Topic: What makes a Fiat worthless? (Read 2285 times)

In a way the government is indirectly stealing money from the people who has money on the banks while they try to inflate their money to lessen the debts. Then the trading partners will be upset for doing so and so they will also try to inflate their money. Yes. BTC will help since the government of any country has no power over it to manipulate its price.

The main danger of fiat money is their constant depreciation.
Most currencies are not provided with anything or conditionally provided, only in words, which makes them very vulnerable to global financial crises.

In addition, banks are bubbles that will burst sooner or later. What will happen to all these people who rely on fiat funds? It will be a disaster.
People need an alternative. Money that is not controlled by anyone other than the people themselves. Cryptocurrency can be such a solution.

That sounds nice, if fiat was used correctly then a small amount of inflation every year will stimulate the economy, but that is not what happens in the real world, what happens is that governments find irresistible to abuse their power to print as much currency as they like and to spend as much money as they possibly can only to find out that there are consequences for their actions but when they realize that it is too late and they cannot fix it.

And the problem of inflation is created by governments. Whenever there is an increase in money supply which eventually outpaces the economic growth of a country, the outcome is inflation. This is done by the authorities. Now we cannot really order them to not do so and neither can we stop it on our own. We are only left with improving our income. Fiat become useless and therefore, bitcoin should be used for this purpose.

There are a lot of things that can cause money inflation. One of it is wrong government policy. But i believe that is only happen in a few countries. Because the others usually have their own way and wouldn't minted fiat to maintain their financial problems.

Actually, I'm leaning towards mild inflation to be a good thing for an economy as it motivates people to spend and invest, otherwise people would sit on their money because they won't lose anything if purchasing power was stable.

The area where inflation goes wrong is the area where governments get too greedy to fix everything by printing money to fill up gaps left and right instead of allowing the economy to take a hit and recover organically.

The fiat currency becomes worthless when enough people disagree to accept it and also the country isn't having stable internal affairs like corruption or financial instability. These factors make up the economy of the country and also the purchasing power of their currency.

Hyperinflation is one of the major causes of the death of fiat currency. This happens when a country decides to print out additional money to address certain problems within the country. Also, countries may decide to abandon their native currency for another which makes the native one worthless. Typical example can be seen in Europe where some countries abandon their main currency for the EURO.

As long as fiat has some purchasing power, it will not become worthless. And people don't have much options available with them. The only alternative to fiat cash is barter. And for sure not many would prefer barter over fiat currency. And that is the advantage with fiat. People are forced to use them, as they don't have any other choice readily available.

Ideally, a currency should have stable purchasing power. But that is not true in the case of fiat. It's purchasing power goes down every day, due to inflation. And this inflation results from the fact that the central banks are printing more and more banknotes every year, to neutralize the budget deficit and to manage the federal debt. Obviously Bitcoin represents the solution for this, but the governments will never allow it to be used for this purpose.

fiat usually becomes worthless because of problems in the country, as is the case with venezuela, because of high corruption rates, it has an impact on the country's economy that is destroyed, so that people become victims. for Zimbabwe I don't think it's that much different either

That's not the cause, but what causes hyperinflation in the first place? one of the reasons for Venezuela's hyperinflation due to trade restrictions by the U.S. and other countries follow U.S. politics. The sanctions restrict the Venezuelan government's access to U.S. debt and equity markets because of the government responsible for violations of human rights, corruption, degradation in the rule of law and repression of democracy. But the main reason for Venezuela's hyperinflation because of the GDP growth depends on petroleum exports has been in a state of total economic collapse, massive money-printing, and deficit spending.

In this case, fiat becomes worthless if the government can't maintain its value related to the country's GDP and GNP growth.
Many factors affect the GDP and GNP of a country, such as;
The quality of human resources (skills, creative, abilities, training, and education), natural resources, capital formation, technological development, social and political factors.


source

in my opinion a country's currency is worthless because that country prints too much money. and if a country prints too much money will cause people to have a lot of money and cause their purchasing power to be high and make the price of goods go up this makes the value of their currency worthless. as happened in zimbahwe. and inflation can also be caused by weak economic conditions and many cases of corruption.

The old Rouble was exchangeable to the new Rouble at a rate of 10,000 to one.    So quite close to worthless and it was because debts exceeded assets, of course the country is rich in many ways (given time to harvest) but it did not have means to pay its on demand debt at that time.      That is what tends to happen, the scales tip a country towards just slamming the reset button.   Its easier for them to destroy the debt and acquire a bad reputation then the 50 years it might take to repay the majority of the debt, doing this can lead to great upsets even wars and the population is stranded by an inability to trade beyond a local barter quite often.

In theory inflation is a form of soft default, like a country raising the retirement age after the population spent 40 years working towards that retirement.    The current global economy is very close to this soft default situation I think, which is why many speculate more secure transactions with less self bias and BTC qualifies in some way for this.

There are a few reasons why fiat currencies die. One is hyperinflation, which is caused by government printing money to deal with some problems like war, natural disaster, economic crisis and so on. Obviously it only makes things worse. The other reason is when the currency's country ceases to exist. When the Soviet Union collapsed, it's currency became worthless rather quickly. Also, sometimes countries abandon their currencies and start new ones, this often happens as the result of hyperinflation. Many EU countries have discontinued their national currencies in favor of Euro.

Correct, inflation is the most serious problem in state finances, if inflation occurs then the currency
will be worthless because every time we want to buy something then our money becomes less, not enough.

You cannot say that the government is worthless. Why do I say it that way because there is the main principle of the function of government that is maintaining public order and security so that every member of society can feel happiness. In maintaining order, the choices made are the best choices from bad choices. In the current era of globalization, domestic stability is also influenced by other countries' external policies.

The problem of the fall in fiat value is not only caused by the government's policy to print new money and not all governments adopt a policy of printing new money to overcome the economic problems in their country. Printing as much money as possible is allowed as long as the printing of money is backed up by gold, so the problem is there is no backup (creating out without nothing). Every fiat money printed by the central bank will become a burden (debt) to the economy.

In addition, why FIAT money becomes worthless because, since the collapse of the Breton Woods system, the world's monetary system automatically relies on the US dollar, as a consequence many countries in the world keep their foreign exchange reserves in dollars. International transactions such as import-export, oil trade, and financial services use the US Dollar as a transaction tool. So, indirectly there is a high enough relation of all these countries to the stability of the dollar. So the instability of the dollar will cause inflation to export throughout the world and the burden on the American economy will be felt by the entire world community.

Tax is the  blood of the economy of each country. With such illegal transactions in which government can not getting anything from, it will lessen the power of a country that can also lead to its fiat devaluations. Fiat become worthless once the economy gets weak. We can't deny the fact that
the value of any fiat relies with how the economy of a country is performing, the more it's been competitive, the higher the value of fiat will
grow.

For me it will be the corruption has the greater contribution to make a certain economy to become unstable making for their money value to become worthless too. Money will not be able to circulate if it will just keep it by a certain individuals causing damage to nation's growth and development. Corruption will also leads to allocative inefficiency / diverting public resources for private gain which contributes to persistent income & wealth inequality and reduced progress in cutting rates of extreme poverty.

If your governing body comes up with good projects that could boost the economy rather than increase the inflation rate and have the right policies to balance the inflation then there is nothing to worry, i am not expecting any major changes in any financial systems and we are not going back to the gold standard we had in the past but as long as there are no stupid economic policies the fiat system will be fine.

in my opinion, what causes fiat is no longer valuable because of the great inflation in a country. This can happen when the government implements a budget deficit system, where the budget deficit is overcome by printing new money. But this makes the amount of money circulating in the community increase and cause inflation.