Topic: Fiat in trouble (Read 612 times)

The problem with the 2008 crisis is that it was never really resolved, governments knew the cause but instead of trying to legislate and create a set of laws so it did not happen again what they did was simply to throw a gigantic amount of money to the problem hoping it went away, and it worked but only for a time, now the pandemic and the war at Ukraine have brought back the fears of a new crisis with the huge disadvantage that now governments cannot play that card again as they are heavily indebted already.

So far, it seems the Fed reserves original mission to solve economic issues is becoming blindsided; since they have tried to combat the inflationary situation by raising interest rates. And it looks to exacerbate the whole thing because instead of tightening the economy, as was it's initial aims, it has all but had a ripple effect since demand of goods and services by both consumers and business alike have slowed down.

 All these can help reduce the value of a country's Fiat.

I fully agree with you that Europe is doomed, the Euro is going to lose a lot of more value in 2023 and whoever has the chance to diversify out of Euro denominated assets should be doing so. Crisis management has always been a bad thing in Europe, politicians over here talk too much and need way too long to react and get anything done. Together with the double digit inflation rates which will likely stay high next year, there is not much we can expect from the Euro. Gold doesn't seem like a good alternative right now which leaves crypto currencies as the main inflation hedge together with real estate investments. The problem is that people are afraid of inflation, but don't react to it. So far most people sold any risky assets in 2022 and didn't reinvest. The cash levels are very high in Europe right now, among my friends most of them have 50-70% cash levels in their portfolio. Which is insane to be honest, because you lose so much value with cash during high inflation times.  

in fact even before the uncontrolled inflation that is still happening today which has an effect on the decline in the value of currencies in several countries. it turns out that even when inflation is under control, the decline in the value of the currency has slowly been and continues every year in several countries. The indicator is seen in the increase in the prices of property, goods and services every year. and the difference now is that inflation is already at a higher and faster rate which makes the rate of currency decline faster. and indeed everyone now has almost the same complaint but with different problems. and the solution for each person will be different.

I believe they could just buy and hold it as well and they are not doing that. Most governments are richer than the richest person in the world, not only they could get taxes like insane levels, but they could also just print money if they ever want to, we have seen them all do it in the past 2 years. Which means they could afford to buy tens of billions of dollars worth of bitcoin.

Any nation that spends just a 50 billion dollar on bitcoin would not only make a huge profit later on, turn that into 500+ billion when it does 10x (and 180k is not impossible in the next 5 years) and they would also be able to start the bull run as well all by themselves for that much money. It is just such a simple idea.

Fiat has lost its value, it is a fact that actually represents how we feel all along. Inflation has obviously taken on many fiat values ​​with varying degrees of severity in each country. So one might be right about one opinion, bitcoin is a very good hedge against fiat in this kind of situation, but of course the risks will cause most people out there to be reluctant to choose it even though staying in fiat is hard.

This year I think it's not as bad as 2020 regarding the value of fiat against the dollar for my country, but of course the current inflation has had a big impact on the people's economy. We complain, they complain and most of us complain, but the solutions won't be the same for everyone.

Now the price of goods in rural areas with the price of goods in urban areas no longer has too much price difference, so the expensive or cheap of an item is also difficult to measure if only through the circulation of money around it. And for the problem of saving money or owning other assets such as property and gold, it is only about how to invest in slightly different ways with the aim of making profits and being safer from the risk of loss.

Can you explain more? as you say the growing population and increasing demand while the raw material is scarce makes companies have to spend more money to produce thereby pushing up the price and it is understandable that the government continues to print money to balance population density and costs, why to blame them so much. I think all governments are aware that printing too much money is not good but do you have a better solution?
In 2020, the outbreak of the pandemic brought the economy to a near standstill. If the government hadn't pumped the money, we would probably have starved to death before we died of the disease.

Economic crisis also has a cycle, once money is pumped out too much, it will cause crisis and inflation. That was also the time when the Fed stepped up to raise interest rates to control inflation and bring the economy will recover. This cycle will always happen and repeat, that is how the world economy works.

Fiat will always be a problem because it is impossible for the central bank to monitor the circulation of real money, sometimes somewhere there is too much money so the price is very expensive, but in rural areas with small money circulation the price is cheaper, and on the other hand, there is none. guarantee that keeping fiat will be profitable so that people prefer to keep assets such as property, gold or something else.

Exactly, the most recent economic crisis was in 2008 and it somehow recovered, and the world economy continued to grow and boom after that without the collapse of fiat or the need for a alternative solution. Bitcoin is really good but don't exaggerate it too much.
What role Bitcoin will play in the economy in the future is unpredictable but with the current economic crisis I think we will recover soon without the help of bitcoin and bitcoin is the one who needs the help of this economy. Bitcoin will not be able to recover if we continue to fall into crisis and inflation.

Yes, that's right, this FIAT currency will continue to experience inflation from year to year, why is that?
The more the population in a country, the greater the need to finance their lives, the need for commodities from year to year will increase, while the commodities used will decrease, so that the scarcity of raw materials causes a company to have to spend more. This is what causes the price of goods to rise due to increased operational costs and high demand. the last one is the government's fault, which prints too much money so that the circulation of money is too large, the circulation of money and goods in circulation must be balanced.
while for Bitcoin, I think it should be pegged to gold so that its volatility is not too volatile and helps maintain its value if it is to be used as a global currency.

Inflation is increasing everyday and their is nothing we can do since we are earning in fiat for those of us that are working and doing some casual businesses that is bring food to our table. Everybody is complaining of recession coming to hit us in full and also the hike in food prices and other goods. Things are becoming very difficult these days and things we could buy with our money can no long afford our necessities. Since there is nothing we can do, we can as well try other things we can do  that we give us some funds.

I do not think that it will "replace" fiat, fiat is something that each nation needs for their own freedom, if they all start to use bitcoin then the bigger ones could take control over the smaller ones. Right now, even if it means a financial war, you can go against USA, which will hurt you like how it did to Cuba for example, but you can have freedom. In that case everyone would be using the same, and that is not going to be fine.

Alternative payment method to fiat is the way to go. The best thing that could happen would be like El Salvador, just get it legal tender in all the nations of the world, which means alternative to fiat, and that would be fine and would actually make crypto go insanely high too.

I think This is an interesting topic at the moment, many new crypto-currencies and blockchain-based startups appear every day. The crypto-currency market has grown rapidly over the past few years and has already managed to attract interest from large industrial investors. Today many experts have already recognized that over time, as a result of competition and technological progress, cryptocurrency will actually become a more efficient and highly secure system compared with banks and payment card systems.

At the same time, I'm excited to see where all this is leading and what the future has in store for cryptocurrency and blockchain. If there ever comes a day when our fiat paper currency is replaced by a cryptocurrency, we'll all look back at this time as the catalyst that got us there.

what is beyond our authority is the government's policy on the legalization of cryptocurrencies. the most difficult thing to penetrate is about the necessary politicization of interests. I personally believe that cryptocurrencies will be worthy of replacing fiat currencies, but not in a short time, given that there are still many pros and cons regarding this, and it actually hinders its development

Fiat has been in real trouble ever since they stopped backing it with something tangible and instead with the full faith and credit of said government.  Every year, fiat is worth less and less and buys less and less.

This whole current inflation thing reminds me of the 2008 global financial meltdown and the consequences it heralded. The small sized company I worked for which was barely starting up then was severely hit to the point that a good number of staff were let go. Some people have opined that the aftermath of that recession birthed Bitcoin. Let's see what will be birthed as this global inflation heightens by next year. May be another phenomenon? I'm only worried that it will get worse by next year.

The problem with this idea is that it has been tried before and governments are very inefficient at producing anything, if we take a look at communist countries in the past in which they owned every single industry you will see that over and over again they were overtaken by economies that were capitalist in nature, so while I can understand your point and it makes sense, when such an experiment has been done in real life it has always failed.

Actually, the source of the problem or the beginning of this uncontrolled inflation was when the Pandemic started and when people were told to quarantine themselves. or rather isolate yourself by not interacting with many people. to break the chain of viral contamination. Now that's when the government of a country like the US for example. become worried that the economic cycle will be hampered or worried that the economy will stop. so the printing of money began. and the government distributes money to the public to spend to keep the economy running. and it worked. but the problem came after. ie where the supply of money that has been printed becomes too much. and causes the value of the currency to decrease and the price of goods to rise (uncontrolled inflation). so that now to overcome this, the government or the bank will definitely raise the bank's interest rate to attract customers and attract too much money in circulation. that's one of the initial causes.

but it doesn't stop there. because actually inflation is a good thing in the economy if it can be controlled properly. but when inflation gets higher it quickly or gets out of control. then of course it is very bad for the economy. and the second problem from the current uncontrolled inflation is that during the pandemic many factories or industries have reduced employees (layoffs). and production is reduced. because the buyer's interest decreased during the pandemic. so the decision to reduce production and lay off some employees looks logical. but problems arise when the pandemic ends. namely there is a surge in buyer interest in a product. and people are getting thirsty for shopping after the pandemic is over. while the producers were not fully prepared at that time. because they now no longer have a lot of employees to make large quantities of products in a short time. and this is the second factor of uncontrolled inflation and rising prices of goods, namely the scarcity of products and the high interest of unbalanced buyers. actually there are some more factors such as war and such.

That is mainly because when nations do not have a plan like companies do, that means they do not have anything ready for the future, plus nobody saves them neither. I know that people love liberal politics a lot here, and socialism seen as a big devil’s work, but in reality, if governments could find a way to make income from things that are not just pure tax, then it would make so much better for all the people that live there, plus there wouldn't be need to keep printing money.

I believe things like education, healthcare, and defence should be government owned, and there could be some money made, look at USA and how they sell weapons, why not build some planes and missiles or whatever and sell them? If it helps then it would help.