The difference in the degree of post-crisis loosening, both among different countries and between the GS period and today, is due to how much the elites can/could get away with politically, not to gold.  (Even though the nature of a gold-based system might have provided more of an incentive for the elites to tighten, there is no essential difference between the different money systems.  The goal is always to benefit the elites, at the cost of pain for everyone else, when necessary.)  As Barry Eichengreen admits, the growth of Western democracy and labor unions in early 20th century, with the resulting drop in popular tolerance for pain, made the gold standard pretty much untenable.

Money as a store of value is a major benefit of a post-bartering economy.  If you want to argue that this benefit is physically impossible, you have to ignore the fact that even though physical resources decay as soon as they're made, the savings in a society incentivize future production of the resources.  And this is nothing more than natural market incentives.  Simple market incentives also dictate that the older one gets and the more savings one has accumulated, the more one wants to spend.  This also seems to be ignored by those who argue that central bank money printing is the only ultimate support for demand.

The real question is not whether we want to stimulate consumption and avoid deflation.  Of course we do.  The real question is whether that process should be driven by market forces or central planning.  Over the last five centuries, central planning in the money sphere has proved itself fundamentally no better or different, though more invisible, than the central planning of a socialist society.  We always have financial crises.  Safe assets are always depreciating.  And we always use wars, assassinations, and coups to support our money system internationally.

The only reason we have the current money system is to benefit the elites.

Of course, the crypto-currency market, this is the most risky market, at any moment the whole market can get under a ban.
I believe that in order to profit from capital, you can invest in gold or deposit in a bank.
Money should not be in a static state.

I've been hearing variations of this statement for years now, so much so that my mind just tunes it out when I see the words.  "Fiat always goes to zero" is part of the propaganda that precious metals dealers and others use to play upon people's fears so they can sell them gold & silver. 

The US dollar might eventually die.  It probably won't in any of our lifetimes, though.  I think bitcoin has a better chance of becoming obsolete and dying than any of the world's stable fiat currencies.  Be very careful what you listen to when you read this shit on the internet.  Always take into account what people's motivations might be for telling you why you need to own gold & silver--they're probably trying to sell it to you.

You could say that all types of currency eventually fails. Crypto is a new type of currency, but it might end up failing one day. We don't know. Many do. Sure they are shit coins, but they were a currency.

Yeah fiat currency are tradeable by using in reality. Need some aplication for any online trade and making so much fee in it to doing transaction

Agreed, Fiat money has been used in crimes and other evil doings, well most of the currency does, But fiat fails more, It cant be used in many transactions like, digital or economical advancement.

You can't store value permanently. It's physically impossible. Things that have value decay and are consumed, and value is constantly destroyed through these two means. The failure of goldbugs is that they expect that all value ever created will last forever, which is why they push the gold standard so hard. It defies economy reality. The value of what you create in the present is going to be worth significantly less in 50 years, and the money that underlies that value should likewise be worth less. Value starts to decay the moment it is created. When money doesn't also, it creates deflation. The appreciation of value in money creates disincentives to spend, which lowers economy activity and puts downward pressure on the economy. Consumption is what creates value, and inflation stokes consumption. It may look manipulative, and perhaps it is, but it's far preferable to the the types of crises caused by the gold standard and our collective inability to shorten the duration and severity of those crises. If all value ever created was storable infinitely, the gold standard would make sense. Because value can't be stored indefinitely, gold ultimately does more harm than good.

Yes, fiat money does not the applicable use in making transaction by buying, selling, paying and investment. I consider it as a running to its forgotten place to let crypto currencies rule the economy.

Zooming out so far is only to make it super-clear that state money is clearly losing value.  From last year to this year, do you expect any price to go down in fiat money?

If most people don't hold most of their savings in cash, that is because they are forced to invest in riskier assets, by the design of the system (ie automatic loss of the value of your savings, unless you take risks.)  What this shows is that this is a system of theft, by design.  (Another way to say it is that it's an inflationary system, by design.)

Oh, and it just happens, if you put your money in the (shadow) banking system, or buy stocks, the advantage goes to those who know which banks will be bailed out, and which stocks will do well.  (Not to mention the top elites whose lives are based on issuing debt.)

Sorry, this is an establishment-friendly opinion that forgets a few key points.

A long time frame of history shows the basic nature of state-issued money (as the devaluation of the dollar against gold by 98% shows.)  But chances are, the future won't be exactly the same as the past.  It took until 1971 for gold to go officially higher than $35/ounce, and only 40+ years to go all the way to $1000+/ounce.  This is due to the strength of the US lead world system, wars, etc., and this pattern probably won't repeat exactly.  So who knows how far gold and Bitcoin can go in our lifetime, or in the next decade?

Yes, the dollar has been relatively stable over the last century, compared to other state issued currencies.  But the price the world paid was wars and imperial aggression.  Just two examples:

- World War II was caused by the rise of Hitler, which was caused by the instability and tight deflationary squeeze that the US lead system deliberately put on Germany during the post-World-War-I period and the Great Depression.

- Poor countries were bribed or forced to borrow massive amounts of dollars after World War II, more than they could hope to repay.  (This became one of the major support systems for the dollar as it guaranteed the countries would always be thirsty for dollars.)  Only a few leaders were wise and courageous enough to resist this system, and 'regime change' was the fate of those who didn't change their minds.  (See 'Confessions of An Economic Hit Man' by John Perkins.)

It is true that money is only a representation of value.  It's only a claim on the future real productivity of the economy, and who knows what the economy can do in future.  All true.  But this establishment line forgets that the destructive incentives inside a state-money system further destabilize the value of money and life itself.  In fact, we can argue that the majority of economic, social and political instability has been caused by state money.

Again, there's no need to argue.  Put a hundred dollar bill next to its equivalent in gold, on the same table, leave them there for a century, and see which one is now worth more.  No need for more words!

And yes, wages have gone up, of course.  (One would hate to live today on 1913 wages!)  So earn today's wages, but put your savings into gold and Bitcoin, or at least that portion that is meant for long-term safe store of value.

'Boosting economy growth' is what establishment commentators like to say.  The reality is that the elites benefit the most from the various bubbles supported by state-controlled money.  (A major example is that politicians can issue government bonds that are almost as good as money -- since the central bank can print money to save an indebted government from bankruptcy.  So politicians are almost as good as being able to print money.)

State money does boost the economy, but at an artificially fast rate, and always with a financial disaster down the road.  After 500 years of this, the elites either don't know this will happen, or don't want to know.

My lifetime is short compared to the 500 year history of elite-manipulated 'money.'  Some state-issued money can last a long time before they fail or get devalued to a small fraction of their value.  (E.g. the pound.)  But it doesn't change their nature, or the incentives for members of the elites to destabilize their own money.

If I had lived my life in England any time between 1690 and 1931, my paper pound would have been freely redeemable for the same amount of gold throughout that period.  It still doesn't change the nature of the system, and, as we see, there was a run on the Bank of England's gold in 1931 and the pound's 'exchange rate' against gold went from 4+ pounds to the ounce to about 1000 pounds today.

Keep in mind that the original linked article is technically about 'totally fiat' money.  These are rare occurrences in modern history, even considering we have been under a 'totally fiat' system today for 45+ years.

In the end, the difference between 'totally fiat' and other state money is only a matter of degree.  Human-issued money always suffers from the same destructive incentives.

They say more than half of the total worldwide value of US dollar cash is in $100 bills.  This is pretty amazing, since you can easily spend a month in the US without ever seeing the $100 bill.

This points to the fact that US dollar cash has been a major facilitator of crime and corruption around the world for decades, if you want to use the language of the outraged Rogoff.  Yet it's only recently that establishment figures started speaking against paper cash. 

The real issue isn't crime.  While criminal demand for dollar cash helped support the dollar in the past, since the 2008 crisis, the existence of cash has become a net negative for the system.  That is because, over the last decade, deflation has been the main problem, and the elites would love to be able to use negative interest to force people to spend and lend.  But the existence of cash defeats any system of negative interest.

It doesn't.  It's a totally separate issue.  The elites are only 'interested in the common good' in the sense that they want their bubbles to be sustained for as long as possible, because they benefit the most from these.  But the way they go about it, and the incentives for the elites to destabilize their own system, guarantee that the bubbles will burst, with the worst pain suffered by the public.  They either don't see this coming, or they don't want to see.


It doesn't.  It merely allows savers to retain their honestly earned wealth.  Deflationary pain in the past has simply been caused by the collapse of the demand that has been propped up by the economic distortion from financial inflation during the 'good' times, in the first place.


'Reward' has been made morally relative in your argument.  When you take morality out of the issue, you can argue that when you prevent the theft of a wallet, you're rewarding the owner of the wallet and robbing the thief.  Oh, and if the theft promotes economic growth, so much more power to your argument.  (Not that I'm equating your argument with this -- I'm only saying if you give no consideration to moral issues, you will reap your 'reward.')

And you still haven't answered my question, 'why do they have value?'  What you gave were pages from a speculator's handbook, not an explanation based on the fundamental reality of how the financial and monetary systems work.


The 'how' is not the same as the 'why.'

Who can ever forget the great economic teachings of the imitable Tyler Durden.  It's hard to take seriously a bunch of clowns who peddle conspiracy theories under a pseudonym on the internet, but let's pretend anyway.

You have to zoom out 100 years to make an argument that the dollar is not stable. Over years, the dollar is stable. Over decades, the dollar is predictably fairly stable. In both cases, the stability is great enough allow long term planning and storage of value and for people to be reasonably certain what their stored value will be worth for long periods of time. Ostensibly, Tyler Durden would be a fan of Bitcoin, but in contrast to the USD, Bitcoin miserably fails the store of value and reasonably certainty of value aspects of a useful currency over any stretch of time.

Because you have to zoom out so far to find meaningful loss of value for holding USD, and because nobody holds wealth in USD for 100 years, the "loss of value" purported to have been suffered has never actually been realized by anyone. If you had a physical dollar 100 years ago, it would be depreciated, yes. But, you didn't have a dollar 100 years ago because you weren't alive 100 years ago. And the people who were alive didn't hold value in cash currency for 100 years. In short, the dollar has devalued by 95% over the last 100 years but nobody has lost 95% of their stored value due to depreciation of the dollar.

Most importantly, there is no such thing as perfect money. What we have in the USD is stable over long periods of time and due to the nature of value and an inability to reliably store it in this universe, that's the best you're ever going to get. Money itself isn't value; it's a representation of value, meaning it represents real things that are produced and consumed that people want/need in the present. This is the key point here: You cannot possibly store more value than what can ever be consumed in the present, so expecting a representation of value that was created 100 years ago to hold perfectly for goods that will no longer exist when it is to be spent is unreasonable. Money depreciates necessarily over time unless we can perfectly store all the value ever created, which we cannot because we constantly destroy value by consuming goods or through depreciation of real assets over time. As the value that the money represents is destroyed/consumed over time without a corresponding reduction in the money supply, money necessarily has to lose value over time.